Robinhood missed Wall Street's profit estimates for the third quarter of 2026, reporting earnings of USD 0.51 per share against an expected USD 0.55, as revenue from crypto trading plunged 55% to USD 120 million.

Despite the crypto downturn, the US online broker posted record net revenue of USD 1.42 billion, up 12% year over year. In a notable shift for the quarter, prediction markets generated more revenue than crypto trading. The stock nonetheless fell 7% in after-hours trading once the results were released.

Robinhood Markets operates a retail investing app that lets customers trade stocks, options and cryptocurrencies. The company generates revenue from transactions, interest on customer balances and subscriptions such as Robinhood Gold. It also owns the crypto exchange Bitstamp and counts 28.7 million customers with funded accounts. Since the 2024 US election, the platform has additionally offered prediction markets, where customers bet on the outcomes of real-world events.

Crypto Trading Revenue Falls 55%

Crypto transaction revenue of USD 120 million came in far below the prior-year quarter, which works out to roughly USD 267 million on a comparable basis. Trading volume shrank as well, though less sharply. Notional volume — the total value of all cryptocurrencies traded — fell 38% to USD 50 billion. Of that, USD 21 billion came from the Robinhood app, down 48%, while volume on Bitstamp dropped only 28% to USD 29 billion.

The gap between the two channels stands out: volume in the retail app fell more sharply than on the exchange. Moreover, revenue declined faster than volume, meaning Robinhood earned less per dollar traded.

The market environment explains part of this. Volatility and capital outflows weighed on cryptocurrencies during the quarter, particularly as inflation pressure and higher interest rates made bonds more attractive to investors. Less trading translates directly into lower transaction revenue for a broker. As a result, the crypto unit now carries less weight within the group: it contributed only about 14% of the USD 867 million in transaction-based revenue.

Event Contracts Overtake Crypto Revenue

Transaction-based revenue nevertheless rose about 19% to USD 867 million. Options made the largest contribution at USD 399 million, up 31%, while equities brought in USD 121 million. The biggest jump, however, came from event contracts — instruments tied to the outcomes of events in Robinhood's prediction markets. As the quarterly report filed with the SEC shows, their revenue grew more than sixfold to USD 173 million, overtaking crypto trading's USD 120 million.

The number of event contracts traded likewise rose more than sevenfold, reaching a record 16.4 billion. The prediction markets hub now also offers contracts on companies' quarterly earnings. On top of that comes Rothera, a prediction market exchange that Robinhood runs as a joint venture with Susquehanna and does not control alone. Rothera posted annualized revenue of more than USD 100 million in its first full quarter, and more than 6.4 billion contracts have changed hands there since launch.

Revenue, however, is not quite keeping pace with trading. The number of contracts grew more than sevenfold, while revenue grew by comparison only more than sixfold — a calculation that points to slightly lower revenue per contract. Chief Financial Officer Shiv Verma nevertheless framed the size of the business positively on a media call.

"Prediction markets is almost a $500-million-a-year business already, and so growing incredibly nicely, and it's less than two years old because it came out at the start of the 2024 election." — Shiv Verma, CFO, Robinhood

Higher Costs and Provisions Weigh on Profit

Diluted earnings per share fell 16% year over year to USD 0.51, versus the USD 0.55 analysts had expected, according to LSEG. The gap does not stem from operations alone. Unrealized losses, mainly on Robinhood Ventures Fund I, cut earnings by USD 0.07 per share — a hit that exceeds the USD 0.04 shortfall against the estimate. Net income fell 14% to USD 476 million, with a net margin of 33%.

On the cost side, operating expenses rose 16% to USD 739 million. A key driver was provisions for credit losses, which jumped 173% to USD 71 million. New businesses such as Trump Accounts and Rothera, along with higher marketing spending, added to costs as well. On the revenue side, net interest revenue fell 9% to USD 415 million, as less securities lending and lower short-term interest rates took their toll. Other revenue, by contrast, grew 61% to USD 142 million, driven by service fees for Trump Accounts and Gold subscriptions.

Adjusted figures paint a friendlier picture. Adjusted earnings per share of USD 0.60 held comparatively steady, down 3% from a year earlier, while adjusted EBITDA rose 9% to USD 808 million, corresponding to a margin of 57%. Reuters measures the miss against the GAAP figure, while other reports cite a beat on adjusted earnings — leaving it open whether the estimates are even comparable.

Finally, Robinhood lowered the top end of its 2026 expense outlook by USD 25 million. The range for adjusted operating expenses, including share-based compensation, now stands at USD 2.675 billion to USD 2.75 billion.

Trump Accounts and Robinhood Chain Seen as Growth Drivers

While crypto trading is weak, capital keeps flowing onto the platform. Total platform assets grew 19% to USD 396 billion. Net deposits reached USD 15.7 billion in the quarter and more than USD 13 billion so far in October. Of the October inflows, USD 6 billion came from the Dell family's contribution to Trump Accounts, investment accounts for children. The US Treasury has started automatic enrollment for these accounts, covering nearly 70 million children, and 25 million children each receive USD 250 from Susan and Michael Dell's USD 6.25 billion pledge. The number of Gold subscribers climbed 34% to 5.2 million.

In its crypto business, Robinhood is betting on its own blockchain. Robinhood Chain has completed its first quarter on mainnet, meaning in regular operation. By the company's own account, it ranks among the five largest chains by revenue and volume, with more than USD 80 billion in volume on decentralized exchanges and more than USD 50 million in fees. Outside the US, Robinhood has meanwhile launched crypto trading in the UK. In Dubai, it already holds a license from the financial regulator DFSA, though the rollout there is not due to start until 2027.

The company also continued its share buybacks, spending USD 25 million in the quarter. Since the third quarter of 2024, buybacks have totaled USD 1.3 billion.

Source: Crypto Valley Journal