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HOOD Q3 Earnings Beat on Trading Strength, Stock Dips on Revenue Miss
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Key Takeaways
HOOD's Q3 adjusted EPS of 60 cents beat estimates, but revenues of $1.42 billion missed expectations.
Robinhood's options revenues surged 31%, equities rose 41% and event-contract revenues grew over sixfold.
HOOD's crypto revenues plunged 55%, while operating expenses rose 16% and Gold subscribers increased 34%.
Robinhood Markets, Inc. (HOOD - Free Report) reported third-quarter 2026 adjusted earnings of 60 cents per share, beating the Zacks Consensus Estimate of 56 cents. The bottom line declined 3% year over year.
HOOD shares plunged almost 8% in after-hours trading on lower profitability and continued crypto weakness.
Strong options, equities and event-contract activity, alongside rising platform assets and Gold subscribers, supported growth. However, weaker cryptocurrency revenues, a decline in net interest revenues (NIR) and higher operating expenses weighed on results.
The reported quarter excluded certain non-operating items. Including these, earnings were 51 cents per share. Further, net income decreased 14% year over year to $476 million.
Robinhood's Revenue Mix Broadens on Trading Strength
Total net revenues climbed 12% year over year to a record $1.42 billion. However, the top line missed the consensus mark of $1.44 billion.
Transaction-based revenues increased 19% year over year to a record $867 million. Options revenues surged 31% to $399 million, while equities revenues jumped 41% to $121 million. Event-contract revenues increased more than sixfold to $173 million.
Cryptocurrency revenues remained a weak spot, declining 55% to $120 million. Other transaction-based revenues rose 20% to $54 million.
NIR decreased 9% year over year to $415 million. Lower securities-lending activity and short-term interest rates more than offset growth in interest-earning assets.
Other revenues climbed 61% to $142 million, aided by Trump Account service revenues and higher Robinhood Gold subscription revenues. The quarter included $47 million of service revenues related to Trump Accounts. Average revenue per user increased 5% to $200.
Robinhood's Trading Volumes Hit New Highs
Equity notional trading volume advanced 53% year over year to a record $992 billion. Options contracts traded increased 48% to a record 905 million.
Event contracts traded surged more than sevenfold year over year to a record 16.4 billion. Rothera Exchange surpassed $100 million in annualized revenues in its first full quarter of operations.
Crypto notional trading volume declined 38% year over year to approximately $50 billion. Robinhood App crypto volume fell 48% to $21 billion, while Bitstamp volume decreased 28% to $29 billion.
HOOD's Customer Assets and Gold Subscribers Rise
Funded Customers increased 7% year over year to a record 28.7 million. Investment Accounts rose 9% to 30.4 million.
Total Platform Assets advanced 19% to a record $396 billion, reflecting continued net deposits and higher equity valuations. These benefits were partially offset by lower cryptocurrency valuations. Average platform assets per funded customer reached $13,800.
Net deposits totaled $15.7 billion, representing a 17% annualized growth rate. Over the past 12 months, net deposits reached $71 billion, reflecting 21% growth.
Robinhood Retirement assets under custody surged 51% to a record $36.6 billion. Gold subscribers increased 34% to 5.18 million, representing an 18% adoption rate. Annualized Gold subscription revenues reached $248 million.
Robinhood's Expenses Rise Amid Business Expansion
Total operating expenses increased 16% year over year to $739 million. The rise primarily reflected higher credit-loss provisions, expenses related to Trump Accounts and Rothera, and marketing and growth investments.
Provision for credit losses surged 173% to $71 million. Technology and development expenses increased 7% to $254 million, while operations expenses climbed 139% to $79 million. General and administrative expenses declined 12% to $163 million.
Adjusted operating expenses and share-based compensation rose 8% to $664 million. Despite higher costs, adjusted EBITDA increased 9% to $808 million. However, the adjusted EBITDA margin contracted to 57% from 58% a year earlier.
HOOD's Balance Sheet and Share Buybacks in Focus
Robinhood ended September 2026 with cash and cash equivalents of $5.8 billion, up from $4.3 billion a year earlier. Net cash provided by operating activities totaled $1.23 billion during the quarter.
The company repurchased $25 million of Class A common stock, representing approximately 0.2 million shares at an average price of $105 each. Since the third quarter of 2024, cumulative repurchases under its program have totaled $1.3 billion, representing 27 million shares at an average price of approximately $48.
Robinhood Lowers 2026 Expense Outlook
Robinhood lowered the upper end of its 2026 adjusted operating expenses and share-based compensation outlook by $25 million. The revised range is $2.68-$2.75 billion compared with the previous projection of $2.68-$2.78 billion.
The updated guidance reflects continued efficiency gains while supporting investments across existing and new products. The revised range implies fourth-quarter adjusted operating expenses and share-based compensation of $765-$840 million.
Our View on HOOD
Robinhood’s solid transaction-based revenues, product expansion efforts and higher interest-earning assets, along with a solid balance sheet, will likely support its financials. Further, the company’s global expansion initiatives are expected to drive growth. Rising expenses, crypto weakness and excessive regulatory risks are major headwinds.
Robinhood Markets, Inc. Price, Consensus and EPS Surprise
Charles Schwab’s (SCHW - Free Report) third-quarter 2026 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.66. The bottom line increased 29% year over year.
Schwab’s results benefited from higher NIR, solid asset management fees and increased trading activity. Record core net new assets were another positive. However, rising expenses were a headwind.
Interactive Brokers Group's (IBKR - Free Report) third-quarter 2026 adjusted earnings per share were 67 cents, matching the Zacks Consensus Estimate. The bottom line rose 17.5% from the prior-year quarter.
Results primarily benefited from higher net interest income, growth in commission revenues, an increase in customer accounts and higher daily average revenue trades (DARTs). However, rising expenses partially offset the gains for Interactive Brokers.
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HOOD Q3 Earnings Beat on Trading Strength, Stock Dips on Revenue Miss
Key Takeaways
Robinhood Markets, Inc. (HOOD - Free Report) reported third-quarter 2026 adjusted earnings of 60 cents per share, beating the Zacks Consensus Estimate of 56 cents. The bottom line declined 3% year over year.
HOOD shares plunged almost 8% in after-hours trading on lower profitability and continued crypto weakness.
Strong options, equities and event-contract activity, alongside rising platform assets and Gold subscribers, supported growth. However, weaker cryptocurrency revenues, a decline in net interest revenues (NIR) and higher operating expenses weighed on results.
The reported quarter excluded certain non-operating items. Including these, earnings were 51 cents per share. Further, net income decreased 14% year over year to $476 million.
Robinhood's Revenue Mix Broadens on Trading Strength
Total net revenues climbed 12% year over year to a record $1.42 billion. However, the top line missed the consensus mark of $1.44 billion.
Transaction-based revenues increased 19% year over year to a record $867 million. Options revenues surged 31% to $399 million, while equities revenues jumped 41% to $121 million. Event-contract revenues increased more than sixfold to $173 million.
Cryptocurrency revenues remained a weak spot, declining 55% to $120 million. Other transaction-based revenues rose 20% to $54 million.
NIR decreased 9% year over year to $415 million. Lower securities-lending activity and short-term interest rates more than offset growth in interest-earning assets.
Other revenues climbed 61% to $142 million, aided by Trump Account service revenues and higher Robinhood Gold subscription revenues. The quarter included $47 million of service revenues related to Trump Accounts. Average revenue per user increased 5% to $200.
Robinhood's Trading Volumes Hit New Highs
Equity notional trading volume advanced 53% year over year to a record $992 billion. Options contracts traded increased 48% to a record 905 million.
Event contracts traded surged more than sevenfold year over year to a record 16.4 billion. Rothera Exchange surpassed $100 million in annualized revenues in its first full quarter of operations.
Crypto notional trading volume declined 38% year over year to approximately $50 billion. Robinhood App crypto volume fell 48% to $21 billion, while Bitstamp volume decreased 28% to $29 billion.
HOOD's Customer Assets and Gold Subscribers Rise
Funded Customers increased 7% year over year to a record 28.7 million. Investment Accounts rose 9% to 30.4 million.
Total Platform Assets advanced 19% to a record $396 billion, reflecting continued net deposits and higher equity valuations. These benefits were partially offset by lower cryptocurrency valuations. Average platform assets per funded customer reached $13,800.
Net deposits totaled $15.7 billion, representing a 17% annualized growth rate. Over the past 12 months, net deposits reached $71 billion, reflecting 21% growth.
Robinhood Retirement assets under custody surged 51% to a record $36.6 billion. Gold subscribers increased 34% to 5.18 million, representing an 18% adoption rate. Annualized Gold subscription revenues reached $248 million.
Robinhood's Expenses Rise Amid Business Expansion
Total operating expenses increased 16% year over year to $739 million. The rise primarily reflected higher credit-loss provisions, expenses related to Trump Accounts and Rothera, and marketing and growth investments.
Provision for credit losses surged 173% to $71 million. Technology and development expenses increased 7% to $254 million, while operations expenses climbed 139% to $79 million. General and administrative expenses declined 12% to $163 million.
Adjusted operating expenses and share-based compensation rose 8% to $664 million. Despite higher costs, adjusted EBITDA increased 9% to $808 million. However, the adjusted EBITDA margin contracted to 57% from 58% a year earlier.
HOOD's Balance Sheet and Share Buybacks in Focus
Robinhood ended September 2026 with cash and cash equivalents of $5.8 billion, up from $4.3 billion a year earlier. Net cash provided by operating activities totaled $1.23 billion during the quarter.
The company repurchased $25 million of Class A common stock, representing approximately 0.2 million shares at an average price of $105 each. Since the third quarter of 2024, cumulative repurchases under its program have totaled $1.3 billion, representing 27 million shares at an average price of approximately $48.
Robinhood Lowers 2026 Expense Outlook
Robinhood lowered the upper end of its 2026 adjusted operating expenses and share-based compensation outlook by $25 million. The revised range is $2.68-$2.75 billion compared with the previous projection of $2.68-$2.78 billion.
The updated guidance reflects continued efficiency gains while supporting investments across existing and new products. The revised range implies fourth-quarter adjusted operating expenses and share-based compensation of $765-$840 million.
Our View on HOOD
Robinhood’s solid transaction-based revenues, product expansion efforts and higher interest-earning assets, along with a solid balance sheet, will likely support its financials. Further, the company’s global expansion initiatives are expected to drive growth. Rising expenses, crypto weakness and excessive regulatory risks are major headwinds.
Robinhood Markets, Inc. Price, Consensus and EPS Surprise
Robinhood Markets, Inc. price-consensus-eps-surprise-chart | Robinhood Markets, Inc. Quote
Currently, Robinhood sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of HOOD’s Peers
Charles Schwab’s (SCHW - Free Report) third-quarter 2026 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.66. The bottom line increased 29% year over year.
Schwab’s results benefited from higher NIR, solid asset management fees and increased trading activity. Record core net new assets were another positive. However, rising expenses were a headwind.
Interactive Brokers Group's (IBKR - Free Report) third-quarter 2026 adjusted earnings per share were 67 cents, matching the Zacks Consensus Estimate. The bottom line rose 17.5% from the prior-year quarter.
Results primarily benefited from higher net interest income, growth in commission revenues, an increase in customer accounts and higher daily average revenue trades (DARTs). However, rising expenses partially offset the gains for Interactive Brokers.