Robinhood's Q3 earnings fell short of expectations, reporting $1.42B in revenue and $0.51 EPS, while crypto revenue saw a slight increase but a significant year-over-year decline.
Overview
- Robinhood's Q3 revenue reached $1.42 billion, slightly short of the $1.43 billion forecast, while earnings per share were $0.51, below the expected $0.55.
- Crypto revenue increased to $120 million from $100 million in Q2, though it represented a 55% decline year-over-year.
- The company revised its 2026 expense guidance, narrowing it to between $2.675 billion and $2.75 billion, leading to a drop in share price during after-hours trading.
On Tuesday, Robinhood announced its third-quarter earnings, revealing a revenue figure of $1.42 billion, which fell short of Wall Street's anticipations of approximately $1.43 billion. The company's earnings per share landed at $0.51, missing the forecast of $0.55 and down from $0.61 a year prior.
The trading app, known for its commission-free model, serves over 28 million users who engage in stock and cryptocurrency trading, as well as betting on various events. The performance metrics offer insight into user activity, with increased trading and deposits often reflected in the quarterly figures.
Net income for the quarter was reported at $476 million, a 14% drop from $556 million the previous year and a 17% decline from $573 million in Q2. This quarter's results included a $67 million unrealized loss from Robinhood Ventures Fund I, impacting earnings by $0.07 per share. Adjusted earnings per share, which account for certain exclusions, stood at $0.60, down 3% year-over-year.
In terms of event contracts—essentially bets on outcomes of events—Robinhood generated $173 million, up from $156 million in Q2. This growth indicates a significant increase in trading activity, with users executing a record 16.4 billion trades, more than seven times the number from a year ago.
CEO Vlad Tenev expressed optimism about the potential growth of prediction markets, highlighting recent additions like NFL player contracts and parlay-style bets.
Meanwhile, crypto trading revenue rose to $120 million from $100 million in the previous quarter, though it was down 55% from $268 million year-over-year. Customers traded $50 billion in cryptocurrency during the quarter, a decrease of 38% compared to the same period last year.
In July, Robinhood launched its layer-2 network, Robinhood Chain, aimed at enhancing transaction efficiency on Ethereum. Early activity on the platform was dominated by meme coins rather than the intended tokenized stocks.
Additionally, Robinhood announced a partnership with Ripple, introducing the RLUSD stablecoin to Robinhood Chain and Bitstamp, with a rollout planned for later this year. This stablecoin has a market capitalization exceeding $2.5 billion.
Despite these developments, Robinhood's shares closed at approximately $94.61, experiencing a decline in after-hours trading. The stock is down about 18% for the year, significantly below its 52-week peak of $150.47.
Robinhood has also adjusted its projected operating costs for 2026, now estimating them to be between $2.675 billion and $2.75 billion, reflecting a more conservative outlook than previously stated.
