Robinhood Markets, Inc. (NASDAQ: HOOD) reported record third-quarter revenue on Tuesday, but its profit fell 14% from a year earlier and missed analysts' estimates as cryptocurrency trading slowed and costs rose.
Revenue rose 12% to $1.42 billion in the three months ended September 30. Net income fell to $476 million, or 51 cents a share, from $556 million, or 61 cents, a year earlier. Analysts had expected 55 cents a share, according to LSEG estimates. Shares fell 7% in after-hours trading.
The quarter showed Robinhood relying more on prediction markets and options as crypto activity cooled. Revenue from event contracts, which let customers trade on the outcome of events through its prediction markets hub, rose more than sixfold to $173 million. Crypto revenue fell 55% to $120 million, with bitcoin down as much as 8% this year.
"Prediction markets is almost a $500-million-a-year business already," Chief Financial Officer Shiv Verma told journalists on a call, noting that the product is less than two years old.
#Prediction Markets Revenue Tops Crypto for Robinhood in Third Quarter
Transaction-based revenue rose 19% to $867 million. Options revenue climbed 31% to $399 million and equities revenue rose 41% to $121 million, as customers traded a record 905 million options contracts and a record $992 billion in stocks by notional value.
Event contracts traded rose more than sevenfold to a record 16.4 billion. Bill Birmingham, research head at REX Financial, said revenue growth lagged the rise in contract volumes. "Prediction markets are becoming a second outlet for the same core active traders rather than a funnel for new customers," he said.
Net interest revenue fell 9% to $415 million, which the company attributed to lower securities lending activity and short-term interest rates, partly offset by growth in interest-earning assets.
Robinhood, based in Menlo Park, California, offers stock, options, crypto and prediction market trading alongside banking, retirement and advisory services. It had 28.7 million funded customers at the end of September, up 7% from a year earlier.
#Higher Costs and Investment Losses Cut Robinhood's Quarterly Profit
Total operating expenses rose 16% to $739 million. Robinhood said the increase came mainly from higher provisions for credit losses as its credit card loan book grows, costs tied to Trump Accounts and Rothera, its joint venture with Susquehanna International Group, and marketing spending. Credit loss provisions rose to $71 million from $26 million.
Net income also included $67 million, or 7 cents a share, of unrealized losses, mainly from marking to market its interest in Robinhood Ventures Fund I. Adjusted earnings, a non-GAAP measure Robinhood introduced this quarter, fell 3% to 60 cents a share.
Customer assets continued to grow. Net deposits were $15.7 billion, an annualized growth rate of 17% against platform assets at the end of the second quarter. Total platform assets rose 19% to $396 billion, and Robinhood Gold subscribers reached a record 5.2 million, up 34%.
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#Robinhood Lowers Top End of 2026 Expense Outlook to $2.75 Billion
Robinhood now expects 2026 adjusted operating expenses and stock-based compensation of $2.675 billion to $2.75 billion, cutting $25 million from the top of its prior range, which it said reflects efficiency gains. The outlook excludes credit loss provisions, costs of pending acquisitions and potential regulatory matters.
"October Net Deposits have already topped $13 billion month-to-date, including $6 billion from the Dell family's contribution to Trump Accounts," Verma said in the earnings release. Trump Accounts are investment accounts for children that Robinhood services, and the company said Susan and Michael Dell's pledge has put $250 into accounts for 25 million children.
The company also said it received authorization from the Dubai Financial Services Authority covering trading and custody across ten asset classes, and plans to begin rolling out its products there in 2027. It launched crypto trading in the UK during the quarter.
Robinhood said in its release that its results remain exposed to crypto trading, interest rates and credit losses. It also said regulatory enforcement actions, litigation or changes in federal or state law could prevent it from offering event contracts, and noted that it does not wholly own or operationally control Rothera.
Management trimmed its expense ceiling for the year and pointed to October deposits as a sign of continued customer inflows, though weaker crypto activity, rising credit costs and regulatory pressure on prediction markets remain key risks to the outlook.