Robinhood Q3 2026: revenue rose 12% to a record $1.42B, but EPS fell 16% to $0.51 on taxes and a fund loss

Robinhood's third quarter of 2026 (July–September) brought its highest revenue ever: total net revenues rose 12% to $1,424 million. Profit went the other way. Net income attributable to Robinhood fell 16% to $468 million and diluted earnings per share (EPS, profit per share counting shares that stock awards could create) fell 16% to $0.51. The business itself did not shrink. Two things below the operating line did the damage: a $67 million paper loss, mostly from marking down Robinhood's stake in its Robinhood Ventures Fund I (RVI), and an income-tax rate that nearly doubled. This analysis is written from the October 27 earnings release (8-K Exhibit 99.1). The full 10-Q is not filed yet, so the line-by-line explanations of interest income, costs and tax are not available.

The numbers

Operating margin is the share of revenue left after running the business (all operating costs), before investment gains or losses, interest on debt and tax. It is calculated here from the income statement: revenue minus operating expenses, divided by revenue. Total Platform Assets is everything customers hold on Robinhood (stocks, options, crypto, cash), and ARPU is annualized revenue divided by average Funded Customers. The year-ago customer and Gold figures are derived from the stated increases (1.9 million and 1.3 million); the release gives only percentage changes for platform assets and ARPU.

Where the revenue came from

Transaction-based revenue is what Robinhood earns when customers trade: payments from market makers for routing orders, plus fees on prediction-market contracts. It rose $137 million to $867 million and is now 61% of revenue. The release names four lines:

Event contracts are contracts on real-world outcomes that pay $1 each if the outcome happens. Robinhood's customers traded a record 16.4 billion of them, more than 7 times a year earlier. Options contracts traded rose 48% to a record 905 million and equity trading volume rose 53% to a record $992 billion. Options revenue grew less than options volume (+31% vs +48%), the same pattern as in Q2, which then came from lower per-contract payments on the mix of stocks traded.

Crypto is still the weak line. Robinhood App crypto trading volume fell 48% to $21 billion and Bitstamp's fell 28% to $29 billion. The release attributes total Platform Assets growth partly to "higher equity valuations, partially offset by lower cryptocurrency valuations."

Net interest revenue (what Robinhood earns on customer loans and the cash it holds, minus what it pays out) fell 9% to $415 million. The release blames "lower securities lending activity and short-term interest rates, partially offset by growth in interest-earning assets." The biggest of those assets is the margin book (loans to customers who borrow to buy securities), which rose 59% to a record $22.1 billion. Cash Sweep balances, customer cash parked at partner banks on which Robinhood earns a spread, fell 9% to $32.3 billion, partly because Robinhood moved over $6 billion of it onto its own balance sheet in February to fund margin loans.

Other revenues rose 61% to $142 million, from fees for servicing Trump Accounts (the government-seeded children's investment accounts Robinhood administers) and more Gold subscription revenue.

Costs

Operating expenses rose 15.6% to $739 million, faster than revenue, so operating margin slipped to 48.1% from 49.8%. Two lines explain $91 million of the $100 million increase:

• Provision for credit losses $71M, up from $26M. This is money set aside for loans expected to go bad, and the release ties it to growing the credit card loan book. The Gold Card now has 1.3 million customers and over $19 billion of annualized spending.
• Operations $79M, up from $33M, which the release links to Trump Accounts and Rothera (Robinhood's joint venture with Susquehanna International Group).

General and administrative costs fell 12% to $163 million. Robinhood's own cost measure, Adjusted Operating Expenses and SBC, rose 8% to $664 million. It leaves out credit-loss provisions, so it understates how much the card business costs to grow.

What the headline numbers hide

• The fund mark-down. "Other income (expense), net" swung to −$60 million from −$1 million a year ago. Inside it is $67 million of unrealized and realized losses, which the release says relate "primarily" to marking Robinhood's remaining RVI stake to market. In Q2 the same stake produced a $106 million deconsolidation gain plus $23 million of other gains. This line has gone from adding $129 million to subtracting $67 million in one quarter, and it is a non-cash swing in an investment's value, not a change in the trading business.
• The tax rate. The provision for income taxes rose to $149 million from $78 million while pre-tax income was flat. The effective rate went to 23.8% from 12.3%. Had the rate stayed at 12.3%, the same $625 million of pre-tax income would have left about $548 million of net income. That is roughly $70 million, or about $0.08 a share, and it is not adjusted out of anything, which is why even adjusted EPS fell 3%. The release gives no reason. In Q2 the 10-Q blamed a similar rise on business growth and a smaller tax benefit from stock compensation, which would make it lasting rather than a one-off. The Q3 10-Q should confirm.
• GAAP vs adjusted. Adjusted net income of $550 million adds back the $67 million of investment losses, $9 million of acquired-intangible amortization and $2 million of stock compensation tied to the CFO transition, less $4 million of tax effects. It does not add back ordinary stock compensation ($80 million) or credit-loss provisions, so the adjustments are narrow. Adjusted EPS is a new measure, introduced this quarter.
• Cash conversion. Operating cash flow was $1,225 million against $476 million of net income (YTD: $3,983 million vs $1,395 million). For a broker this line mostly tracks customer cash and margin balances: a year ago the same quarter showed −$1,576 million. It says little about earnings quality in either direction.
• Receivables. Receivables from users, mostly margin loans, reached $23.6 billion, up 31% since December. That is the lending business growing, not unpaid bills. It also brings credit risk, which the provision line already shows.
• Buybacks. Robinhood repurchased only $25 million of stock in the quarter, versus $107 million a year earlier, and diluted shares fell 0.8% to 911 million. Share count did essentially nothing for EPS.

On balance the quarter is understated: reported EPS fell 16%, but pre-tax income before the $67 million fund mark-down rose 9% on 12% revenue growth. The higher tax rate, the other half of the decline, looks like a real and probably lasting cost, not a one-off.

Takeaway: Robinhood's trading business had its best quarter yet, but none of that reached the bottom line. The fund stake that flattered Q2 by $129 million cost $67 million in Q3, and a tax rate near 24% instead of 12% took about $70 million more. Strip out the mark-down and pre-tax income grew 9% on 12% revenue growth: still slightly slower than revenue, because credit-card loss provisions and Trump Account costs are growing faster than the businesses that pay for them.

Did last time's read hold up?

Our Q2 2026 analysis and the what-to-watch note before these results set three tests:

1. Would event contracts hold about 12% of revenue? Yes. $173 million against $156 million in Q2, still 12% of revenue. Q2 was not a one-quarter peak.
2. Would margin interest keep net interest revenue rising from $389 million? Sequentially yes: $415 million, up 7% on Q2, with the margin book at a record $22.1 billion. Year over year it still fell 9%, as lower rates and securities lending outweighed the loan growth.
3. Would costs grow slower than revenue after the June 10% staff cut? Partly. Operating margin recovered to 48.1% from Q2's 43.9%, and G&A fell 12%. But total operating expenses still grew faster than revenue year over year (+15.6% vs +11.8%). We also flagged that investment gains had flattered Q2. That swing reversed into a loss this quarter.

Crypto, the smaller watch item, rose to $120 million from $100 million in Q2, but is still down 55% on a year ago.

Outlook

Robinhood gives no revenue or earnings guidance. Its one outlook is for costs. It narrowed the 2026 range for Adjusted Operating Expenses and SBC to $2.675–2.75 billion from $2.675–2.775 billion, citing "ongoing efficiency gains." That range excludes credit-loss provisions, costs of pending acquisitions and regulatory matters. Spending through September was $1,912 million, so the range implies $763–838 million in Q4, at least 15% above Q3's $664 million. Either Q4 spending steps up sharply or the full year lands well below the bottom of the range. Robinhood hasn't said which.

Management also said October Net Deposits (new money customers brought in, net of withdrawals) had topped $13 billion month-to-date, $6 billion of it the Dell family's contribution to Trump Accounts. Q3's full quarter was $15.7 billion. That money adds to platform assets. The release does not say how much of the $142 million of other revenues Trump Accounts contribute.

Our read: revenue now rests on active trading (options, equities, prediction markets) and margin lending. Both do well when markets are busy and rising, and both would weaken together in a downturn. Crypto's fall now matters less to the total. The two things to watch in Q4 are whether credit-loss provisions keep growing faster than the card book, and whether the tax rate stays near 24%. The 10-Q, due in the coming days, should explain both the tax rate and the fund mark-down.