Robinhood Revenue Rises 12% to $1.42 Billion as Income Sources Diverge
Key Facts
Robinhood reported results on October 27 for the third quarter ended September 30, posting net revenue of $1.42 billion, up 12% year over year. The increase came as transaction revenue rose and trading activity expanded, while declines in crypto and interest weighed on some income sources. The company said transaction-based revenue increased 19% to $867 million. Adjusted net income, by contrast, fell 3% to $550 million, while adjusted earnings per share declined 3% to $0.60. The company's shares fell 3.4% after the close on October 27, according to Reuters.
The strongest activity indicators came from equities, options and event contracts. Notional equity trading volume rose 53% to a record $992 billion, and the number of options contracts traded increased 48% to a record 905 million. Event contracts traded rose more than 7-fold to a record 16.4 billion contracts. Event-contract revenue was $173 million, including $28 million from Rothera, according to the results presentation. Reuters linked trading activity during the quarter to global market disruptions tied to Middle East tensions, which led investors to adjust portfolios and hedge risk.
The uneven activity was reflected in transaction revenue: options revenue was $399 million, and equity revenue was $121 million, while crypto revenue fell 55% to $120 million. That revenue is separate from notional crypto trading volume, which declined 38% to $50 billion. The volume comprised $21 billion through the Robinhood app, down 48%, and $29 billion through Bitstamp, down 28%. Reuters coverage noted that inflation and higher interest rates made bonds and traditional investments more attractive than speculative assets, alongside market volatility and outflows. Thus, increased trading in equities, options and event contracts offset part of the decline in digital activity, but did not prevent crypto revenue from falling.
Other revenue grew faster, rising 61% to $142 million, driven mainly by Trump Accounts services and higher Robinhood Gold subscription revenue. Gold subscribers reached a record 5.2 million, up 34% year over year, while average revenue per user rose 5% to $200. Rothera stood out among the newer businesses: the company said its annualized revenue exceeded $100 million in its first full quarter of operation. Customers also traded more than 6.4 billion contracts since its launch. These figures show how new products and subscriptions are broadening revenue sources alongside trading activity.
The customer and asset base expanded during the quarter. Funded customers rose 7% to 28.7 million, and platform assets increased 19% to $396 billion. Net deposits were $15.7 billion in the quarter, equivalent to an annualized growth rate of 17% relative to platform assets at the end of the second quarter; net deposits over the trailing twelve months reached $71 billion. Margin balances also rose 59% to a record $22.1 billion, while cash and deposits increased 43% to a record $20.4 billion. But the larger asset base did not lift every income source: net interest revenue fell 9% to $415 million, which the company attributed mainly to lower securities lending activity and short-term interest rates, partly offset by growth in interest-earning assets.
On costs and profitability, operating expenses rose 16% to $739 million. The company attributed the increase to higher credit-loss provisions as its credit card portfolio grew, Trump Accounts and Rothera expenses, and investment in marketing and growth. Net income included unrealized losses of $67 million, or $0.07 in diluted earnings per share, mainly related to the mark-to-market revaluation of Robinhood Ventures Fund I. Alongside the declines in adjusted net income and adjusted earnings per share, the rise in expenses highlights the operating costs that accompanied the expansion. The comparison between revenue and earnings shows that increased activity did not translate into growth in adjusted profitability this quarter.
Chief Financial Officer Shiv Verma said October net deposits exceeded $13 billion from the start of the month through the results announcement, including $6 billion from the Dell family's contribution to Trump Accounts. On guidance, the company lowered the upper end of its 2026 adjusted operating expense and stock-based compensation range by $25 million to a range of $2.675 billion to $2.75 billion, from a previous upper end of $2.775 billion. Robinhood said it received authorization from the Dubai Financial Services Authority to launch services in the region and plans to begin rolling out products there in 2027. These steps combine strong October deposits, an adjustment to expense guidance and a regional expansion plan deferred until next year. These indicators therefore remain near-term milestones for tracking the path of assets, costs and expansion in the period ahead.