Robinhood 10-Qquarter ended 2026-03-31

Executive Summary

Robinhood grew Q1 revenue 15% Y/Y, but expenses rose faster, leaving net income attributable to Robinhood up just 4%. The growth story shifted: event contracts, margin lending and subscriptions offset a steep decline in cryptocurrency trading revenue, while customer deposits continued despite market losses that reduced platform assets during the quarter. Expansion into derivatives, credit cards and international crypto services broadens the opportunity but adds regulatory, credit and operational exposure. For investors, the test is whether those newer businesses can sustain growth and profit after their associated costs and risks.

Key Financial Highlights

• Revenue mix: Transaction-based revenue rose 7% to $623M, led by event contracts at $104M vs $3M and equities at $82M vs $56M; cryptocurrency revenue fell to $134M from $252M. Net interest revenue rose 24% to $359M, driven chiefly by margin interest of $193M vs $110M. Gold subscriptions contributed $50M vs $38M.
• Costs and credit: Operating expenses increased 18% to $656M, including a $36M credit-loss provision, up 50%. Higher legal, staffing and integration costs also pressured earnings; tax expense rose to $65M from $35M.
• Cash conversion: OCF of $2.04B vs $350M of net income benefited from a $5.61B working-capital increase, substantially offset by a $4.35B increase in securities segregated under regulatory requirements. FCF subtracts $9M of property, software and equipment purchases and $9M of capitalized internally developed software.
• Capital return: Robinhood repurchased ≈3M shares for $250M during Q1, while combined shares outstanding declined only from 901.328M to 901.219M after issuance and other activity. Stock-based compensation was $92M in the cash-flow reconciliation, up from $73M; only $2M of the newly expanded $1.5B authorization had been used by quarter-end.

Business Developments

Funded Customers reached 27.4M, up 6% Y/Y, and Gold subscribers rose 36% to 4.34M. Total Platform Assets grew 39% Y/Y to $307B but fell from $322B at year-end: $17.7B of Q1 net deposits was outweighed by $32.5B of market losses. Deposit growth therefore signals customer retention even as asset-linked economics remain exposed to markets.

Management is expanding derivatives, prediction markets, international crypto and investment services. Robinhood retained ≈52% of RVI after its initial public offering, which generated $312M of net proceeds, and consolidated its joint venture’s acquisition of 90% of MIAXdx. Bitstamp broadens institutional and international crypto capabilities; the proposed WonderFi acquisition would extend the Canadian footprint. These moves diversify potential revenue but require investment in integration and compliance. Robinhood also announced an April partnership with BNY to support U.S. Treasury Trump Accounts.

Credit cards are becoming a larger lending business: on- and off-balance-sheet loans reached $1.13B from $1.04B at year-end. They add interest revenue, but the larger receivables base is already raising credit provisions.

Risk Assessment

• Event-contract regulation: State and tribal challenges allege sports-related contracts constitute illegal gambling; Robinhood stopped offering new sports-related contracts in Nevada after an adverse injunction decision, and further restrictions could impair a fast-growing revenue source.
• Trading and counterparty concentration: Cryptocurrency revenue fell 47% Y/Y, while Citadel Securities represented 15% of Q1 net revenue; changes in trading activity, execution terms or provider capacity could quickly affect results.
• Interest rates: A modeled +100 bp rate move increases 12-month pretax revenue, income and cash flows by $294M, under constant-balance assumptions; rate cuts would pressure interest economics.
• Consumer and margin credit: The card allowance reached $73M from $56M, and balances at least 90 days past due rose to $20M from $16M; weaker repayment or collateral values could increase losses.
• Crypto custody and infrastructure: Customer crypto held in custody had $30.5B of fair value; irreversible asset loss, outages or vendor failures could create claims and damage trust, while insurance does not cover the full exposure.
• Liquidity and regulatory capital: Volatile markets can sharply increase clearing collateral and customer-reserve needs; $703M of Credit Card Funding Trust borrowing principal and interest is due during the remainder of 2026, although revolving facilities had no outstanding borrowings at quarter-end.
• Product and international compliance: Crypto, tokenized products, derivatives and acquired operations face evolving licensing and legal requirements that could force product changes or raise costs.

Strategic Outlook and Investor Actionables

Robinhood is using its customer base to build a broader financial platform. The opportunity is more durable revenue from subscriptions, lending and new products; the near-term constraint is proving those gains can outpace operating costs and credit losses without depending on unusually favorable markets.

• Monitor revenue mix: Sustained growth in event contracts, Gold and margin interest alongside stabilizing cryptocurrency revenue would support diversification; restrictions or renewed crypto weakness would challenge it.
• Monitor customer assets: Net deposits and Gold subscribers should continue growing even when market valuations fall; weakening deposits would undermine the engagement thesis.
• Monitor earnings quality and credit: Compare net income with OCF after customer-balance movements, and track card provisions and delinquencies against card revenue growth.