HOOD Robinhood 10-Q 2026-09-30 section summaries

Robinhood — Q3 and first nine months of 2026

Results and revenue mix

Q3 2026 net revenue rose to $1.424B from $1.274B. Transaction-based revenue was $867M from $730M, net interest revenue $415M from $456M, and other revenue $142M from $88M. For 9M 2026, net revenue was $3.799B from $3.190B: transaction-based revenue $2.266B from $1.852B, net interest revenue $1.163B from $1.103B, and other revenue $370M from $235M.

Q3 transaction revenue by category was: options $399M from $304M; event contracts $173M from $27M; crypto $120M from $268M; equities $121M from $86M; and other $54M from $45M. For 9M, the corresponding figures were $1.001B from $809M, $433M from $40M, $354M from $680M, $332M from $208M, and $146M from $115M. Options and event contracts drove growth, while crypto revenue declined substantially.

Q3 net interest revenue components were margin interest $244M from $153M, interest on segregated cash, securities and deposits $55M from $103M, Cash Sweep $45M from $64M, credit card $50M from $17M, corporate cash and investments $47M from $39M, credit-facility interest expense $(8)M from $(8)M, securities lending $(19)M from $87M, and other $1M from $1M. Securities-lending revenue and expense were $126M/$145M, versus $212M/$125M. Other revenue included Gold subscriptions of $62M from $47M, proxy revenue of $7M from $7M, and other of $73M from $34M.

Operating expenses increased to $739M from $639M, including credit-loss provision of $71M from $26M. Operating income was $685M from $635M. Q3 net income was $476M from $556M; net income attributable to Robinhood was $468M from $556M, and diluted EPS was $0.51 from $0.61. For 9M, operating income was $1.670B from $1.444B, net income $1.395B from $1.278B, and diluted EPS $1.51 from $1.39. Q3 other expense was $60M from $1M. The 9M tax provision rose to $350M from $169M.

Balance sheet, cash flow and capital

At September 30, 2026, total assets were $58.271B, versus $38.137B at December 31, 2025; total stockholders’ equity was $10.078B, versus $9.151B. Goodwill was $515M, versus $385M; intangible assets, net, were $231M, versus $168M. The September intangible balance comprised developed technology $61M, customer relationships $74M, trade names $1M, and indefinite-lived intangibles $95M. Equity less goodwill and intangibles was $9.332B, versus $8.598B. Long-term borrowings were $2.660B, versus none at year-end.

For 9M, operating cash flow was $3.983B from $2.575B; capital expenditures, including property, equipment, and internally developed software, were $63M from $41M. Cash flow reflected substantial customer-balance movements. Investing cash flow was negative $1.533B, including $10.834B of credit-card receivable purchases; financing cash flow was positive $2.439B, including $2.700B of long-term borrowing proceeds, $689M of Class A repurchases, and $757M of Credit Card Funding Trust borrowings. Class A and B shares outstanding totaled 901M at both the start and end of 9M 2026; 7M shares were repurchased and retired. Separately, the company reported 9M repurchases of 5.0M shares for $399M, including a $290M purchase of 2.7M shares funded from convertible-note proceeds.

In June, Robinhood issued $2.20B principal of 0.00% convertible notes due 2029; carrying value was $2.17B. The notes could convert into 12.6M Class A shares at an initial $174.42 conversion price. Robinhood paid $123.2M for capped calls intended to reduce dilution. Its March 2026 $1.5B repurchase authorization is expected to be executed over approximately three years. Revolving facilities totaling $4.450B had no borrowings outstanding at quarter-end.

Credit, acquisitions and business developments

The credit-card portfolio expanded as purchased receivables rose to $1.51B from $786M. Past-due card balances reached $102M (6%), versus $49M (5%); balances 90 days or more past due were $33M from $16M. The share of balances with FICO below 640 increased to 5%/$88M from 3%/$26M. The purchased-card allowance was $134M from $36M; Q3 provision was $57M from $15M. The Credit Card Funding Trust purchased $10.8B of receivables in 9M and issued $500M principal of asset-backed notes in July.

Acquisitions expanded custody, crypto and international capabilities: TradePMR consideration was $169M, Bitstamp $224M, and WonderFi $178M; Rothera, Robinhood’s SIG joint venture, acquired 90% of MIAXdx for approximately $79M. Goodwill from acquisitions is primarily attributed to assembled workforces and expected synergies and is not tax-deductible. Robinhood also became broker and sole initial trustee for U.S. Treasury Trump Accounts, launched in July 2026.

RVI and RVII were deconsolidated after loss of control. Robinhood reported a $106M 9M gain from RVI deconsolidation and retained interests in both entities measured at fair value. At September 30, retained interests were $361M in RVI and $23M in RVII.

Risks and investor considerations

Market makers and exchanges accounted for 46% of Q3 revenue, down from 54% a year earlier; Citadel Securities’ share increased to 17% from 13%. Robinhood remains exposed to transaction-based revenue, interest-rate changes, and regulatory limits on products and payment-for-order-flow-like practices. Sports event contracts face numerous state, tribal and customer challenges over gambling laws and federal preemption; Robinhood has agreed to suspend or limit offerings in certain jurisdictions, and availability could be further restricted. Potential event-contract tax exposure is unquantified.

The company also faces ongoing litigation and investigations, including IPO-related securities litigation, inquiries into execution quality and a trading outage, and a customer privacy action. A cash-sweep class action has reached a settlement in principle, with terms undisclosed. Management says many legal outcomes and reasonably possible losses cannot yet be estimated. Other risks include acquisition integration, cybersecurity and third-party dependence, and regulatory and operational exposure from newer offerings such as tokenized securities and Robinhood Chain.

Reported comparability has limits: TradePMR, WonderFi and Trump Accounts entered certain customer, deposit and platform-asset metrics at different dates. In February 2026, more than $6B of Cash Sweep balances moved to “Cash and Deposits” as customer free credit balances following a change in how the brokerage cash program funded margin lending.

Robinhood (HOOD) — Q3 and 9M 2026

Results and revenue mix

Q3 2026 net revenue increased 12% to $1.424B from $1.274B, while operating expenses rose 16% to $739M from $639M. Net income attributable to Robinhood declined 16% to $468M from $556M and diluted EPS fell to $0.51 from $0.61; consolidated net income was $476M, including $8M attributable to non-controlling interests. Adjusted EBITDA (non-GAAP) grew 9% to $808M from $742M. For 9M, revenue was $3.799B from $3.190B, operating expenses $2.129B from $1.746B, net income attributable to Robinhood $1.379B from $1.278B, and Adjusted EBITDA $2.083B from $1.761B. Q3 earnings were pressured by higher expenses and an income-tax provision of $149M from $78M; the 9M provision was $350M from $169M.

Event contracts became a major growth driver, with activity accelerating—predominantly in sports-related contracts—against a small prior-year base. Options revenue benefited from more contracts traded per trader (+66% Q3; +44% 9M), partly offset by fewer options traders and lower rebate rates. Equities growth reflected higher average notional volume per trader (+48% Q3; +50% 9M), partly offset by lower rebates. Crypto weakness reflected fewer trading users and lower volume per trader, partly offset by Robinhood Chain revenue.

Net interest revenue shifted in mix. Q3 margin interest was $244M from $153M (9M $652M from $377M), and credit-card net interest was $50M from $17M (9M $122M from $40M). These gains were offset by securities lending, net, which swung to $(19)M from $87M in Q3 and $(5)M from $164M for 9M as hard-to-borrow conditions and average lending rates weakened. Interest on segregated cash, cash equivalents, securities and deposits, net, was $55M from $103M Q3 and $173M from $236M 9M; Cash Sweep was $45M from $64M and $131M from $172M, respectively. Higher customer free-credit-balance expense under the updated High-Yield Cash program and lower short-term rates also weighed on revenue. Management noted potential Fed rate cuts could pressure net interest revenue and customer cash returns.

Other revenue included Gold subscriptions of $62M from $47M Q3 and $166M from $129M 9M; proxy revenue of $7M from $7M and $57M from $52M; and other revenue of $73M from $34M and $147M from $54M, respectively. Growth was driven by Trump Accounts service revenue and Gold.

Operating costs and notable items

Q3 / 9M expense lines, each against the comparable prior period, were: brokerage and transaction $68M from $56M / $190M from $154M; technology and development $254M from $237M / $751M from $665M; operations $79M from $33M / $174M from $93M; credit-loss provision $71M from $26M / $163M from $78M; marketing $104M from $102M / $315M from $306M; and G&A $163M from $185M / $536M from $450M.

Credit-loss provision growth chiefly reflected the expanding credit-card portfolio: card-related provision was $61M from $23M Q3 and $143M from $55M 9M. Technology expense included higher AI-related software costs (+$22M Q3; +$47M 9M) and cloud infrastructure for acquired-business integration (+$6M; +$11M). Lower average headcount reduced Q3 G&A compensation and overhead by $25M, but 9M compensation and overhead increased to $331M from $298M, partly due to executive-award modifications related to leadership transitions and business expansion. Q3 stock-based compensation was $80M from $78M; 9M was $277M from $229M, including G&A stock-based compensation of $132M from $89M.

Other income (expense), net, was a $60M expense in Q3 versus a $1M expense a year earlier, primarily from mark-to-market losses on RVI and RVII equity securities. For 9M it was $75M income versus $3M income, including a $106M RVI deconsolidation gain and a $23M equity-securities gain, partly offset by subsequent market losses. After RVI’s March 2026 IPO, Robinhood’s June share sales reduced ownership from approximately 52% to 49%, resulting in deconsolidation; RVI sale proceeds totaled $40M through September 30.

Scale, customer assets, and strategy

Funded Customers rose 7% to 28.7M from 26.8M; Investment Accounts increased 9% to 30.4M from 27.9M. Gold subscribers grew 34% to 5.18M from 3.88M, and ARPU rose 5% to $200 from $191. Total Platform Assets increased 19% to $395.9B from $332.7B, supported by deposits and higher equity valuations, partly offset by lower crypto valuations. Q3 net deposits were $15.7B versus $20.4B, while net market gains were $11.5B versus $33.7B. Trailing-12-month deposits were $71.0B, equal to 21% growth relative to Q3 2025 platform assets. Assets included equities $277.5B from $203.0B, crypto $37.9B from $51.1B, options and futures $2.4B from $3.9B, RIA assets $51.1B from $42.2B, customer cash $49.1B from $46.3B, and customer receivables, primarily margin balances, $(22.1)B from $(13.8)B.

In September 2026, Robinhood agreed to route selected event contracts to Crypto.com’s CFTC-regulated exchange and clearinghouse. Over three years, Robinhood may receive up to a 10% equity interest in Crypto.com and certain affiliates as consideration, connecting a fast-growing product to an external venue while creating execution-partner dependence.

Liquidity, cash flows, and obligations

At September 30, cash and cash equivalents were $5.83B and stablecoin was $164M. Robinhood said operations-generated cash and liquid assets should cover needs for the next 12 months. Revolving credit facilities had $4.45B of commitments, and the Credit Card Funding Trust had borrowing capacity up to $1.55B. In July, the Trust issued $500M principal of asset-backed notes for $497M net proceeds, primarily to repay warehouse-facility borrowings.

Contractual cash requirements totaled $5.107B: long-term borrowings $2.700B (including $2.200B due 2029–2030 and $500M thereafter), purchase commitments $1.237B (mainly cloud, data services, and insurance), Trust borrowing principal and interest $839M, all due in the remainder of 2026, and operating leases $329M. Separate committed financing agreements require daily minimum commitments of $25M for 30 days and $35M for 21 days.

For 9M, operating cash flow was $3.983B from $2.575B. Investing cash flow was −$1.533B versus +$699M, mainly reflecting lower cash acquired in acquisitions, increased credit-card receivable purchases net of collections, and fewer maturities of held-to-maturity investments. Financing cash flow was +$2.439B versus −$708M, including $2.700B of long-term borrowing proceeds and higher Trust borrowings, partly offset by higher Trust repayments. Broker-dealer and futures subsidiaries were compliant with regulatory capital requirements; excess net capital was RHS $3.721B, RHF $329M, RHD $574M, and TradePMR $18M. No material changes to critical accounting estimates were reported for 9M 2026.

Interest-rate and market-related risk

Based on September 30 period-end balances, Robinhood’s modeled pretax interest-rate sensitivity over the next 12 months increased year over year, reflecting growth in interest-earning assets. A hypothetical rate change of 50 basis points implies a $183 million impact in 2026, versus $149 million in 2025; 100 basis points implies $366 million versus $298 million; and 150 basis points implies $548 million versus $447 million. The modeled sensitivity is linear and positively correlated with the size of the rate change; the impact’s direction depends on whether rates rise or fall.

The analysis holds balance-sheet composition constant and excludes Cash Sweep balances and trading-activity effects. Actual results may differ due to changes in balances, the timing and magnitude of rate movements, market conditions, and management actions. For most Cash Sweep balances, Robinhood can adjust the rates paid to users as partner-bank rates change, helping manage the net interest spread and limit near-term rate exposure.

Interest-rate swaps convert certain fixed-rate borrowings to floating-rate exposure and are designated as fair-value hedges. Changes in the fair values of the swaps and hedged debt offset and are noncash; periodic net swap settlements affect net interest revenue and operating cash flows. Robinhood had no borrowings outstanding under uncommitted revolving credit facilities at September 30, 2026, limiting related rate exposure.

Market-related credit exposure arises indirectly from equity securities serving as collateral for margin receivables and from securities lending. Risk controls include daily monitoring of margin requirements and collateral values; customer collateral calls or position reductions; surveillance of concentrations and activity; counterparty credit approvals; and participation in an OCC risk-sharing program.

Controls and Procedures

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2026. No changes during Q3 2026 materially affected, or were reasonably likely to materially affect, internal control over financial reporting.

Following the June 1, 2026 acquisition of WonderFi, Robinhood is evaluating and integrating WonderFi into its internal-control systems. Management expects to exclude WonderFi from its 2026 internal-control assessment, consistent with SEC staff guidance permitting an acquired business to be excluded in the acquisition’s first fiscal year.

Risk Factors and Business Uncertainties

Robinhood’s results remain highly sensitive to market activity, customer behavior, regulation, and its ability to operate reliably as it expands. The company cautions that quarterly results can be volatile and that past growth in revenue and customer metrics may not predict future performance. Although Robinhood first reported positive full-year GAAP net income in 2024 and increased it in 2025, sustained profitability depends on revenue and expense management.

Revenue, competition, and market exposure

A substantial portion of revenue is transaction-based, including equity and options payment for order flow (PFOF) and cryptocurrency transaction rebates. Lower trading volumes, tighter spreads, changes in customer or asset mix, reduced crypto activity, or adverse changes in liquidity-provider relationships could weaken revenue and margins. Revenue also depends on interest earned on customer and corporate balances, securities lending, margin receivables, and other interest-earning assets; falling rates could reduce net interest revenue, while higher rates can increase customer delinquencies and credit losses.

SEC market-structure changes could increase quote transparency and narrow spreads, reducing PFOF. The SEC extended compliance dates for minimum pricing-increment and access-fee-cap rules to November 2027. New or revised rules could also raise compliance costs or require changes to Robinhood’s business model, potentially affecting it more than competitors that rely less on PFOF. Competitors increasingly offer similar low-cost products, and Robinhood’s most active customers account for a disproportionate share of trading volume. Loss of those customers, reduced confidence, or weaker adoption of new products could materially affect results.

Regulation, litigation, and new products

Robinhood operates across numerous regulated activities and jurisdictions, including brokerage, crypto, futures, payments, credit, investment advisory, and prediction markets. Requirements are changing and can be interpreted differently by regulators, courts, and jurisdictions. A regulator or court could classify supported crypto assets or services as securities, requiring registration, delisting, service changes, or cessation; federal guidance and enforcement developments have not eliminated this uncertainty.

Event contracts face particularly unsettled legal and regulatory challenges. State actions, private litigation, proposed federal rules, and new state taxes could restrict offerings or make them uneconomic in some markets. Robinhood has agreed to stop offering certain sports-related contracts in some states and may do so again. Illinois enacted taxes effective July 1, 2026, while North Carolina and Kentucky taxes are scheduled to take effect January 1, 2027.

Newer initiatives—including Robinhood Agents and agentic trading, leveraged crypto perpetual futures, Stock Tokens, Robinhood Chain, crypto staking and lending, and the Trump Accounts trustee role—bring additional regulatory, operational, security, fiduciary, and reputational risks. AI tools may produce unintended trades or expose customer data; tokenized products may face disputes with issuers or regulators; and the Trump Accounts role adds government-specific operational and fiduciary obligations. In June 2026, RHS received approval to underwrite public offerings, adding inventory, liability, and conflict risks. International expansion, including licensed operations in Singapore and the UAE and crypto operations under EU MiCA, creates growth opportunities but also adds licensing, compliance, localization, and execution costs.

Regulatory matters have already resulted in significant payments: RHF and RHS paid $45 million in SEC penalties in January 2025 and $26 million in FINRA penalties in March 2025, plus approximately $3.76 million in customer restitution, plus interest. Other settlements included a $30 million NYDFS penalty in 2022 and a $7.5 million Massachusetts settlement in 2024. Investigations, litigation, or adverse rulings may lead to additional penalties, restitution, restrictions, legal costs, and reputational damage.

Liquidity, credit, and operational resilience

Robinhood must maintain liquidity for settlement, custody, margin lending, crypto operations, and regulatory capital. Clearing collateral requirements can rise sharply with volatility; the 2021 NSCC deposit shock led to trading restrictions, investigations, litigation, and additional capital raising. Regulatory reserve requirements and limits on subsidiary distributions can further constrain liquidity available to the parent. Cash and investments held at financial institutions exceed FDIC-insured limits.

Credit and counterparty exposures are growing with margin and institutional crypto activities. From October 2026, eligible margin customers could opt into intraday buying power of up to 4×, compared with up to 2× previously. Robinhood reports that it can routinely have an intraday net receivable of $100 million from a single crypto liquidity provider; crypto settlement is bilateral rather than through a central clearinghouse and can involve unsecured payment intervals. Planned U.S. crypto perpetual futures could offer leverage up to 10×, increasing default and regulatory-capital risks.

The company depends on its self-clearing platform, proprietary systems, AWS, mobile-app gatekeepers, liquidity providers, banks, trading venues, and other vendors. It lacks fully redundant systems and has experienced disruptions, including an AWS incident in October 2025 and BOATS overnight-market failures in August 2024. Outages or failures during trading surges could cause incorrect or unexecuted orders, customer losses, litigation, regulatory scrutiny, and attrition. Cybersecurity and privacy threats—including vendor-related incidents, AI-enabled attacks, and remote-work exposure—could compromise customer information or assets; insurance may not cover all resulting losses. Crypto custody also carries risk of irreversible losses from compromised keys, wallet attacks, network forks, or service-provider failures.

Execution, workforce, and governance

Expansion, acquisitions, and new products require substantial investment and may not deliver expected returns. Integration challenges include TradePMR, Bitstamp, and WonderFi; Robinhood consolidates Rothera despite SIG’s participation and shared governance. In September 2026, Robinhood completed a previously announced reduction of approximately 10% of full-time employees, which may affect morale, productivity, support, and delivery even as the company seeks a leaner operating model.

Robinhood has $2.2 billion aggregate principal amount of 0.00% convertible senior notes due 2029. Debt agreements and covenants may limit operating flexibility, and conversion could require cash or dilute shareholders. The board authorized a $1.5 billion repurchase program in March 2026; approximately $152 million had been repurchased through September 30, 2026. Repurchases reduce resources available for other purposes and may not offset equity-award dilution.

As of September 30, 2026, founders and related entities held approximately 12% of outstanding common stock but more than 50% of voting power through the multi-class structure. This control may create conflicts and limit shareholder influence or the possibility of a takeover premium. Class A shares may also remain volatile, and potential equity issuance, awards, convertible-note settlement, and founder control are relevant to dilution and valuation risk.

Insider trading arrangements

No company financial results or operating developments are reported in this section. Four executives adopted Rule 10b5-1 trading arrangements in 2026 authorizing planned sales of Class A common stock through 2027:

• CFO Shiv Verma: May sell up to 40,258 shares, plus up to 19,436 additional shares subject to reduction for sales under predecessor plans, through August 27, 2027.
• Chief Accounting Officer Dara Bazzano: May sell shares received upon settlement of up to 31,378 unvested RSUs, less shares withheld for taxes, through November 26, 2027.
• Chief Legal Officer Daniel Gallagher: May sell up to 120,000 shares, including up to 50,000 subject to reduction for predecessor-plan sales, and shares from settlement of up to 112,856 unvested RSUs (up to 50,000 shares, less applicable tax withholding), through November 19, 2027.
• CEO and Chair Vlad Tenev: May sell up to 1,900,000 shares through November 19, 2027.

RSUs settle one-for-one into Class A shares. These arrangements could add potential insider-sale supply, but the authorized sales are not necessarily new share issuance. Other officers may also make ESPP elections or share-withholding arrangements, under Rule 10b5-1 or otherwise.