Robinhood (HOOD) reported a weaker-than-expected third-quarter profit on Tuesday as declining interest income and rising expenses weighed on the online brokerage despite record trading activity in stocks, options and prediction markets.
The company reported net income of $476 million, down 14% from a year earlier, while its diluted earnings per share fell 16% to $0.51. Revenue rose 12% to $1.42 billion. Analysts had expected earnings of $0.57 per share and revenue of $1.43 billion, according to data compiled by Bloomberg.
Robinhood shares fell 4% in after hours trading. The stock has slumped more than 15% since the start of 2026 through Tuesday’s close, putting it on pace for its worst annual performance since 2022.
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The company’s investing platform experienced record trading volumes across stocks, options, and prediction markets, spurring transaction revenue 19% higher from a year earlier to $867 million.
But that frenzy was offset by a 9% decline in net interest revenue to $415 million. Robinhood said the decline was driven in part by lower securities lending activity.
Robinhood CFO Shiv Verma said weaker demand to borrow stocks weighed on the online brokerage’s securities lending business, citing fewer IPOs and less disagreement among investors over the prospects of individual companies.
“Right now, there was lower market volatility, and there was less IPOs, and so there were lower requests for demand,” Verma said in a call with reporters.
“The core business is on fire,” he added.
Still, Robinhood’s operating expenses also climbed 16% to $739 million while provisions for credit losses nearly tripled to $71 million as Robinhood expanded its credit card business. The company also reported $67 million in unrealized investment losses, primarily from with its venture fund.
Excluding certain items, adjusted net income fell 3% to $550 million.
Robinhood attracted $15.7 billion in net deposits during the quarter, compared with $21.7 billion in the previous quarter. CFO Verma, however, added that the company disclosed deposits already surpassed $13 billion, driven in part by the Dell family’s contribution to Trump Accounts.
Prediction markets remained an important growth driver. Revenue from event contracts surged to $173 million, up 11% from the previous quarter, as customers traded a record 16.4 billion contracts during the quarter.
Options trading revenue rose 31% to $399 million from a year ago, while equities trading revenue increased 41% to $121 million over the same period. Meanwhile, crypto trading revenue plunged 55% to $120 million amid a slump in activity.
