Robinhood (HOOD) Q3 2026: Prediction Market Revenue Hits Record as Sports Halts Spread

Robinhood's Q3 2026 earnings show record revenue, but its fastest-growing business, prediction markets, now faces clearer legal limits. Robinhood reported results for the third quarter ended September 30, 2026 in a press release and 10-Q on October 27, 2026 [1][2]. Earlier research focused on four questions: whether options and equities could hold revenue after a record quarter, whether event contracts could hold their scale after the World Cup, whether margin balances could support net interest revenue, and whether net deposits could return to the company's 20% annualized goal.

This quarter, options revenue held, margin interest offset a negative securities lending line, and event contract revenue kept growing. Net deposits grew at a 17% annualized rate, still below the goal, and since July the metric has included Trump Accounts contributions [1]. Overall, growth depends more on high-frequency traders and customer leverage, and revenue per unit is falling.

Robinhood is an online broker for US retail investors, whose customers use its app to trade equities, options, event contracts and crypto [1]. In Q3, transaction-based revenue was $867 million, net interest revenue was $415 million, and other revenue, including Gold subscriptions and Trump Accounts service fees, was $142 million [1].

Prediction markets: record revenue, but sports contracts now halted in three states

Event contract revenue kept growing after the World Cup. Q3 event contract revenue was $173 million, compared with $156 million in Q2 [2][3], on a record 16.4 billion contracts traded [1]. Revenue divided by contracts implies about 1.05 cents per contract, down from about 1.15 cents in Q2. Management said it cut prices and moved to dynamic pricing when it bought Rothera, and that non-sports contracts were about 30% of volume, up from about 15% in Q2 [4].

The legal boundary for sports contracts narrowed this quarter. The 10-Q discloses that Robinhood reached an agreement with Michigan to stop offering and to close sports-related event contracts there. On October 26, 2026, it also agreed to stop offering new sports-related event contracts in Ohio by November 2, 2026 [2]. Before this, Nevada was the only state where it had stopped [2]. In exchange, the two states agreed not to enforce their gaming laws while appeals are pending [2].

The financial effect of these halts cannot yet be measured. Event contracts were 12% of Q3 total revenue and grew by $146 million year over year, almost offsetting a $148 million decline in crypto revenue [2]. The 10-Q says growth came mainly from sports-related contracts, but the company did not disclose how much revenue comes from the two states [2].

Net interest revenue: margin lending offset securities lending

Net interest revenue rose from Q2 because margin balances grew. Q3 net interest revenue was $415 million, up 7% from Q2 and down 9% from a year earlier [1]. Margin interest was $244 million, compared with $215 million in Q2. The margin book reached a record $22.1 billion at quarter end, and the annualized margin yield was 4.54%, nearly unchanged from Q2 [1][2].

Margin interest fully offset the swing in securities lending. Net securities lending revenue moved from $10 million in Q2 to negative $19 million, which the 10-Q attributes to a weaker hard-to-borrow market [2]. Net interest revenue carries almost no direct cost, so the increase falls largely to pretax profit. It also makes net interest revenue more dependent on customer leverage, so it would decline if customers reduce borrowing.

Options held up while net deposits trailed the target

Options revenue held its Q2 level, while equities revenue slipped on a lower rebate rate. Options revenue was $399 million, compared with $342 million in Q2, or about $0.44 per contract, the same as in Q2. Equities revenue was $121 million, below $129 million in Q2, even as notional volume set a record [1][3]. The number of users placing options trades fell 11% year over year, and growth came from each trader trading more [2].

Net deposits slowed below the company's goal. Q3 net deposits were $15.7 billion, a 17% annualized growth rate, compared with 28% in Q2 [1][5]. Robinhood Gold subscribers rose to 5.2 million [1]. October net deposits topped $13 billion month to date, including $6 billion from the Dell family's contribution to Trump Accounts [1].

Conclusion

Robinhood's revenue is still growing in Q3 2026, but the sources are more concentrated and revenue per unit is falling. Adjusted EBITDA was $808 million, a 57% margin. GAAP net income was $476 million, down 14% year over year, including $67 million of unrealized investment losses. Operating cash flow was $1.225 billion and moves mainly with customer funds [1]. The sports contract halts take effect from Q4, and their impact depends on revenue in the three states and whether other states follow. Management said October average daily volumes for equities, options and crypto were about 5% lighter than in Q3 [4]. The next tests are whether transaction revenue holds, whether net interest revenue keeps growing, whether securities lending turns positive, and whether net deposits recover once the donation is excluded.

Sources

[1] HOOD 8-K/A filed 2026-10-27 Exhibit 99.1, 2026-10-27, 8-K/A, https://www.sec.gov/Archives/edgar/data/1783879/000178387926000170/q32026robinhoodamendedex991.htm

[2] HOOD 10-Q filed 2026-10-27 (Q3 2026), 2026-10-27, 10-Q, https://www.sec.gov/Archives/edgar/data/1783879/000178387926000167/hood-20260930.htm

[3] HOOD 10-Q filed 2026-07-30 · Q2 2026 transaction-based revenue by asset, 2026-07-30, 10-Q, https://www.sec.gov/Archives/edgar/data/0001783879/000178387926000114/hood-20260630.htm

[4] HOOD Q3 2026 earnings call 2026-10-27, 2026-10-27, earnings call, https://investors.robinhood.com/news-events/events

[5] HOOD 8-K filed 2026-07-29 · Q2 2026 net deposits, Gold, ARPU and buybacks, 2026-07-29, 8-K, https://www.sec.gov/Archives/edgar/data/0001783879/000178387926000113/q22026robinhoodexhibit991.htm