Robinhood's quarter shows retail money moving from crypto to event contracts and margin
Record revenue at Robinhood hid a sharp change in what its customers do: crypto income fell by more than half while event contracts, options and borrowing surged.
Robinhood's third-quarter results, published on October 27th, were greeted coolly by the market. Net revenue reached a record $1.42bn, up 12% on a year earlier, but diluted earnings of 51 cents a share fell short of the 56 cents analysts had expected, according to LSEG estimates cited by CNBC, and the shares were down about 8% in pre-market trading the following morning. Much of the shortfall came from a $67m unrealised loss on the company's own venture fund, which has little to do with how its customers trade.
The more revealing story lies inside the revenue line. Robinhood serves 28.7m funded customers, most of them individuals managing their own money, and its quarterly disclosures are among the most detailed public records of what retail investors are actually doing. This quarter they show a customer base that has cooled sharply on crypto, embraced prediction markets and options, and borrowed against its portfolios on a scale the firm has never seen.
Crypto loses its place at the centre
A year ago crypto was the engine of Robinhood's growth. In the third quarter of 2025 it produced $268m of revenue. This time it produced $120m, a fall of 55%. Crypto notional volume dropped 38% to $50bn, and the decline was steepest in the main Robinhood app, where volume fell 48% to $21bn. Bitstamp, the separate exchange the group acquired, held up better, with volume down 28% to $29bn.
Crypto revenue did edge up from $100m in the second quarter, so this is not a collapse in progress. But the order of priorities has changed. Crypto now accounts for less than 14% of transaction revenue, compared with roughly 37% a year earlier, while options alone now contribute 46%. On the earnings call, Shiv Verma, the chief financial officer, pointed to one reason the damage was contained: event contracts on crypto price movements did well in the quarter, giving customers a way to take a view on crypto without buying the coins themselves.
Event contracts become a core business
That shift is the most striking feature of the quarter. Customers traded 16.4bn event contracts, more than seven times the year-earlier figure, and the product line generated $173m of revenue, up more than sixfold. It now earns Robinhood more than crypto and more than equities, and represents about a fifth of transaction revenue. Divided by volume, the business earns roughly one cent per contract, which shows how much of the revenue depends on sheer frequency of small bets.
The composition is changing too. Mr Verma said non-sports contracts made up about 30% of volume in the quarter, double the 15% of the previous quarter. Vlad Tenev, the chief executive, made clear that he expects sports betting style contracts to become a commodity and would rather build financial ones; the company said contracts on corporate earnings and other business indicators should follow shortly, pending approvals. Rothera, its prediction market exchange joint venture with Susquehanna, has already reached more than $100m of annualised revenue.
For individual investors, the point is less Robinhood's margin than the behaviour it reflects. A growing slice of retail activity now takes the form of short-dated, binary positions on prices, events and soon earnings figures. Those instruments are legal and regulated, but they are closer in economic character to options than to owning a business.
Options, equities and leverage at records
Options remain the largest source of transaction revenue, at $399m, up 31%. Customers traded 905m contracts, a record and 48% more than a year earlier. Equity notional volume also hit a record, $992bn, up 53%, and equity revenue rose 41% to $121m.
The figure that deserves most attention is the margin book. Loans to customers secured against their portfolios reached a record $22.1bn at the end of September, up 59% in a year. Total platform assets grew 19% to $396bn over the same period, so borrowing has risen roughly three times as fast as the assets it is secured on. Margin still equals only about 5.6% of platform assets, a modest ratio, but the direction is unmistakable. Robinhood also raised its provision for credit losses to $71m from $26m a year earlier, which the company attributed to the growth of its credit card loan book.
Robinhood is not an outlier. Interactive Brokers, whose customer base is more professional and international, reported on October 15th that customer margin loans had risen 36% to $105.2bn, against customer equity of $964.7bn. The two firms differ in scale and clientele, yet both point to the same conclusion: self-directed investors are using more borrowed money than a year ago.
October: a little quieter, except for bets
Management also gave an early read on the fourth quarter. Mr Verma said average daily volumes in equities, options and crypto in October were running about 5% below the strong third-quarter levels, while event contract volume was up about 10%. Net deposits in October exceeded $13bn, but $6bn of that came from the Dell family's contribution to Trump Accounts, the Treasury programme of investment accounts for children whose assets Robinhood custodies, so organic inflows were considerably smaller than the headline suggests.
The third quarter itself brought $15.7bn of net deposits, an annualised growth rate of 17% on platform assets. Mr Verma noted that the money came more from existing customers than from new accounts, which fits a picture of an established user base trading more actively rather than a fresh wave of newcomers.
Beyond America
The international push is slower to show up in the numbers but is now explicit. Mr Tenev said he expects more than half of the business to come from outside the United States over the long term. In the European Economic Area Robinhood continues to offer tokenised shares, now branded Classic Stock Tokens, alongside perpetual futures; it launched crypto trading in Britain, received authorisation in Dubai with a rollout planned for 2027, and holds in-principle approval in Singapore. None of these markets yet changes the group's economics, but they extend the same product mix of stocks, derivatives and event contracts to new retail audiences.
Our view
Robinhood's quarter is best read as a snapshot of the self-directed investor in late 2026. The enthusiasm has not gone away; it has moved. Spot crypto has lost its pull, while event contracts, options and margin borrowing have all set records. Each of these activities has a short horizon and, in the case of margin, an amplifying effect on losses when markets fall.
For investors, the useful lesson is to watch where the activity goes rather than how much of it there is. A margin book growing three times as fast as the assets behind it is the kind of statistic that matters little in calm markets and a great deal in a sharp correction. Robinhood's next disclosures on lending, credit provisions and the share of financial versus sports contracts will say more about retail risk appetite than any headline revenue figure. This article is analysis, not investment advice.
Sources
- SEC: Robinhood Markets, Form 8-K, Exhibit 99.1, third quarter 2026 results
- CNBC: Robinhood shares fall as crypto slump weighs on profits, offsetting gains in new businesses
- Decrypt: Robinhood misses Q3 earnings as crypto revenue rises and prediction market bets grow
- Investing.com: Earnings call transcript, Robinhood Q3 2026
- SEC: Interactive Brokers Group, Form 8-K, Exhibit 99.1, third quarter 2026 results
Filed under Investing. Written by Invest Times Editorial under our editorial standards. Commentary and analysis for information only, not investment advice.
