Robinhood shares drop on Q1 miss as crypto trading revenue tumbles 47%

Shares in Robinhood Markets Inc. fell more than 8% in late trading today after the financial services company reported earnings and revenue below analyst expectations in its fiscal 2026 first quarter.

For the quarter that ended on March 31, Robinhood reported diluted adjusted earnings per share of 38 cents per share, up a penny from 37 cents per share in the same quarter of the previous year, on revenue of $1.07 billion, up 15% year-over-year. Both figures came in below the 41 cents per share and revenue of $1.17 billion expected by analysts.

Robinhood saw net income in the quarter grow 3% year-over-year to $346 million, while adjusted earnings before interest, taxes, depreciation and amortization climbed 14% to $534 million.

Transaction-based revenue rose 7% year-over-year to $623 million, but the mix told the story of the quarter.

Cryptocurrency revenue fell 47% year-over-year, to $134 million, as the digital asset market deteriorated through early February, while options revenue rose 8%, to $260 million, and equities revenue jumped 46%, to $82 million. Other transaction revenue, made up largely of event contracts, surged 320%, to $147 million on record volumes through the company’s Prediction Markets Hub.

Net interest revenue rose 24% year-over-year, to $359 million, and other revenue, driven by Robinhood Gold subscriptions, rose 57%, to $85 million.

Funded customers grew 6% year-over-year, to 27.4 million, while Robinhood Gold subscribers rose 36%, to a record 4.3 million. Total platform assets climbed 39%, to $307 billion. Net deposits in the quarter were $17.7 billion, an annualized growth rate of 22%.

The company also disclosed that the U.S. Department of the Treasury has named Robinhood the broker and sole initial trustee for Trump Accounts, the new federal savings program for children. Robinhood will work with Bank of New York Mellon Corp. to build a standalone Trump Account app and custody the assets.

Robinhood raised its 2026 outlook for adjusted operating expenses and share-based compensation to a range of $2.7 billion to $2.825 billion, up from $2.6 billion to $2.725 billion previously, to reflect an additional $100 million for the Trump Accounts buildout. The company said the work is contracted on a cost-plus basis and revenues are expected to exceed costs.

“Driven by our relentless product velocity and innovation, Robinhood is increasingly positioned at the center of our customers’ financial lives, just as we enter the early innings of the Great Wealth Transfer,” Vlad Tenev, chairman and chief executive officer of Robinhood, said in the company’s earnings release.

Commenting on the results, David Bartosiak, stock strategist at Zacks Investment Research told SiliconANGLE via email that “Robinhood came out swinging with a headline beat on growth, but when you dig in, this is a classic case of top-line strength, bottom-line pressure. They want you focused on innovation, artificial intelligence and ‘financial super app’ buzzwords. I’m focused on margins, revenue quality and sustainability.”

Bartosiak gave some credit to Robinhood, noting that revenue rose 15% and net deposits rose 22%, but added that there was a catch and a “big one.”

“Profit growth is basically stalling. Net income up just 3% and EPS up just 3%. That’s a massive disconnect from 15% revenue growth,” Bartosiak explains. “They’re running faster… but not getting much further. They’re buying growth by spending heavily to keep users engaged and expand the ecosystem. That means margins are quietly slipping.”

Bartosiak added that the company is “replacing lost crypto momentum with less proven, more speculative revenue streams. That 320% growth in ‘other transaction revenue’ sounds great, he said, but on a small, volatile base.

“This is a good company with a great story but a messy earnings profile,” Bartosiak concluded. “This is no longer just a growth story, it’s now a prove-it story. If they can’t turn this engagement into real margin expansion, the market’s patience is going to wear thin and that’s the immediate reaction we are seeing in after-hours.”

Photo: Robinhood