Robinhood 3Q26: the beat came from event contracts, and higher spending absorbs half of it
Net revenue of $1,412m was 3.7% above our estimate, led by $236m of event-contract revenue, but FY26 spending guidance rose by $125m at the midpoint. Sell and $92 target unchanged. Sample update with illustrative figures and sources.
The full 3-page report
Sign in to read the complete analysis, estimates and model detail.
Key takeaways
- Net revenue rose 11% to $1,412m, 3.7% above our estimate and 1.9% above consensus; event contracts brought in $236m1 (source: Form 8-K, Exhibit 99.1, Q3 2026 earnings release, opens in a new tab)
- Management guided to about 8% sequential revenue growth in 4Q26 if October activity holds; we model 4%2 (source: Earnings call transcript, Q3 2026 earnings call, opens in a new tab)
- FY26 adjusted operating expense and SBC guidance rose to $2.45bn to $2.50bn, from $2.30bn to $2.40bn3 (source: Form 8-K, Exhibit 99.1, Q3 2026 earnings release, opens in a new tab)
- Crypto revenue fell 64% year on year to $96m as notional volume fell 58% and rebate rates declined4 (source: Form 10-Q, Q3 2026 Form 10-Q, opens in a new tab)
- Event contracts cleared $200m, but without a final CFTC rule this is not yet the trigger we set at initiation5 (source: Penmark initiation, HOOD, page 17, opens in a new tab)
3Q26 results
| Line | Reported | Our estimate | Consensus | vs our estimate | vs consensus |
|---|---|---|---|---|---|
| Revenue | $1,412m | $1,361m | $1,385m | +3.7% | +1.9% |
| EPS | $0.62 | $0.57 | $0.60 | +8.8% | +3.3% |
Investment thesis
The quarter was better than we expected, but the beat came from the most regulation-dependent line. Event contracts were 17% of revenue, against 12.9% in our FY27E, and sports were about 63% of contracts traded6 (source: Form 10-Q, Q3 2026 Form 10-Q, opens in a new tab). Higher spending guidance absorbs about half of the revenue upside3 (source: Form 8-K, Exhibit 99.1, Q3 2026 earnings release, opens in a new tab), so FY27E EPS stays at $2.49. We need two quarters above $200m and a final CFTC rule before we move5 (source: Penmark initiation, HOOD, page 17, opens in a new tab).
Valuation
Our $92 target is unchanged: 70% on 40x NTM EPS of $2.86 and 30% on our DCF7 (source: Penmark initiation, HOOD, page 20, opens in a new tab). Each $100m of FY27E event-contract revenue is worth about $1.90 a share, so the third-quarter run rate of about $940m, if sustained, would add about $2.405 (source: Penmark initiation, HOOD, page 17, opens in a new tab).
Our estimates
| Line | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue | $5,515m | $6,432m | $7,240m |
| EPS | $2.08 | $2.49 | $2.93 |
Risks to our view
- An adverse prediction-market ruling that removes sports contracts, worth about $16 a share5 (source: Penmark initiation, HOOD, page 17, opens in a new tab)
- A retail market-cycle drawdown that cuts trading volumes 20%, worth about $13 a share7 (source: Penmark initiation, HOOD, page 20, opens in a new tab)
- Spending above the new $2.45bn to $2.50bn range as international and banking launches scale3 (source: Form 8-K, Exhibit 99.1, Q3 2026 earnings release, opens in a new tab)
- Upside risk: a final CFTC rule that permits sports contracts, worth up to $7.40 a share at $1.2bn of FY27E revenue5 (source: Penmark initiation, HOOD, page 17, opens in a new tab)
Sources
- 1Form 8-K, Exhibit 99.1, Q3 2026 earnings release (opens in a new tab)Table: Condensed results
- 2Earnings call transcript, Q3 2026 earnings call (opens in a new tab)Chief Financial Officer
- 3
- 4Form 10-Q, Q3 2026 Form 10-Q (opens in a new tab)MD&A, cryptocurrencies revenue
- 5Penmark initiation, HOOD, page 17 (opens in a new tab)Robinhood: a great franchise, but the price discounts more growth than we model (Oct 12, 2026)
- 6Form 10-Q, Q3 2026 Form 10-Q (opens in a new tab)MD&A, other transaction-based revenues
- 7Penmark initiation, HOOD, page 20 (opens in a new tab)Robinhood: a great franchise, but the price discounts more growth than we model (Oct 12, 2026)
- 8Earnings call transcript, Q3 2026 earnings call (opens in a new tab)Chief Executive Officer, Q&A
This sample update and the company documents it cites are illustrative.