Robinhood's Stock Down Despite Q3 Earnings Beat on Trading & NIR Surge

Shares of Robinhood Markets Inc. HOOD declined 2.4% in yesterday’s after-market trading session despite solid quarterly results. Its third-quarter 2025 earnings per share of 61 cents handily surpassed the Zacks Consensus Estimate of 51 cents. Moreover, the figure compared favorably with earnings of 17 cents in the prior-year quarter.

Results benefited substantially from solid trading activity across all asset classes amid heightened volatility, which led to a jump in transaction-based revenues. Further, higher net interest revenues (NIR), a surge in Gold subscribers and an improvement in Monthly Active Users (MAU) were tailwinds. However, higher expenses were an undermining factor.

Net income (GAAP) was $556 million, jumping significantly from $150 million in the year-ago quarter.

HOOD’s Revenues Soar, Expenses Rise

Quarterly total net revenues soared 100% year over year to $1.3 billion. Moreover, the top line beat the Zacks Consensus Estimate of $1.2 billion.

During the quarter, average revenue per user (ARPU) increased 82% year over year to $191.

Transaction-based revenues of $730 million jumped 128.8% from the prior-year quarter. This was primarily driven by an improvement in options, equities and cryptocurrencies revenues, which jumped 50%, 132% and 300%, respectively.

NIR rose 66.4% to $456 million. This was mainly attributable to a higher interest-earning assets balance and securities lending activity, partially offset by lower short-term interest rates.

Other revenues increased 100% to $88 million, primarily due to a rise in Gold subscription revenues. During the reported quarter, its Gold subscribers jumped 77% year over year to 3.9 million.
 
Total operating expenses were $639 million, up 31.5%. The increase was primarily due to a rise in all the components. Adjusted operating expenses increased 34.8% to $535 million.

During the reported quarter, adjusted EBITDA jumped to $742 million from $268 million in the year-ago period.

Robinhood’s Other Business Activities

As of Sept. 30, 2025, total platform assets soared 119% year over year to $333 billion. The rise was driven by continued net deposits, acquired assets and higher equity and cryptocurrency valuations.

Equity Notional Trading Volumes surged 126% in the quarter to a record $647 billion. Likewise, Options Contracts Traded rose 38% to 610 million, while Crypto Notional Trading Volumes (which includes Robinhood App and Bitstamp Exchange) were $80 billion.

Further, the company reported MAU of 13.8 million, up 25.5% year over year.

Robinhood’s Share Repurchase Update

In the reported quarter, the company repurchased nearly 1 million shares for $107 million.

HOOD’s Updated Outlook for 2025

Robinhood anticipates combined adjusted operating expenses and share-based compensation (SBC) for 2025 to be roughly $2.28 billion, including Bitstamp-related costs.

Our View on Robinhood

Robinhood’s expansion efforts, product diversification and relatively higher interest rates, alongside a solid balance sheet, will aid its financials. Further, the company’s initiatives to expand globally will drive growth. However, rising expenses and excessive regulatory risks are major headwinds.

Robinhood Markets, Inc. Price, Consensus and EPS Surprise

Robinhood Markets, Inc. price-consensus-eps-surprise-chart | Robinhood Markets, Inc. Quote

Currently, Robinhood carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of HOOD’s Peers

Interactive Brokers’ IBKR third-quarter 2025 adjusted earnings per share of 57 cents surpassed the Zacks Consensus Estimate of 50 cents. The bottom line reflected a rise of 42.5% from the prior-year quarter.

IBKR’s results were primarily aided by an increase in revenues and a decline in expenses. Growth in customer accounts and a rise in daily average revenue trades acted as other tailwinds.
 
Charles Schwab’s SCHW third-quarter 2025 adjusted earnings of $1.31 per share beat the Zacks Consensus Estimate of $1.23. The bottom line soared 70% year over year.

Results benefited from the solid performance of the asset management business and higher trading revenues. Higher NIR and solid brokerage account numbers were other positives. However, an increase in expenses acted as a headwind for SCHW.

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This article originally published on Zacks Investment Research (zacks.com).

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