Robinhood (HOOD %) had a split-screen Tuesday. The earnings report missed Wall Street's numbers and the stock dropped more than 8% after hours, but tucked into the same release was one of the biggest contracts the company has ever signed.
The Treasury Department named Robinhood the broker and sole initial trustee for Trump Accounts, the new federal savings program that gives children a tax-advantaged investment account at birth.
Robinhood is partnering with Bank of New York Mellon (BK %) on the buildout. BNY will custody the assets, and Robinhood will run the standalone Trump Account app where parents and kids can manage the money.
The company raised its 2026 outlook for adjusted operating expenses to $2.7 billion to $2.825 billion to reflect about $100 million of buildout costs. Robinhood says the contract is structured cost-plus, which means the revenue is expected to outrun the spend.
The headline numbers didn't help the stock. Adjusted earnings per share came in at $0.38 - up a penny year over year but below analyst expectations - and revenue rose 15% year over year to $1.07 billion, missing the roughly $1.17 billion consensus.
Net income climbed only 3% to $346 million, and that's a small bump on top of a 15% revenue jump that investors really zeroed in on.
"This is a classic case of top-line strength, bottom-line pressure," David Bartosiak, a stock strategist at Zacks Investment Research, said in an email to SiliconANGLE. "Margins are quietly slipping."
Inside the revenue mix, the story shifted hard. Crypto trading revenue dropped 47% year over year to $134 million as the digital asset market sold off through early February.
In its place, a newer product line took off. Other transaction revenue, made up mostly of event contracts trading on Robinhood's Prediction Markets Hub, jumped 320% to $147 million.
By the numbers (Q1 2026):
Robinhood is no longer just a retail crypto and options broker. It's a publicly traded company that now holds a federal contract for a child savings program every newborn in the country could end up using.
CEO Vlad Tenev framed the moment in his earnings statement, saying the company is "increasingly positioned at the center of our customers' financial lives, just as we enter the early innings of the Great Wealth Transfer."
The market wants to see margins follow the revenue, and that story plays out over the next few quarters.
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