Robinhood reported a weaker-than-expected third-quarter profit on Tuesday as declining interest income and rising expenses weighed on the online brokerage despite record trading activity in stocks, options and prediction markets.

The company reported net income of $476 million, down 14% from a year earlier, while its diluted earnings per share fell 16% to $0.51. Revenue rose 12% to $1.42 billion. Analysts had expected earnings of $0.57 per share and revenue of $1.43 billion, according to data compiled by Bloomberg.

Robinhood shares fell 4% in after hours trading. The stock has slumped more than 15% since the start of 2026, putting it on pace for its worst annual performance since 2022.

The company’s investing platform experienced record trading volumes across stocks, options, and prediction markets, helping transaction-based revenue climb 19% from a year earlier to $867 million.

But that strength was partly offset by a 9% decline in net interest revenue to $415 million. Robinhood attributed the decline primarily to reduced securities lending activity and lower short-term interest rates, even as its interest-earning assets grew.

Robinhood CFO Shiv Verma said weaker demand to borrow stocks weighed on the online brokerage’s securities lending business, citing fewer IPOs and less disagreement among investors over the prospects of individual companies.

“Right now, there was lower market volatility, and there was less IPOs, and so there were lower requests for demand,” Verma said in a call with reporters.

Prediction markets remained an important growth driver. Revenue from event contracts surged to $173 million as customers traded a record 16.4 billion contracts during the quarter, up 11% from the previous quarter.

Options trading revenue rose 31% to $399 million from a year ago, while equities trading revenue increased 41% to $121 million over the same period. Meanwhile, crypto trading revenue plunged 55% to $120 million amid a slump in activity.