HOOD · Forward model · Net interest · Bear case
What has to happen in Net interest
Model as of
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Net interest
Basis quarter$389M
Final quarter$421M
Implied CAGR+2%
Final revenue mix23%
The half of the business nobody talks about: $389M a quarter earned on customer balances - a $21.6B margin book, $29.7B of cash sweep and $18.7B of customer cash. It grows with balances and shrinks with rates, and it is the reason a bad quarter for trading is no longer a bad quarter for Robinhood.
Last four quarters
2025 Q3
$456M
Reported
2025 Q4
$411M
Reported
2026 Q1
$359M
Reported
2026 Q2
$389M
Reported
Margin lendingCash sweep to partner banksSecurities lendingCorporate cash and segregated balances
Capacity energised
70 $B of balances
at the basis quarter
$70B of interest-earning balances: $21.6B margin book, $29.7B cash sweep, $18.7B customer cash.
Capacity added
4 $B of balances/qtr
changing 0.0% per quarter
$3.5B of balances a quarter, against $21.7B of net deposits in the June quarter and $5.6B in July.
Utilisation
100%
gliding toward 100%
100%: every dollar in the base already earns. Move it only if you mean balances stop paying.
Revenue per $B of balances
$5.56M/qtr
drifting −1.0% per quarter
$5.56M per $1B a quarter - $389M over $70B, about a 2.2% annualised net spread.
Net interest
Latest: $421M (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $290M |
| 2025Q2 | $357M |
| 2025Q3 | $456M |
| 2025Q4 | $411M |
| 2026Q1 | $359M |
| 2026Q2 | $389M |
| 2026Q3E | $394M |
| 2026Q4E | $399M |
| 2027Q1E | $404M |
| 2027Q2E | $407M |
| 2027Q3E | $411M |
| 2027Q4E | $414M |
| 2028Q1E | $417M |
| 2028Q2E | $419M |
| 2028Q3E | $421M |
| 2028Q4E | $422M |
| 2029Q1E | $424M |
| 2029Q2E | $425M |
| 2029Q3E | $425M |
| 2029Q4E | $425M |
| 2030Q1E | $425M |
| 2030Q2E | $425M |
| 2030Q3E | $424M |
| 2030Q4E | $424M |
| 2031Q1E | $422M |
| 2031Q2E | $421M |
Assumptions & reasoning
- Balances x net spread, in billions, because that is what net interest revenue physically is. A growth rate here would hide the fact that balances and rates move independently, and usually in opposite directions.
- The $70B base is the margin book at $21.6B plus cash sweep at $29.7B plus customer cash and deposits at $18.7B, each of them a disclosed number. $389M over $70B is $5.56M per billion a quarter, about a 2.2% annualised net spread.
- July's monthly data says the balances are flat to down, not growing: margin book $20.7B, down 4% on June, cash sweep $29.2B, down 2%. The $3.5B a quarter of balance growth assumed here is a bet on net deposits, which ran $5.6B in July alone.
- The spread falls 1% a quarter, which is the rate-cut assumption doing its work. This is the input to change first if you disagree about the path of short rates - it is worth more to this line than balance growth is.
- Utilisation is held at 100% because every dollar in the base is already earning something. It is a slider that should not be moved unless you mean that some of these balances stop paying.