stockrowLatest quarter
The Charles Schwab Corporation reported Q3 FY2026 revenue of $7.2 billion, up 16.9% from $6.1 billion in Q3 FY2025. Revenue was 0.26% below the consensus, with both reported revenue and the consensus shown as $7.2 billion.
Schwab reported adjusted EPS, as the consensus counts it, of $1.69 for the quarter to September 30, 2026, compared with the $1.66 consensus, or 1.81% above it. The company reported diluted EPS of $1.68, up 33.1% from $1.26 a year earlier. Schwab recorded 16.0% growth in trading revenues, while Q3 net interest revenue was $3.5 billion.
The company reported an operating margin of 57.9%, compared with 54.1% a year earlier, while gross margin was 100.0% in both periods. Schwab’s most recently reported free cash flow was $4.1 billion in Q2 FY2026, compared with $3.0 billion in Q2 FY2025.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $7.2 billion | $6.1 billion | 16.9% |
| Diluted EPS | $1.68 | $1.26 | 33.1% |
| Gross margin | 100.0% | 100.0% | 0.0 percentage points |
| Operating margin | 57.9% | 54.1% | 3.8 percentage points |
| Free cash flow | $4.1 billion | $3.0 billion | 35.0% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.69 | $1.66 | Beat by 1.81% |
| Revenue | $7.2 billion | $7.2 billion | In line |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
At Schwab’s October business update, CFO Mike Verdeschi said the company expected client engagement and growth in lending and trading to continue in the fourth quarter. He said the company’s Q2 FY2026 call reflected demand for lending, trading, wealth and asset-management offerings, alongside balance-sheet management intended to support client activity.
On that Q2 call, Verdeschi said higher client use of margin and bank lending, reduced higher-cost bank borrowings and long-short demand contributed to net interest revenue growth. He said lending demand had kept the securities portfolio relatively stable because Schwab was allocating resources to meet client lending needs. Verdeschi also said rate and volume tend to be inversely correlated and anticipated revenue per trade would increase modestly from Q2 FY2026 levels under its then-current scenario.
Rick Wurster said Schwab was investing in branches, financial consultants, wealth advisers, RIA relationship managers, artificial intelligence and additional platform capabilities. He said the company had closed the Forge transaction and was working to bring private-market capabilities to clients. Wurster also said Schwab was developing infrastructure for client activity using blockchain technology, while noting uncertainty about tokenized-securities adoption.
During the Q2 question-and-answer session, analysts asked about the drivers of net interest margin, securities lending and long-short strategies. Verdeschi said lending activity was the primary driver of margin expansion and that the deposit base supported it. Wurster said client interest in long-short strategies had moved beyond an earlier surge into a more stable growth environment, and he said Schwab sought to support RIA clients using the strategy.
Verdeschi said Schwab’s capital-management framework prioritized resources for client activity and franchise growth.
Guidance
At its Q2 FY2026 update, Schwab raised its FY2026 daily average trades assumption to 10,600,000. Verdeschi said Schwab expected FY2026 revenue growth of 17.5%–18.5% and annual expense growth of 9.50%–10.5%. He said the higher expense-growth view reflected volume-related expenses and Forge, while underlying expenses remained in line with the 5.5%–6.5% range previously shared at the January business update.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Units, Daily Average Trades | FY2026 | 10,600,000 | — | — |
| Operating expenses growth | FY2026 | 9.50%–10.5% | — | New |
| Revenue growth | FY2026 | 17.5%–18.5% | — | New |