Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today
announced financial results for the first quarter of 2024, which
ended March 31, 2024.
“We continued to aggressively execute on our
product roadmap in Q1, leading to all-time highs for Net Deposits
and Gold Subscribers," said Vlad Tenev, CEO and
Co-Founder of Robinhood. "Q2 is off to a
strong start with April being our highest month of the year for Net
Deposits and Gold Subscriber growth, and we’re excited to see
strong interest from over 1 million customers in our Robinhood Gold
Card."
"We delivered significant revenue growth and
margin expansion in Q1 as we remain focused on driving another year
of profitable growth in 2024,” said Jason Warnick, Chief
Financial Officer of Robinhood. “In Q1, we set records for
quarterly revenues, net income, and EPS, even as we stepped up our
marketing and growth investments."
First Quarter Results:
- Total
net revenues increased 40% year-over-year to
$618 million.
-
Transaction-based revenues increased 59%
year-over-year to $329 million, primarily driven by
cryptocurrencies revenue of $126 million, up 232%, options revenue
of $154 million, up 16%, and equities revenue of $39 million,
up 44%.
- Net
interest revenues increased 22% year-over-year to $254
million, driven by growth in interest-earning assets and higher
short term interest rates.
- Other revenues
increased 35% year-over-year to $35 million, primarily driven by
higher Gold subscription revenue.
- Net income
increased year-over-year to $157 million, or diluted earnings per
share (EPS) of $0.18, compared with a net loss of
$511 million, or diluted EPS of -$0.57, in Q1 2023.
- Q1 2023 diluted
EPS of -$0.57 included a -$0.54 impact from a one-time $485 million
share-based compensation ("SBC") expense related to our co-founders
cancelling their 2021 market-based restricted stock unit awards in
February 2023 (the "2021 Founders Award Cancellation").
- Total
operating expenses decreased 52% year-over-year to $460
million primarily due to the 2021 Founders Award Cancellation in Q1
2023.
- Adjusted Operating
Expenses (non-GAAP) increased 13%
year-over-year to $398 million, primarily due to increased
marketing and growth investments.
- SBC decreased 90%
year-over-year to $62 million, primarily due to the 2021 Founders
Award Cancellation in Q1 2023.
- Adjusted EBITDA
(non-GAAP) increased 115% year-over-year to
$247 million.
- Funded
Customers increased by 810 thousand year-over-year to
23.9 million.
-
Investment Accounts increased by 1.1 million
year-over-year to 24.4 million.
- Assets
Under Custody (AUC) increased 65% year-over-year to $129.6
billion, primarily driven by higher equity and cryptocurrency
valuations and continued Net Deposits.
- Net
Deposits were $11.2 billion, an annualized growth rate of
44% relative to AUC at the end of Q4 2023. Over the past twelve
months, Net Deposits were $23.9 billion, a growth rate of 30%
relative to AUC at the end of Q1 2023.
- Average
Revenue Per User (ARPU) increased by 35% year-over-year to
$104.
- Gold
Subscribers increased by 500 thousand, or
42%, year-over-year to 1.7 million.
- Cash and
cash equivalents totaled $4.7 billion compared with
$5.5 billion at the end of Q1 2023.
Highlights
Robinhood drives value for customers as
it makes progress on its goal to be the most trusted, lowest cost,
and most culturally relevant money app worldwide
- Gold Subscribers continue
to accelerate - Gold Subscribers grew to a record high of
1.7 million in Q1 2024, up 260 thousand quarter-over-quarter,
marking the fastest quarterly growth in three years.
- New 1% unlimited deposit
boost with Gold - Announced in March and launching soon,
deposit boost will provide even more value to customers with
Robinhood Gold.
- Robinhood announces new
Gold Credit Card - Announced in March and exclusively for
Robinhood Gold Subscribers, the Gold credit card provides industry
leading benefits such as 3% cash back on all categories and no
annual or foreign transaction fees. More than 1 million customers
have joined the waitlist.
- 3% Retirement Transfer
Match Drives Adoption - Customers transferred over $4
billion in retirement assets from brokerage competitors during
Robinhood's 3% transfer promotion between January 2024 and April
2024, averaging over $90 thousand per customer.
- Robinhood Retirement grows
more than 4X year-to-date - In early May, Retirement AUC
reached a new high with over $7 billion.
- Robinhood UK Reaches Full
Availability - Marking another step in global expansion,
Robinhood rolled all eligible customers off the waitlist in
March.
- 24 Hour Market Sees Record
Overnight Volumes - With over 900 stocks and ETFs
available, Robinhood 24 Hour Market reached new highs in its
overnight trading volumes. Through March, customers have traded
over $10 billion in Notional Trading Volume during the overnight
session since launch.
Additional Q1 2024 Operating
Data
- Retirement AUC
totaled $4.2 billion compared with $0.3 billion at the
end of Q1 2023.
- Cash Sweep increased
113% year-over-year to $19.0 billion.
- Margin Book increased
32% year-over-year to $4.1 billion.
- Equity Notional Trading
Volumes increased 40% year-over-year to
$225.0 billion.
- Options Contracts
Traded increased 26% year-over-year to
343.6 million.
- Crypto Notional Trading
Volumes increased 224% year-over-year to
$36.0 billion.
- Monthly Active Users
(MAU) increased 16% year-over-year to
13.7 million.
Webcast and Conference Call
Information
Robinhood will host a conference call to discuss
its results at 2 p.m. PT / 5 p.m. ET today, May 8, 2024. The
live webcast of Robinhood's earnings conference call can be
accessed at investors.robinhood.com, along with the earnings press
release and accompanying slide presentation.
Following the call, a replay and transcript will
also be available at the same website.
Financial Outlook
Our 2024 expense plan includes growth
investments in new products, features, and international expansion
while also getting more efficient in our existing businesses. Taken
together, we continue to expect both GAAP total operating expenses
and Non-GAAP combined Adjusted Operating Expenses and SBC for
full-year 2024 to be in the range of $1.85 billion to $1.95
billion.
Actual results might differ materially from our
outlook due to several factors, including the rate of growth in
Funded Customers and our effectiveness to cross-sell products which
affects variable marketing costs, the degree to which we are
successful in managing credit losses and preventing fraud, and our
ability to manage web-hosting expenses efficiently, among other
factors. The above expense outlook does not include potential
significant regulatory matters or other significant expenses (such
as impairments, restructuring charges, and business acquisition- or
disposition-related expenses) that may arise or accruals we may
determine in the future are required, as we are unable to
accurately predict the size or timing of such matters, expenses or
accruals at this time. See “Non-GAAP Financial Measures” for more
information on Adjusted Operating Expenses and SBC, including
significant items that we believe are not indicative of our ongoing
expenses that would be adjusted out of total operating expenses
(GAAP) to get to Adjusted Operating Expenses and SBC (non-GAAP)
should they occur.
About Robinhood
Robinhood Markets, Inc. is on a mission to
democratize finance for all. In the U.S., people can invest with no
account minimums through Robinhood Financial LLC, a registered
broker dealer (member SIPC), buy and sell crypto through Robinhood
Crypto, LLC, and spend and earn rewards through debit cards with
Robinhood Money, LLC and credit cards with Robinhood Credit, Inc.
People can also trade U.S. stocks without commission or FX fees in
the UK through Robinhood U.K. Ltd., trade crypto in select
jurisdictions in the European Union through Robinhood Europe, UAB,
and access easy-to-understand educational content through Robinhood
Learn.
Robinhood uses the “Overview” tab of its
Investor Relations website (accessible at
investors.robinhood.com/overview) and its Newsroom (accessible at
newsroom.aboutrobinhood.com), as means of disclosing information to
the public in a broad, non-exclusionary manner for purposes of the
U.S. Securities and Exchange Commission's (“SEC”) Regulation Fair
Disclosure (Reg. FD). Investors should routinely monitor those web
pages, in addition to Robinhood’s press releases, SEC filings, and
public conference calls and webcasts, as information posted on them
could be deemed to be material information.
“Robinhood” and the Robinhood feather logo are
registered trademarks of Robinhood Markets, Inc. All other names
are trademarks and/or registered trademarks of their respective
owners.
Contacts
Investors:ir@robinhood.com
Press:press@robinhood.com
ROBINHOOD MARKETS, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited) |
|
December 31, |
|
March 31, |
(in millions, except share and per share data) |
|
2023 |
|
|
|
2024 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
4,835 |
|
|
$ |
4,717 |
|
Cash, cash equivalents, and securities segregated under federal and
other regulations |
|
4,448 |
|
|
|
4,521 |
|
Receivables from brokers, dealers, and clearing organizations |
|
89 |
|
|
|
207 |
|
Receivables from users, net |
|
3,495 |
|
|
|
4,303 |
|
Securities borrowed |
|
1,602 |
|
|
|
2,107 |
|
Deposits with clearing organizations |
|
338 |
|
|
|
585 |
|
Asset related to user cryptocurrencies safeguarding obligation |
|
14,708 |
|
|
|
26,223 |
|
User-held fractional shares |
|
1,592 |
|
|
|
1,975 |
|
Held-to-maturity investments |
|
413 |
|
|
|
495 |
|
Prepaid expenses |
|
63 |
|
|
|
64 |
|
Other current assets |
|
207 |
|
|
|
348 |
|
Total current assets |
|
31,790 |
|
|
|
45,545 |
|
Property, software, and equipment, net |
|
120 |
|
|
|
122 |
|
Goodwill |
|
175 |
|
|
|
175 |
|
Intangible assets, net |
|
48 |
|
|
|
46 |
|
Non-current held-to-maturity investments |
|
73 |
|
|
|
10 |
|
Other non-current assets, including non-current prepaid expenses of
$3 as of December 31, 2023 and $4 as of March 31, 2024 |
|
126 |
|
|
|
190 |
|
Total assets |
$ |
32,332 |
|
|
$ |
46,088 |
|
Liabilities and stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
384 |
|
|
$ |
351 |
|
Payables to users |
|
5,097 |
|
|
|
6,074 |
|
Securities loaned |
|
3,547 |
|
|
|
4,215 |
|
User cryptocurrencies safeguarding obligation |
|
14,708 |
|
|
|
26,223 |
|
Fractional shares repurchase obligation |
|
1,592 |
|
|
|
1,975 |
|
Other current liabilities |
|
217 |
|
|
|
275 |
|
Total current liabilities |
|
25,545 |
|
|
|
39,113 |
|
Other non-current liabilities |
|
91 |
|
|
|
90 |
|
Total liabilities |
|
25,636 |
|
|
|
39,203 |
|
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.0001 par value 210,000,000 shares authorized,
no shares issued and outstanding as of December 31, 2023 and March
31, 2024. |
|
— |
|
|
|
— |
|
Class A common stock, $0.0001 par value. 21,000,000,000 shares
authorized, 745,401,862 shares issued and outstanding as of
December 31, 2023; 21,000,000,000 shares authorized, 753,880,032
shares issued and outstanding as of March 31, 2024. |
|
— |
|
|
|
— |
|
Class B common stock, $0.0001 par value. 700,000,000 shares
authorized, 126,760,802 shares issued and outstanding as of
December 31, 2023; 700,000,000 shares authorized, 124,480,224
shares issued and outstanding as of March 31, 2024. |
|
— |
|
|
|
— |
|
Class C common stock, $0.0001 par value. 7,000,000,000 shares
authorized, no shares issued and outstanding as of December 31,
2023 and March 31, 2024. |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
12,145 |
|
|
|
12,176 |
|
Accumulated other comprehensive loss |
|
(3 |
) |
|
|
(2 |
) |
Accumulated deficit |
|
(5,446 |
) |
|
|
(5,289 |
) |
Total stockholders’ equity |
|
6,696 |
|
|
|
6,885 |
|
Total liabilities and stockholders’ equity |
$ |
32,332 |
|
|
$ |
46,088 |
|
ROBINHOOD MARKETS, INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited) |
|
Three Months EndedMarch 31, |
|
YOY% Change |
|
Three Months EndedDecember
31, |
|
QOQ% Change |
(in millions, except share, per share, and percentage data) |
|
2023 |
|
|
|
2024 |
|
|
|
|
2023 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
Transaction-based revenues |
$ |
207 |
|
|
$ |
329 |
|
|
59 |
% |
|
$ |
200 |
|
|
65 |
% |
Net interest revenues |
|
208 |
|
|
|
254 |
|
|
22 |
% |
|
|
236 |
|
|
8 |
% |
Other revenues |
|
26 |
|
|
|
35 |
|
|
35 |
% |
|
|
35 |
|
|
— |
% |
Total net revenues |
|
441 |
|
|
|
618 |
|
|
40 |
% |
|
|
471 |
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
Operating expenses(1)(2): |
|
|
|
|
|
|
|
|
|
Brokerage and transaction |
|
36 |
|
|
|
35 |
|
|
(3) |
% |
|
|
32 |
|
|
9 |
% |
Technology and development |
|
199 |
|
|
|
196 |
|
|
(2) |
% |
|
|
197 |
|
|
(1) |
% |
Operations |
|
42 |
|
|
|
44 |
|
|
5 |
% |
|
|
40 |
|
|
10 |
% |
Marketing |
|
26 |
|
|
|
67 |
|
|
158 |
% |
|
|
43 |
|
|
56 |
% |
General and administrative |
|
647 |
|
|
|
118 |
|
|
(82) |
% |
|
|
133 |
|
|
(11) |
% |
Total operating expenses |
|
950 |
|
|
|
460 |
|
|
(52) |
% |
|
|
445 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
Other (income) expense, net |
|
— |
|
|
|
(4 |
) |
|
NM |
|
|
(3 |
) |
|
33 |
% |
Income (loss) before income taxes |
|
(509 |
) |
|
|
162 |
|
|
NM |
|
|
29 |
|
|
459 |
% |
Provision for (benefit from) income taxes |
|
2 |
|
|
|
5 |
|
|
150 |
% |
|
|
(1 |
) |
|
NM |
Net income (loss) |
$ |
(511 |
) |
|
$ |
157 |
|
|
NM |
|
$ |
30 |
|
|
423 |
% |
Net income (loss) attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(511 |
) |
|
$ |
157 |
|
|
|
|
$ |
30 |
|
|
|
Diluted |
$ |
(511 |
) |
|
$ |
157 |
|
|
|
|
$ |
30 |
|
|
|
Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.57 |
) |
|
$ |
0.18 |
|
|
|
|
$ |
0.03 |
|
|
|
Diluted |
$ |
(0.57 |
) |
|
$ |
0.18 |
|
|
|
|
$ |
0.03 |
|
|
|
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
|
896,924,695 |
|
|
|
875,319,407 |
|
|
|
|
|
867,298,537 |
|
|
|
Diluted |
|
896,924,695 |
|
|
|
895,779,155 |
|
|
|
|
|
883,227,967 |
|
|
|
(1) The following table presents operating expenses
as a percent of total net revenues:
|
Three Months EndedMarch 31, |
|
Three Months EndedDecember
31, |
|
2023 |
|
2024 |
|
2023 |
Brokerage and transaction |
8 |
% |
|
5 |
% |
|
7 |
% |
Technology and
development |
45 |
% |
|
32 |
% |
|
42 |
% |
Operations |
10 |
% |
|
7 |
% |
|
8 |
% |
Marketing |
6 |
% |
|
11 |
% |
|
9 |
% |
General and
administrative |
147 |
% |
|
19 |
% |
|
28 |
% |
Total operating expenses |
216 |
% |
|
74 |
% |
|
94 |
% |
(2) The following table presents the SBC on
our unaudited condensed consolidated statements of operations for
the periods indicated:
|
Three Months EndedMarch 31, |
|
Three Months EndedDecember
31, |
(in millions) |
2023 |
|
2024 |
|
2023 |
Brokerage and transaction |
$ |
2 |
|
$ |
2 |
|
$ |
1 |
Technology and
development |
|
54 |
|
|
44 |
|
|
50 |
Operations |
|
2 |
|
|
2 |
|
|
2 |
Marketing |
|
1 |
|
|
2 |
|
|
2 |
General and
administrative |
|
539 |
|
|
12 |
|
|
26 |
Total SBC |
$ |
598 |
|
$ |
62 |
|
$ |
81 |
ROBINHOOD MARKETS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) |
|
Three Months EndedMarch 31, |
(in millions) |
|
2023 |
|
|
|
2024 |
|
Operating activities: |
|
|
|
Net income (loss) |
$ |
(511 |
) |
|
$ |
157 |
|
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities: |
|
|
|
Depreciation and amortization |
|
20 |
|
|
|
17 |
|
Provision for credit losses |
|
9 |
|
|
|
16 |
|
Share-based compensation |
|
598 |
|
|
|
62 |
|
Other |
|
5 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Securities segregated under federal and other regulations |
|
— |
|
|
|
(692 |
) |
Receivables from brokers, dealers, and clearing organizations |
|
(36 |
) |
|
|
(118 |
) |
Receivables from users, net |
|
57 |
|
|
|
(796 |
) |
Securities borrowed |
|
(327 |
) |
|
|
(505 |
) |
Deposits with clearing organizations |
|
(61 |
) |
|
|
(247 |
) |
Current and non-current prepaid expenses |
|
2 |
|
|
|
— |
|
Other current and non-current assets |
|
(8 |
) |
|
|
(157 |
) |
Accounts payable and accrued expenses |
|
18 |
|
|
|
(46 |
) |
Payables to users |
|
285 |
|
|
|
977 |
|
Securities loaned |
|
775 |
|
|
|
668 |
|
Other current and non-current liabilities |
|
2 |
|
|
|
41 |
|
Net cash provided by (used in) operating activities |
|
828 |
|
|
|
(623 |
) |
Investing activities: |
|
|
|
Purchases of property, software, and equipment |
|
— |
|
|
|
(2 |
) |
Capitalization of internally developed software |
|
(5 |
) |
|
|
(7 |
) |
Proceeds from sales and maturities of available-for-sale
investments |
|
9 |
|
|
|
— |
|
Purchases of held-to-maturity investments |
|
(487 |
) |
|
|
(171 |
) |
Proceeds from maturities of held-to-maturity investments |
|
2 |
|
|
|
154 |
|
Purchases of credit card receivables |
|
— |
|
|
|
(29 |
) |
Collections of purchased credit card receivables |
|
— |
|
|
|
11 |
|
Asset acquisition, net of cash acquired |
|
— |
|
|
|
(3 |
) |
Net cash used in investing activities |
|
(481 |
) |
|
|
(47 |
) |
Financing activities: |
|
|
|
Taxes paid related to net share settlement of equity awards |
|
(2 |
) |
|
|
(40 |
) |
Payments of debt issuance costs |
|
(10 |
) |
|
|
(14 |
) |
Borrowings on Credit Card Funding Trust |
|
— |
|
|
|
17 |
|
Change in principal collected from customers due to Coastal
Bank |
|
— |
|
|
|
3 |
|
Proceeds from exercise of stock options, net of repurchases |
|
1 |
|
|
|
4 |
|
Net cash used in financing activities |
|
(11 |
) |
|
|
(30 |
) |
Net increase (decrease) in cash, cash equivalents,
segregated cash, and restricted cash |
|
336 |
|
|
|
(700 |
) |
Cash, cash equivalents, segregated cash,
and restricted cash, beginning of the period |
|
9,357 |
|
|
|
9,346 |
|
Cash, cash equivalents, segregated cash,
and restricted cash, end of the period |
$ |
9,693 |
|
|
$ |
8,646 |
|
Reconciliation of
cash, cash equivalents, segregated cash,
and restricted cash, end of the period: |
|
|
|
Cash and cash equivalents, end of the period |
$ |
5,459 |
|
|
$ |
4,717 |
|
Segregated cash and cash equivalents, end of the period |
|
4,213 |
|
|
|
3,829 |
|
Restricted cash in other current assets, end of the period |
|
1 |
|
|
|
83 |
|
Restricted cash in other non-current assets, end of the period |
|
20 |
|
|
|
17 |
|
Cash, cash equivalents, segregated
cash, and restricted cash, end of the period |
|
9,693 |
|
|
|
8,646 |
|
Supplemental disclosures: |
|
|
|
Cash paid for interest |
$ |
3 |
|
|
$ |
7 |
|
Cash paid for income taxes, net of refund received |
$ |
— |
|
|
$ |
2 |
|
Reconciliation of GAAP to Non-GAAP
Results(Unaudited) |
|
|
Three Months EndedMarch 31, |
|
Three Months EndedDecember
31, |
(in millions) |
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income (loss) |
|
$ |
(511 |
) |
|
$ |
157 |
|
|
$ |
30 |
|
Net margin |
|
|
(116) |
% |
|
|
25 |
% |
|
|
6 |
% |
Add: |
|
|
|
|
|
|
Interest expenses related to
credit facilities |
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
Provision for (benefit from) income taxes |
|
|
2 |
|
|
|
5 |
|
|
|
(1 |
) |
Depreciation and amortization |
|
|
20 |
|
|
|
17 |
|
|
|
17 |
|
EBITDA (non-GAAP) |
|
|
(483 |
) |
|
|
185 |
|
|
|
52 |
|
Less: SBC |
|
|
|
|
|
|
2021 Founders Award Cancellation |
|
|
485 |
|
|
|
— |
|
|
|
— |
|
SBC Excluding 2021 Founders Award Cancellation |
|
|
113 |
|
|
|
62 |
|
|
|
81 |
|
Adjusted EBITDA (non-GAAP) |
|
$ |
115 |
|
|
$ |
247 |
|
|
$ |
133 |
|
Adjusted EBITDA margin
(non-GAAP) |
|
|
26 |
% |
|
|
40 |
% |
|
|
28 |
% |
|
Three Months EndedMarch 31, |
|
Three Months EndedDecember
31, |
(in millions) |
2023 |
|
2024 |
|
2023 |
Total operating expenses (GAAP) |
$ |
950 |
|
$ |
460 |
|
$ |
445 |
Less: SBC |
|
|
|
|
|
2021 Founders Award Cancellation |
|
485 |
|
|
— |
|
|
— |
SBC Excluding 2021 Founders Award Cancellation |
|
113 |
|
|
62 |
|
|
81 |
Adjusted Operating Expenses (Non-GAAP) |
$ |
352 |
|
$ |
398 |
|
$ |
364 |
|
|
Financial Outlookfor the Year Ending
December 31, 2024 |
|
|
Outlook(in millions) |
Total operating expenses (GAAP) |
|
$1,850 - $1,950 |
Significant reconciliation items(1) |
|
— |
Adjusted Operating Expenses and SBC (non-GAAP) |
|
$1,850 - $1,950 |
(1) Actual results might differ materially from
our outlook, see “Financial Outlook” for more information. The
above expense outlook does not include potential significant
regulatory matters or other significant expenses (such as
impairments, restructuring charges, and business acquisition- or
disposition-related expenses) that may arise or accruals we may
determine in the future are required, as we are unable to
accurately predict the size or timing of such matters, expenses or
accruals at this time. See “Non-GAAP Financial Measures” for more
information on Adjusted Operating Expenses and SBC, including
significant items that we believe are not indicative of our ongoing
expenses that would be adjusted out of total operating expenses
(GAAP) to get to Adjusted Operating Expenses and SBC (non-GAAP)
should they occur.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking
statements regarding the expected financial performance of
Robinhood Markets, Inc. and its consolidated subsidiaries (“we,”
“Robinhood,” or the “Company”) and our strategic and operational
plans, including (among others) statements regarding that we remain
focused on driving another year of profitable growth in 2024; we
drive value for customers as we make progress on our goal to be the
most trusted, lowest cost, and most culturally relevant money app
worldwide; the new 1% unlimited deposit boostwith Gold will be
launching soon and will provide even more value to customers with
Robinhood Gold; and all statements and information under the
headings “Financial Outlook” and “Reconciliation of GAAP to
Non-GAAP Financial Outlook.” Forward-looking statements generally
relate to future events or our future financial or operating
performance. In some cases, you can identify forward-looking
statements because they contain words such as “believe,” “may,”
“will” “should,” “expect,” “plan” “anticipate,” “could,” “intend,”
“target,” “project,” “contemplate,” “estimate,” “predict,”
“potential,” or “continue,” or the negative of these words or other
similar terms or expressions that concern our expectations,
strategy, plans, or intentions. Our forward-looking statements are
subject to a number of known and unknown risks, uncertainties,
assumptions, and other factors that may cause our actual future
results, performance, or achievements to differ materially from any
future results expressed or implied in this press release. Reported
results should not be considered an indication of future
performance. Factors that contribute to the uncertain nature of our
forward-looking statements include, among others: our limited
operating experience at our current scale; the difficulty of
managing our business effectively, including the size of our
workforce, and the risk of continued declining or negative growth;
the fluctuations in our financial results and key metrics from
quarter to quarter; our reliance on transaction-based revenue,
including payment for order flow (“PFOF”), and the risk of new
regulation or bans on PFOF and similar practices; our exposure to
fluctuations in interest rates and rapidly changing interest rate
environments; the difficulty of raising additional capital (to
provide liquidity needs and support business growth and objectives)
on reasonable terms, if at all; the need to maintain capital levels
required by regulators and self-regulatory organizations; the risk
that we might mishandle the cash, securities, and cryptocurrencies
we hold on behalf of customers, and our exposure to liability for
processing, operational, or technical errors in clearing functions;
the impact of negative publicity on our brand and reputation; the
risk that changes in business, economic, or political conditions
that impact the global financial markets, or a systemic market
event, might harm our business; our dependence on key employees and
a skilled workforce; the difficulty of complying with an extensive,
complex, and changing regulatory environment and the need to adjust
our business model in response to new or modified laws and
regulations; the possibility of adverse developments in pending
litigation and regulatory investigations; the effects of
competition; our need to innovate and invest in new products,
services, technologies, and geographies in order to attract and
retain customers and deepen their engagement with us in order to
maintain growth; our reliance on third parties to perform some key
functions and the risk that processing, operational or
technological failures could impair the availability or stability
of our platforms; the risk of cybersecurity incidents, theft, data
breaches, and other online attacks; the difficulty of processing
customer data in compliance with privacy laws; our need as a
regulated financial services company to develop and maintain
effective compliance and risk management infrastructures; the risks
associated with incorporating artificial intelligence technologies
into some of our products and processes; the volatility of
cryptocurrency prices and trading volumes; the risk that our
platforms and services could be exploited to facilitate illegal
payments; and the risk that substantial future sales of Class A
common stock in the public market, or the perception that they may
occur, could cause the price of our stock to fall. Because some of
these risks and uncertainties cannot be predicted or quantified and
some are beyond our control, you should not rely on our
forward-looking statements as predictions of future events. More
information about potential risks and uncertainties that could
affect our business and financial results can be found in Part II,
Item 1A of our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2024 (our "Q1 2024 10-Q"), as well as in our other
filings with the SEC, all of which are available on the SEC’s web
site at www.sec.gov. Moreover, we operate in a very competitive and
rapidly changing environment; new risks and uncertainties may
emerge from time to time, and it is not possible for us to predict
all risks nor identify all uncertainties. The events and
circumstances reflected in our forward-looking statements might not
be achieved and actual results could differ materially from those
projected in the forward-looking statements. Except as otherwise
noted, all forward-looking statements are made as of the date of
this press release, May 8, 2024 and are based on information
and estimates available to us at this time. Although we believe
that the expectations reflected in our forward-looking statements
are reasonable, we cannot guarantee future results, performance, or
achievements. Except as required by law, Robinhood assumes no
obligation to update any of the statements in this press release
whether as a result of any new information, future events, changed
circumstances, or otherwise. You should read this press release
with the understanding that our actual future results, performance,
events, and circumstances might be materially different from what
we expect.
Non-GAAP Financial Measures
We collect and analyze operating and financial
data to evaluate the health of our business, allocate our resources
and assess our performance. In addition to total net revenues, net
income (loss) and other results under GAAP, we utilize non-GAAP
calculations of adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA”), Adjusted EBITDA
margin, Adjusted Operating Expenses, and Adjusted Operating
Expenses and SBC. This non-GAAP financial information is presented
for supplemental informational purposes only, should not be
considered a substitute for or superior to financial information
presented in accordance with GAAP and may be different from
similarly titled non-GAAP measures used by other companies.
Reconciliations of these non-GAAP measures to the most directly
comparable financial measures calculated and presented in
accordance with GAAP are provided in the financial tables included
in this release.
Adjusted EBITDA
Adjusted EBITDA is defined as net income (loss),
excluding (i) interest expenses related to credit facilities, (ii)
provision for (benefit from) income taxes, (iii) depreciation and
amortization, (iv) SBC, (v) significant legal and tax settlements
and reserves, and (vi) other significant gains, losses, and
expenses (such as impairments, restructuring charges, and business
acquisition- or disposition-related expenses) that we believe are
not indicative of our ongoing results.
The above items are excluded from our Adjusted
EBITDA measure because these items are non-cash in nature, or
because the amount and timing of these items are unpredictable, are
not driven by core results of operations, and render comparisons
with prior periods and competitors less meaningful. We believe
Adjusted EBITDA provides useful information to investors and others
in understanding and evaluating our results of operations, as well
as providing a useful measure for period-to-period comparisons of
our business performance. Moreover, Adjusted EBITDA is a key
measurement used by our management internally to make operating
decisions, including those related to operating expenses, evaluate
performance, and perform strategic planning and annual
budgeting.
Adjusted EBITDA Margin
Adjusted EBITDA Margin is calculated as Adjusted
EBITDA divided by total net revenues. The most directly comparable
GAAP measure is net margin (calculated as net income (loss) divided
by total net revenues). We believe Adjusted EBITDA Margin provides
useful information to investors and others in understanding and
evaluating our results of operations, as well as providing a useful
measure for period-to-period comparisons of our business
performance. Adjusted EBITDA Margin is used by our management
internally to make operating decisions, including those related to
operating expenses, evaluate performance, and perform strategic
planning and annual budgeting.
Adjusted Operating Expenses
Adjusted Operating Expenses is defined as GAAP
total operating expenses minus (i) SBC, (ii) significant legal and
tax settlements and reserves, and (iii) other significant expenses
(such as impairments, restructuring charges, and business
acquisition- or disposition-related expenses) that we believe are
not indicative of our ongoing expenses. The amount and timing of
the excluded items are unpredictable, are not driven by core
results, of operations, and render comparisons with prior periods
less meaningful. We believe Adjusted Operating Expenses provides
useful information to investors and others in understanding and
evaluating our results of operations, as well as providing a useful
measure for period-to-period comparisons of our cost structure.
Adjusted Operating Expenses is used by our management internally to
make operating decisions, including those related to operating
expenses, evaluate performance, and perform strategic planning and
annual budgeting.
Adjusted Operating Expenses and SBC
Adjusted Operating Expenses and SBC is defined
as GAAP total operating expenses minus (i) significant legal and
tax settlements and reserves and (ii) other significant expenses
(such as impairments, restructuring charges, and business
acquisition- or disposition-related expenses), that we believe are
not indicative of our ongoing expenses. The amount and timing of
the excluded items are unpredictable, are not driven by core
results, of operations, and render comparisons with prior periods
less meaningful. Unlike Adjusted Operating Expenses, Adjusted
Operating Expenses and SBC does not adjust for SBC. We believe
Adjusted Operating Expense and SBC provides useful information to
investors and others in understanding and evaluating our results of
operations, as well as providing a useful measure for
period-to-period comparisons of our cost structure. Adjusted
Operating Expenses and SBC is used by our management internally to
make operating decisions, including those related to operating
expenses, evaluate performance, and perform strategic planning and
annual budgeting.
Key Performance Metrics
In addition to the measures presented in our
unaudited condensed consolidated financial statements, we use the
following key performance metrics to help us evaluate our business,
identify trends affecting our business, formulate business plans,
and make strategic decisions. For information on changes to our key
performance metrics, see 'Key Performance Metrics" in Part I, Item
2 "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Q1 2024 10-Q.
Funded Customers
We define a Funded Customer as a unique person
who has at least one account with a Robinhood entity and, within
the past 45 calendar days (a) had an account balance that was
greater than zero (excluding amounts that are deposited into a
Funded Customer account by the Company with no action taken by the
unique person) or (b) completed a transaction using any such
account. We define an Investment Account as a funded individual
brokerage account or a funded individual retirement account
("IRA"). As of March 31, 2024, a Funded Customer can have up to
three Investment Accounts - individual brokerage account,
traditional IRA, and Roth IRA.
Assets Under Custody (“AUC”)
We define AUC as the sum of the fair value of
all equities, options, cryptocurrency and cash held by users in
their accounts, net of receivables from users, as of a stated date
or period end on a trade date basis. Net Deposits and net market
gains (losses) drive the change in AUC in any given period.
Net Deposits
We define Net Deposits as all cash deposits and
asset transfers from, as well as dividends and interest received by
customers, net of reversals, customer cash withdrawals, margin
interest, Gold subscription fees, and other assets transferred out
of our platforms (assets transferred in or out include debit card
transactions, AutomatedCustomer Account Transfer Service transfers,
and custodial crypto wallet transfers) for a stated period. Prior
to January 2024, Net Deposits did not include inflows from
dividends and interest or outflows from Robinhood Gold subscription
fees and margin interest, although we have not restated amounts in
prior periods as the impact to those figures was immaterial.
Average Revenue Per User (“ARPU”)
We define ARPU as total revenue for a given
period divided by the average number of Funded Customers on the
last day of that period and the last day of the immediately
preceding period. Figures in this release represent ARPU annualized
for each three-month period presented.
Growth Rate and Annualized Growth Rate with
respect to Net Deposits
When used with respect to Net Deposits, “growth
rate” and “annualized growth rate” provide information about Net
Deposits relative to total AUC. “Growth rate” is calculated as
aggregate Net Deposits over a specified 12 month period, divided by
AUC for the fiscal quarter that immediately precedes such 12 month
period. “Annualized growth rate” is calculated as Net Deposits for
a specified quarter multiplied by 4 and divided by AUC for the
immediately preceding quarter.
Gold Subscribers
We define a Gold Subscriber as a unique person
who has at least one account with a Robinhood entity and who, as of
the end of the relevant period (a) is subscribed to Robinhood Gold
and (b) has made at least one Robinhood Gold subscription fee
payment.
Additional Operating
Metrics
Retirement AUC
We define Retirement AUC as the total AUC in
traditional IRAs and Roth IRAs.
Cash Sweep
We define Cash Sweep as the period-end aggregate
balances in our brokerage sweep program (i.e., the period-end total
amount of participating users’ uninvested brokerage cash that has
been automatically “swept” or moved from their brokerage accounts
into deposits for their benefit at a network of program banks).
This is an off-balance-sheet amount. Robinhood earns a net interest
spread on Cash Sweep balances based on the interest rate offered by
the banks less the interest rate given to users as stated in our
program terms.
Margin Book
We define Margin Book as our period-end
aggregate outstanding margin loan balances receivable (i.e., the
period-end total amount we are owed by customers on loans made for
the purchase of securities, supported by a pledge of assets in
their margin-enabled brokerage accounts).
Notional Trading Volume
We define Notional Trading Volume for any
specified asset class as the aggregate dollar value (purchase price
or sale price as applicable) of trades executed in that asset class
over a specified period of time.
Options Contracts Traded
We define Options Contracts Traded as the total
number of options contracts bought or sold over a specified period
of time. Each contract generally entitles the holder to trade 100
shares of the underlying stock.
Monthly Active Users ("MAU")
We define MAUs as the number of unique persons
who, using one or more accounts with a Robinhood entity, meet one
of the following criteria at any point during a specified calendar
month: a) executes a debit card or credit card transaction, b)
transitions between two different screens on a mobile device while
logged into their account or c) loads a page in a web browser while
logged into their account. A person need not satisfy these
conditions on a recurring monthly basis or be a Funded Customer to
be included in MAU. MAU figures in this release reflect MAU for the
last month of the relevant period presented. We utilize MAU to
measure how many customers interact with our products and services
during a given month. MAU does not measure the frequency or
duration of the interaction, but we consider it a useful indicator
for engagement. Additionally, MAUs are positively correlated with,
but are not indicative of, the performance of revenue and other key
performance indicators.
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