Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today
announced financial results for the fourth quarter and full year
2023, which ended December 31, 2023.
“2023 was a strong year as our product velocity
continued to accelerate, our trading market share increased, and we
started to expand globally,” said Vlad Tenev, CEO and
Co-Founder of Robinhood. “And we're off to an even better
start in 2024, as we've already brought in more Funded Customers
and Net Deposits through the first half of Q1 than we did in all of
Q4 2023.”
“We delivered significant profitable growth in
2023,” said Jason Warnick, Chief Financial Officer of
Robinhood. “We drove record full-year revenues and
substantially higher margins, and in Q4 we had positive GAAP net
income. In 2024, we aim to continue delivering profitable growth as
we work to maximize earnings per share over time to drive long-term
shareholder value.”
Fourth Quarter Results:
- Total
net revenues increased 24% year-over-year to
$471 million, due to higher net interest, transaction-based,
and other revenues.
- Net
interest revenues increased 41% year-over-year to $236
million, driven by growth in interest-earning assets and higher
short term interest rates.
-
Transaction-based revenues increased 8%
year-over-year to $200 million, primarily driven by
cryptocurrencies revenue of $43 million, up 10%, equities revenue
of $25 million, up 19%, partially offset by options revenue of
$121 million, down 2%.
- Other
revenues increased 30% year-over-year to $35 million,
primarily driven by higher revenues from Gold subscriptions and
Sherwood Media.
- Net
income increased year-over-year to $30 million, or
earnings per share (EPS) of $0.03, compared with a net loss of
$166 million, or EPS of -$0.19, in Q4 2022.
- Total
operating expenses decreased 17% year-over-year to $445
million.
- Adjusted
Operating Expenses (non-GAAP) increased
14% year-over-year to $364 million.
-
Share-based compensation (SBC) decreased 49%
year-over-year to $81 million.
- Adjusted
EBITDA (non-GAAP) increased 62% year-over-year to
$133 million.
- Funded
Customers (previously Net Cumulative Funded Accounts,
please see "Key Performance Metrics" below for more information)
increased by 420 thousand year-over-year to 23.4 million.
- Assets
Under Custody (AUC) increased 65% year-over-year to $102.6
billion, primarily driven by continued Net Deposits and higher
equity valuations.
- Net
Deposits were $4.6 billion, which translates to an
annualized growth rate of 21% relative to AUC at the end of Q3
2023. Over the past twelve months, Net Deposits were $17.1 billion,
which translates to a growth rate of 27% relative to AUC at the end
of Q4 2022.
- Gold subscribers
increased 25% year-over-year to 1.42 million.
- Average
Revenue Per User (ARPU) increased by 23% year-over-year to
$81.
- Cash and
cash equivalents totaled $4.8 billion compared with
$6.3 billion at the end of Q4 2022. The decrease was primarily
driven by the purchase of 55 million Robinhood shares,
movement of some corporate cash into investments, and the
acquisition of X1 Inc. (now "Robinhood Credit").
- Monthly
Active Users (MAU) decreased 4% year-over-year to
10.9 million.
Full Year Results:
- Total net revenues
increased 37% year-over-year to $1.87 billion.
- Net loss improved
$487 million year-over-year to $541 million, or EPS of -$0.61 per
share, compared with a net loss of $1.03 billion, or EPS of -$1.17,
in 2022.
- 2023 includes $589 million in
expenses, or -$0.66 EPS impact, from the combination of the
$485 million 2021 Founders Award Cancellation and a $104
million regulatory accrual recorded in Q3 2023.
- Total
operating expenses increased 1%
year-over-year to $2.40 billion.
- Adjusted
Operating Expenses (non-GAAP) decreased 7% year-over-year
to $1.43 billion.
-
SBC increased 33% year-over-year to $871 million.
SBC excluding the 2021 Founders Award Cancellation decreased 41%
year-over-year to $386 million.
- Adjusted EBITDA
(non-GAAP) increased $630 million year-over-year to
positive $536 million, compared to negative $94 million in
2022.
Highlights
Accelerated product velocity as
Robinhood continues to aggressively invest for the
future
- 1% bonus drives
$3 billion in asset transfers in -
Customers increased their investment potential, taking advantage of
Robinhood's three month 1% bonus promotion, by transferring over
$3 billion of assets from brokerage competitors with an
average transfer of over $100 thousand.
- The most for retirement
with Robinhood Gold - Through April 30, Robinhood is
offering customers subscribed to Robinhood Gold up to 3% extra on
every dollar contributed to their Robinhood Retirement accounts,
including IRA transfers and 401(k) rollovers.
- Robinhood Gold subscribers
continue to grow - Robinhood Gold grew to $1.42 million
subscribers as of December 31, 2023 (up 25% year-over-year) and
increased their FDIC-insured cash sweep balances to over $15
billion (up over 200% year-over-year) with an average of more than
$10 thousand per subscriber.
- 11 Spot Bitcoin ETFs added
on first day available - On January 11, 2024, Robinhood
added 11 spot Bitcoin ETFs on the 1st day available following their
approval by the SEC.
- Global expansion kicks off
in UK and EU - Building on early progress following the UK
brokerage waitlist launch and the EU crypto launch, Robinhood plans
to explore opportunities to continue growing its customer base
outside the US.
- Building features for
active traders - Further expanding offerings for active
traders, the Company will move forward on creating a pro trader web
experience and plans to introduce futures and index options.
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, February 13, 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 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 or
expenses we may determine in the future are required, as we are
unable to accurately predict the size or timing of such matters 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, spend and earn rewards through debit cards with
Robinhood Money, LLC and credit cards with Robinhood Credit, Inc.,
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
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, |
|
December 31, |
(in millions, except share and per share data) |
|
2022 |
|
|
|
2023 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
6,339 |
|
|
$ |
4,835 |
|
Cash segregated under federal and other regulations |
|
2,995 |
|
|
|
4,448 |
|
Receivables from brokers, dealers, and clearing organizations |
|
76 |
|
|
|
89 |
|
Receivables from users, net |
|
3,218 |
|
|
|
3,495 |
|
Securities borrowed |
|
517 |
|
|
|
1,602 |
|
Deposits with clearing organizations |
|
186 |
|
|
|
338 |
|
Asset related to user cryptocurrencies safeguarding obligation |
|
8,431 |
|
|
|
14,708 |
|
User-held fractional shares |
|
997 |
|
|
|
1,592 |
|
Held-to-maturity investments |
|
— |
|
|
|
413 |
|
Prepaid expenses |
|
86 |
|
|
|
63 |
|
Other current assets |
|
72 |
|
|
|
207 |
|
Total current assets |
|
22,917 |
|
|
|
31,790 |
|
Property, software, and equipment, net |
|
146 |
|
|
|
120 |
|
Goodwill |
|
100 |
|
|
|
175 |
|
Intangible assets, net |
|
25 |
|
|
|
48 |
|
Non-current held-to-maturity investments |
|
— |
|
|
|
73 |
|
Non-current prepaid expenses |
|
17 |
|
|
|
4 |
|
Other non-current assets |
|
132 |
|
|
|
122 |
|
Total assets |
$ |
23,337 |
|
|
$ |
32,332 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
185 |
|
|
$ |
384 |
|
Payables to users |
|
4,701 |
|
|
|
5,097 |
|
Securities loaned |
|
1,834 |
|
|
|
3,547 |
|
User cryptocurrencies safeguarding obligation |
|
8,431 |
|
|
|
14,708 |
|
Fractional shares repurchase obligation |
|
997 |
|
|
|
1,592 |
|
Other current liabilities |
|
105 |
|
|
|
217 |
|
Total current liabilities |
|
16,253 |
|
|
|
25,545 |
|
Other non-current liabilities |
|
128 |
|
|
|
91 |
|
Total liabilities |
|
16,381 |
|
|
|
25,636 |
|
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, 2022 and
December 31, 2023. |
|
— |
|
|
|
— |
|
Class A common stock, $0.0001 par value. 21,000,000,000 shares
authorized, 764,888,917 shares issued and outstanding as of
December 31, 2022; 21,000,000,000 shares authorized, 745,401,862
shares issued and outstanding as of December 31, 2023. |
|
— |
|
|
|
— |
|
Class B common stock, $0.0001 par value. 700,000,000 shares
authorized, 127,862,654 shares issued and outstanding as of
December 31, 2022; 700,000,000 shares authorized, 126,760,802
shares issued and outstanding as of December 31, 2023. |
|
— |
|
|
|
— |
|
Class C common stock, $0.0001 par value. 7,000,000,000 shares
authorized, no shares issued and outstanding as of December 31,
2022 and December 31, 2023. |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
11,861 |
|
|
|
12,145 |
|
Accumulated other comprehensive income (loss) |
|
— |
|
|
|
(3 |
) |
Accumulated deficit |
|
(4,905 |
) |
|
|
(5,446 |
) |
Total stockholders’ equity |
|
6,956 |
|
|
|
6,696 |
|
Total liabilities and stockholders’ equity |
$ |
23,337 |
|
|
$ |
32,332 |
|
|
ROBINHOOD MARKETS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) |
|
|
Three Months EndedDecember
31, |
|
YOY%Change |
|
Three Months EndedSeptember
30, |
|
QOQ%Change |
(in millions, except share,
per share, and percentage data) |
|
2022 |
|
|
|
2023 |
|
|
|
|
2023 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
Transaction-based revenues |
$ |
186 |
|
|
$ |
200 |
|
|
8 |
% |
|
$ |
185 |
|
|
8 |
% |
Net interest revenues |
|
167 |
|
|
|
236 |
|
|
41 |
% |
|
|
251 |
|
|
(6 |
)% |
Other revenues |
|
27 |
|
|
|
35 |
|
|
30 |
% |
|
|
31 |
|
|
13 |
% |
Total net revenues |
|
380 |
|
|
|
471 |
|
|
24 |
% |
|
|
467 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
Operating expenses(1)(2): |
|
|
|
|
|
|
|
|
|
Brokerage and transaction |
|
85 |
|
|
|
32 |
|
|
(62 |
)% |
|
|
39 |
|
|
(18 |
)% |
Technology and development |
|
180 |
|
|
|
197 |
|
|
9 |
% |
|
|
202 |
|
|
(2 |
)% |
Operations |
|
43 |
|
|
|
40 |
|
|
(7 |
)% |
|
|
41 |
|
|
(2 |
)% |
Marketing |
|
29 |
|
|
|
43 |
|
|
48 |
% |
|
|
28 |
|
|
54 |
% |
General and administrative |
|
197 |
|
|
|
133 |
|
|
(32 |
)% |
|
|
230 |
|
|
(42 |
)% |
Total operating expenses |
|
534 |
|
|
|
445 |
|
|
(17 |
)% |
|
|
540 |
|
|
(18 |
)% |
|
|
|
|
|
|
|
|
|
|
Other (income) expense,
net |
|
14 |
|
|
|
(3 |
) |
|
NM |
|
|
2 |
|
|
NM |
Income (loss) before income
taxes |
|
(168 |
) |
|
|
29 |
|
|
NM |
|
|
(75 |
) |
|
NM |
Provision for (benefit from)
income taxes |
|
(2 |
) |
|
|
(1 |
) |
|
(50 |
)% |
|
|
10 |
|
|
NM |
Net income (loss) |
$ |
(166 |
) |
|
$ |
30 |
|
|
NM |
|
$ |
(85 |
) |
|
NM |
Net income (loss) attributable
to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(166 |
) |
|
$ |
30 |
|
|
|
|
$ |
(85 |
) |
|
|
Diluted |
$ |
(166 |
) |
|
$ |
30 |
|
|
|
|
$ |
(85 |
) |
|
|
Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.19 |
) |
|
$ |
0.03 |
|
|
|
|
$ |
(0.09 |
) |
|
|
Diluted |
$ |
(0.19 |
) |
|
$ |
0.03 |
|
|
|
|
$ |
(0.09 |
) |
|
|
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
|
889,239,632 |
|
|
|
867,298,537 |
|
|
|
|
|
895,108,790 |
|
|
|
Diluted |
|
889,239,632 |
|
|
|
883,227,967 |
|
|
|
|
|
895,108,790 |
|
|
|
|
ROBINHOOD MARKETS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) |
|
|
|
Year EndedDecember 31, |
|
YOY% Change |
(in millions, except share,
per share, and percentage data) |
|
|
2022 |
|
|
|
2023 |
|
|
Revenues: |
|
|
|
|
|
|
Transaction-based revenues |
|
$ |
814 |
|
|
$ |
785 |
|
|
(4 |
)% |
Net interest revenues |
|
|
424 |
|
|
|
929 |
|
|
119 |
% |
Other revenues |
|
|
120 |
|
|
|
151 |
|
|
26 |
% |
Total net revenues |
|
|
1,358 |
|
|
|
1,865 |
|
|
37 |
% |
|
|
|
|
|
|
|
Operating expenses(1)(2): |
|
|
|
|
|
|
Brokerage and transaction |
|
|
179 |
|
|
|
146 |
|
|
(18 |
)% |
Technology and development |
|
|
878 |
|
|
|
805 |
|
|
(8 |
)% |
Operations |
|
|
285 |
|
|
|
159 |
|
|
(44 |
)% |
Marketing |
|
|
103 |
|
|
|
122 |
|
|
18 |
% |
General and administrative |
|
|
924 |
|
|
|
1,169 |
|
|
27 |
% |
Total operating expenses |
|
|
2,369 |
|
|
|
2,401 |
|
|
1 |
% |
|
|
|
|
|
|
|
Other (income) expense,
net |
|
|
16 |
|
|
|
(3 |
) |
|
NM |
Loss before income taxes |
|
|
(1,027 |
) |
|
|
(533 |
) |
|
(48 |
)% |
Provision for income
taxes |
|
|
1 |
|
|
|
8 |
|
|
700 |
% |
Net loss |
|
$ |
(1,028 |
) |
|
$ |
(541 |
) |
|
(47 |
)% |
Net loss attributable to
common stockholders: |
|
|
|
|
|
|
Basic |
|
$ |
(1,028 |
) |
|
$ |
(541 |
) |
|
|
Diluted |
|
$ |
(1,028 |
) |
|
$ |
(541 |
) |
|
|
Net loss per share
attributable to common stockholders: |
|
|
|
|
|
|
Basic |
|
$ |
(1.17 |
) |
|
$ |
(0.61 |
) |
|
|
Diluted |
|
$ |
(1.17 |
) |
|
$ |
(0.61 |
) |
|
|
Weighted-average shares used
to compute net loss per share attributable to common
stockholders: |
|
|
|
|
|
|
Basic |
|
|
878,630,024 |
|
|
|
890,857,659 |
|
|
|
Diluted |
|
|
878,630,024 |
|
|
|
890,857,659 |
|
|
|
________________(1) The following table presents
operating expenses as a percent of total net revenues:
|
|
Three Months EndedDecember
31, |
|
Three Months EndedSeptember
30, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
Brokerage and transaction |
22 |
% |
|
7 |
% |
|
8 |
% |
|
13 |
% |
|
8 |
% |
|
Technology and
development |
47 |
% |
|
42 |
% |
|
43 |
% |
|
65 |
% |
|
43 |
% |
|
Operations |
11 |
% |
|
8 |
% |
|
9 |
% |
|
21 |
% |
|
9 |
% |
|
Marketing |
8 |
% |
|
9 |
% |
|
6 |
% |
|
8 |
% |
|
7 |
% |
|
General and
administrative |
52 |
% |
|
28 |
% |
|
49 |
% |
|
68 |
% |
|
63 |
% |
|
Total operating expenses |
140 |
% |
|
94 |
% |
|
115 |
% |
|
175 |
% |
|
130 |
% |
(2) The following table presents the
SBC in our unaudited condensed consolidated statements of
operations for the periods indicated:
|
|
Three Months EndedDecember
31, |
|
Three Months EndedSeptember
30, |
|
Year EndedDecember 31, |
|
(in millions) |
|
2022 |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
Brokerage and transaction |
$ |
1 |
|
|
$ |
1 |
|
|
$ |
2 |
|
|
$ |
5 |
|
|
$ |
7 |
|
|
Technology and
development |
|
46 |
|
|
|
50 |
|
|
|
51 |
|
|
|
212 |
|
|
|
211 |
|
|
Operations |
|
3 |
|
|
|
2 |
|
|
|
3 |
|
|
|
8 |
|
|
|
8 |
|
|
Marketing |
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
4 |
|
|
|
5 |
|
|
General and
administrative |
|
109 |
|
|
|
26 |
|
|
|
26 |
|
|
|
425 |
|
|
|
640 |
|
|
Total SBC |
$ |
160 |
|
|
$ |
81 |
|
|
$ |
83 |
|
|
$ |
654 |
|
|
$ |
871 |
|
|
ROBINHOOD MARKETS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) |
|
|
Three Months EndedDecember
31, |
|
Year Ended December 31, |
(in millions) |
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Operating
activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(166 |
) |
|
$ |
30 |
|
|
$ |
(1,028 |
) |
|
$ |
(541 |
) |
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
17 |
|
|
|
17 |
|
|
|
61 |
|
|
|
71 |
|
Impairment of long-lived assets |
|
(2 |
) |
|
|
4 |
|
|
|
45 |
|
|
|
5 |
|
Provision for credit losses |
|
8 |
|
|
|
14 |
|
|
|
36 |
|
|
|
43 |
|
Share-based compensation |
|
160 |
|
|
|
81 |
|
|
|
654 |
|
|
|
871 |
|
Other |
|
19 |
|
|
|
1 |
|
|
|
35 |
|
|
|
3 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
Receivables from brokers, dealers, and clearing organizations |
|
(1 |
) |
|
|
(26 |
) |
|
|
12 |
|
|
|
(13 |
) |
Receivables from users, net |
|
821 |
|
|
|
204 |
|
|
|
3,386 |
|
|
|
(298 |
) |
Securities borrowed |
|
(378 |
) |
|
|
(398 |
) |
|
|
(517 |
) |
|
|
(1,085 |
) |
Deposits with clearing organizations |
|
15 |
|
|
|
(63 |
) |
|
|
142 |
|
|
|
(152 |
) |
Current and non-current prepaid expenses |
|
4 |
|
|
|
11 |
|
|
|
33 |
|
|
|
37 |
|
Other current and non-current assets |
|
(23 |
) |
|
|
(39 |
) |
|
|
(26 |
) |
|
|
(48 |
) |
Accounts payable and accrued expenses |
|
(17 |
) |
|
|
(11 |
) |
|
|
(62 |
) |
|
|
134 |
|
Payables to users |
|
(695 |
) |
|
|
772 |
|
|
|
(1,775 |
) |
|
|
396 |
|
Securities loaned |
|
411 |
|
|
|
302 |
|
|
|
(1,817 |
) |
|
|
1,713 |
|
Other current and non-current liabilities |
|
8 |
|
|
|
61 |
|
|
|
(31 |
) |
|
|
45 |
|
Net cash provided by (used in) operating activities |
|
181 |
|
|
|
960 |
|
|
|
(852 |
) |
|
|
1,181 |
|
Investing
activities: |
|
|
|
|
|
|
|
Purchases of property, software, and equipment |
|
(3 |
) |
|
|
(1 |
) |
|
|
(28 |
) |
|
|
(2 |
) |
Capitalization of internally developed software |
|
(7 |
) |
|
|
(5 |
) |
|
|
(29 |
) |
|
|
(19 |
) |
Purchases of available-for-sale investments |
|
(1 |
) |
|
|
— |
|
|
|
(25 |
) |
|
|
— |
|
Proceeds from sales and maturities of available-for-sale
investments |
|
23 |
|
|
|
— |
|
|
|
42 |
|
|
|
10 |
|
Purchases of held-to-maturity investments |
|
— |
|
|
|
(108 |
) |
|
|
— |
|
|
|
(759 |
) |
Proceeds from maturities of held-to-maturity investments |
|
— |
|
|
|
115 |
|
|
|
— |
|
|
|
282 |
|
Acquisitions of a business, net of cash and cash equivalents
acquired |
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
(93 |
) |
Other |
|
(1 |
) |
|
|
(1 |
) |
|
|
(20 |
) |
|
|
(1 |
) |
Net cash provided by (used in) investing activities |
|
11 |
|
|
|
(3 |
) |
|
|
(60 |
) |
|
|
(582 |
) |
Financing
activities: |
|
|
|
|
|
|
|
Proceeds from issuance of common stock under the Employee Stock
Purchase Plan ("ESPP") |
|
3 |
|
|
|
5 |
|
|
|
16 |
|
|
|
14 |
|
Taxes paid related to net share settlement of equity awards |
|
(3 |
) |
|
|
(3 |
) |
|
|
(12 |
) |
|
|
(12 |
) |
Draws on credit facilities |
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
20 |
|
Repayments on credit facilities |
|
— |
|
|
|
— |
|
|
|
(21 |
) |
|
|
(20 |
) |
Payments of debt issuance costs |
|
— |
|
|
|
— |
|
|
|
(10 |
) |
|
|
(10 |
) |
Change in principal collected from customers due to Coastal
Bank |
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
1 |
|
Proceeds from exercise of stock options, net of repurchases |
|
— |
|
|
|
3 |
|
|
|
6 |
|
|
|
5 |
|
Repurchase of common stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(608 |
) |
Net cash provided by (used in) financing activities |
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
(610 |
) |
Effect of foreign exchange rate changes on cash and cash
equivalents |
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Net decrease in cash, cash equivalents, segregated
cash, and restricted cash |
|
193 |
|
|
|
966 |
|
|
|
(913 |
) |
|
|
(11 |
) |
Cash, cash equivalents, segregated cash,
and restricted cash, beginning of the period |
|
9,164 |
|
|
|
8,380 |
|
|
|
10,270 |
|
|
|
9,357 |
|
Cash, cash equivalents, segregated cash,
and restricted cash, end of the period |
$ |
9,357 |
|
|
$ |
9,346 |
|
|
$ |
9,357 |
|
|
$ |
9,346 |
|
Reconciliation of
cash, cash equivalents, segregated cash,
and restricted cash, end of the period: |
|
|
|
|
|
|
|
Cash and cash equivalents, end
of the period |
$ |
6,339 |
|
|
$ |
4,835 |
|
|
$ |
6,339 |
|
|
$ |
4,835 |
|
Segregated cash, end of the
period |
|
2,995 |
|
|
|
4,448 |
|
|
|
2,995 |
|
|
|
4,448 |
|
Restricted cash in other
current assets, end of the period |
|
1 |
|
|
|
46 |
|
|
|
1 |
|
|
|
46 |
|
Restricted cash in other
non-current assets, end of the period |
|
22 |
|
|
|
17 |
|
|
|
22 |
|
|
|
17 |
|
Cash, cash equivalents, segregated
cash, and restricted cash, end of the period |
|
9,357 |
|
|
|
9,346 |
|
|
|
9,357 |
|
|
|
9,346 |
|
Supplemental
disclosures: |
|
|
|
|
|
|
|
Cash paid for interest |
$ |
6 |
|
|
$ |
4 |
|
|
$ |
12 |
|
|
$ |
12 |
|
Cash paid for income taxes, net of refund received |
$ |
— |
|
|
$ |
— |
|
|
$ |
4 |
|
|
$ |
9 |
|
|
Reconciliation of GAAP to Non-GAAP
Results(Unaudited) |
|
|
|
Three Months EndedDecember
31, |
|
Three Months EndedSeptember
30, |
|
Year Ended December 31, |
(in millions) |
|
|
2022 |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Net income (loss) |
|
$ |
(166 |
) |
|
$ |
30 |
|
|
$ |
(85 |
) |
|
$ |
(1,028 |
) |
|
$ |
(541 |
) |
Net margin |
|
(44 |
)% |
|
|
6 |
% |
|
(18 |
)% |
|
(76 |
)% |
|
(29 |
)% |
Add: |
|
|
|
|
|
|
|
|
|
|
Interest expenses related to
credit facilities |
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
24 |
|
|
|
23 |
|
Provision for (benefit from)
income taxes |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
10 |
|
|
|
1 |
|
|
|
8 |
|
Depreciation and
amortization |
|
|
17 |
|
|
|
17 |
|
|
|
19 |
|
|
|
61 |
|
|
|
71 |
|
EBITDA (non-GAAP) |
|
|
(145 |
) |
|
|
52 |
|
|
|
(50 |
) |
|
|
(942 |
) |
|
|
(439 |
) |
Less: SBC |
|
|
|
|
|
|
|
|
|
|
2021 Founders Award Cancellation(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
485 |
|
SBC excluding 2021 Founders Award Cancellation(2) |
|
|
160 |
|
|
|
81 |
|
|
|
83 |
|
|
|
654 |
|
|
|
386 |
|
Impairment of Ziglu equity
securities(3) |
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
Restructuring charges(4) |
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
|
105 |
|
|
|
— |
|
Significant legal and tax
settlements and reserves |
|
|
— |
|
|
|
— |
|
|
|
104 |
|
|
|
20 |
|
|
|
104 |
|
Q4 2022 Processing
Error(5) |
|
|
57 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
57 |
|
|
$ |
— |
|
Adjusted EBITDA
(non-GAAP) |
|
$ |
82 |
|
|
$ |
133 |
|
|
$ |
137 |
|
|
$ |
(94 |
) |
|
$ |
536 |
|
Adjusted EBITDA margin
(non-GAAP) |
|
|
22 |
% |
|
|
28 |
% |
|
|
29 |
% |
|
(7 |
)% |
|
|
29 |
% |
________________(1) In February 2023, we
cancelled the 2021 pre-IPO market-based restricted stock units
granted to our founders of $35.5 million unvested shares (the "2021
Founders Award Cancellation").(2) For the year ended December
31, 2022, SBC excluding 2021 Founders Award Cancellation benefited
from restructuring-related net reversals of previously recognized
expense of $77 million in connection with a reduction in force
announced on April 26, 2022 (the “April 2022 Restructuring”) and
another one announced on August 2, 2022 (the “August 2022
Restructuring”).(3) Partially as a result of the termination
of the stock purchase agreement, the advances made to Ziglu
accounted for as non-marketable equity securities were impaired to
a carrying value of zero.(4) Restructuring charges
includes:
- A final adjustment related to office
closures that were part of the August 2022 Restructuring for the
three months ended December 31, 2022; and
- $105 million for the year ended
December 31, 2022, related to both the April 2022 Restructuring and
August 2022 Restructuring, consisting of $45 million of impairment
and $9 million of accelerated depreciation, in each case relating
to office closures, and $51 million of cash charges for
employee-related wages, benefits and severance.
(5) Q4 Processing Error includes:
- $57 million
for the three months ended December 31, 2022 due to delays in
notification from third parties and process failures within
Robinhood’s brokerage systems and operations in connection with the
handling of a 1-for-25 reverse stock split transaction of Cosmos
Health, Inc. The resulting loss of $57 million is recorded
within brokerage and transaction in the consolidated statement of
operations.
|
Reconciliation of GAAP to Non-GAAP
Results(Unaudited) |
|
|
Three Months EndedDecember
31, |
|
Three Months EndedSeptember
30, |
|
Year Ended December 31, |
(in millions) |
|
2022 |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Total operating expenses
(GAAP) |
$ |
534 |
|
|
$ |
445 |
|
|
$ |
540 |
|
|
$ |
2,369 |
|
|
$ |
2,401 |
|
Less: SBC |
|
|
|
|
|
|
|
|
|
2021 Founders Award Cancellation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
485 |
|
SBC Excluding 2021 Founders Award Cancellation |
|
160 |
|
|
|
81 |
|
|
|
83 |
|
|
|
654 |
|
|
|
386 |
|
Less: Restructuring
charges |
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
|
105 |
|
|
|
— |
|
Less: Significant legal and
tax settlements and reserves |
|
— |
|
|
|
— |
|
|
|
104 |
|
|
|
20 |
|
|
|
104 |
|
Less: Q4 2022 Processing
Error |
|
57 |
|
|
|
— |
|
|
|
— |
|
|
|
57 |
|
|
|
— |
|
Adjusted Operating Expenses (Non-GAAP) |
$ |
319 |
|
|
$ |
364 |
|
|
$ |
353 |
|
|
$ |
1,533 |
|
|
$ |
1,426 |
|
|
|
Financial Outlook for the Year Ending
December 31, 2024 |
|
|
Prior Outlook(1) (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 in 2024,
we aim to continue delivering profitable growth as we work to
maximize earnings per share over time to drive long-term
shareholder value; that we continue to aggressively invest for the
future; that through April 30, Robinhood is offering customers
subscribed to Robinhood Gold up to 3% extra on every dollar
contributed to their Robinhood Retirement accounts, including IRA
transfers and 401(k) rollovers; that Robinhood plans to explore
opportunities to continue growing its customer base outside the US;
that we will move forward on creating a pro trader web experience
and plans to introduce futures and index options; that our 2024
expense plan includes growth investments in new products, features,
and international expansion while also getting more efficient in
our existing businesses; 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 similar
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 and services 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 platform; 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
volatility of cryptocurrency prices and trading volumes; the risk
that our platform 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
September 30, 2023, 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, February 13, 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. All fourth quarter and full year 2023 financial
information in this press release is preliminary, based on our
estimates and subject to completion of our financial closing
procedures. Final results for the full year, which will be reported
in our Annual Report on Form 10-K for the year ended December 31,
2023, may vary from the information in this press release. In
particular, until our financial statements are issued in our Annual
Report on Form 10-K, we may be required to recognize certain
subsequent events (such as in connection with contingencies or the
realization of assets) which could affect our final results.
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, Adjusted Operating Expenses
and SBC, and SBC excluding the 2021 Founders Award Cancellation.
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.
SBC excluding the 2021 Founders Award
Cancellation
We define SBC excluding the 2021 Founders Award
Cancellation as GAAP SBC minus the impact of the 2021 Founders
Award Cancellation, which we do not believe is indicative of our
ongoing expenses. The amount and timing of the 2021 Founders Award
Cancellation not driven by core results of operations and renders
comparisons with prior periods less meaningful. We believe SBC
excluding the 2021 Founders Award Cancellation 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. SBC
excluding the Founders Award Cancellation 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
key performance metrics described below to help us evaluate our
business, identify trends affecting our business, formulate
business plans, and make strategic decisions.
Before Q4 2023, we referred to Funded Customers
as Net Cumulative Funded Accounts. As our business has grown and we
have added additional account types (such as retirement accounts),
we have relabeled this metric (and made conforming changes
throughout other definitions) to clarify that it measures unique
individuals (rather than accounts), although the calculation
remains the same and does not affect amounts reported in prior
periods. Additionally, beginning in Q4 2023, Robinhood Credit users
are included in our calculation of MAU, although we are not
restating amounts in prior periods as the impact to those figures
was immaterial.
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.
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 press 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.
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 received from customers, net of reversals, customer
cash withdrawals, and other assets transferred out of our platform
(assets transferred in or out include debit card transactions,
ACATS transfers, and custodial crypto wallet transfers) for a
stated period. Starting in January 2024, Net Deposits include
dividend and interest inflows and Robinhood Gold subscription fees
and margin interest outflows, although we will not restate 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 for the
year or annualized for each three-month period presented, as
applicable.
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.
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