Robinhood Markets, Inc.

Good day, and thank you for standing by. Welcome to Robin Hood, third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question, simply press star 11 on your telephone. You will hear a message advising your hand is raised. To withdraw your question, press star 11 again. And please be advised that today's conference is being recorded. I would now like to turn the call over to Chris Coggle, Vice President of Corporate, FP&A, and Investor Relations.

Thank you, Carmen, and thank you to everyone for joining Robinhood's Q3 earnings call. With us today are CEO and co-founder Vlad Tenev and CFO Jason Warnick. Before getting started, I want to remind you that today's call will contain forward-looking statements. Actual results could differ materially from our expectations. and we have no duty to provide updates unless legally required. Potential risk factors that could cause differences, including regulatory developments that we continue to monitor, are described in the press release we issued today, the earnings presentation on our investor relations website at investors.robinhood.com, our Form 10-Q filed this afternoon, and in our other SEC filings. Today's discussion will also include non-GAAP financial metrics. Reconciliations to the gap results we consider most comparable can be found in the earnings presentation. With that, let me turn it over to Vlad.

Thanks for the intro, Chris, and thanks to everyone for joining us today. It's been nearly 10 years since Beju and I first launched the waitlist for Robinhood. Back then, nobody had heard of fintech. Customers were paying $7 to $10 every time they placed a trade at one of the discount brokerages. And people were generally skeptical about using their smartphones for serious financial matters. Investors were also skeptical about Robinhood's prospects as a business. They viewed the idea of us entering a highly regulated market with large entrenched competitors as a fool's errand. Even if we were to succeed in bringing our product to market, would anyone want it? The conventional wisdom at the time was that individual stock investing was dead and that all anyone needed was index funds. We spoke to nearly 100 investors before we closed our initial seed round at a $10 million valuation. Almost 10 years later, we're serving over 23 million customers in the U.S. Our surviving competitors have been forced to adopt our business model and even to adapt their user interfaces to be similar to ours. And Robinhood is no longer just a trading app. We've been rapidly evolving into a broad financial services platform serving multiple financial needs, including spending, savings, and retirement. Our ambition and the opportunity ahead of us has expanded greatly. And so it still feels like we are at the beginning of our journey. We're still number two in retail trading market share in the U.S., We're at the very early stages of expanding beyond trading with just over 1 billion of retirement assets on our platform out of the over 12 trillion US IRA market. We are also just now beginning to take our first steps to serve customers outside the US where we believe the need and opportunity for innovation in financial services is even greater than it is domestically. As we continue to execute on our strategy, We believe we can grow into one of the largest and most profitable financial companies in the world. I'm excited to talk to you about our progress, but first, let's review our Q3 high-level business and financial results. It goes without saying that the macro environment of the past few years has been challenging for investors. Geopolitical tensions are continuing to increase, interest rates are at 30-year highs, and household savings are being depleted at a rapid clip. I want to explain the three things I look at at a company level to ensure Robinhood emerges from this challenging environment stronger than ever. First, financial health. You've heard me mention over the past year that I want to ensure Robinhood is a sustainable business, not just in bull markets, but in all market conditions. We put in a lot of work to make this a reality. We had our first quarter of GAAP profitability as a public company in Q2. And in Q3, total net revenues were up 29% from a year ago. And by keeping our costs lean, we more than doubled our adjusted EBITDA margin year over year. This is all while making big investments across product, customer service, and international expansion. Second, company culture. I believe very strongly that small groups of highly motivated and talented people can out-execute incumbents with over 10x the headcount and resources required. I believe we have the highest concentration of talent in the history of the company, and over the past year, we have turned the crank even more on ensuring we are hiring, retaining, and motivating the highest caliber people across all of our positions. Third, product velocity. We use a number of metrics to track this, and right now, by several key metrics, our product velocity is the highest in our recorded history. We move fast, and we've been simultaneously improving our service quality. Now let's turn to our 2023 roadmap, which as you know, we've organized into three areas, deepening relationships with our customers, innovating for our active traders, and launching new growth opportunities. Let's first talk about how we're deepening relationships with our customers. Success in this part of our strategy means that Robinhood becomes the most important financial relationship for a large portion of our customers. This will lead to a healthier and more diversified business and you should track our progress here by gold subscribers and net deposits. Robinhood Gold continues to be our number one focus in deepening relationships with our customers. Over the past year, as the environment evolved and customers were looking for new ways to save and invest, we put a lot more value in gold by adding a 4.9% APY on uninvested cash and a 3% match on IRA contributions. As a result, Subscriptions are now over 1.3 million and growth is accelerating as we added 100,000 in Q3 alone and 240,000 over the past year. Today, 6% of Robinhood customers are gold subscribers and new customers are joining gold at more than double that rate. Gold customers have tens of thousands of dollars in average assets under custody, up more than 60% year over year. And they've opened IRAs with us at seven times the rate of non-gold customers. As we look ahead, we want the majority of our customers to be gold subscribers, and we're taking a number of steps to make that a reality. Alty is one of them right now. After acquiring X1 in July, our team has been hard at work creating an awesome credit card, and we've got something special planned for gold customers. You'll hear more about this early next year. Now, let's discuss active traders. We are laser focused on being the number one platform for active traders, and we track our progress here by market share. Our focus has been on systematically removing any limitation that would lead an active trader to consider using another platform with a particular emphasis on pricing, speed, and app usability. In the past quarter, we streamlined our equities trading flow introduced options chain customization and an option P&L simulator, and more than doubled the number of stocks and ETFs available to trade 24-5 on Robinhood 24-hour market. For our crypto customers, we've rolled out some changes to the user interface on mobile so that customers can clearly see the spreads that we offer on our crypto transactions. This makes it easier for customers to see their all-in cost of execution, compare it against other platforms, and see how great of a deal Robinhood is giving them. As we deliver for our active traders, we continue to see our market share of retail trading grow. In Q3, both our equities and options market share increased from Q2 and year over year. Let me now talk about futures. We're getting closer to unveiling our offering there, and we have been hard at work building what we believe is the best designed futures product, particularly on mobile. Competitors generate hundreds of millions of annual revenue from futures trading, so as we continue to execute, we believe we have a real opportunity to expand the market, take market share, and build a nine-figure revenue business over time. The third part of our 2023 roadmap is exploring new growth opportunities. Here, we have been laser-focused on international expansion. In the U.S. alone, we've built a business with 23 million customers, that serves nearly 10% of American adults. But there are billions more potential customers across the globe, and as we serve them, we believe our business can evolve into one where the majority of our customer base is outside the U.S. in the years to come. Our approach has been to build the capabilities for international expansion organically. This allows us to scale in a capital-efficient manner while easily sharing our capabilities across multiple geos. For example, with the launch of Robinhood 24-hour market, we became the first U.S. broker to offer round-the-clock trading of individual stocks. Our customers in the U.K. will benefit from this and other platform enhancements as 24-hour market will be available in the U.K. at launch. Two major things are happening in the coming weeks. First, we'll launch brokerage operations in the U.K. We look forward to eliminating commissions in that market just like we did in the U.S., Also in the coming weeks, we will launch crypto trading in the EU. Crypto benefits from a relatively clear regulatory framework in the EU, and we're excited to bring our capabilities across the pond to better serve that market. As I reflect on all that Robinhood has in front of us, I'm energized by our long-term potential to innovate for our customers, grow assets, gain market share, and continue to disrupt our industry. We're really excited about the roadmap ahead, and there's so much to do. With that, I'll turn the call over to Jason.