Robinhood Markets, Inc.

Thank you to everyone for joining Robinhood's Q4 and full year 2024 earnings call. Joining today are CEO and co-founder Vlad Tenev, CFO Jason Warnick, and Senior Manager of Investor Relations Jack Riemann. Vlad and Jason will offer opening remarks and then open the call to Q&A. During the Q&A portion of the call, we will answer questions from institutional research analysts, and we will also answer questions from retail analysts who may hold an ownership position in Robinhood. As a reminder, 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, and our SEC filings. all of which can be found at investors.robinhood.com. Today's discussion will also include non-GAAP financial measures. Reconciliations to the GAAP measures we consider most comparable can be found in the earnings presentation. With that, please welcome Vlad and Jason.

All right. Good to see everyone. Thank you for being here for our first live video earnings call. Hopefully this is both informative, but also entertaining. Let me first start by saying that this was a big quarter for us. So we did over 1 billion in revenue for the first time as a public company, really for the first time in the history of the company. And that capped off what was a record breaking year with over 3 billion in revenue for the whole year. Yeah, I would say that this was driven by a lot of things. And let me remind you the three priorities we have as a public company. So the first one is being number one in active traders. Second one is being number one wallet share for the next generation. And our long term arc being the number one global financial ecosystem. I'm really proud of the product velocity in 2024. So the team executed unbelievably well. And there's a couple of things to point out. We began scaling the Robinhood Gold Card. And Robinhood Gold Card, it wasn't just a me too credit card. I think we did a nice job building a revolutionary credit card and it has both best in class rewards and user experience. Robinhood Legend, which we announced at the Hood Summit event just a couple of months ago, our first desktop platform built from the ground up just for active traders. And I think what's been even more amazing than the initial launch is We not only rolled it out, but the team's been executing really well and adding new things on a weekly basis. It's been energizing to see the customer feedback and to see the team respond to that. New things are landing, new indicators, new features pretty much every week. And as a result, I should mention one other exciting thing. We added a whole new derivatives business. So Robinhood Derivatives launched also last year at the Hood Summit. And we're offering both futures outrights and event contracts, which is an innovative new asset class that our customers are super excited about. So we're excited to do more there. As a result of this product velocity, We saw fantastic business results. I mentioned the $1 billion in revenue quarter, $3 billion for the full year, which, by the way, up 58% from 2023, and 2x from two years ago. And some of the things we track on a... uh more input oriented basis market share up 30 year over year both for equities and options record net deposits of over 50 billion which is over a 50 nearly 50 growth rate multiples of what traditional brokerages are seeing And gold subscribers also had a banner year up to a record of 2.6 million, which is 80% growth year over year. And now we're at over 10% attach rate if you look at the overall customer base, over 10% gold attach rate. And we've continued to see strength actually through 2025. We're closing in on 3 million gold subscribers. And perhaps the thing that I'm most excited by is if you look at the net new customer funded accounts in Q4, of those new customers that joined Robinhood in Q4, over 30% have adopted gold. So that 10% attach rate increases to well north of 30% if you look at new customers. So the team's been really executing well, and There's more to do, but we're proud of the progress we've made there. There's going to be three events in 2025, three new product events, and the agendas are already packed. So we're very excited for them. Gold event is coming up in March in San Francisco. We're going to be launching a bunch of new products and features for the gold program, including advisory, which we've been working on. And I think you guys are going to like what you see there. Our first crypto event in June, which will be in France. And then, of course, Hood Summit, our active trader event. Got great feedback. We're going to bring that back, and that will be later this year. So I'll talk a little bit about what you can expect in 2025. But first, let me turn turn it over to Jason for business and finance results.

Thanks, Vlad. Q4 was a record setting quarter and 2024 a record setting year. In both, we reached new highs for many of our financial measures and KPIs. including assets under custody, net deposits, gold subscribers, revenues, adjusted EBITDA, and earnings per share. Here's some of the full year 2024 highlights. Revenues up 58% to nearly $3 billion. Adjusted EBITDA up over 160% to $1.4 billion. And adjusted EBITDA margin grew to 48%. This really shows the operating leverage in our business with over 80%. of top-line growth dropping to the bottom line. And in our first full year of positive net income, earnings per share was $1.56. We've built strong momentum entering 2025, and we're staying focused on delivering another year of profitable growth. So let's talk a bit about Q4. Revenues more than doubled year over year to $1 billion, driven by strong revenue growth, strong growth across the board, including transaction volumes, interest earning assets, securities lending, and gold subscriptions. And like you said, Vlad, Robinhood Gold subscribers are closing in on 3 million, driving annualized gold subscription revenue higher to now above 170 million. We also stayed disciplined on expenses in Q4. This brought full year adjusted OPEX and SBC to 1.94 billion, up 7% year over year and within our original outlook. You may recall a couple years ago, we set a goal to bring share-based compensation as a percentage of revenue into the zone of 10% down from higher levels in the past. So it feels really great. We achieved that milestone in 2024, and we're staying focused on managing this even lower over time. And as you saw, we had a large tax benefit in Q4. Given our recent strong performance and forecast of continued profits, we released most of our valuation allowance. We now expect our long-term tax rate to be more normalized in the mid-20% zone before any quarterly items. Now, as we look to twenty twenty five, we want to keep investing for profitable growth while driving efficiency. So for revenues, we're planning on another year of double digit growth driven by product innovation, market share gains and expanding into new markets. And on expenses, we'll keep managing our existing businesses to low single-digit growth or even lower, and then make focused investments for growth for both new products on our roadmap and increasing marketing by another $100 million or so this year. And we're keeping our hands on the wheel as we monitor the environment and evaluate potential investment opportunities. So our outlook for adjusted OpEx and SBC is a range of 2.0 to 2.1 billion. Now, it's important to note that this does not include provisions for credit losses, any large regulatory charges or anything related to our acquisitions of trade PMR or Bitstamp. And the midpoint of our outlook range is up about 10% from 2024. As for provisions for credit losses, these have been in the zone of about $20 million for the past couple of quarters, and we expect they'll gradually increase over time from here. As you know, this will really depend on balancing how quickly we onboard more customers and the underwriting risk, which we continue to manage closely. There's a couple other areas I'd like to highlight. First, we're now more than a quarter of the way through our $1 billion share buyback program, and we're on track for a two- to three-year total timeline. As a result of repurchases and other actions that we've taken over the past couple years, we anticipate our diluted share count will be roughly flat in 2025. This means shareholders will benefit even more as we grow earnings and free cash flow over time. Second, we have a strong momentum to start the year. In January, net deposits were our second highest month ever. And equities, options, and crypto trading volumes were all up double to triple digit growth rates from a year ago. In fact, January option volumes were an all-time high. It's also great to see January margin balances crossed $8 billion, doubling in the eight months since we moved to industry-leading pricing. And while it's early, we love the progress we're seeing with new products that we launched in the past few months. For example, looking at annualized trading revenue, legend is now up to $50 million, and index options are up to $15 million. And both are showing nice incrementality and strong week-over-week growth rates. So we feel great about our business and financial results and remain focused on driving another year of profitable growth in 2025. We're continuing to work to maximize earnings per share and free cash flow per share over time.