Robinhood Markets, Inc.

Thank you to everyone for joining Robinhood's Q1 2025 earnings call. Joining today are Chair and CEO Vlad Tenev, CFO Jason Warnick, and VP of Corporate Finance and Investor Relations Chris Cagle. Vlad and Jason will offer opening remarks. marks, 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 for looking statements actual results could differ materially from our current expectations and we may not 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 directly comparable can be found in the earnings presentation. With that, please welcome Vlad and Jason.

Devant toi All right.

Hey, everyone. Great to speak with you again today. Thank you for joining us. This is our second live video earnings call. I think the last one hopefully was informative and entertaining. So we're happy to be with you again. If I had to sum up the quarter. What I'm most excited about is the incredible product velocity. And it was across our three focus areas, which, if you remember, are building the number one platform for active traders, being number one in wallet share for the next generation and building the number one global financial ecosystem. So let's get into it in a little bit more detail. When I look at our active trader offering, it just keeps getting more disruptive. We launched futures and prediction markets in Q1 and futures are accelerating nicely. So about 4.5 million contracts traded in April alone, which is more than all of Q1. So Q1, which was a strong quarter, greatly greatly was accelerated in april and prediction markets have done over 1 billion contracts in the last six months and we've recently started to increase the breadth of the contracts we offer so we're we're still very much in the early stages there on robin hood legend which if you remember we announced at hood summit late last year and launched fully a few months after that We've been making a lot of improvements. We've upgraded speed. We've brought in new asset classes like crypto and index options. We've added support for joint accounts, more indicators and charts, and really more features being shipped on a weekly basis. So the team has just been executing incredibly quickly on making Robinhood Legend the best platform for active traders. And all of that has been driving strong incremental volume on the Legend platform. There's actually a lot more to come. The team's already spending a lot of time preparing for the second annual Active Trader event, which we'll be holding this fall. We're also working to serve far more of our customers' assets. So at our last City of Gold event just this past March, we announced three new products, Robinhood Strategies, Robinhood Cortex, and, of course, Robinhood Banking.

pretty awesome that Robinhood Strategies already has

over 40,000 customers and over 100 million in assets. So that's gone off to a very rapid start. Robinhood Gold. So when you look at the gold credit card, we doubled the gold cardholders to 200K just in the past few weeks. And we love what we're seeing. We know that there's a ton of excitement about getting the credit card from customers. We see it on social media and in the questions, and we're excited to accelerate the rollout from here. So already doubled and it's going to continue. Retirement assets, they're now up to $16 billion, which is up about 20% just from the start of the year. And we closed the acquisition of Trade PMR, which was bringing over $40 billion of platform assets to Robinhood. So a lot of progress on wallet share. And on global financial ecosystem, this is our 10-year arc. We continue to make the UK brokerage offering better and better. And we're working on launching in Asia. So excited about that. Bitstamp acquisition still on track to close mid-year. And we're heads down getting things ready for the crypto event, which will be in France in two months. So we're very excited about that. There's going to be some new things unveiled. And wrapping it all up, as a result of the strong product velocity, we saw strong business results as well. Revenue is up 50% year over year. Trading volumes all up double digits year over year, including a record quarter for options trading. Record net deposits as well, $18 billion of net deposits in the quarter. I'm glad to see the strategies working. Customers are not only trading more with us, but they're entrusting us with more of their assets. Gold subscribers nearly doubling year over year to three point two million as of the end of the quarter and actually now three point three million in April. And that's a 12 percent plus adoption rate. But if you look at new customers who joined Robinhood in Q1, about one in three became gold subscribers relatively quickly. And we look on international, that's continuing to accelerate. We are now up to over 150,000 international customers, and that's just going to keep going and going. So we feel great about our product velocity and the business results that it's driving. I'll turn it over to you, Jason, to talk through financials, and then we'll go straight to Q&A.

Okay. Thanks, Vlad. Q1 was another quarter of profitable growth as revenues grew 50% year over year and EPS more than doubled. Our focus on profitable growth drove 72% incremental margins as adjusted EBITDA margin expanded by 11 points from a year ago. And over the past 12 months, revenues reached $3.3 billion and adjusted EBITDA was $1.7 billion as we continue to grow and diversify our business. It's also great to see momentum continuing into the second quarter. April net deposits are around $6.5 billion. Equities trading is a four-year high. Options are in the zone of an all-time high, and crypto trading is north of $8 billion. Also, margin balances are about $8.4 billion, which is up 2x from last year. I'm pleased with our customers' continued engagement. It's driven by a greater share of active traders who tend to stay resilient through volatility, continued market share gains, and diversification into newer areas like Robinhood Legend, advisory, futures, and index options. Let's take a closer look at our Q1 financials compared to a year ago. Q1 revenues were $927 million, driven by strong growth across the board. Transaction volumes increased by double digits across all categories, including up 84% year-over-year in equities, and we saw record options volume in the quarter. Interest-earning assets and securities lending activity continued to grow, more than offsetting short-term rates, and other revenues grew as gold subscriptions reached new highs. We also stayed disciplined on expenses, leading to 51% adjusted EBITDA margins. In Q1, adjusted OPEX and SBC was $533 million, in the middle of our updated full-year outlook range on a quarterly basis. As we previously announced, we anticipate approximately 85 million of costs from trade PMR in 2025. So we updated our full year outlook for adjusted OPEX and SBC to 2.085 to 2.185 billion. As a reminder, this outlook does not include costs from our anticipated acquisition of Bitstamp or provisions for credit losses. Let's talk for a moment about how we're diversifying our business. You've heard me say that we have nine businesses that each generate over $100 million in annualized revenues, nearly double the number we had just a couple years ago. And I'm excited to say we have many more that are quickly scaling. For example, we've recently launched three new products, futures, index options, and prediction markets, where the ARR for each of them individually is already around 20 million. And with the addition of Trade PMR, we've added a business that has a $50 million run rate and a nice track record for growth. And there's several more businesses that we recently announced and expect to begin contributing later this year, including Robinhood Strategies, Robinhood Banking, and our acquisition of Bitstamp in the middle of the year. So we're incredibly excited about all these new businesses, and I like our opportunity to build many of them into additional $100 million revenue businesses in the coming years. I also want to give an update on our share repurchase program. You'll recall we began executing on our $1 billion share repurchase plan in Q3 last year with target completion over two to three years. Since then, we've moved faster and have deployed over $650 million at an average price of $33 per share. This includes over $300 million of buybacks in Q1 which more than offsets share issuance for Trade PMR. Given our strong performance and positive outlook, our board has increased the authorization by $500 million, taking the program up to a total of $1.5 billion. We expect to deploy the remaining $800 million plus over roughly the next two years, but we're keeping flexibility to accelerate if market conditions warrant. 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. With that, Chris, let's move to Q&A.

All right. Thank you, Jason. For the Q&A session, we'll start by answering the top few questions from Say Technologies ranked by the number of votes. We passed over questions that we've already addressed on this call or in prior quarters and grouped together questions that shared a common theme. After the Say questions, we'll turn to live questions from our analysts. So let's kick it off with our first question from Say. Patrick asks, what is Robinhood doing to accelerate credit cards and checking accounts to their gold members?

Thanks for the questions. I'll start with the gold card and maybe turn it over to you, Vlad, for banking. As I've mentioned, it's really important for us to study customer behavior as we roll out the card. We've been doing that and have increased the number of cardholders from 100,000 to over 200,000 just in Q1. So far, what we're seeing in terms of customer behavior is in line with our expectations, so we feel good. And we plan to continue increasing the number of cardholders throughout the year. But along the way, we're going to continue to be measured in the near term.

Thanks, Jason. Yeah, on the banking side, so we announced at Velocity of Gold event back in March, Robinhood Banking, and the philosophy behind this product is that we want to build a compelling banking experience for the top of market. So if you're someone who's a high net worth individual with more assets, we wanted to provide a digital banking experience where you would feel like you're not making compromises relative to your brick and mortar bank. And I don't think any digital bank has taken that approach. So we're extremely excited. We've been testing the product internally. It's looking really good. I think you're going to like it. And at the event, we announced rolling out to the public in Q3, and we feel good about that date. So stay tuned. The team's been working incredibly hard.

Awesome. All right. Thanks, Vlad. The next question is from Nico, who asks, when will users be able to invest in private companies such as SpaceX?

Yeah. So this is actually one of our top policy priorities. We believe that it's actually quite crazy that, you know, customers can't invest in private companies, given that private companies, companies are staying private longer. The days of, you know, Microsoft going public at a multi hundred million market cap or Apple at relatively low market caps in. You being able to take advantage of a lot of the appreciation in public markets, they're fewer and far between. Now you have companies like OpenAI and SpaceX still private and in valuations of hundreds of billions. So those gains are accruing to a smaller and smaller group of insiders. We have the technology to do this. And in fact, I wrote in an op-ed for the Washington Post that You know, tokenizing private equities is a huge unlock, both for individuals, but also for these companies and for crypto technology, which can actually solve a lot of the problems in crypto. secondary market transactions that have been tried thus far. What's needed is comprehensive security legislation in the US and also for us to rethink the accredited investor rules, which shut out north of 80% of the public currently. So both of those we're making progress on. We're in active discussions. There's definitely a willingness from the administration and lawmakers to engage in these issues. So stay tuned. But we believe we're going to make progress here.

Great. Thank you, Vlad. And then the last question is from Paul, who asks, when will Robinhood offer 401k plans to businesses?

Yeah, thanks, Paul. Our 10-year arc, our long-term arc, is to build the number one global financial ecosystem. And what that means is expanding our business from retail only, which it pretty much is now, to also serving businesses and institutions, and also expanding from primarily U.S. to being a full global platform serving customers everywhere. regardless of whether they're individual retail businesses or institutions. And so when we look at that B2B opportunity, we think businesses and institutions have fundamentally similar needs in many ways to retail. The things that we're building, the innovations we're building for retail, things like 24-hour trading, rock-bottom margin rates, also appeal to institutions. and businesses and there's so many opportunities 401k administration for businesses is one you also look at things like employee stock plan administration for public companies you look at institutional prime brokerage and of course serving registered investment advisors which which we're now getting into through trade pmr and we think that's an enormous opportunity to serve businesses if we look at registered investment advisors it's a business that has an additional layer of compounding so not only are we taking advantage of the great wealth transfer where young people are going to be making more and more money over time we're getting more customers but as we get more advisors that's a third layer of asset growth So for the near term, we're working really hard to integrate the trade PMR team and technology, build a great experience serving registered investment advisors. We want to make sure we stay super focused and we don't take on too much. So that's been our B2B focus for the near term. But over the long term, we do think 401k is a sizable opportunity that we'd be excited to tackle alongside all the other things in our 10-year arc.

Great. All right. Thank you, Vlad. That concludes our shareholder questions from Say Technologies. Now we will open the call to Q&A. We ask that each person limit themselves to one question and return to the queue if they would like to ask a follow-up. To enter the queue, please press star 1-1 on your phone, and if you'd like to leave the queue, please press star 1-1 again. The first question comes from Chris Allen at Citi. Chris?

Yeah, afternoon, guys. Appreciate the question. The health of the retail customers is a big focus in the current environment. I was wondering if you could peel back or provide some additional color on April. Metrics you provided were very solid. Curious if margin balance has kind of improved towards the back half of the month, whether you've seen net new account openings and the strong deposit numbers. Are those coming from existing customers or new customers today?

Hey, Chris, thanks. It's Jason. I'll take it. And Vlad, feel free to add in. So we saw incredibly strong engagement across the board, not just in Q1, but it continued into April, as we said. And it was throughout the month of April. So I wouldn't say it was front-loaded or back-loaded. It was really a strong month in total. We're seeing strong additions, as Vlad alluded to, to Robinhood Gold. And, you know, the strength in net deposits is pretty diverse. And what's different about us today than perhaps a few years ago is there's just a lot more options for customers to place their assets, whether it's the growth in retirement, the nascent growth in strategies, certainly brokerage. We're also seeing it go into crypto. I'd say that there's a pretty broad-based strength of retail engagement that we're seeing, and all signs are positive throughout the month of April.

Yeah, the only thing I'd add to that is unlike where the business was back in 2022, where we were predominantly focused on novice investors, the new focus on being the best platform for active traders has made us more resilient in times like these because we used to just not have a lot of mechanisms for customers that were more sophisticated that wanted to trade sideways or declining markets. They just couldn't engage in that super easily on Robin Hood. But just recently, we've launched futures. And, you know, as we shared, futures had a very, very significant growth in April with over four point five million contracts traded. Outright contracts we've rolled out an amazing experience for multi-leg options trading on mobile the side-by-side chain Which will make it easier for advanced traders to to engage in the multi-leg strategies and Robin Hood legend Continues to grow and get better. So now we have Multiple mechanisms for these active traders to engage no matter what the the market environment is in so Even though we're diversifying the business with nine business lines of over 100 million and we're getting less reliant upon trading in the revenue mix, even within trading, it's becoming more resilient. So I think we're very excited about that, and there's still more to come.

Great. Thank you, Jason. Thank you, Vlad. The next question is from Dan Doloff from Mizuho.

Hey, guys. Hey, Jason. Hey, Vlad. Great quarter as always. Very impressive. You know, really quick, looks like Robinhood Gold is doing really, really well. And hopefully I didn't miss and it was already addressed. But, you know, this seems to be growing way faster than we had expected. Like, you know, what should we be thinking about in terms of, like, the trajectory of the growth here? Because it seems to be, I think you had 550,000 quarter over quarter increase.

um this quarter so maybe just some color on like how big it could be and just the the velocity there which seems to be very impressive thank you yeah um i'll maybe i'll share some some higher level thoughts jason feel free to add in um yeah our our aspiration i already think robin hood gold is the best deal in financial services But I think the aspiration is to actually make it on par with the best membership loyalty programs out there. So we're not just looking at financial services as a benchmark. And in reality, these types of products are, until we came along, relatively unique in our industry. But we're looking at things like the Costco membership. Amazon Prime is an inspiration. And we're really sort of like students of this. And I think that the improvements that we've made in day one and Q1 attach raid, which have been tremendous, are just the beginning. I think that when you keep hearing. how uh crazy high of a value gold is and uh why we don't raise the price not just from you know analysts but also customers uh we i think i think we feel very good we're on the right track and you know credit card is continuing to roll out that's in the relatively early stages banking which is going to be a gold uh only product um that's looking really really good so As far as we can see, the gold roadmap is looking very solid.

Great. All right. The next question is from Devin Ryan at Citizens.

Hey, Vlad. Hey, Jason. How are you? Hey, Devin. I want to ask a question on crypto. Specifically, you've seen a little bit of a pullback, record fourth quarter, and we know that was kind of particularly elevated. But we'd love to just get a little bit of color from what you're seeing or hearing from customers there, because it's still very active. And I know you're going to have the update in June, so I don't want to completely front run it. But at the same time, I'm curious kind of the level of urgency to do more as this industry is getting unlocked. We're hearing more about kind of a race on stable coins. And so just love to kind of get a sense of how hard you guys are pushing there. And then also just the engagement from customers, just given that we're off the highs a little bit. Thanks.

Yeah, yeah. So, I mean, crypto had an awesome quarter. You know, we had about $260 million in revenue for the quarter, which was the second highest quarter in recent years. You know, last quarter, obviously, was higher than that. You know, it's going to go up and down in terms of trading volumes. But what we like to look at is market share. And if industry volumes are going down, but market share is going up for Robin Hood, and we're continuing to unlock and add more selection and add more products, we feel like we are – We're doing very, very, very well. So the team has been cranking. There have been a slew of improvements, both for traders and, you know, coming down the pike. But more selection, smart exchange routing. And, you know, the team's been executing a lot and there's so much to do. So we're excited for the June event. But I'd also tell you. We're diversifying the business outside of the crypto business, which will make us less reliant on crypto transaction volumes. But also within crypto, there's going to be diversification over time. So crypto itself will diversify and be less reliant on transaction volumes in the future.

Great. Thanks, Vlad. The next question is from Roy at Crossroads.

Roy. Hi, guys. Thanks for taking my question. I really enjoyed getting that early look at Robinhood Strategies and seeing what that platform is about and what you guys have been building. And I'm curious if you could give us any early read on that product as far as how it's being approached by customers, how many are actually looking at that.

Yeah, yeah, absolutely. So we shared earlier over 40,000 customers already, over 100 million in assets on strategies. I'm sure you've seen, you know, some of the engagement on social customers sharing their portfolios and talking about how despite sort of like the volatility of of the times we're in. The product's been holding up very, very well, so it's continuing to grow. We're adding more and more features based on demand, but early read has been tremendously positive from the customers that have it.

Thanks, Vlad. The next question is from Patrick Moley at Piper.

Yeah, good evening. Thanks for taking the question. So I wanted to touch on the futures offering again. You mentioned that you've seen four and a half million contracts traded in April. So it sounds like that's picking up Pretty nicely. So just curious where that volume is coming from. Is that existing customers? Are you finding that, you know, you're winning customers from other brokerage platforms there? And then any specific commentary that you can give on, you know, whether they're specific products or specific asset classes that you're finding your customers are migrating to. Thanks.

Yeah, yeah. So I think it's a little bit early to give you sort of like the full read, but we're seeing good signs of these volumes being incremental, actually. And the reason we can tell is we look at a lot of our futures traders. They also are trading equities and other assets. And you're actually seeing the power of futures. having multiple assets in one platform shine through there. And really, the thing that futures allows customers to do, easy ability to take short positions, which we still don't have equity shorting. While that's coming, it's sort of an outlet for that type of advanced systematic trading. We have the latter, and we also have those markets trading around the clock. So it's really opening up new behaviors and new styles of trading for our active traders. So that's, I think, why it's seen such good adoption. Plus the product experience that the team, the Futures team has built, they've done a really nice job, particularly on the mobile ladder. And there's more to do. Futures on Legend, for example, and making it available also to outside the U.S. as we continue to expand there.

Great. The next question is from Craig Siegenthaler at Bank of America.

Craig Siegenthaler Thanks. Good afternoon, everyone. So, my question is on Cortex. Are you going to charge for this product or is it offered or will it be offered for free to your Gold subscribers? And is the launch plan towards the end of the year for Q25?

David Morgan For Cortex?

Craig Siegenthaler Yeah.

Yeah, I think we'd like to get it a little bit before then. Teams have been working hard to get that out. And Cortex is what you saw announced in the Lost City of Gold events just at the beginning. So we announced Cortex for Stock Digest that will help customers answer the question of what's going on with the stock. also trade builder which will help customers execute on an options trading strategy given a Viewpoint and in a selection of a particular stock and it'll be for gold subscribers So right now no plans to charge additional fee. We want to give this technology to our gold customers and you should see it actually permeating the entire Robin Hood experience. So this is just the start, but we're already thinking about how to integrate it more deeply into flows for active traders across different platforms. And also we're continuing to make progress improving the operations of the company and also the customer service through AI. So while maybe that's less overt, it's incredibly powerful because it gives customers resolution, really effective resolution whenever they run into issues.

Great. The next question is from James Yarrow at Goldman Sachs.

Good afternoon, and thanks for taking my question. So, Vlad, I want to ask a longer-term crypto one for you. We've now seen all three U.S. banking regulators shift their posture to allow them to participate in the crypto ecosystem. What role do you expect U.S. banks to play across both retail and wealth versus institutional crypto? And what does this mean for competition and pricing in the U.S. crypto markets?

Yeah, I would just put out there, I like our positioning. It's always hard to speculate on what, you know, competitors may or may not do before they have products in market. You know, we're focused on driving innovation here. So obviously we've done well on the trading side. We think crypto is interesting as a foundational technology that could actually improve a wide variety of financial services, not just spot crypto trading. So we think we're just in the early innings of having this technology permeate the financial system. And, you know, we're excited to see what not just we bring to market, but what others can do partnering with us and just independently as well.

I think as more competitors enter the market, it makes crypto more mainstream, which makes the market bigger. And I think we've been demonstrating our ability to take market share. So I really like our competitive position.

Thank you. The next question is from Amit at Amit is Investing.

Hey, Vlad. Hey, Jason. Congrats again on a great quarter. My question here is on the promotion you guys ran for the 2% match in March. Jason, I know you said you've loved the unit economics on these matches. Can you give us a little bit of insight on the types of customers you brought over in March and if you think the 2% match is sustainable to continue bringing over more of the wealthier clients? Thanks, guys.

You bet. So first of all, incredible engagement by customers, record level of net deposits. The promotions were not the majority of that. In fact, they were, you know, in Q1, less than 15%. Customers love it. We love it. And you're right, Amit, I love the economics of it. The payback periods are really attractive, consistently below, you know, across all of our promotions, below the clawback periods. on that. In terms of the kinds of customers that we're getting, we're getting large customers. The average customer transfer per user was $90,000 overall. So we're getting large customers. And then what's really interesting is for taxable accounts, because we had taxable and non-taxable promotions, for taxable accounts it was double that. So over $180,000 average ACAT transfer in for the promotion. So we really love these promotions. We like the customers that we're getting, and they tend to have larger balances.

Thanks, Jason. The next question is from Matt O'Neill at FT Partners.

Yeah, thanks so much for taking my question. I joined a little bit late, so apologies if this has already been discussed. But I was just curious around crypto pricing. It seems like things are moving in the direction that they have been for a number of quarters now. Maybe you could just discuss kind of where that stands as far as the experimentation that continues, as well as I believe there's some further experimentation going on with volume-based pricing. Thanks.

You want to hit that, Jason?

Sure. I mean, we're continuing to experiment. We've been seeing the take rates come up sequentially for several quarters now. What I'd say is that when we look at take rates for crypto for the month of April— It's in a similar zone to where we were at in Q1. I do think the big opportunity for us on experimenting is tiered pricing. While Robinhood has really attractive pricing on average, I think that there's a big opportunity for us for the highest volume traders of crypto to get a better price from Robinhood, and that's what we're really looking at. experimenting with. And, you know, we like what we're seeing so far, but we're still pretty early in those experiments.

All right. Thanks, Jason. The next question is from Brian Bedell at Deutsche Bank.

Thanks. Good afternoon, guys. Maybe just going back to the net deposits in March and the continued traction in April and the actual active trader mix, within those net deposits. So you talked about the $180,000 average balance on the taxable side. Either Jason or Vlad, can you talk about what you're seeing from active traders coming into the complex and the usage on Legend? I think the last time you quoted that was about a $50 million run rate. I don't know if there's an update to that. And maybe just talk about the plans for Legend as we roll out through the year.

Maybe I'll start, Vlad, and then you can kind of fill in. So last quarter we said $50 million ARR. We didn't update it this quarter. We'll just update that periodically. But I can tell you that we've seen strong growth sequentially in volumes through Legend as active traders continue to adopt and engage with the product and as we continue to Legend. One thing that's really nice is that when we look at incrementality, the vast majority of the volumes that are coming through Legend are incrementals. So that's super encouraging.

Yeah, and in terms of roadmap for Legend throughout the year, rounding out the feature set. So futures on Legend is oft requested. Customers want to see the latter, which they love on mobile on Legend as well. And then continuing to refine. and improve the active trader experience and also the live streamer experience. So we've added a bunch of new widgets, snapshot to make live streaming on legend better and better. So the velocity.