Robinhood Markets, Inc. Q1 FY2025 earnings call

• Product velocity across three focus areas: building the top platform for active traders, achieving number one wallet share for the next generation, and constructing the number one global financial ecosystem. • Launched futures and prediction markets in Q1; futures saw strong acceleration with over 4.5 million contracts traded in April alone, and prediction markets had over 1 billion contracts in six months. • Robinhood Legend underwent improvements, including speed upgrades, addition of asset classes like crypto and index options, support for joint accounts, etc., driving incremental volume. • At the Lost City of Gold event, three new products were launched: Robinhood Strategies (over 40,000 customers, over $100 million in assets), Robinhood Cortex, and Robinhood Banking. • Robinhood Gold cardholders doubled to 200,000 in recent weeks. • Retirement assets grew to $16 billion, a 20% increase from the start of the year; the acquisition of TradePMR added $40 billion of platform assets. • Continued to enhance the U.K. brokerage offering and is working on launching in Asia; the Bitstamp acquisition is on track to close mid-year. • Revenue grew 50% year-over-year, EPS more than doubled, adjusted EBITDA margin expanded by 11 points from the previous year, and revenues reached $3.3 billion over the past 12 months with adjusted EBITDA of $1.7 billion.

Revenue increased 50% year-over-year. Trading volumes saw double-digit growth across all categories, with record options volume in the quarter. Net deposits reached a record $18 billion. Robinhood Gold subscribers nearly doubled to $3.3 million in April. Retirement assets rose to $16 billion, a 20% increase from the start of the year. The acquisition of TradePMR brought over $40 billion of platform assets. Futures had strong growth, with over 4.5 million contracts traded in April alone. Prediction markets had over 1 billion contracts in the last six months. Robinhood Strategies had over 40,000 customers and over $100 million in assets. International customers exceeded 150,000 and continued to grow. Interest-earning assets and securities lending activity expanded, and margin balances were $8.4 billion, up 2x from the previous year.

• In Q2, April net deposits were around $6.5 billion, equities trading was at a four-year high, options were in the all-time high zone, crypto trading was north of $8 billion, and margin balances were $8.4 billion, up 2x from the previous year. • The full-year outlook for adjusted OpEx and SBC was updated to $2.085 billion to $2.185 billion, including approximately $85 million of costs from TradePMR in 2025. • The share repurchase program has a $1.5 billion authorization, with over $650 million deployed and the remaining approximately $800 million expected to be deployed over the next two years.

• Actual results could differ significantly from current expectations. • Regulatory developments that could cause differences, which are described in the press release, earnings presentation, and SEC filings.

Q: What is Robinhood doing to accelerate credit cards and checking accounts to their gold members?

A: Jason stated that they have been studying customer behavior, cardholders grew from 100,000 to over 200,000 in Q1 and plan to continue increasing; Vlad mentioned that Robinhood Banking was announced, is being tested well, and is set to roll out to the public in Q3.

Q: When will users be able to invest in private companies such as SpaceX?

A: Vlad said it is a top policy priority, requiring comprehensive security legislation and a rethinking of the accredited investor rules, and progress is being made in discussions.

Q: When will Robinhood offer 401(k) plans to businesses?

A: Vlad said the B2B opportunity is part of the 10-year arc; in the near term, focus is on integrating the TradePMR team and technology, and in the long term, 401(k) is seen as a significant opportunity.

Q: Health of retail customer, net new account openings and deposit sources?

A: Jason said there was strong engagement across April, net deposits were diverse, coming from both existing and new customers, with Robinhood Gold and new products contributing.

Q: Robinhood Gold growth trajectory?

A: Vlad said the aspiration is to make Robinhood Gold on par with top membership loyalty programs; the Gold roadmap is solid with the credit card rollout in the early stages and banking, a Gold-only product, looking very good.

Q: Crypto pullback, customer engagement, urgency?

A: Vlad said crypto had a strong quarter, market share is important, and the team is working on improvements while diversifying the business outside of crypto.

Q: Robinhood Strategies customer feedback?

A: Vlad said there are over 40,000 customers, over $100 million in assets, and positive feedback from customers.

Q: Futures borrowing source and customer migration?

A: Vlad said volumes are incremental, futures allow short positions, opening new trading behaviors, and the team has built a good product experience.

Q: Cortex pricing and launch?

A: Vlad said Cortex is for Gold subscribers, no additional fee is planned, and the team is working to launch it.

Q: U.S. banks in crypto ecosystem role?

A: Vlad said the focus is on innovation, and crypto is seen as a foundational technology; Jason said more competitors make the market bigger, and Robinhood can gain market share.

Q: March 2% match promotion customers?

A: Jason said the average taxable account transfer was $180,000, involving large customers, and the unit economics are attractive.

Q: Crypto pricing experimentation?

A: Jason said experiments are continuing, with tiered pricing for high-volume traders, and they are still in the early stages of these experiments.

Q: Robinhood Legend ARR and plans?

A: Jason said there was strong sequential growth in volumes through Legend, and plans include rounding out the feature set, adding futures, and refining the active trader experience.

Q: Credit loss provisioning?

A: Jason said delinquency rates are low, customer behavior for the credit card is good, and provisioning is expected to increase gradually as cards are rolled out.

Q: Contribution margin with new products?

A: Jason said each product has different economics, the focus is on increasing EPS and FCF per share, and it is well positioned as a technology company.

Q: Prediction markets trading and contracts?

A: Vlad said there were over $1 billion contracts in six months, approximately half related to sports, and the product will continue to be improved with vast potential at an early stage.

Q: New products attracting new users?

A: Vlad said there is a mix of channels, a large installed base, and the credit card rollout has a low customer acquisition cost; Jason said Robinhood Gold is important for cross-selling, with Gold customers more likely to adopt other products.

Q: Crypto mark exchange routing adoption?

A: Vlad said it is in the early stages, experiments are ongoing, and results are good for active traders, with the goal of providing a better experience with more activity.

Q: TradePMR cost base?

A: Jason said $85 million includes deal costs, and there is an opportunity to reduce it.

Q: Crypto staking regulatory update?

A: Vlad said work is being done towards clarity on listing crypto asset securities, which is a primary policy objective.

Q: Time spent on app and users minutes?

A: Vlad said the focus is on a great product experience, teams are being built out, and Cortex will make the app more engaging.

Q: Prediction market participants and velocity?

A: Vlad said there is broad appeal, different behaviors among customers, and wide dispersion in trading activity.

Q: NII guidance and interest rate sensitivity?

A: Jason said specific NII guidance was not provided; a 25 basis point cut would have a ~$50 million headwind, but interest-earning assets are growing and there is an offset from trading.

Q: 24/5 markets traction and success?

A: Vlad said the 24/7 market is continuing to grow, and it is expected to become standard in five years as table stakes for active trader platforms.

Q: Bitstamp acquisition impact?

A: Vlad said they are excited about Bitstamp, which has a global presence and offers institutional and international opportunities, with the goal of providing customers with choice and a great execution experience.