Q2 2024 Robinhood Markets Inc Earnings Call

Thank you for standing by and welcome to Robinhood's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session.

Operator: for earning its conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, please press star 11 again. I would now like to hand the call over to Chris Koegel, VP of Corporate FP&A and Investor Relations. Please go ahead.

To ask a question during the session, you will need to press star 11 on your telephone.

To remove yourself from the queue, please press star 1 1 again.

chris kgego: I would now like to hand the call over to Chris Koegel, VP of Corporate FP&A and Investor Relations. Please, go ahead.

Chris Koegel: Thank you, Lateef, and thank you to everyone for joining Robinhood's Q2 earnings call. With us today are CEO and co-founder Vlad Tenev and CFO Jason Warnick.

Chris Kgego: Thank you, Lateef, and thank you to everyone for joining Robinhood's Q2 earnings call. With us today are CEO and co-founder, Vlad Tenev, and CFO , Jason Warnick.

Chris Koegel: Before getting started, I just want to remind you that today's call will contain forward-looking statements. The 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 results we consider most comparable can be found in the earnings presentation. With that, I will turn it over to Blythe.

Speaker Change: Before getting started, I just want to remind you that today's call will contain forward-looking statements.

Speaker Change: Actual results can differ materially from our expectations and we have no duty to provide updates unless legally required.

Speaker Change: 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.

Unknown Executive: In 2024, earnings conference call. At this time, all participants aren't able to listen only mode.

Today's discussion will also include non-GAAP financial measures. Reconciliations to the GAAP results we consider most comparable can be found in the earnings presentation.

Unknown Executive: After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, please press star 1-1 again.

Blythe: Thanks, Chris. Hi everyone. Let me start with the three things Robinhood is focused on. Number one, winning the active trader market. Number two, increasing wallet share with our customers. And number three, expanding internationally. We're making progress across all three of these, and in Q2, we delivered another quarter of strong results and several financial records. More specifically, our retail trading market share continued to increase, leading to year-over-year growth in equity, option, and crypto volumes. Net deposits were a new record of $13 billion in the quarter, translating to a 41% annualized growth rate.

With that, let me turn it over to Vlad.

Vlad: Thanks, Chris. Hi, everyone. Let me start with the three things Robinhood is focused on. Number one, winning the active trader market. Number two, increasing WalletShare with our customers. And number three, expanding internationally.

Chris Koegel: I would now like to hand the call over to Chris Koegel, VP of Corporate FPNA and Investor Relations. Please go ahead.

Vlad: We're making progress across all three of these, and in Q2 we delivered another quarter of strong outcomes and several financial records.

Vladimir Tenev: Thank you, Lateef, and thank you to everyone for joining Robinhood's Q2 earnings call. With us today, our CEO and co-founder, Vlad Tenev and CFO, Jason Warnick. Before getting started, I just want to remind you that today's call will contain forward-looking statements.

Speaker Change: More specifically, our retail trading market share continued to increase, leading to year-over-year growth in equity, option, and crypto volumes.

Speaker Change: Net deposits were a new record of $13 billion in the quarter, translating to a 41% annualized growth rate. With $11 billion in Q1, we've already exceeded our long-term annual target of 20% plus, and we're only halfway through the year.

Vladimir Tenev: 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 development, requirements 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.robanhood.com. Today's discussion will also include non-gap financial measures. Reconciliation to the gap results we consider most comparable can be found in the earnings presentation.

Blythe: With $11 billion in Q1, we've already exceeded our long-term annual target of 20%-plus, and we're only halfway through the year. Gold subscribers reached a record 2 million, which is over 60% year-over-year growth, and now over 8% of funded customers are gold members. These results, combined with continued expense discipline, drove 40% year-over-year revenue growth to a record $682 million, as well as record EPS of 21 cent

Vlad: Gold subscribers reached a record 2 million, which is over 60% year-over-year growth, and now over 8% of funded customers are gold members.

Speaker Change: And these results, combined with continued expense discipline, drove 40% year-over-year revenue growth to a record $682 million, as well as record EPS of $0.21.

Vladimir Tenev: With that, let me turn it over to Vlad. Thanks, Chris. Hi, everyone.

Blythe: There's still so much to do, so we're not slowing down. On the active trader front, we've been consistently growing our market share among equities and options. But until recently, one area where, candidly, our progress has not been so great is margin. And this is a huge opportunity for us, as brokerage incumbents generate far more revenue on margin than on trading. In particular, we were not getting much adoption from customers with larger margin balances because our rates were not very competitive.

Vlad: There's still so much to do so we're not slowing down on the active trader front

Vladimir Tenev: Let me start with the three things Robinhood is focused on. Number one, winning the active trader market. Number two, increasing wallet share with our customers. And number three, expanding internationally. We're making progress across all three of these.

Speaker Change: We've been consistently growing our market share among equities and options.

Speaker Change: But, until recently, one area where, candidly, our progress has not been so great is margin.

Vladimir Tenev: And in Q2, we delivered another quarter of strong outcomes and several financial records. More specifically, our retail trading market share continue to increase. We're leading to year-over-year growth and equity option and crypto volumes. Net deposits were a new record of 13 billion in the quarter, translating to a 41% annualized growth rate. With 11 billion in Q1, we've already exceeded our long-term annual target of 20% plus. And we're only halfway through the year. Gold subscribers reached a record 2 million, which is over 60% year-over-year growth. And now, over 8% of funded customers are gold numbers.

Vlad: And this is a huge opportunity for us as brokerage incumbents generate far more revenue on margin than even trading.

Vlad: In particular, we were not getting much adoption from customers with larger margin balances because our rates were not very competitive.

Blythe: So we introduced industry-leading rates for active traders in May, and this, coupled with the continued improvements we're making to the account transfer flow, led margin balances to grow by over 20% in the last five weeks of the quarter to a two-year high of $5 billion. Now 75% of that growth came from customers with margin balances over $100K, so we're really pleased with the progress we're making on margin with our large active customers. And we're continuing to see strong margin balance growth in Q3. Finally, we're nowhere close to being done building for active traders.

Vlad: So we introduced industry-leading rates for active traders in May, and this, coupled with the continued improvements we're making to the accounts transfers flow, led margin balances to grow by over 20% in the last five weeks of the quarter to a two-year high of $5 billion.

Vlad: Now, 75% of that growth came from customers with margin balances over $100K. So we're really pleased with the progress we're making on margin with our large active customers. And we're continuing to see strong margin balance growth in Q3.

Vladimir Tenev: And these results, combined with continued expense discipline, drove 40% year-over-year revenue growth to a record 682 million as well as record EPS of 21 cents. There's still so much to do, so we're not slowing down. On the active trader front, we've been consistently growing our market share among equities and options. But until recently, one area where candidly our progress has not been so great is margin. And this is a huge opportunity for us as brokerage incumbents generate far more revenue on margin than even trading.

Blythe: There's plenty more coming, including our inaugural Hood Summit in October. We got a lot of positive feedback from our GOLD event in March, so we decided to host a special event just for our active traders. And this will be much bigger than the GOLD event. We'll be launching some awesome new products that we can't wait to tell you about. Now, I'll turn it over to Jason to review our financial results, and then I'll offer some additional thoughts. Thanks. Thank you.

Vlad: Finally, we're nowhere close to being done building for active traders. There's plenty more coming, including our inaugural Hood Summit in October .

Vlad: we have a lot of positive feedback from our gold event in march so we decided to host a special event just for our active traders and this will be much bigger than the gold event wewillll be launching some awesome new products that we can't wait to tell you about

Vlad: Now, let me turn it over to Jason to review our financial results, and then I'll offer some additional thoughts.

Jason Warnick: Thanks, Vlad. It's good to speak with everyone today. As we discussed last quarter, we are focused on driving another year of profitable growth. And in Q2, we continue to make good progress. We drove new highs in revenues, adjusted EBITDA, net income, and GAAP EPS in Q2. Compared to a year ago, total net revenues grew 40% to $682 million, and adjusted EBITDA roughly doubled to $301 million. Incremental margins were 77%, and adjusted EBITDA margins expanded by 13 points to 44%.

Vladimir Tenev: In particular, we were not getting much adoption from customers with larger margin balances because our rates were not very competitive. So we introduced industry-leading rates for active traders in May. And this, coupled with the continued improvements we're making to the accounts transfers below, led margin balances to grow by over 20% in the last five weeks of the quarter to a 2-year high 5 billion. Now, 75% of that growth came from customers with margin balances over 100K. So we're really pleased with the progress we're making on margin with our large active customers. And we're continuing to see strong margin balance growth in Q3.

Jason Warnick: Thanks Vlad, it's good to speak with everyone today. As we discussed last quarter, we are focused on driving another year of profitable growth and in Q2 we continue to make good progress.

Jason Warnick: We drove new highs in revenues, adjusted EBITDA, net income, and GAAP EPS in Q2.

Jason: Compared to a year ago, total net revenues grew 40% to $682 million, adjusted EBITDA roughly doubled to $301 million, incremental margins were 77%,

Vlad: Adjusted EBITDA margins expanded by 13 points to 44% as we make progress over time towards the 50% plus levels comparable to what we see from incumbent brokerage firms.

Jason Warnick: As we make progress over time towards the 50% plus levels comparable to what we see from incumbent brokerages. And net income was $188 million, or $0.21 per share, up seven times from a year ago. And taking a look at the past year, it's great to see how a number of strong quarters came together. For the last 12 months, revenues were over $2.2 billion, and adjusted EBITDA was over $800 million. Both new highs.

Vladimir Tenev: Finally, we're nowhere close to being done building for active traders. There's plenty more coming, including our inaugural hood summit in October. We have a lot of positive feedback from our gold event in March, so we decided to host a special event just for our active traders, and this will be much bigger than the gold event. We'll be launching some awesome new products that we can't wait to tell you about.

Vlad: And net income was $188 million or $0.21 per share, up seven times from a year ago.

Vlad: And taking a look at the past year, it's great to see how a number of strong quarters came together. For the last 12 months, revenues were over $2.2 billion and adjusted EBITDA was over $800 million, both new highs.

Jason Warnick: Now let me turn it over to Jason to review our financial results. And then I'll offer some additional thoughts. Thanks, lad.

Jason Warnick: We're pleased with these results as we aim to continue delivering profitable growth in 2020. Now, let's move to Q2 business results. Assets Under Custody finished Q2 at a record $140 billion, up 57% year over year.

Jason Warnick: We're pleased with these results as we aim to continue delivering profitable growth in 2024.

Jason Warnick: It's good to speak with everyone today. As we discuss last quarter, we are focused on driving another year of profitable growth, and in Q2, we continue to make good progress. We drove new highs and revenues, adjusted EBITDA, net income, and GAP EPS in Q2. Compared to a year ago, total net revenues grew 40% to 682 million. Adjusted EBITDA, roughly doubled to 301 million, incremental margins were 77%. Adjusted EBITDA margins expanded by 13 points to 44%.

Jason Warnick: As we make progress over time towards the 50% plus levels, comparable to what we see from incumbent brokerage firms. And net income was 188 million, or 21 cents per share, up seven times from a year ago. And taking a look at the past year, it's great to see how a number of strong quarters came together. For the last 12 months, revenues were over 2.2 billion, and adjusted EBITDA was over 800 million, both new highs.

Vlad: Now let's move to Q2 business results. Assets Under Custody finished Q2 at a record $140 billion, up 57% year-over-year.

Jason Warnick: A key driver of that asset growth was record Q2 net deposits of over $13 billion, which translates to a 41% annualized growth rate. It's also great to see how assets continue to diversify. Retirement AUC was nearly $9 billion in Q2, more than doubling from last quarter. The cash sweep balances were a record $21 billion in Q2, up 76% year over year.

Jason Warnick: A key driver of that asset growth was record Q2 net deposits of over $13 billion, which translates to a 41% annualized growth rate.

Jason Warnick: It's also great to see how assets continue to diversify. Retirement AUC was nearly $9 billion in Q2, more than doubling from last quarter. And cash suite balances were a record $21 billion in Q2, up 76% year over year.

Jason Warnick: We're also driving growth in Robinhood Gold, which continues to deliver value to both our customers and our shareholders. As a reminder, gold subscribers, on average, are seven times larger than our customers overall, have been growing net deposits twice as fast, and adopt products at higher rates, leading to gold ARPU that is over seven times our customer average. In Q2, we grew gold subscribers to 2 million, up over 60% year over year. This represents an adoption rate of 8.2% of customers, up from 5.3% a year ago.

Jason Warnick: We're also driving growth in Robinhood Gold, which continues to deliver value to both our customers and our shareholders.

Jason Warnick: As a reminder, gold subscribers, on average, are seven times larger than our customers overall, have been growing net deposits twice as fast, and adopt products at higher rates, leading to gold ARPU that is over seven times our customer average.

Jason Warnick: In Q2, we grew Gold subscribers to 2 million, up over 60% year-over-year. This represents an adoption rate of 8.2% of customers, up from 5.3% a year ago.

Jason Warnick: We're pleased with these results as we aim to continue delivering profitable growth in 2024.

Jason Warnick: Now let's move to Q2 business results. Asset's under custody finished Q2 at a record 140 billion, up 57% year over year. A key driver of that asset growth was record Q2 net deposits of over 13 billion, which translates to a 41% annualized growth rate. It's also great to see how assets continue to diversify. Retirement AUC was nearly 9 billion in Q2 more than doubling from last quarter. And cash sweep balances were a record 21 billion in Q2 of 76% year over year.

Jason Warnick: We are excited to see continued momentum in our gold program, which now includes annualized recurring subscription revenue of over $100 million. Now, let's turn to our financial results, starting with Q2 revenues compared to last quarter. Transaction-based revenues were roughly flat as equities and options increased while crypto revenues declined with industry volume. Net interest revenues grew due to higher securities lending activity and higher interest-earning asset balances, and other revenues increased driven by proxy seasonality and continued growth in Robinhood gold. Turning to second quarter expenses, combined adjusted OPEX and SBC was $493 million in Q2.

Jason Warnick: We are excited to see continued momentum in our gold program, which now includes annualized recurring subscription revenue of over $100 million.

Jason Warnick: This includes increased employee bonus accruals, given the strong start we've had to the year, as well as some costs related to our two recently announced acquisitions, Bitstamp and Pluto. All in, through the first half of the year, our expenses are on track with the middle of our full year outlook range of $1.85 to $1.95 billion. So we're keeping our outlook unchanged, and we'll continue actively managing our expenses based on the returns we see on our growth investments, as well as the macro environment.

Speaker Change: Now let's turn to our financial results, starting with Q2 revenues compared to last quarter. Transaction-based revenues were roughly flat as equities and options increased while crypto revenues declined with industry volumes.

Jason Warnick: Net interest revenues grew due to higher securities lending activity and higher interest earning asset balances, and other revenues increased driven by proxy seasonality and continued growth in Robinhood Gold.

Jason Warnick: We're also driving growth in Robinhood Gold, which continues to deliver value to both our customers and our shareholders. As a reminder, gold subscribers on average are seven times larger than our customers overall, have been growing net deposits twice as fast and adopt products at higher rates, leading to gold R2 that is over seven times our customer average. In Q2, we grew gold subscribers to 2 million, up over 60% year over year. This represents an adoption rate of 8.2% of customers, up from 5.3% a year ago. We are excited to see continued momentum in our gold program, which now includes annualized recurring subscription revenue of over 100 million.

Jason Warnick: Turning to second quarter expenses, combined adjusted OPEX and SBC was $493 million in Q2.

Jason Warnick: this includes increased employee bonus accruals given the strong start we've had to the year as well as some costs related to our two recently announced acquisitions bidstamp and pluto

Jason Warnick: all in through the first half of the year our expenses are on ack with the middle of our full year outlook range of one point eight five to one point nine five billion

Jason Warnick: So, we're keeping our outlook unchanged and we'll continue actively managing our expenses based on the returns we see on our growth investments, as well as the macro environment.

Jason Warnick: Before I pass the call back to Vlad, I want to share some thoughts about how we are thinking about capital deployment. When we think about capital allocation, our primary objective is to maximize earnings and free cash flow per share over time.

Jason Warnick: Now let's turn to our financial results, starting with Q2 revenues compared to last quarter. Transaction based revenues were roughly flat as equities and options increased while crypto revenues declined with industry volume. Williams. Ned Interest Revenue's grew due to higher securities lending activity and higher interest earning asset balances, and other revenues increased driven by proxy seasonality and continued growth in Robinhood gold. Turning to second quarter expenses, combined adjusted off X and SBC was 493 million in Q2.

Speaker Change: Before I pass the call back to Vlad, I want to share some perspectives about how we are thinking about capital deployment.

Speaker Change: When we think about capital allocation, our primary objective is to maximize earnings and free cash flow per share over time.

Jason Warnick: We do this by allocating capital to organic growth and M&A to drive earnings and free cash flow higher. And we complement that with share repurchases that can increase the value per share. And in Q2, we made good progress. First, we continue to invest in organic growth in areas like product development, marketing, and customer match. We have a lot of momentum, and I like the economics we're driving. Second, we announced two acquisitions.

Speaker Change: We do this by allocating capital to organic growth and M&A to drive earnings and free cash flow higher. And we complement that with share repurchases that can increase the value per share.

Speaker Change: And in Q2, we made good progress.

Jason Warnick: This includes increased employee bonus accruals given the strong start we've had to the year, as well as some costs related to our two recently announced acquisitions, Bidstamp and Pluto. All in, through the first half of the year, our expenses are on track with the middle of our full year outlook range at 1.85 to 1.95 billion. So we're keeping our outlook unchanged and we'll continue actively managing our expenses based on the returns we see on our growth investments, as well as the macro environment.

Speaker Change: First, we continue to invest in organic growth in areas like product development, marketing, and customer matches.

Speaker Change: we have a lot of momentum and i like the economics we're driving

Jason Warnick: In June, we signed an agreement to acquire Bitstamp, a global crypto exchange. We believe it will accelerate our crypto roadmap, enabling us to serve a broader user base, enhance our capabilities, and provide additional liquidity for crypto trading. Additionally, we acquired Pluto to help us move even faster in AI and advisory.

Speaker Change: Second, we announced two acquisitions. In June , we signed an agreement to acquire BidStamp, a global crypto exchange. We believe it will accelerate our crypto roadmap, enabling us to serve a broader user base, enhance our capabilities, and provide additional liquidity for crypto trading.

Speaker Change: Additionally we acquired Pluto to help us move even faster in AI and advisory. We're excited to share more as we make progress here.

Jason Warnick: We're excited to share more as we make progress here. And finally, we announced a one billion share repurchase authorization, which we started implementing in July and currently expect to complete over a two to three year period. This timeline could vary depending on market conditions and other capital allocation opportunities. Looking ahead, we believe we are well positioned to drive higher earnings and free cash flow per share over time, driven by our 20% plus debt deposit growth, naturally hedged business model, and 90% fixed cost base.

Speaker Change: And finally, we announced a one billion share repurchase authorization, which we started executing in July and currently expect to execute over a two to three year period. This timeline could vary depending on market conditions and other capital allocation opportunities.

Jason Warnick: Before I pass the call back to Vlad, I want to share some perspectives about how we are thinking about capital deployment. When we think about capital allocation, our primary objective is to maximize earnings and free cash flow per share over time. We do this by allocating capital to organic growth and M&A to drive earnings and free cash flow higher, and we complement that with share repurchases that can increase the value per share. And in Q2, we made good progress. First, we continued to invest in organic growth in areas like product development, marketing and customer matches. We have a lot of momentum and I like the economics we're driving.

Speaker Change: Looking ahead, we believe we are well positioned to drive higher earnings and free cash flow per share over time, driven by our 20% plus debt deposit growth, naturally hedged business model, and 90% fixed cost base.

Jason Warnick: And we have a lot of momentum entering the second half of the year, as our business is having a great start to Q3. For context, June was a strong month, with nearly record options volume, close to a 24-month high for equities volume, and over $4 billion of net deposits. And in July, trading volumes were more than 20% higher than June across equities, options, and crypto, and net deposits were again over $4 billion. While August is just getting started, so far, it looks a lot like July, including over 1 billion net deposits in the first week of August.

Speaker Change: And we have a lot of momentum entering the second half of the year as our business is having a great start to Q3.

Speaker Change: As context, June was a strong month, with nearly record options volume, close to a 24-month high for equities volume, and over $4 billion of net deposits.

Jason Warnick: Second, we announced two acquisitions. In June, we signed an agreement to acquire Bidstamp, a global crypto exchange. We believe it will accelerate our crypto roadmap, enabling us to serve a broader user base, enhance our capabilities, and provide additional liquidity for crypto trading. Additionally, we acquired Pluto to help us move even faster in AI and advisory. We're excited to share more as we make progress here.

Speaker Change: and in july trading volumes were more than twenty percent higher than june across equities options and crypto and net deposits were again over four billion

Speaker Change: While August is just getting started, so far it looks a lot like July , including over 1 billion of net deposits in the first week of August .

Jason Warnick: And finally, we announced a one billion share repurchase authorization, which we started executing in July, and currently expect to execute over a two to three year period. This timeline could vary depending on market conditions and other capital allocation opportunities. Looking ahead, we believe we are well positioned to drive higher earnings and free cash flow per share over time, driven by our 20% plus debt deposit growth, naturally hedged business model, and 90% fixed cost base.

Glenn: With that, I'll turn the call back to Glenn.

Speaker Change: With that, I'll turn the call back to Blatt.

Glenn: As I said earlier, the second part of our strategy is increasing wallet share with customers, including growing Robinhood Gold subscriptions, which hit an all-time high in Q2. And we've been busy rolling out additional value for Robinhood Gold customers, including a 1% unlimited deposit boost and a new gold credit card with 3% cash back. Now, I've talked before about how we've been seeing the flywheel accelerate, and I thought I would explain in a little bit more detail how it works. So, here it goes.

Blatt: Thanks, Jason.

Blatt: As I said earlier, the second part of our strategy is increasing wallet share with customers, including growing Robinhood Gold subscriptions, which hit an all-time high in Q2.

Speaker Change: And we've been busy rolling out additional value for Robinhood Gold customers, including a 1% unlimited deposit boost and a new gold credit card with 3% cash back.

Speaker Change: Now, I've talked before about how we've been seeing the flywheel accelerate, and I thought I would explain in a little bit more detail how it works. So here it goes.

Jason Warnick: And we have a lot of momentum entering the second half of the year as our business is having a great start to Q3. As context, June was a strong month with nearly record options volume close to a 24 month high for equities volume and over 4 billion of net deposits. And in July, trading volumes were more than 20% higher than June across equities, options, and crypto. And net deposits were again over 4 billion. While August is just getting started, so far, it looks a lot like July, including over 1 billion of net deposits in the first week of August. Yes.

Glenn: Our gold members receive industry-leading economics and a world-class customer experience across all of our products and services. This leads to double the net deposit growth and higher multi-product adoption, including retirement adoption that's five times that of average customers. And as the flywheel spins, it leads to greater customer loyalty and an ARPU that's over seven times that of our average customer. And this leads to faster gold member growth at a better ROI. The different components of the flywheel are self-reinforcing, leading to higher customer satisfaction, higher revenues, and greater diversification for our business over time.

Speaker Change: First.

Speaker Change: Our gold members receive industry-leading economics and a world-class customer experience across all of our products and services. This leads to double the net deposit growth and higher multi-product adoption, including retirement adoption that's five times that of average customers.

Speaker Change: And as the flywheel spins, it leads to greater customer loyalty and ARPU that's over seven times that of our average customer. And this leads to faster gold member growth at a better ROI.

Speaker Change: The different components of the flywheel are self-reinforcing, leading to higher customer satisfaction, higher revenues, and greater diversification for our business over time. So we had a strong Q2, and you should know our team has been working incredibly hard to deliver even more value to our customers.

Glenn: So we had a strong Q2, and you should know our team's been working incredibly hard to deliver even more value to our customers. The roadmap is full. There's so much to do. Now, we move to questions.

Vladimir Tenev: With that, I'll turn the call back to Black. Thanks, Jason. As I said earlier, the second part of our strategy is increasing wallet share with customers, including growing Robinhood gold subscriptions, which hit an all-time high in Q2, and we've been busy rolling out additional value for Robinhood gold customers, including a 1% unlimited deposit boost and a new gold credit card with 3% cash back.

Speaker Change: Roadmap is full. There's so much to do. Now let's move to questions.

Operator: Thank you, Vlad. For the Q&A session, we'll start by answering the top few shareholder questions from Say Technologies, ranked by number of votes. We passed over questions that have already been answered on this call or in prior quarters and grouped together questions that shared a common theme. After the said questions, we'll turn to live questions from our analysts. So I'll kick it off with our first question, which is, what are you rolling out the credit card for?

Speaker Change: thank you bblad for the qa session will start by answering the top to w shareholder questions from say technologies ranked by number of voeswe passed overver questions that have already been answered on this call or in prior quarters and group together questions that shair to comment teme

Vladimir Tenev: Now, I've talked before about how we've been seeing the flywheel accelerate, and I thought I would explain in a little bit more detail how it works. So here it goes. First, our gold members receive industry leading economics in a world-class customer experience across all of our products and services. This leads to double the net deposit growth and higher multi-product adoption, including retirement adoption, that's five times that of average customers. And as the flywheel spins, it leads to greater customer loyalty and RPU that's over seven times that of our average customer. And this leads to faster gold member growth at a better ROI. The different components of the flywheel are self-reinforcing, leading to higher customer satisfaction, higher revenues, and greater diversification for our business over time.

Speaker Change: After the say questions we'll turn to live questions from our analysts. So I'll kick it off with our first question from say. The first question is what are you rolling out the credit cards?

Vlad Tenev: Thank you, and thanks to Chandler the question asker. So we started rolling out the credit card a few months ago, and we recently announced that we've crossed 50,000 cardholders. And we recognize that demand for the credit card is high, and the feedback that we've gotten so far from customers is also very, very positive. People love the card. Customers love the rewards. They love everything about it, the in-app experience, the digital experience, and the card itself. The app so far has a 5.0 rating on the App Store with over 7,000 reviews.

Speaker Change: Thank you, and thanks to Chandler, the question asker.

Speaker Change: So, we started rolling out the credit card a few months ago, and we recently announced that we've crossed 50,000 cardholders.

Speaker Change: We recognize the demand for the credit card is high and the feedback that we've gotten so far from customers is also very, very positive.

Speaker Change: People love the card.

Speaker Change: Customers love the rewards. They love everything about it. The in-app experience, the digital experience, the card itself.

Vladimir Tenev: So we had a strong Q2, and you should know our team has been working incredibly hard to deliver even more value to our customers. Road map is full. There's so much to do.

Speaker Change: The app so far has a 5.0 rating on the App Store with over 7,000 reviews.

Vlad Tenev: So there's a lot of demand to roll it out faster. But to set the context, if you compare the rollout of our credit card with other successful card programs in the past, we're kind of right on track, rolling it out at the same rate roughly in year one. And these programs tend to start off a little bit more slowly as the unit economics are validated, and the customer activity around borrowing and spending is validated as well.

Unknown Executive: Now let's move to questions. Thank you, Vlad. For the Q&A session, we'll start by answering the top two shareholder questions from Say Technologies, ranked by number of votes. We passed over questions that have already been answered on this call or in prior quarters and grouped together questions that share the common theme. After the say questions, we'll turn to live questions from our analysts.

Speaker Change: So there's a lot of demand to roll it out faster. Just to set the context, if you compare the rollout of our credit card with other successful card programs in the past,

Speaker Change: We're kind of right on track, rolling it out at the same rate, roughly, in year one.

Speaker Change: and these programs tend to start off a little bit more slowly as the unit economics are validated in the customer activity around borrowing and spending is validated as well so

Vladimir Tenev: So kick it off with our first question from Say. The first question is, what are you rolling out the credit cards? Thank you. And thanks to Chandler, the question asker. So we started rolling out the credit card a few months ago, and we recently announced that we've crossed 50,000 card holders, and we recognize the demand for the credit card is high, and the feedback that we've gotten so far from customers is also very, very positive.

Vlad Tenev: So we recognize that there's a ton of demand. Part of that is also because people are seeing the card in the wild and seeing the positive reviews. And we want to fill that demand, but we're going to be prudent and make sure we do it while carefully managing the risks of any new business.

Speaker Change: We recognize that there's a ton of demand. Part of that is also because people are seeing the card in the wild and seeing the positive reviews.

Vladimir Tenev: People love the card. Customers love the rewards. They love everything about it. The in-app experience, the digital experience, the card itself. The app so far has a 5.0 rating on the app store with over 7,000 reviews. So there's a lot of demand to roll it out faster. Just to set the context, if you compare the rollout of our credit card with other successful card programs in the past, we're kind of right on track rolling it out at the same rate roughly in year one.

Speaker Change: We want to fill that demand, but we're going to be prudent and make sure we do it while carefully managing the risks of any new business.

Operator: All right. Thank you, Vlad. The next question asks, can we get more information on the AI company that you just acquired?

Speaker Change: All right. Thank you, Vlad.

Speaker Change: The next question asks, can we get more information on the AAI company that you just acquired?

Vlad Tenev: Yeah, absolutely. I'll take this one as well.

Speaker Change: Yeah, absolutely. I'll take this one as well. We're really excited about Pluto. They're an AI-powered investment research platform, and the team is really, really great.

Vlad Tenev: We're really excited about Pluto. They're an AI-powered investment research platform, and the team is really, really great. And in terms of what we plan to do with the team and the technology, we think they can help us accelerate the work we're doing, both in AI and in advisory. And we've got some really good stuff in the works there. So stay tuned.

Speaker Change: And, in terms of what we plan to do with the team and the technology, we think they can help us accelerate the work we're doing, both in AI and in advisory, and we've got some really good stuff in the works there, so stay tuned.

Operator: Alright, thank you, Vlad. And then the last question from Say: do you ever plan on releasing a desktop version of Robinhood with more in-depth chart analysis capabilities?

Vlad Tenev: Alright, thank you Vlad. And then the last question from Say, do you ever plan on releasing a desktop version of Robinhood with more in-depth chart analysis capabilities?

Vladimir Tenev: And these programs tend to start off a little bit more slowly as the unit economics are validated and the customer activity around borrowing and spending is validated as well. So we recognize that there's a ton of demand. Part of that is also because people are seeing the card in the wild and seeing the positive reviews. And we want to fill that demand, but we're going to be prudent and make sure we do it while carefully managing the risks of any new business.

Vlad Tenev: Yes, as a matter of fact, this is one of the top things that we've been focused on this year, and we've been making sure that the platform is very, very good. I've seen some demos of it, and the demos are looking great, and I think it's going to be an amazing product that customers will love. So stay tuned. We can't wait to share it with you guys.

Speaker Change: Yes, as a matter of fact, this is one of the top things that we've been focused on this year.

Speaker Change: and we've been actually...

Speaker Change: We've been actually making sure that the platform is very very good. I've seen some demos of it and the demos are looking great.

Speaker Change: And I think it's going to be an amazing product that customers will love. So stay tuned. We can't wait to share it with you guys.

Unknown Executive: Alright, thank you, Vlad.

Operator: Thanks, Vlad. That concludes our shareholder questions from SAIT Technologies. We appreciate our shareholders taking time to ask these questions of Vlad and Jason and look forward to more next quarter. Now I'll turn the call back over to Lateef to lead Q&A from our analysts. Thank you.

Vladimir Tenev: The next question asks, can we get more information on the AI company that you just required? Yeah, absolutely. I'll take this one as well.

Speaker Change: Alright, thanks Vlad. That concludes our shareholder questions from SAIT Technologies. We appreciate our shareholders taking time to ask these questions of Vlad and Jason and look forward to more next quarter. Now we'll turn the call back over to Lateef to lead Q&A from our analysts.

Vladimir Tenev: We're really excited about Pluto. They're an AI-powered investment research platform, and the team is really, really great. And in terms of what we plan to do with the team and the technology, we think they can help us accelerate the work we're doing, both in AI and in advisory. And we've got some really good stuff in the works there. So stay tuned. Alright, thank you, Vlad.

Operator: Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.

Lateef: Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone.

Speaker Change: To remove yourself from the queue, you may press star 11 again. We ask that you please limit yourself to one question and then re-queue.

Operator: We ask that you please limit yourself to one question and then resign. Please stand by while we compile the Q&A roster. Our first question comes from the line of Dan Dolev of Mizzou. Hey Vlad, hey guys.

Vladimir Tenev: And then the last question from Say, do you ever plan on releasing a desktop version of Robinhood with more in-depth chart analysis capabilities? Yes, as a matter of fact, this is one of the top things that we've been focused on this year. And we've been actually, we've been actually making sure that the platform is very, very good. I've seen some demos of it, and the demos are looking great. And I think it's going to be an amazing product that customers will love. So stay tuned. We can't wait to share it with you guys.

Speaker Change: Please stand by while we compile the Q&A roster.

Unknown Executive: Alright, thanks, Vlad.

Speaker Change: Our first question.

Speaker Change: comes from the line of Dan Dolev of Mizzou.

Unknown Executive: Yeah, yeah, I'll feel that one. And thank you, Dan.

Speaker Change: heyve l hey guys really good results here hey really amazing results here is always

Speaker Change: I want to know about all the growth you're seeing in the 24-hour markets and can you give me some color on the outage from earlier this week because we've got a lot of questions about it. Thank you and great stuff.

Unknown Executive: So about the 24 hour market, I first want to say that with this product, we're on the bleeding edge of technology in trading. This product is not commonly available with such a large instrument base for customers. And with any new product, you know, there's some, sometimes things don't go exactly right. In this particular case, the third-party ATS that we route orders to, which is called Blue Ocean ATS, had some technology issues, they couldn't handle the extreme demand this Sunday, and they had to shut down.

Speaker Change: Yeah, yeah, I'll feel that one. And thank you, Dan.

Unknown Executive: That concludes our shareholder questions from Say Technologies. We appreciate our shareholders taking time to ask these questions of Vlad and Jason, and look forward to more next quarter.

Speaker Change: So, about 24-hour market.

Speaker Change: I first want to say that with this product, we're on the bleeding edge of technology in trading. This product is not commonly available with such a large instrument base to customers. And

Unknown Executive: Now I'll turn the corner of the call back over to the Lateef to lead Q&A from our analysts. Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. We ask that you please limit yourself to one question and then recute. Please stand by while we compile the Q&A roster.

Speaker Change: With any new product, you know, there's...

Speaker Change: There's some, sometimes, you know, things don't go exactly right. In this particular case...

Speaker Change: The third-party ATS that we route orders to, which is called Blue Ocean ATS.

Dan Joseph: Our first question comes from the line of Dan Joseph of Mizzouha. Hey, Vlad. Hey, guys, really good result here. Hey, really amazing results here as always. I want to know about all the growth you're seeing in the 24 hour markets. And can you give me some color on the outage from earlier? This week because we've got a lot of questions about it. Thank you and great stuff. Yeah, yeah, I'll feel that one. And thank you, Dan.

Speaker Change: had some technology issues. They couldn't handle the extreme demand this Sunday.

Unknown Executive: And this is disappointing for customers. I mean, we've had our share of scaling pains in the past. This time, it's a third party, which is nonetheless very, very frustrating.

Speaker Change: They had to shut down, and this is disappointing for customers. I mean, we've had our share of scaling pains in the past. This time, it's a third party, which is nonetheless very, very frustrating.

Unknown Executive: But we've been working with the team over at Blue Ocean, making sure that, you know, we're being as helpful as possible in them scaling their infrastructure, helping them with testing. And we are confident that they have a testing and scaling plan in place that will allow us to release this product safely and handle a much larger load across all the symbols we offer. And I think that's planning to be instituted in the next week or so. I should also mention that the 24-hour market has been incredibly successful. And that's partly the cause of all this attention.

Speaker Change: We've been working with the team over at Blue Ocean, making sure that, you know, we're being as helpful as possible in them scaling their infrastructure, helping them with testing. And we are confident that they have a testing and scaling plan in place that will allow us to

Vladimir Tenev: So about 24 hour market, I first want to say that with this product, we're on the bleeding edge of technology in trading. This product is not commonly available with such a large instrument base to customers. And with with any new product, you know, there's there's some sometimes, you know, things don't go exactly right in this particular case. The third party ATS that we route orders to, which is called Blue Ocean ATS, had some technology issues.

Speaker Change: Release this product safely and handle much larger load across all the symbols we offer. And I think that's planning to be instituted over in the next week or so. I should also mention.

Speaker Change: 24-hour market has been incredibly successful, and that's partly the cause of all this attention. We're nearing 30 billion in volumes since launch in the overnight hours, and we're really excited because...

Unknown Executive: We're nearing 30 billion in volumes since launch in the overnight hours, and we're really excited because this product is one of the reasons why we believe that customers would be advantaged on Robinhood, and they would have access that they wouldn't have on other platforms. So we're going to continue to invest in it. As with any product on the bleeding edge of innovation, you should expect the reliability and the quality to improve consistently over time. And we're going to make sure we continue to work with our partners, including Blue Ocean, so that we can deliver that for you all.

Speaker Change: This product is one of the reasons why we believe that customers would be advantaged on Robinhood and they would have access that they wouldn't have on other platforms. So we're going to continue to invest in it as with any product on the bleeding edge of innovation you should expect.

Vladimir Tenev: They couldn't handle the extreme demand this Sunday and they had to shut down. And this is disappointing for customers. I mean, we've had our share of scaling pains in the past. This time, it's a third party, which is nonetheless very, very frustrating. But we've been working with the team over at Blue Ocean, making sure that, you know, we're being as helpful as possible and them scaling their infrastructure, helping them with testing.

Speaker Change: The reliability and the quality to improve consistently over time, and we're going to make sure we continue to work with our partners, including Blue Ocean, so that we can deliver that for you all.

Speaker Change: Amazing momentum. Thanks again.

Vladimir Tenev: And we are confident that they have a testing and scaling plan in place that'll allow us to release this product safely and handle much larger load across all the symbols we offer. And I think that's planning to be instituted over in the next week or so.

Dan Dolev: Thanks, Dan.

Speaker Change: Thank you. Our next question.

Dan Dolev: comes from the line of Steven Chubak of Wolf Research. Please go ahead, Steven.

Operator: Thank you. Our next question comes from the line of Steven Chubak.

Operator: Vlad, Jason, and Chris, good afternoon. Hope you're well. Thank you, Steven. Hi, there.

Steven Chubak: Vlad, Jason, Chris, good afternoon. Hope you're well.

Operator: So I wanted to start off with a question just on a bigger picture one, the crypto strategy. There's been some speculation that we could get some improved regulatory clarity on the crypto side, especially with the change in administration. And we're just hoping you could speak to the incremental revenue opportunity or how the strategy might evolve from expanding your crypto offering, whether it's adding additional coins, staking, or lending. And specific to the quarter, what drove the higher crypto take rate in 2Q?

Dan Joseph: I should also mention 24 hour market has been incredibly successful. And that's partly the cause of all this attention. We're nearing 30 billion in volumes since launch in the overnight hours. And we're really excited because... This product is one of the reasons why we believe that customers would be advantaged on Robinhood and they would have access that they wouldn't have on other platforms. So we're going to continue to invest in it as with any product on the bleeding edge of innovation, you should expect the reliability and the quality to improve consistently over time. And we're going to make sure we continue to work with our partners, including Blue Ocean, so that we can deliver that for you all. Amazing momentum. Thanks again. Thanks Dan. Thank you.

Speaker Change: i see that what why if this

Steven: Hi there. So I wanted to start off with a question just on a bigger picture one, the crypto strategy. There's been some speculation

Speaker Change: That we could get some improved regulatory clarity on the crypto side, especially with the change in administration.

Speaker Change: And we're just hoping you could speak to the incremental revenue opportunity or how the strategy might evolve from expanding your crypto offering, whether it's adding additional coins, staking or lending, and specific to the quarter, what drove the higher crypto take rate in 2Q?

Jason Warnick: I'll go ahead and start. It's Jason here, and Vlad can, contributed with his thoughts as well. So in terms of, you know, what the implications would be of an improved regulatory environment for crypto, I think what that would do is really allow us to innovate more rapidly and bring more to market what customers would like to see in crypto. And, you know, in the current situation, we're able to do that more in the EU than we are in the US. And I know that can be frustrating for our customers. And so I think you hit on some of the top things.

Steven: I'll go ahead and start. It's Jason here and Vlad can...

Speaker Change: contributed with his thoughts as well.

Speaker Change: So in terms of, you know, what the implications would be of improved regulatory environment for crypto.

Speaker Change: I think what that would do is really allow us to innovate more rapidly and bring more to market what customers would like to see in crypto and, and, you know,

Steven Chubak: Our next question comes from the line of Steven Chubak. Oh, for research. Please go ahead and Steven. Glad, Jason, Chris, good afternoon. Hope you're well. Steven, why don't you just hide out there?

Steven: In the current situation, we're able to do that more in the EU than we are in the US. And I know that can be frustrating for our customers. And so I think you hit on some of the top things.

Jason Warnick: We'd be able to offer more coins, and certainly there's a wide selection of coins that, because of the regulatory environment, we're not comfortable listing today. We'd also be able to innovate in new products and services, things like bringing those to market. So in terms of the revenue opportunity, I mean, I think for tokens, you could just estimate looking at share of market and overall industry volumes as they are traded on other platforms here in the US and abroad, as well as other services that we don't yet offer. So I think it could be meaningful, you know, and we're continuing to work with our regulators to gain that clarity.

Steven Chubak: So I wanted to start off with a question just on a bigger picture on the crypto strategy. There's been some speculation that we could get some improved regulatory clarity on the crypto side, especially with the change in administration. And we're just hoping you could speak to the incremental revenue opportunity or how the strategy might evolve from expanding your crypto offering, whether it's adding additional coins, staking, or lending. And specific to the quarter, what drove the higher crypto cake rate into Q?

Steven: We'd be able to offer more coins and certainly there's a wide selection of coins that Because of the regulatory environment, we're not comfortable listing today We'd also be able to innovate in new products and services things like lending and

Speaker Change: Thank you.

Speaker Change: and bring that to market so in terms of the revenue opportunity and i think for tokens you could just estimate looking at sheriff market and an overall industry volumes of

Steven: As they are traded in other platforms here in the U.S. and abroad, as well as the other services that we don't yet offer. So I think it could be meaningful, you know, and we're continuing to work with our regulators to gain that clarity.

Steven Chubak: So I'll go ahead and start as Jason here in black and contribute with his thoughts as well. So in terms of what the implications would be, have improved regulatory environment for crypto. I think what that would do is really allow us to innovate more rapidly and bring more to market what customers would like to see in crypto. And in the current situation, we're able to do that more in the EU than we are in the US.

Vlad Tenev: Yeah, and I would just add that, of course, clarity is good. And we believe the US needs to be a leader in crypto, and we will get that clarity here in the domestic market. We haven't felt constrained by this with regard to our crypto business. We've been really happy with the speed of execution and innovation. Of course, we built a system that offers different products, you know, Solana staking, more asset selection in the EU. In the US, however, there's plenty of work to do.

Speaker Change: Yeah, and I would just add that, um...

Speaker Change: Of course, clarity is good, and we believe the U.S. needs to be a leader in crypto, and we will get the clarity here in the domestic market. We haven't felt constrained by this with regard to our crypto business. We've been really happy at the speed of execution and innovation. Of course, we built a system that offers...

Steven Chubak: And I know that can be frustrating for our customers. And so I think you hit on some of the top things. We'd be able to offer more coins. And certainly there's a wide selection of coins that because of the regulatory environment, we're not comfortable listening today. We'd also be able to innovate in new products and services, things like lending and staking and bring that to market. So in terms of the revenue opportunity, I think for tokens, you could just estimate looking at a share of market and an overall industry volume, as they are traded in other platforms here in the US and abroad, as well as the other services that we don't yet offer.

Jason Warnick: And we believe we can be successful regardless of what administration ultimately ends up taking power in November, or if it's the same one. We've done a lot of work to innovate on pricing. And you've seen year over year increases in market share and volumes of our crypto business as well. So there's plenty of work to do.

Steven: Different products, you know, Solana staking, more asset selection in the EU. In the U.S., there's plenty of work to do, and we believe we can be successful regardless of what administration ultimately ends up doing.

Steven: Taking Power in November , or if it's the same one. We've done a lot of work to innovate on pricing, and you've seen year-over-year increases in market share and volumes of our crypto business as well. So there's plenty of work to do.

Jason Warnick: The second part of your question, Stephen, was around take rates. And so in the quarter, the crypto take rate was 38 bps. That's up three bps quarter over quarter. That's really due to pricing experiments. Looking at Q3 in July, the crypto take rates were in the low 40 cent range. We continue to offer great pricing to customers and are excited to see how the quarter plays out.

Speaker Change: the second part of your questions even was around take rates and so in the quarter the cryptotake rate was thirty eight ps that's up three thisps quarter of a quarter andthat's really due to pricing experiments looking at q three in julyand the cryptito take rates were in the low forty cent range

Steven Chubak: So I think it could be meaningful, you know, and we're continuing to work with our regulators to gain that clarity. Yeah, and I would just add that, of course, clarity is good. And we believe the US needs to be a leader in crypto. And we will get the clarity here in the domestic market. We haven't felt constrained by this with regard to our crypto business. We've been really happy at the speed of execution and innovation.

Speaker Change: and see how we go from there but we continue to offer great pricing to customers and are excited to see how the quarter plays out.

Jason Warnick: That's great color. And if I could just squeeze in one more on the rate outlook, Fed Futures is now pricing in four additional cuts since the last earnings call. It might be helpful if you could just speak to the sensitivity to rate cuts or provide an update. But also, what are some of the potential offsets you envisage on the revenue side that could help mitigate some of that pressure on that?

Speaker Change: It's a great color. And if I could just squeeze in one more just on the rate outlook, Fed futures.

Speaker Change: Now, pricing in four additional cuts since the last earnings call, it might be helpful if you could just speak to the sensitivity to rate cuts or provide an update, but also what are some of the potential offsets you envisage on the revenue side that could help mitigate some of that pressure on NII?

Steven Chubak: Of course, we built a system that offers different products. So a lot of staking, more asset selection in the EU. In the US, there's plenty of work to do. And we believe we can be successful, regardless of what administration ultimately ends up taking power in November. Or if it's the same one, we've done a lot of work to innovate on pricing. And you've seen your overyear increases in market share and volumes of our crypto business as well. So there's plenty of work to do.

Jason Warnick: Sure, I'll take that one. First of all, we've got a lot of experience operating in different rate environments, high rate environments, and low rate environments. One thing that we really like about our business is the natural offset between rates and trading. So as rates fall, asset values and trading tend to increase. And overall, lower rates tend to be a tailwind for growth for our business. I think there are a couple of important things to call out.

Speaker Change: Sure, I'll take that one. So, first of all, we've got a lot of experience operating and

Speaker Change: Different rate environments, high rate environments, low rate environments. One thing that we really like about our business is the natural offset between rates and trading. So as rates fall, asset values and trading tend to increase.

Jason Warnick: The second part of your question, Steven, was around take rates. And so in the quarter, the crypto take rate was 38 dips. That's up three dips, quarter of a quarter. And that's really due to pricing experiments. Looking at Q3 in July and the crypto take rates were in the low 40 cent range. And see how we go from there. But we continue to offer great pricing to customers and are excited to see how the quarter plays out.

Speaker Change: And overall, lower rates tend to be a tailwind for growth for our business.

Jason Warnick: First, we've been growing our interest-earning assets at a really nice pace. But not all of our interest-earning assets are sensitive to rate changes. So actually, over half of the balance of interest-earning assets relates to our cash sweep, and the spread we earn there is relatively fixed, which minimizes the impact of changes in rates. Second, we're broadening the way that we serve our customers, and that's leading to a much more diversified business for us.

Speaker Change: I think there's a couple of important things to call out. First, we've been growing our interest earning assets at a really nice pace, but not all of our interest earning assets are sensitive to rate changes.

Speaker Change: So actually, over half of the balance of interest earning assets relates to our cash sweep, and the spread we earn there is relatively fixed, which minimizes the impact of changes in rates.

Jason Warnick: Goods for a color, and if I could just squeeze in one more just on the rate outlook, Fed futures, now pricing in four additional cuts since the last earnings call, it might be helpful if you could just speak to the sensitivity to rate cuts or provide an update, but also what are some of the potential offsets you envisaged on the revenue side that could help mitigate some of that pressure on that eye. Sure, I'll take that one.

Jason Warnick: Specific to the question you asked about what the rate impact is, so assuming a 25 basis point change or decline, that would affect NIM by $40 million. And, you know, hard to predict the exact timing, but we feel good about the natural hedge. We have a billion dollars of transaction-based revenue, and it takes a relatively small uptick in trading activity to offset that decline in interest.

Speaker Change: Second, we're broadening the way that we serve our customers and that's leading to a much more diversified business for us.

Speaker Change: Specific to the question you asked about what the rate impact is,

Speaker Change: So, assuming a 25-basis point,

Speaker Change: Change or decline that would affect NIM by 40 million dollars

Jason Warnick: So first of all, we've got a lot of experience operating in different rate environments, high rate environments, low rate environments. One thing that we really like about our business is the natural offset between rates and trading, so as rates fall, asset values and trading tend to increase. And overall, lower rates tend to be a tailwind for growth for our business. I think there's a couple of important things to call out. First, we've been growing our interest earning assets at a really nice pace, but not all of our interest earning assets are sensitive to rate changes, so actually over half of the balance of interest earning assets relates to our cash sweep and the spread we earn there is relatively fixed, which minimizes the impact of changes and rates.

Speaker Change: And, you know, hard to predict the exact timing, but we feel good about the natural hedge. We have a billion dollars of transaction-based revenue, and it takes a relatively small uptick in trading activity to offset that decline in interest.

Operator: That's great, Collar. Thanks so much for taking my questions. Yeah.

Operator: It's great colors.

Speaker Change: That's great, Culler. Thanks so much for taking my questions.

Culler: Yeah, you bet.

Operator: Our next question comes from the line of Craig Siegenthaler of Bank of America.

Speaker Change: Thank you. Our next question comes from the line of Craig Siegenthaler of Bank of America.

Operator: Good afternoon, everyone. I hope you're all doing well.

Operator: So my question is about big picture organic growth. This was the second quarter in a row that your total organic growth has exceeded 40% annualized. Now, there are a lot of drivers in there, like the matching efforts, but some of your initiatives like the UK brokerage and your crypto are very early on in it. So we wanted to get your thoughts on the potential organic growth rate in the second half, just given all the moving pieces. So is 40% sustainable?

Craig Siegenthaler: Good afternoon everyone. I hope you're all doing well. So my question is on big picture organic growth.

Speaker Change: This was the second quarter in a row that your total organic growth has exceeded 40% annualized. Now, there's a lot of drivers in there, like the matching efforts.

Jason Warnick: Second, we're broadening the way that we serve our customers, and that's leading to a much more diversified business for us. Specific to the question you asked about what the rate impact is, so assuming a 25 basis point change or decline that would affect NIM by $40 million. And, you know, hard to predict the exact timing, but we feel good about the natural hedge. We have a billion dollars of transaction based revenue, and it takes a relatively small uptick in trading activity to offset that declining interest. That's great color.

Craig Siegenthaler: But some of your initiatives like the UK brokerage and Europe Crypto are very early innings. So we wanted to get your potential, your thoughts on the potential organic growth rate in the second half, just given all the moving pieces. So is 40% sustainable?

Unknown Executive: So, we have a long track record of 20% plus organic growth rates, and we had a really strong first half of the year, as you pointed out. I think what I can say that would be helpful here is that that's continuing so far into Q3. We're seeing an incredibly strong July with activity across the three trading categories up 20% over June levels, and we're seeing that continue in August, so over $4 billion of net deposits in July and over $1 billion in the first week of August.

Speaker Change: So we have a long track record of 20% plus organic growth rate, and we have a really strong first half of the year, as you pointed out.

Speaker Change: I think what I can say that would be helpful here is that that's continuing so far into Q3. We're seeing an incredibly strong July.

Unknown Executive: Thanks so much for taking my questions.

Speaker Change: with activity across the three trading categories of twenty percent over the june levels and we're seeing that continue in august so over four billion of net deposits in july and over one billion in the first week of august so all signs at this point the quarter are showing that our customers continue to engage with us

Unknown Executive: Yeah, be back. Thank you.

Craig Siegenthaler: Our next question comes from the line of Craig Seaganthaler, a Bank of America. Good afternoon, everyone. I hope you're all doing well.

Unknown Executive: So, all signs at this point in the quarter are showing that our customers continue to engage with us, continue to deposit their money with us, and I think as Vlad mentioned, we now have eight businesses where the annualized revenue run rate is over $100 million, and so we're much more diversified today than we were even just a couple of years ago, and I think very well positioned, especially as we continue innovating for customers and rolling out new products to continue driving outsized organic growth.

Craig Siegenthaler: So my question is on big picture organic growth. This was the second quarter in a row that your total organic growth has exceeded 40% annualized. Now, there's a lot of drivers in there like the matching efforts, but some of your initiatives like the UK brokerage and your crypto are very early earnings. So we wanted to get your potential your thoughts on the potential organic growth rate in the second half, just given all the moving pieces.

Speaker Change: Continue to deposit their money with us.

Vlad Tenev: And, you know, I think as Vlad mentioned, we now have eight businesses where the annualized revenue run rate is over $100 million. And so we're much more diversified today than we were even just a couple of years ago and I think very well positioned.

Vlad Tenev: Especially as we continue innovating for customers and rolling out new products to continue driving outsized organic growth.

Craig Siegenthaler: So it is 40% sustainable. So we have a long track record of 20% plus organic growth rate, and we have a really strong first half of the year as you pointed out. What I think what I can say would be helpful here is that that's continuing so far into Q3. We're seeing an incredibly strong July with activity across the three trading categories of 20% over the June levels. And we're seeing that continue in August.

Unknown Executive: And I just want to emphasize one other thing I mentioned earlier in the remarks, which is that we haven't really taken the lid off of the new active trader products. Our active trader business is the most mature, and investments that we make there have the most immediate impact on our business, you know, relative to our investments growing wallet share and also internationally.

Speaker Change: And I just want to emphasize one other thing I mentioned earlier in the remarks, which is that we haven't really taken the lid off of the new active trader products.

Speaker Change: Our active trader business is the most mature, and investments that we make there have the most immediate impact on our business, you know, relative to

Unknown Executive: And we've got an event for our active traders in October where we're going to unveil some new products, and I think we're getting very, very excited about it. So you know, those results that you're seeing, they're good results, we're proud of them. But I think we have plenty of room to run on the active trader side. And that includes margin, but it also includes new product innovations that we've been baking for the majority of the year.

Vlad Tenev: Our Investments Growing Wallet Share and also internationally and we've got an event for our active traders in October where we're going to unveil some new products.

Craig Siegenthaler: So over 4 billion of net deposits in July and over 1 billion in the first week of August. So all signs at this point in the quarter are showing that our customers continue to engage with us, continue to deposit their money with us. And I think it's flat mentioned, we now have eight businesses where the annualized revenue run rates over $100 million. And so we're much more diversified today than we were even just a couple of years ago, and I think very well positioned.

Vlad Tenev: and

Vlad Tenev: I think we're getting very, very excited about it. So, you know, those results that you're seeing, I mean, they're good results. We're proud of them. But I think we have plenty of room to run on the active trader side. And that includes margin, but it also includes new product innovations that we've been baking for the majority of the year.

Unknown Executive: I'm glad that's, you know, that's great to hear. On the innovation side, I think there's still a few product gaps versus some of the more established online brokers. I'm thinking, like, custody mutual funds, fixed income products, CDs. Now you do have ACAT functionality now, and I think that helps. But can you provide us an update on some of the near-term product gaps that you can fill?

Speaker Change: Glad that's great to hear. On the innovation side I think there's still a few product gaps.

Craig Siegenthaler: Especially as we continue innovating for customers and rolling out new products to continue driving outsized organic growth. And I just want to emphasize one other thing I mentioned earlier in the remarks, which is that we haven't really taken the lid off of the new active trader products. Our active trader business is the most mature and investments that we make there have the most immediate impact on our business relative to our investments growing wallet share and also internationally.

Speaker Change: versus some of the more established online brokers and I'm thinking like custom mutual funds, fixed income products, CDs. Now you do have ACAT functionality now and I think that helps but can you provide us an update on some of the near-term product gaps that you can fill?

Unknown Executive: Yeah, well, what I'll tell you is that on the active trader front, you know, we've talked a lot about futures. We've talked a lot about how we're great on mobile, but there are a lot of existing customers that need the more power of a web interface and a desktop interface so they can take advantage of extra screen real estate and use better tools and charting.

Speaker Change: Yeah, well, what I'll tell you is that, um...

Speaker Change: On the active trader front, you know, we've talked a lot about futures.

Speaker Change: We've talked a lot about how we're great on mobile but there's a lot of existing customers that need the more power of a web interface and a desktop interface so they can take advantage of extra screen real estate and use better tools and charting.

Craig Siegenthaler: And we've got an event for our active traders in October where we're going to unveil some new products. And I think we're getting very, very excited about it. So, you know, those results that you're seeing, I mean, they're good results. We're proud of them. But I think we have plenty of room to run on the active trader side. And that includes margin, but it also includes new product innovations that we've been baking for the majority of the year. Glad that's great to hear.

Unknown Executive: So those are, gaps in a way, but also opportunities for us to really differentiate and innovate and jump ahead of what we've seen elsewhere. I think regarding more sort of passive buy and hold assets, like CDs and mutual funds, we're climbing the capability curve with our ACAT transfers product. And we made a ton of progress just this year, making the process of moving assets into Robinhood as easy as possible.

Vlad Tenev: So those are...

Vlad Tenev: gaps in a way, but also opportunities for us to really differentiate and innovate and jump ahead of what we've seen elsewhere. I think

Vlad Tenev: regarding more sort of like passive buy-and-hold assets like CDs and mutual funds

Vlad Tenev: We're climbing the capability curve with our ACAT transfers product.

Vladimir Tenev: On the innovation side, I think there's still a few product gaps versus some of the more established online brokers, and I'm thinking like, custing mutual funds, fixed income products, CDs. Now you do a vacat functionality now, and I think that helps, but can you provide us an update on some of the near-term product gaps that you can fill? Yeah, well what I'll tell you is that on the active trader front, you know, we've talked a lot about futures, we've talked a lot about how we're great on mobile, but there's a lot of existing customers that need the more power of a web interface and a desktop interface, so they can take advantage of extra screen real estate and use better tools and charting.

Vlad Tenev: And we made a ton of progress just this year, making the process of moving assets into Robinhood as easy as possible. I think that's really led to some of the bottom line results that you're seeing, including net positive account transfers from every major incumbent brokerage firm for several quarters running now. And the goal would be.

Unknown Executive: I think that's really led to some of the bottom line results that you're seeing, including net positive account transfers from every major incumbent brokerage firm for several quarters running now. And the goal would be to actually accelerate that over time. We see plenty of opportunity. We want to remove reasons that customers have for withdrawing.

Vlad Tenev: to actually accelerate that over time. We see plenty of opportunity. We want to remove reasons that customers have for withdrawing, and we think we can systematically reduce reasons for withdrawals over the long run, and also increase reasons for customers to deposit.

Unknown Executive: And we think we can systematically reduce reasons for withdrawals over the long run and also increase reasons for customers to deposit. And so this is one thing we're really focused on, and it's going to take some time for it to play out. But I think you should see that reflect in the long run and increase net deposit activity. We're going to go through and add all of the assets that are missing. We're going to add all the capabilities.

Vlad Tenev: And so this is one thing we're really focused on, and it's going to take some time to play out. But I think you should see that reflect over the long run and increase net deposit activity. We're going to go through and add all of the assets that are missing. We're going to add all the capabilities.

Vladimir Tenev: So those are gaps in a way, but also opportunities for us to really differentiate and innovate and jump ahead of what we've seen elsewhere. I think regarding more sort of like passive buy and hold assets, like CDs and mutual funds, we're climbing the capability curve with our ACAD transverse product, and we've made a ton of progress just this year, making the process of moving assets into Robinhood as easy as possible. I think that's really led to some of the bottom line results that you're seeing, including net positive account transfers from every major incumbent brokerage firm for several quarters running now, and the goal would be to actually accelerate that over time.

Unknown Executive: And then we're going to make sure the process of transferring is better at Robinhood than anywhere else. And then the incentives that we offer because of our economics are just kind of the cherry on top that I think will really accelerate asset growth on the platform. So I'm getting there's so much to do here, and we're just at the beginning, and we only started offering incoming ACATs in the past couple of years, and we've already made a ton of progress here.

Vlad Tenev: and then we're going to make sure the process of transferring is better at robin hood that anywhere else and then the incentives that we offer because of our our economics are just kind of the cherry on top that i think we'll really accelerate asset growth into the platform

Vlad Tenev: I'm getting it. There's so much to do here, and we're just at the beginning. We only started offering incoming ACATs in the past couple of years, and we've already made a ton of progress here.

Operator: Thank you. Again, we ask that you limit yourself to one question and then fall back into the queue. Our next question comes from Devin Ryan of Citizens JMP.

Speaker Change: Thank you. Again, we ask that you limit yourself to one question, then fall back into the queue. Our next question comes from the line of Devin Ryan of Citizens JMP.

Vladimir Tenev: We see plenty of opportunity. We want to remove reasons that customers have for withdrawing, and we think we can systematically reduce reasons for withdrawals over the long run, and also increase reasons for customers to deposit. And so this is one thing we're really focused on, and it's going to take some time to play out, but I think you should see that reflect over the long run and increase net deposit activity. We're going to go through and add all of the assets that are missing.

Operator: Hi, good afternoon, Vlad, Jason. Great quarter. Question, I'd love to just dig in a little bit around how you guys are thinking about Incremental Margin Potential from Here over the Intermediate Terms. So, you're obviously already at a mid 40% EBITDA margin, 90% of the current expense base is fixed, and I know 50% plus is the objective, but you really aren't that far away from 50. So, I just love to think about, like, what the ceiling looks like here. Is there one?

Devin Ryan: Hi, good afternoon, Vlad, Jason. Great quarter.

Devin Ryan: question lck' dig get a little bit how do youguys are thinking about

Devin Ryan: the incremental margin potential from here over the intermediate term so you' obviously already at mid forty percent ebitda margin ninety percent of the current expensepiece of sixed and i know fifty percent lous is the objective but you really aren't that far away from fifty so just want to think about like

Vladimir Tenev: We're going to add all the capabilities, and then we're going to make sure the process of transferring is better at Robinhood than anywhere else. And then the incentives that we offer because of our economics are just kind of the cherry on top that I think will really accelerate asset growth into the platform. So there's so much to do here, and we're just at the beginning, and we only started offering incoming ACADs in the past couple of years, and we've already made a ton of progress here. Thank you. Again, we ask that you limit yourself to one question, and then fall back into the queue.

Unknown Executive: Because you have such an efficient tech stack and infrastructure. And then, you know, is there anything on the roadmap that could drive material acceleration and fix expenses from the core pace? I'm just trying to think about where we could go. I know what the targets are, but just the algorithm.

Speaker Change: What the ceiling looks like here? Is there one? Because you have such an efficient tech stack and infrastructure. And then, you know, is there anything on the roadmap that, you know, could drive a material acceleration and fix expenses from the core pace? I'm just trying to think about where we could go. I know what the targets are, but just the algorithm. Thanks.

Unknown Executive: Yeah, I view kind of the 50% Devin is more of a way station on our path to higher long-term margins. You've seen us drive substantial incremental margins over the last few years. This quarter was 77%.

Speaker Change: Yeah, I view kind of the 50% Devin is more of a way station on our path to the longer term margins. You've seen us drive.

Speaker Change: Substantial incremental margins over the last few years. This quarter was 77% and it's really a reflection of us driving up revenue and managing our costs closely.

Devin Ryan: Our next question comes from the line of Devon Ryan of Citizens' JMP. Hi, good afternoon, Vlad. Jason, great quarter. Question, let's just dig in a little bit around how you guys are thinking about the incremental margin potential from here over the intermediate terms. So you're obviously already at a mid 40% EBITDA margin, 90% of the current expense piece is fixed, and I know 50% plus is the objective, but you really aren't that far away from 50.

Unknown Executive: And it's really a reflection of us driving up revenue and managing our costs closely. You know, I think a good analogy to how we're thinking about costs long term is looking at what we did in 2024. We looked at our existing businesses and held those businesses to a low single-digit, and in some cases, negative OPEX growth rate. We used those savings to help fund specific growth investments for the business. And there are many that we've been talking about and alluding to on this call.

Speaker Change: I think a good analogy to how we're thinking about costs long-term is looking at what we did in 2024. We looked at our existing businesses and held those businesses to a low single-digit and in some cases negative OPEX growth rate.

Jason Warnick: So just love to think about What the feeling looks like here is there one because you have such an efficient tech stack and infrastructure and then is there anything on the road map that could drive a material acceleration at six expenses from the core piece. If you're trying to think about where we could go, I know what the targets are, but just the algorithm.

Vlad Tenev: And we use those savings to help fund.

Speaker Change: Specific growth investments for the business. And there are many that we've been talking about and alluding to on this call.

Unknown Executive: And we set aside an extra $100 million in marketing budget. And all that translated to, you know, operating expense guidance that was up 5% at the midpoint, which we continue to reiterate. And so, you know, I think we have a lot of opportunity to see continued leverage in our existing business. And then you're going to see us, on top of that, continue to make very targeted, high-expected ROI investments for growth.

Speaker Change: And we set aside an extra $100 million in marketing budget. And all that translated to operating expense guidance that was up 5% at the midpoint, which we continue to reiterate.

Speaker Change: and so

Speaker Change: You know, I think we have a lot of opportunity to see continuing leverage in our existing business.

Jason Warnick: Thanks. Yeah, I view kind of the 50% Devin is more of a way station on our path to the longer term margins. You've seen us drive. It's a substantial incremental margins over the last few years. This quarter was 77% and it's really a reflection of us driving up revenue and managing our costs closely. I think a good analogy to how we're thinking about costs long term is looking at what we did in 2024.

Speaker Change: and then you're going to see us on top of that.

Speaker Change: continue to make very targeted, high-expected ROI investments for growth.

Speaker Change: In terms of, you know, things that are out there on the roadmap.

Unknown Executive: In terms of, you know, things that are out there on the roadmap, you know, it's too early to give specific guidance. But, the one thing I'd point to is that we are rolling out a credit card. And as Vlad talked about, we're being very patient in the short term in the way that we approach that. But there'll certainly be some incremental investments next year. But we'll stay tuned for specific guidance on next year. Yeah, the only thing that I would add to that,

Speaker Change: It's too early to give specific guidance. The one thing I'd point to is we are rolling out a credit card, and as Vlad talked about, we're being very patient in the short term in the way that we approach that, but that'll certainly be some incremental investments next year, but we'll stay tuned for specific guidance on next year.

Jason Warnick: We looked at our existing businesses and held those businesses to a low single digit and in some cases negative off X growth rate. And we use those savings to help fund specific growth investments for the business and there are many that we've been talking about and alluding to on this call. And we set aside an extra $100 million in marketing budget and all that translated to operating expense guidance that was up 5% at the midpoint, which we continue to reiterate.

Unknown Executive: Yeah, the only thing that I would add to that, which I think is interesting, is that we've talked a lot about AI and the impact on different sorts of companies. I think one area that we maybe haven't emphasized as much is how we've been making use of it operationally, including for engineering. And as we look at kind of the core engine of our business, we're creating software, we're rolling out products to companies, and our business, even though we're in financial services, is technology at its core.

Vlad Tenev: Yeah, the only thing that I would add to that, which I think is interesting is, I think we've talked a lot, you hear a lot about AI and the impact on

Jason Warnick: I think we have a lot of opportunity to see continuing leverage in our existing business and then you're going to see us on top of that continue to make very targeted high expected ROI investments for growth.

Speaker Change: Different sorts of companies. I think one area that

Speaker Change: We maybe haven't emphasized as much is

Speaker Change: How we've been making use of that operationally, including for engineering. And as we look at kind of the core engine of our business,

Speaker Change: We're creating software, we're rolling out products to companies and our business, even though we're in financial services, is technology at its core. And we've seen a lot of impact in applying these AI tools on the engineering side, just making different parts of software development process easier and simpler. That's an area we're investing a lot in, and I think there's a lot of room to run. We've already seen significant productivity gains in the past year, and we think we're just...

Unknown Executive: And we've seen a lot of impact in applying these AI tools on the engineering side, just making different parts of the software development process easier and simpler. That's an area we're investing a lot in, and I think there's a lot of room to run. We've already seen significant productivity gains in the past year, and we think we're closer to the beginning than to the maturation point of that cycle.

Vladimir Tenev: In terms of things that are out there on the roadmap, it's too early to give specific guidance. The one thing I point to is we are rolling out a credit card and as Vlad talked about, we're being very patient in the short term in the way that we approach that.

Speaker Change: We're closer to the beginning than to the maturation point of that cycle.

Vladimir Tenev: But that will certainly be some incremental investments next year, but we'll stay tuned for specific guidance on next year. Yeah, the only thing that I would add to that, which I think is interesting, is I think we've talked a lot. You hear a lot about AI and the impact on different sorts of companies. I think one area that we maybe haven't emphasized as much is how we've been making use of that operationally, including for engineering.

Operator: Our next question comes from the line of Patrick Moley from Piper Sandler. Yes, good evening. Thanks for taking the question. So I had one on

Operator: Thank you. Our next question comes from the line of Patrick Moley from Piper Sandler. Yes, good evening. Thanks for taking the question. So I had one on the gold off.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Patrick Moley of Piper Sandler.

Speaker Change: yess good evening thank for dg the question

Patrick Moley: So I had one on the gold offering.

Speaker Change: You've added a number of things over the last few quarters.

Speaker Change: You're plenty dead.

Speaker Change: more before the end of the year with the web-based platform and options in futures trading or index options in futures trading rather.

Vladimir Tenev: As we look at the core engine of our business, we're creating software, we're rolling out products to companies and our business, even though we're in financial services, is technology at its core. We've seen a lot of impact in applying these AI tools on the engineering side, just making different parts of software development process easier and simpler. That's an area we're investing a lot in, and I think there's a lot of room to run. We've already seen significant productivity gains in the past year, and we think we're closer to the beginning than to the maturation point of that cycle.

Speaker Change: Just talk to us about your thoughts on pricing here. You're at $5 a month now. What's the appetite to go higher? How do you kind of balance that pricing dynamic with your desire to kind of continue to grow that subscriber base? Thanks.

Unknown Executive: Yeah, I'll go ahead and take this one. You know, what I'd say our focus right now is increasing the adoption rate of our customers in gold. And we're doing that by just continuing to invest in the gold program. And we love the economics. I mean, it's great that we have subscription revenue that's north of $100 million annually, but it leads to downstream effects, higher adoption, faster net deposits, and seven times the ARPU.

Unknown Executive: Thank you.

Speaker Change: Yeah, I'll go ahead and take this one.

Speaker Change: You know, what I'd say is our focus right now is increasing the adoption rate of our customers in gold, and we're doing that by just continuing to invest in the gold program.

Speaker Change: and we love the economics i mean it's great that we have

Speaker Change: the subscription revenue that's north of one hundred million dollars annually but it leads to downstream effects higher adoption

Speaker Change: faster net deposits and seven times the ARPU.

Patrick Moley: Our next question comes from a line of Patrick Moley, a Piper Center. Thank you very much. Yes, good evening. Thanks for taking the question. So I had one on the gold offering. You've added a number of things over the last few quarters. You're planning to add more before the end of the year with the webbing platform and options and futures trading or index options and futures trading rather. Just talk to us about your thoughts on pricing here. You're $5 a month now. What's the appetite to go higher? How do you kind of balance that? That pricing dynamic with your desire to kind of continue to grow that subscriber base? Thanks.

Unknown Executive: And so we're not feeling pressured in the short term to raise the price. It is something that we will continue to look at. And we don't have a religion that we wouldn't touch the price over time. But right now, it's not the top priority.

Speaker Change: And so, we're not feeling pressured in the short term to raise the price. It is something that we will continue to look at, and we don't have religion that we wouldn't touch the price over time, but right now it's not the top priority.

Speaker Change: cate

Speaker Change: Thank you.

Operator: Our next question comes from the line of Kyle Voigt of KBW.

Speaker Change: Our next question comes from the line of Kyle Voigt of KBW.

Operator: Hi, good evening. Maybe I have a question on margin balances. So you know that the impact of cutting your margin rates and the subsequent margin balance growth of 20%, I guess. Is there any way you can disaggregate how much of that growth is coming from existing Robinhood margin declines? Simply utilizing margin more versus maybe customers where you know they were utilizing margin elsewhere and have simply transferred or switched that activity to Robinhood. And if there is some of that switching that's happening, can you comment on whether the customer margin inflows have generally been from one firm or broad-based from retail brokers across the industry?

Kyle Voigt: Hi, good evening. Maybe a question on margin balances. So you know that the impact of cutting your margin rates and the subsequent margin balance growth of 20%. I guess, is there any way you can disaggregate how much of that growth is coming from existing Robinhood margined clients?

Vladimir Tenev: I'll go ahead and take this one. You know what I'd say is our focus right now is increasing the adoption rate of our customers in gold. And we're doing that by just continuing to invest in the gold program. And we love the economics. I mean, it's great that we have the subscription revenue that's north of $100 million annually. But it leads to downstream effects, higher adoption, faster net deposits, and seven times the RPU.

Speaker Change: Simply utilizing margin more versus maybe customers where you know, they were utilizing margin elsewhere.

Speaker Change: and has simply transferred or switched that activity to Robinhood. And if there is some of that switching that's happening, can you comment on if the customer margin inflows have generally been from one firm or a broad base from retail brokers across the industry?

Unknown Executive: Yeah, I'll go ahead and take this. So it's mostly from existing customers, but we're seeing both existing as well as new customers take advantage of the lower margin rates. And we continue to see this grow in July. You know, we talk about one of our top three strategic pillars is to be number one in active trading. And as Vlad mentioned, we've made a lot of progress on market share for both equities and options, and overall, we are number two in active trading for those categories.

Vladimir Tenev: And so we're not feeling pressured in the short term to raise the price. It is something that we will continue to look at. And we don't have religion that we wouldn't touch the price over time. But right now it's not the top priority. Thank you.

Speaker Change: Yeah, I'll go ahead and take this. So it's mostly from existing customers, but we're seeing both existing as well as new customers, you know, take advantage of the lower margin rates.

Speaker Change: and we continue to see this grow in july we talk about one of our top three strategic pillars is to be number one in active trading and as lad mentioned we've made a lot of progress on

Kyle Voigt: Our next question comes from the line of Kyle Voit of KBW.

lad: Market share for both equities and options and overall or number two in active trading for those categories for trading but we're a distant fifth in market share in margins so it's a huge opportunity for us.

Jason Warnick: Hi, good evening. Maybe a question on margin balances. So you know that the impact of cutting your margin rates and the subsequent margin balance growth 20%. I guess is there any way you can disaggregate how much of that growth is coming from existing Robinhood margined clients, simply utilizing margin more versus maybe customers where you know they were utilizing margin elsewhere. And as simply transferred or switched that activity to Robinhood. And if there is some of that switching that's happening, can you comment on if the customer customer margin inflows have generally been from one firm or broad based from retail brokers across the industry.

Unknown Executive: But we're a distant fifth in market share on margin. So it's a huge opportunity for us. We just lowered the rates in May, and we saw that, you know, the 20% move to the end of the quarter that's continuing in July. And we think that, you know, this is a really big opportunity. And we're definitely starting to take share there. We grew much faster than our peers in the second quarter, even with the May change in the rate.

lad: We just lowered the rates in May and we saw the 20% move.

lad: to the end of the quarter that's continuing in July . And we think that, you know, this is a really big opportunity. And we're definitely starting to take share there. We grew much faster than our peers in the second quarter, even with the May change in the rates.

Operator: Thank you. Our next question comes from the line of Michael Cyprys of Morgan Stanley.

lad: Thank you. Our next question comes from the line of Michael Cyprys of Morgan Stanley .

Jason Warnick: Yeah, I'll go ahead and take this so it's mostly from existing customers, but we're seeing both existing as well as new customers. You know, take advantage of the lower margin rates. And we continue to see this grow in July. You know, we talk about one of our top three strategic pillars is to be number one in active trading. And as Vlad mentioned, we've made a lot of progress on market share for both equities and options.

Operator: Good afternoon. Thanks for taking the time to answer the question. Just wanted to ask for a little bit more color and an update on the international expansion efforts, in particular in the UK, in Europe, and around the world. Just curious what sort of traction you're seeing so far, and what steps are you looking to take here in the second half and into 2025 in order to accelerate growth? And as you think about and look around building out the platform overseas, I'd be curious what challenges you face versus having built out the business in the US and how you're looking to overcome some of those hurdles. Thank you. Yeah,

Michael Cyprys: Hey, good afternoon. Thanks for taking the question. Just wanted to ask for a little bit more color and update on the international expansion efforts, in particular in the UK.

Michael Cyprys: in Europe and around the world. Just curious what sort of traction you're seeing so far. What steps are you looking to take here in the second half and into 25 in order to accelerate growth? And as you think about and look around building out the platform overseas, just curious what challenges you face.

Jason Warnick: And over all are number two in active trading for those categories for trading. But we're a distance fifth in market share in margins. So it's a huge opportunity for us. We just lower the rates in May and we saw the 20% move to the end of the quarter that's continuing in July. And we think that you know this is a really big opportunity. And we're definitely starting to take share there. We grew much faster than our peers in the second quarter, even with the May change in the range.

Unknown Executive: Thank you.

Speaker Change: versus having built out the business in the U.S. and how you're looking to overcome some of those hurdles.

Operator: Yeah, thanks for the question. I'll field that.

Speaker Change: Yeah, thanks for the question. I'll field that.

Speaker Change: In a nutshell, we like the early signs that we're seeing. So far, account balances overseas are a little bit smaller than the U.S. on average, but the trading characteristics are pretty similar.

Michael Cyprys: And what we really like is as we hear from customers both in the UK for brokerage and in the EU for crypto, they want things that we offer in the U.S.

Unknown Executive: In a nutshell, we like the early signs that we're seeing. So far, account balances overseas are a little bit smaller than the US on average, but the trading characteristics are pretty similar. And what we really like is, as we hear from customers, both in the UK for brokerage and in the EU for crypto, they want things that we offer in the US. So UK customers are requesting margin and options, and EU customers are requesting the ability to trade stocks.

Michael Cyprys: So, UK customers are requesting margin and options, and EU customers are requesting the ability to trade stocks.

Michael Cyprys: Our next question comes from the line of Michael Cyprys of Morgan Stanley. Thank you Thanks for the question. I'll feel that in a nutshell, we like the early signs that we're seeing. So far, account balances overseas are a little bit smaller than the US on average, but the trading characteristics are pretty similar. And what we're going to do is we're going to look at some of the things that we're going to look at in the US and how we're looking to overcome some of those hurdles.

Michael Cyprys: so

Michael Cyprys: That, I think, validates, in part, our strategy of expanding with one unified platform internationally.

Michael Cyprys: Having the same technology be available in as many markets worldwide as possible.

Michael Cyprys: So our focus really is rounding out the feature set in the UK and in the EU, making sure that all of the great products that we have available in the U.S.

Unknown Executive: So that, I think, validates in part our strategy of expanding with one unified platform internationally and having the same technology be available in as many markets worldwide as possible. So our focus really is rounding out the feature set in the UK and in the EU, making sure that all the great products that we have available in the US can be made available there. And that involves working with the relevant regulators in these jurisdictions, taking them along, and giving their customers access to all these awesome products.

Michael Cyprys: can be made available there. And that involves working with the relevant regulators in these jurisdictions, taking them along, and.

Michael Cyprys: giving their customers' access to all of these awesome products we feel really really good about that and then simultaneously we are looking into expanding to other jurisdictions

Michael Cyprys: Thank you. What we really like is as we hear from customers, both in the UK for brokerage and in the EU for crypto, they want things that we offer in the US. So UK customers are requesting margin and options and EU customers are requesting the ability to trade stocks. So that I think validates in part our strategy of expanding with one unified platform internationally and having the same technology be available in as many markets worldwide as possible.

Operator: Thank you. Our next question comes from the line of John Todaro of NETO. Hey guys, congrats on the quarter's good results here. I just wanted to drill down a little.

Unknown Executive: We feel really, really good about that. And then simultaneously, we are looking into expanding to other jurisdictions. Thank you. Our next question comes from the line of John Todaro of NETA. Hey guys, congrats on the quarter's good results here. I just wanted to drill down a little bit more into fit stance. They offer a number

Michael Cyprys: Thank you. Our next question comes from the line of John Todaro of Needham.

John Todaro: Hey guys, congrats on the quarter, good results here. I just wanted to drill down a little bit more into fit and stance.

Speaker Change: They offer a number of crypto offerings and then also the trading pairs.

Speaker Change: This first part of that is...

Speaker Change: Do you anticipate growing products with that acquisition in the US or are you still a little bit hamstrung on regulation? That is the deciding factor.

Speaker Change: And then just two, within that, Bitstamp historically has had higher trading fees than Hood. Do you think those fees on the platform could kind of go higher as we saw cake rate going higher here? Or should we not read into that, the Bitstamp fees?

Michael Cyprys: So our focus really is rounding out the feature set in the UK and in the EU, making sure that all of the great products that we have available in the US can be made available there. And that involves working with the relevant regulators and these jurisdictions taking them along and giving their customers access to all of these awesome products. We feel really, really good about that.

Operator: I think there are two interesting things about the Bitstamp acquisition that you should know. One of them is international. The second one is institutional.

Speaker Change: I think there's two interesting things about the BidStamp acquisition that you should know. One of them is international. The second one is institutional. The business is a global business. It operates in a lot of jurisdictions.

Unknown Executive: The business is a global business. It operates in a lot of jurisdictions. And we could see that accelerating our international expansion on the crypto side significantly and also dovetailing quite nicely with the large retail business that we currently have at Robinhood and the great product innovation that we're driving there. The other thing we're excited about is institutional business. And they have great relationships with institutions. It's an area that we believe we're well-positioned to tackle because we've built great technology for consumers. Institutions also want low costs for market access to crypto. And so we're really excited about the acquisition and working really closely with the team to make our joint products better and better.

Speaker Change: and we could see that accelerating accelerating our international expansion on the cryptose side

Vladimir Tenev: And then simultaneously we are looking into expanding to other jurisdictions. Thank you.

Speaker Change: significantly, and also

Michael Cyprys: dovetailing quite nicely with the large retail business that we currently have at Robinhood and the great product innovation that we're driving there.

John Todaro: Our next question comes from the line of John Tadaro of Needham. Hey guys, congrats on the quarter. Good results here.

Michael Cyprys: The other thing we're excited about is institutional business.

John Todaro: I just wanted to do about a little bit more to fit stamp. They offer a number of crypto offerings and then also the trading pairs. The first part of that is you anticipate growing products with that acquisition in the US are you still a little bit hamstring on regulation. That is the deciding factor. And then just two within that bit stamp historically, it's at higher trading fees and hood. Do you think those fees on the platform could kind of go higher as we saw K great going higher here or should we not read into that?

Michael Cyprys: and they have...

Speaker Change: Great relationships with institutions.

Speaker Change: It's an area that we believe we're well-positioned to tackle because we've built great technology for consumers and institutions also want low costs.

Speaker Change: for Market Access to Crypto.

Michael Cyprys: And so we're really excited about the acquisition.

Michael Cyprys: Working really closely with the team and

Unknown Executive: And I wouldn't over-index on their fee structure at this point. I tell you philosophically, we want to be the market share leader, and we want to offer really competitive rates to customers. And that's kind of the North Star that Robinhood operates under. We'd rather offer low fees and, due to our investments in technology and infrastructure, operate at a larger scale than our competitors.

Michael Cyprys: making our our joint products better and better. And I wouldn't over index on their fee structure at this point. I tell you, you know, philosophically we want to be the market share leader and we want to offer really competitive rates to customers.

Vladimir Tenev: I think there's two interesting things about the bid stamp acquisition that you should know. One of them is international. The second one is institutional. The business is a global business. It operates in a lot of jurisdictions and we could see that accelerating, accelerating our international expansion on the crypto side significantly. And also dovetailing quite nicely with the large retail business that we currently have at Robinhood and the great product innovation that we're driving there.

Michael Cyprys: And that's kind of the North Star that Robinhood operates under.

Michael Cyprys: Offer low fees, and due to our investments in technology and infrastructure, operate at larger scale than our competitors, so you should see us continuing to be aggressive there, but we don't have any specific...

Unknown Executive: So you should see us continuing to be aggressive there, but we don't have any specifics yet. I think it's premature to talk about specific changes to the fee structure at this point.

Speaker Change: I think it's premature to talk about like the specific changes to the fee structure at this point.

Vladimir Tenev: The other thing we're excited about is institutional business. And they have great relationships with institutions. It's an area that we believe were well positioned to tackle because we built great technology for consumers. And institutions also want low costs for market access to crypto. And so we're really excited about the acquisition and working really closely with the team and making our joint products better and better.

Operator: Thank you. Our next question comes from the line of Chris Allen. Thanks for taking the question, guys.

Speaker Change: Thank you.

Operator: comes from the line of Chris Allen of Citi.

Speaker Change: my next question

Michael Cyprys: Comes from the line of Chris Allen of Citi.

Chris Allen: Thanks for taking the question guys. I want to dig in a little bit on SEC lending if possible.

Speaker Change: We've seen some really nice growth in the customers enrolled and the customer custody enrolled.

Chris Allen: um

Chris Allen: And just maybe talking about the outlook here, are you seeing customers enrolled putting more money to work here? Are you seeing just the momentum pick up? And just during the quarter, was there any, how would you frame the environment from a SEC lending perspective? Because it looks slower at some of your competitors out there.

Vladimir Tenev: And I wouldn't over index on their fee structure at this point. I tell you, philosophically, we want to be the market share leader and we want to offer really competitive rates to customers. And that's kind of the north star that Robinhood operates under. We'd rather offer low fees and due to our investments in technology and infrastructure operate at larger scale than our competitors. So you should see us continuing to be aggressive there. But we don't have any specific, I think it's premature to talk about like the specific changes to the fee structure at this point.

Unknown Executive: Thank you.

Unknown Executive: Sure, I'll go ahead and take that. I mean, the primary inputs to the business are signing up more customers. And we saw a really nice pickup there. About 400,000 customers joined the program in the quarter, and the assets that are enrolled increased by a little over $6 billion.

Speaker Change: Sure, I'll go ahead and take that. I mean, the primary inputs to the business are signing up more customers. And we saw a really nice pickup there.

Speaker Change: About 400,000 customers joined the program.

Chris Allen: in the quarter.

Chris Allen: and the assets that are enrolled, and that increased by a little over $6 billion.

Unknown Executive: So really, really strong inputs into the business. I thought the trading desk did a really nice job. You know, the other input is just the rates that are available and the specific names that we call specials, where there's a higher rebate that we'll earn on lending activity. And we saw, you know, some nice, attractive returns in the quarter. So I'd say, you know, the inputs and the momentum of growing that program are really strong. The trading desk is just doing a great job. And we'll have to see how the rest of the year plays out.

Chris Allen: So really, really strong inputs into the business. I thought the trading desk did a really nice job.

Chris Allen: The other input is just the rates that are available and the specific names that we call specials, where there's a higher rebate that we'll earn on lending activity.

Unknown Executive: Our next question comes from the line of Chris Allen of City. Thanks for taking the question, guys. I wanted to dig in a little bit on sec lending if possible. I've seen some really nice growth in the customers enrolled, and they asked me to be enrolled. And just maybe talking about the outlook here, are you seeing customers enrolled putting more money to work here? Are you seeing just a momentum pick up? And just starting the corner, how would you frame the environment from a sec lending perspective? Because it looks slower at some of your competitors out there.

Chris Allen: You know, some nice, attractive returns in the quarter. So I'd say, you know, the inputs and the momentum of growing that program is really strong. The trading desk is just doing a great job, and we'll have to see how the rest of the year plays out.

Operator: The next question comes from the line of Matthew O'Neill of FCC. Yeah, hi. Good afternoon.

Speaker Change: Thank you. Our next question comes from the line of Matthew O'Neill of FT Partners.

Operator: My next question comes from the line of Matthew O'Neill of FT Park. Yeah, hey, good afternoon. Good evening.

Speaker Change: Good afternoon, good evening, everybody. Thanks so much for the question. Just wanted to follow up. Really, the only nit to pick here maybe was the monthly active user number, and I fully recognize the importance of that number is probably coming down over time as you diversify into more

Unknown Executive: Sure, I'll go ahead and take that. I mean, the primary inputs to the business are signing up more customers, and we saw a really nice pick up there. About 400,000 customers joined the program in the quarter, and the assets that are enrolled, and that increased by a little over six billion. So really, really strong inputs into the business. I thought the trading desk did a really nice job. The other input is just the rates that are available, and the specific names that we call specials, where there's a higher rebate that we'll earn on lending activity.

Unknown Executive: And we saw some nice attractive returns in the quarter. So I'd say the inputs and the momentum of growing that program is really strong. The trading desk is just doing a great job, and we'll have to see how the rest of the year plays out.

Speaker Change: products and you know some are longer term and less frequently used but just curious if there's anything to call out maybe around crypto activity or otherwise. Thanks.

Unknown Executive: Yeah, I'll go ahead and do that, and then maybe Jason will have some thoughts. One of the reasons we de-emphasized monthly active users, besides, as you mentioned, investing in all these diversified products like Robinhood Gold, which is a yield-based product and retirement, and not directly monetizing monthly active users yet, like we don't have an advertising business, for instance, is that it's just volatile quarter to quarter. And a lot of the monthly active user variation is just driven by what's going on in the crypto market.

Speaker Change: Yeah.

Speaker Change: and then maybe Jason will have some thoughts. One of the reasons we de-emphasized the

Speaker Change: Monthly active users besides

Jason Warnick: As you mentioned, you know, us investing in all these diversified products, like

Jason Warnick: Gold, which is a yield-based product and retirement.

Speaker Change: and us not directly monetizing monthly active users yet.

Jason Warnick: Like, we don't have an advertising business, for instance.

Jason Warnick: Is that it's just volatile quarter to quarter. And a lot of the monthly active user variation is just driven by what's going on in the crypto market. So since we're so large in retail crypto, that can cause

Unknown Executive: So since we're so large in retail crypto, that can cause meaningful swings in monthly active users quarter over quarter. And that's pretty much what you see going on. When the crypto markets are hot, there's a huge immediate spike in monthly active user engagement metrics. But then, when crypto cools down, that tends to drop more acutely as well. And I think that's pretty similar to what you'd see across the entire crypto market. I think that's not an idiosyncratic Robinhood phenomenon.

Matthew O'Neill: Thank you. My next question comes from the line of Matthew O'Neill of FT Partners. Yeah, hi. Good afternoon. Good evening, everybody. Thanks so much for the question.

Jason Warnick: meaningful swings in monthly active users quarter-over-quarter

Vladimir Tenev: I just wanted to follow up really the only knit to pick here maybe was the monthly active user number, and I fully recognize the importance of that number is probably coming down over time as you diversify into more products and some longer term and less frequently used, but just curious if there's anything to call out, maybe around crypto activity or otherwise. Thanks. Yeah, I'll feel bad and then maybe Jason will have some thoughts.

Jason Warnick: And that's pretty much what you see going on. You know, when the crypto markets are hot, there's a huge immediate spike in monthly active user engagement metrics. But then when crypto cools down, that tends to drop more acutely as well.

Jason Warnick: and i think that's pretty similar to what you'd see across the entire crytoill market i think that's not a idiosynchric robinhood phenomenon

Vladimir Tenev: One of the reasons we deemphasized monthly active users besides, as you mentioned, you know, us investing in all these diversified products like Robinhood Gold, which is a yield based product and retirement. And us not directly monetizing monthly active users yet, like we don't have an advertising business, for instance, is that it's just volatile quarter to quarter and a lot of the monthly active user variation is just driven by what's going on in the crypto market.

Operator: Our next question comes from the line of Ken Worthington of JP Morgan.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Ken Worthington of J.P. Morgan.

Operator: Hi, thanks for taking the question. I would love to get a bit more color on how the recent market sell-off has impacted your customers. You gave us some color on trading activity, but margin balances have been growing, as you called out, sort of recovering with the market, but then growing with the more competitive market rates that you announced, sort of going right into this sell-off. So how did Robinhood customers perform in the sell-off in August in recent days? And can you distinguish the health of your equity-type long-only customers, given their access to leverage, versus those with option capabilities where they can both hedge and speculate with options?

Ken Worthington: Hi, thanks for taking the question. I would love to get a bit more color on how the recent markets show off.

Ken Worthington: has impacted your customers. You gave us some color on trading activity. But margin balances have been growing, as you called out, sort of recovering with the market.

Ken Worthington: but then growing with the more competitive market rates that you announced.

Speaker Change: Sort of going right into this sell-off. So how did Robinhood

Vladimir Tenev: So since we're so large and retail crypto, that can cause meaningful swings in monthly active users quarter over quarter. And that's pretty much what you see going on, you know, when the crypto markets are hot, there's a huge immediate spike in monthly active user engagement metrics, but then when crypto cools down, that tends to drop more acutely as well. And I think that's pretty similar to what you'd see across the entire crypto market. I think that's not a idiosyncratic Robinhood phenomenon. Thank you.

Speaker Change: customers perform in the sell-off in August in recent days? And can you distinguish the health of your equity sort of long-only customers given their access to leverage versus those with option capabilities where they can both hedge and speculate with options?

Unknown Executive: Yeah, I'll go ahead and take this and, glad you can, you know, add some context. So first of all, customers who are trading options and those that are using leverage tend to be our more advanced customers, and they use a variety of trading strategies to create returns. You know, the thing that I would point to is that we feel great about offering low prices and attractive rates. And the rates that we offer on the margin book, as an example, are, on average, leading across the industry.

Speaker Change: Yeah, I'll go ahead and take this and I'm glad you can, you know, add some context. So first of all,

Speaker Change: You know, customers who are trading options and those that are using leverage tend to be

Speaker Change: are more advanced customers, and they're using a variety of trading strategies to create returns.

Ken Worthington: My next question comes from the line of Ken Worthington of JP Morgan. Hi, thanks for taking the question. I love to get a bit more color on how the recent market to sell off has impacted your customers. You gave us some color on trading activity, but margin balances have been growing as you called out, sort of recovering with the market. But then growing with the more competitive market rates that you announced, sort of going right into this sell-off.

Speaker Change: The thing that I would point to is that we feel great about offering low-price,

Ken Worthington: So how did Robinhood customers perform in the sell-off in August and recent days? And can you distinguish the health of your equity, sort of long-only customers, given their access to leverage versus those with option capabilities where they can both hedge and speculate with options?

Unknown Executive: And so I feel really good about that. I don't think we've shared any specifics on specific returns that individual customers are having or groups of customers. But what I'd tell you is, almost every time I look at the daily summary reports, when there's a sell-off, our customers are buying, or when prices are up, our customers are selling. And that contributes to kind of, you know, a pretty attractive return capability for customers. That's all the thing that I'd add.

Jason Warnick: and Attractive Rates. And the rates that we offer on the margin book

Jason Warnick: As an example, or on average, leading across the industry.

Jason Warnick: And so, I feel really good about that. I don't think we've shared any specifics on...

Jason Warnick: on specific returns that individual customers are having or groups of customers. What I'll tell you is almost every time I look at the daily summary reports.

Ken Worthington: When there's a sell-off, our customers are buying, or when prices are up, our customers are selling. And that contributes to kind of a pretty attractive return capability for customers.

Unknown Executive: The only thing that I'd add, Ken, is that there are a number of areas that we're focused on, and I outlined them in the call. One of them is being the leader in the active trader market. And I think the goal there is that when people think of Robinhood in the active trader space, they should associate us with being at the forefront of technology and innovation in trading. And I think products like 24-hour market reinforce that.

Jason Warnick: Yeah, I'll go ahead and take this and glad you can add some contact. So first of all, customers who are trading options and those that are using leverage tend to be are more advanced customers, and they're using a variety of trading strategies to create returns. The thing that I would point to is that we feel great about offering low price and attractive rates, and the rates that we offer on the margin book as an example are on average leading across the industry.

Ken Worthington: backking

Jason Warnick: Yeah, the only thing that I'd add, Ken, is, you know, there's a number of areas that we're focused on, and I outlined them in the call, but one of them is being the leader in the active trader market.

Speaker Change: And I think when the goal there is when people think of Robinhood in the active trader space.

Speaker Change: They should associate us with being at the frontier of...

Speaker Change: Technology and Innovation in Trading.

Speaker Change: and I think products like 24-Hour Market reinforce that.

Unknown Executive: And we do have work to do, both on the product side and kind of in how we tell the story, to move away from sort of this, like, thought that we're for novices. The reality is that most of our customers are in their 30s, you know, they're definitely adults, and they're extremely sophisticated.

Jason Warnick: And we do have work to do both on the product side and kind of in how we tell the story to move away from sort of this like thought that we're for novices. The reality is most of our customers are in their 30s, you know, they're definitely adults and they're extremely sophisticated.

Jason Warnick: And so feel really good about that. I don't think we've shared any specifics on specific returns that individual customers are having or groups of customers. But what I'll tell you is almost every time I look at the daily summary reports when there's a sell-off our customers are buying or when prices are up, our customers are selling. And that contributes to kind of a pretty attractive return capability for customers.

Unknown Executive: And we're in a competitive market for serving this very real use case, and we're gaining market share, and it's a big part of the core business. But we also have customers that are coming to us for Robinhood Gold, for our high-yield products, for our awesome retirement products that have been growing assets very, very tremendously. And, you know, they're less interested in trading actively, and that's fine, too

Jason Warnick: We're in a competitive market for serving this very real use case, and we're gaining market share, and it's a big part of the core business.

Jason Warnick: Gold. But we also have customers that are coming to us for Robinhood Gold for our high yield products.

Speaker Change: for our awesome retirement products that has been growing assets very, very tremendously. And, you know, they're less interested in trading actively, and that's fine, too. We think that we can be a leader in wallet share, particularly for the millennial generation. And that's something that we're also focused on.

Vladimir Tenev: The only thing that I'd add, Ken, is there's a number of areas that we're focused on and I outlined them in the call. One of them is being the leader in the active trader market. And I think when the goal there is when people think of Robinhood in the active trader space, they should associate us with being at the frontier of technology and innovation in trading. And I think products like 24-hour market reinforce that.

Operator: We think that we can be a leader in wallet share, particularly for the millennial generation, and that's something that we're also focused on. There are going to be tens of trillions of assets going from baby boomers down to Gen X and Gen Y and beyond, and we're putting Robinhood at a position to be one of the, if not the primary beneficiary of that long-term shift in assets. And that's kind of how you're seeing the work we're doing in ACATs, diversifying the business and adding support for different assets. And so we're very excited about that, but we think we can be leaders in both.

Speaker Change: There's going to be tens of trillions of assets.

Speaker Change: going from baby boomers down to Gen X and Gen Y and beyond. We're putting Robinhood in a position to be one of the, if not the primary beneficiary of that long-term shift in assets.

Vladimir Tenev: And we do have work to do both on the product side and kind of in how we tell the story. To move away from sort of this like thought that we're for novices. The reality is most of our customers are in their 30s. They're definitely adults and they're extremely sophisticated and we're in a competitive market for serving this very real use case and we're gaining market share and it's a big part of the core business.

Speaker Change: How you're seeing the work we're doing in ACATs, diversifying the business and adding support for different assets. And so we're very excited about that, but we think we can be leaders in both.

Operator: Thank you. Our next question comes from the line of Ben Budish of Barclays.

Speaker Change: Thank you. Our next question comes from the line of Ben Budish of Barclays.

Operator: Hi, good evening, and thanks for taking the question. I was wondering, maybe following up some of your comments there, Vlad, if you could unpack a little bit the growth in options over the course of the year. You know, what are you seeing in terms of like-for-like growth or almost the same unit or same sales, if you will? Are you seeing, you know, any stats you can share around the number of customers enabled for options, or is it sort of the existing base sort of getting more active?

Vladimir Tenev: But we also have customers that are coming to us for Robinhood gold for our high yield products for our awesome retirement products that has been growing assets very, very tremendously and you know they're less interested in trading actively. And that's fine too. We think that we can be a leader in wallet share particularly for the millennial generation and that's something that we're also focused on. There's going to be tens of trillions of assets going from baby boomers down to Gen X and Gen Y and beyond.

Ben Budish: Hi, good evening, and thanks for taking the question. I was wondering, maybe following up some of your comments there, Vlad, if you could unpack a little bit the growth in options over the course of the year. You know, what are you seeing in terms of like for like growth, or almost the same unit or same sales, if you will? Are you seeing, you know, any stats you can share around the number of customers enabled for options? Or is it sort of the existing base sort of getting more active? And when you talk about market share, you know, clearly your options activity is a percentage of overall industry activity is going up. What about on the customer side? To what degree do you know, to what extent are you seeing customers coming to Robinhood for options? Or how much of the growth is coming from new customers versus, you know, increased activity from from prior customers? Thank you. Transcribed by https://otter.ai

Operator: And when you talk about market share, you know, clearly, your options activity is a percentage of overall industry activity is going up. But what about on the customer side? To what extent are you seeing customers coming to Robinhood for options, or how much of the growth is coming from new customers versus, you know, increased activity from prior customers? Thank you.

Vladimir Tenev: And we're putting Robinhood a position to be one of the if not the primary beneficiary of that long term long term shift in assets and that kind of how you're seeing the work we're doing in ACATs diversifying the business and adding support for different assets. And so we're very excited about that but we think we can be leaders and folks.

Unknown Executive: Yeah, I mean, the thing I'm going to tell you, and maybe Jason can jump into this, our options team's been doing a great job. We have one major advantage, I mean, several major advantages relative to what you see elsewhere in the options market. First of all, we don't charge options contract fees. So most of our competitors charge 65 cents a contract, which can add up if you're an active trader. And so

Ben Budish: Thank you.

Speaker Change: Yeah, I mean,

Vlad Tenev: The thing I tell you, and maybe Jason can jump into, our options team has been doing a great job. We have one major advantage, I mean several major advantages relative to what you see elsewhere in the options market.

Speaker Change: First of all, we don't charge options contract fees, so most of our competitors charge $0.65 a contract, which can add up if you're an active trader.

Vladimir Tenev: Our next question comes from the line of Ben Budish, of Barclays. Hi, a good evening and thanks for taking the question. I was wondering if maybe following up on some of your comments they're glad if you could unpack a little bit the growth and options over the course of the year. What are you seeing in terms of like for like growth or almost the same unit or same sales if you will, are you seeing any stats you can share around the number of customers enabled for options or is it sort of the existing base sort of getting more active.

Unknown Executive: From a purely economic perspective, you're kind of at a disadvantage if you trade options outside of Robinhood, particularly for active traders. The other area is the user experience, and we've built and announced some amazing tools in the past couple of quarters, including option-simulated returns, which gives people a pretty advanced analytic tool that they previously were downloading other products and paying subscription fees to get. Now that's built in with Robinhood, and we've done awesome improvements to the user experience to make it easier for customers to do the transactions that they want to do.

Jason Warnick: purely economic perspective, you're kind of at a disadvantage.

Jason Warnick: If you trade options outside of Robinhood, particularly for active traders.

Jason Warnick: The other area is the user experience, and we've built and announced

Speaker Change: Some amazing tools in the past couple of quarters, including option simulated returns, which gives people pretty advanced analytic tool that they previously were downloading other products and paying subscription fees to get now that's built in with Robinhood.

Vladimir Tenev: And when you talk about market share, clearly your options activity is a percentage of overall industry activity is going up. What about on the customer side, what degree do you, at Accent, are you seeing customers coming to Robinhood for options or how much of the growth is coming from new customers versus increased activity from prior customers. Thank you. Yeah, I mean, the thing I tell you and maybe Jason can jump into our option teams been doing a great job.

Speaker Change: and we've done

Speaker Change: Awesome improvements to the user experience.

Speaker Change: to make it easier for customers to do the transactions that they want to do. And we've got a lot of remaining work to do. We know a lot of our customers like trading options on desktop where they get additional screen real estate and have the opportunity to do more research on platform.

Unknown Executive: And we've got a lot of remaining work to do. We know a lot of our customers like trading options on desktop, where they get additional screen real estate and have the opportunity to do more research on the platform. And so we're confident that we can keep growing that market share even further.

Vladimir Tenev: We have one major advantage, I mean several major advantages relative to what you see elsewhere in the options market. First of all, we don't charge options contract fees. So most of our competitors charge 65 cents at contract, which can add up if you're an active trader. And so purely economic perspective, you're kind of at a disadvantage if you trade options outside of Robinhood, particularly for active traders. The other area is the user experience.

Speaker Change: And so we're confident that we can keep growing that market share even further.

Unknown Executive: Yeah, I would just say that the number of customers trading options is up about 25% year over year.

Speaker Change: Yeah, I would just say that the number of customers trading options are up about 25% year-over-year.

Unknown Executive: Yeah, the team's really been doing a great job.

Operator: Thank you. I would now like to turn the conference back to Vlad Tenev for his closing remarks, sir.

Speaker Change: Thank you. I would now like to turn the conference back to Vlad Tenev for closing remarks, sir.

Vlad Tenev: Okay, well, thank you everyone for listening. We really appreciate the engagement from shareholders and the analyst community, and also a special shout out to the retail analysts. We have a lot of retail analysts that cover the company as well. Maybe they're not on these calls, but they're on YouTube and on X. We appreciate you all and look out for us on podcasts and other things in the next couple of days where we'll share more about the company. This concludes today's conference call. Thank you for participating. You may now go on. [music] Thanks for watching!

Vlad Tenev: Okay, well, thank you everyone for listening. We really appreciate the engagement from shareholders and the analyst community.

Vladimir Tenev: And we've built and announced some amazing tools in the past couple of quarters, including option simulated returns, which gives people pretty advanced analytic tool that they previously were downloading other products and paying subscription fees to get. Now that's built in with Robinhood. And we've done awesome improvements to the user experience to make it easier for customers to do the transactions that they want to do. And we've got a lot of remaining work to do.

Speaker Change: And also a special shout out to the retail analysts. We have a lot of retail analysts that cover the company as well. Maybe they're not on these calls, but they're on YouTube and on X.

Speaker Change: We appreciate you all and look out for us on podcasts and other things in the next couple of days where we'll share more about the company.

Operator: This concludes today's conference call. Thank you for participating. You may now [music] Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music [music] Thank you for standing by and welcome to Robinhood second quarter 2024 earnings conference call.

Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.

Vladimir Tenev: We know a lot of our customers like trading options on desktop where they get additional screen real estate and have the opportunity to do more research on platform. And so we're confident that we can keep growing that market share even further.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, please press star 11 again. I would now like to hand the call over to Chris Koegel, VP of Corporate FP&A and Investor Relations. Please, go ahead.

Jason Warnick: Yeah, I would just say that the number of customers trading options are up about 25% year over year. Yeah, the team's really been doing a great job. Thank you.

Vladimir Tenev: I would now like to turn the conference back to Vlad 10F for closing remarks, sir.

Vladimir Tenev: Okay, well, thank you everyone for listening. We really appreciate the engagement from shareholders and the analyst community. And also special shout out to the retail analysts. We have a lot of retail analysts that cover the company as well. Maybe they're not on these calls, but they're on YouTube and on X. We appreciate you all and look out for us on podcasts and other things in the next couple of days where we'll share more about the company.

Speaker Change: Jeremy Mac for more Great Stories from Vanity Fair! Subscribe to our YouTube channel for more great stories!

Unknown Executive: This concludes today's conference call. Thank you for participating. You may now. Paul Disconnect[inaudible] very, very, very, very, very, very, . .

Speaker Change: Thanks for watching!

Speaker Change: ? ? ? ? ? ? ? ? ?

Chris Koegel: Thank you, Lateef, and thank you to everyone for joining Robinhood's Q2 earnings call. With us today are CEO and co-founder Vlad Tenev and CFO Jason Warnick.

Speaker Change: Why are you here? RESCUE.WEBS.Copenhagen.def

Speaker Change: Minashif Number One Hi, I'm Chris Koegel. I make 3D Dragons, Team 별로, Team Nehnut I plays the Battle Boy Assistant. Thanks for watching!

Unknown Executive: [inaudible] I'm going to tell you something,[inaudible] you something, I'm going[inaudible] Thank you, Lateef, and thank you to everyone for joining Robinhood's Q2 earnings call.

Chris Koegel: Before getting started, I just want to remind you that today's call will contain forward-looking statements. The 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 results we consider most comparable can be found in the earnings presentation. With that, I will turn it over to Vlad.

Speaker Change: Thank you for standing by, and welcome to Robinhood's second quarter, 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone.

Speaker Change: To remove yourself from the queue, please press star 1 1 again.

Vlad Tenev: Thanks, Chris. Hi everyone.

Chris Koegel: I would now like to hand the call over to Chris Koegel, VP of Corporate FP&A and Investor Relations. Please go ahead.

Vlad Tenev: Let me start with the three things Robinhood is focused on. Number one, winning the active trader market. Number two, increasing wallet share with our customers. And number three, expanding internationally. We're making progress across all three of these, and in Q2, we delivered another quarter of strong results and several financial records. More specifically, our retail trading market share continued to increase, leading to year-over-year growth in equity, option, and crypto volumes. Net deposits were a new record of $13 billion in the quarter, translating to a 41% annualized growth rate.

Chris Koegel: Thank You Lateef and thank you to everyone for joining Robinhood's Q2 earnings call. With us today are CEO and co-founder Vlad Tenev and CFO Jason Warnick.

Vlad Tenev: With $11 billion in Q1, we've already exceeded our long-term annual target of 20%-plus, and we're only halfway through the year. Gold subscribers reached a record 2 million, which is over 60% year-over-year growth, and now over 8% of funded customers are gold members. And these results, combined with continued expense discipline, drove 40% year-over-year revenue growth to a record $682 million, as well as record EPS of $0.

Chris Koegel: Before getting started, I just want to remind you that today's call will contain forward-looking statements.

Speaker Change: Actual results can differ materially from our expectations and we have no duty to provide updates unless legally required.

Speaker Change: 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.

Speaker Change: Today's discussion will also include non-GAAP financial measures. Reconciliations to the GAAP results we consider most comparable can be found in the earnings presentation.

Vlad Tenev: There's still so much to do, so we're not slowing down. On the active trader front, we've been consistently growing our market share among equities and options. But until recently, one area where, candidly, our progress has not been so great is margin. And this is a huge opportunity for us, as brokerage incumbents generate far more revenue on margin than on trading. In particular, we were not getting much adoption from customers with larger margin balances because our rates were not very competitive.

Vlad Tenev: So we introduced industry-leading rates for active traders in May, and this, coupled with the continued improvements we're making to the account transfer flow, led margin balances to grow by over 20% in the last five weeks of the quarter to a two-year high of $5 billion. Now 75% of that growth came from customers with margin balances over $100K. So we're really pleased with the progress we're making on margin with our large active, and we're continuing to see strong margin balance growth in Q3.

Speaker Change: With that, let me turn it over to Blyde.

Blyde: Thanks, Chris. Hi, everyone. Let me start with the three things Robinhood is focused on. Number one, winning the active trader market. Number two, increasing wallet share with our customers. And number three, expanding internationally.

Blyde: We're making progress across all three of these, and in Q2 we delivered another quarter of strong outcomes and several financial records.

Vladimir Tenev: With us today, our CEO and co-founder, Vlad Tenev and CFO, Jason Warnick.

Speaker Change: More specifically, our retail trading market share continued to increase, leading to year-over-year growth in equity, option, and crypto volumes.

Vladimir Tenev: Before getting started, I just want to remind you that today's call will contain forward-looking statements. Actual results can 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 development 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.robenhood.com. Today's discussion will also include non-gap financial measures. Reconciliation to the gap results we consider most comparable can be found in the earnings presentation.

Speaker Change: Net deposits were a new record of $13 billion in the quarter, translating to a 41% annualized growth rate. With $11 billion in Q1, we've already exceeded our long-term annual target of 20% plus, and we're only halfway through the year.

Speaker Change: Gold subscribers reached a record 2 million, which is over 60% year-over-year growth, and now over 8% of funded customers are gold members.

Speaker Change: And these results, combined with continued expense discipline, drove 40% year-over-year revenue growth to a record $682 million, as well as record EPS of $0.21.

Vladimir Tenev: With that, let me turn it over to Vlad. Thanks, Chris. Hi, everyone.

Vladimir Tenev: Let me start with the three things Robinhood is focused on. Number one, winning the active trader market. Number two, increasing wallet share with our customers. And number three, expanding internationally. We're making progress across all three of these.

Speaker Change: There's still so much to do so we're not slowing down on the active trader front

Speaker Change: We've been consistently growing our market share among equities and options.

Speaker Change: But, until recently, one area where, candidly, our progress has not been so great is margin. And this is a huge opportunity for us, as brokerage incumbents generate far more revenue on margin than even trading.

Vladimir Tenev: And in Q2, we delivered another quarter of strong outcomes and several financial records. More specifically, our retail trading market share continue to increase. We're leading to year-over-year growth and equity option and crypto volumes. Net deposits were a new record of 13 billion in the quarter, translating to a 41% annualized growth rate. With 11 billion in Q1, we've already exceeded our long-term annual target of 20% plus. And we're only halfway through the year.

Speaker Change: In particular, we were not getting much adoption from customers with larger margin balances because our rates were not very competitive.

Speaker Change: So we introduced industry-leading rates for active traders in May, and this, coupled with the continued improvements we're making to the accounts transfers flow, led margin balances to grow by over 20% in the last five weeks of the quarter to a two-year high of $5 billion.

Vladimir Tenev: Gold subscribers reached a record 2 million, which is over 60% year-over-year growth. And now, over 8% of funded customers are gold members. And these results, combined with continued expense discipline, drove 40% year-over-year revenue growth to a record 682 million, as well as record EPS of 21 cents. There's still so much to do, so we're not slowing down.

Speaker Change: Now, 75% of that growth came from customers with margin balances over 100K. So we're really pleased with the progress we're making on margin with our large active customers. And we're continuing to see strong margin balance growth in Q3.

Vlad Tenev: Finally, we're nowhere close to being done building for active traders. There's plenty more coming, including our inaugural Hood Summit in October. We got a lot of positive feedback from our GOLD event in March, so we decided to host a special event just for our active traders, and this will be much bigger than the GOLD event. We'll be launching some awesome new products that we can't wait to tell you about. Now, I'll turn it over to Jason to review our financial results, and then I'll offer some additional thoughts. Thanks. Thank you.

Speaker Change: Finally, we're nowhere close to being done building for active traders. There's plenty more coming, including our inaugural Hood Summit in October .

Vladimir Tenev: On the active trader front, we've been consistently growing our market share among equities and options. But until recently, one area where candidly our progress has not been so great is margin. And this is a huge opportunity for us, as brokerage incumbents generate far more revenue on margin than even trading. In particular, we were not getting much adoption from customers with larger margin balances because our rates were not very competitive. So we introduced industry-leading rates for active traders in May.

Speaker Change: We had a lot of positive feedback from our gold event in March, so we decided to host a special event just for our active traders. And this will be much bigger than the gold event. We'll be launching some awesome new products that we can't wait to tell you about.

Vladimir Tenev: And this, coupled with the continued improvements we're making to the accounts transfers below, led margin balances to grow by over 20% in the last five weeks of the quarter to a 2-year high 5 billion. Now, 75% of that growth came from customers with margin balances over 100K. So we're really pleased with the progress we're making on margin with our large active customers. And we're continuing to see strong margin balance growth in Q3.

Speaker Change: Now, let me turn it over to Jason to review our financial results, and then I'll offer some additional thoughts.

Jason Warnick: Thanks, Vlad. It's good to speak with everyone today. As we discussed last quarter, we are focused on driving another year of profitable growth. And in Q2, we continue to make good progress. We drove new highs in revenues, adjusted EBITDA, net income, and GAAP EPS in Q2. Compared to a year ago, total net revenues grew 40% to $682 million, and adjusted EBITDA roughly doubled to $301 million. Incremental margins were 77%. Adjusted EBITDA margins expanded by 13 points to 44%.

Jason Warnick: Thanks Vlad, it's good to speak with everyone today. As we discussed last quarter, we are focused on driving another year of profitable growth and in Q2 we continue to make good progress.

Jason Warnick: We drove new highs in revenues, adjusted EBITDA, net income, and GAAP EPS in Q2.

Jason Warnick: Compared to a year ago, total net revenues grew 40% to $682 million, adjusted EBITDA roughly doubled to $301 million, incremental margins were 77%.

Jason Warnick: Adjusted EBITDA margins expanded by 13 points to 44% as we make progress over time towards the 50% plus levels comparable to what we see from incumbent brokerage firms.

Jason Warnick: As we make progress over time towards the 50% plus levels, comparable to what we see from incumbent brokerage. And net income was $188 million, or $0.21 per share, up seven times from a year ago. And taking a look at the past year, it's great to see how a number of strong quarters came together.

Vladimir Tenev: Finally, we're nowhere close to being done building for active traders. There's plenty more coming, including our inaugural hood summit in October. We have a lot of positive feedback from our gold event in March. So we decided to host the special event just for our active traders. And this will be much bigger than the gold event. We'll be launching some awesome new products that we can't wait to tell you about.

Jason Warnick: And net income was $188 million or $0.21 per share, up seven times from a year ago.

Jason Warnick: For the last 12 months, revenues were over $2.2 billion, and adjusted EBITDA was over $800 million, both new highs. We're pleased with these results as we aim to continue delivering profitable growth in 2020. Now, let's move to Q2 business results. Assets Under Custody finished Q2 at a record $140 billion, up 57% year over year.

Jason Warnick: And taking a look at the past year, it's great to see how a number of strong quarters came together. For the last 12 months, revenues were over $2.2 billion and adjusted EBITDA was over $800 million, both new highs.

Jason Warnick: Now, let me turn it over to Jason to review our financial results, and then I'll offer some additional thoughts. Thanks, lad. It's good to speak with everyone today. As we discuss last quarter, we are focused on driving another year of profitable growth. And in Q2, we continue to make good progress. We drove new highs and revenues, adjusted EBITDA, net income, and gap EPS in Q2. Compared to a year ago, total net revenues grew 40% to 682 million, adjusted EBITDA, roughly doubled to 301 million, incremental margins were 77%.

Jason Warnick: We're pleased with these results as we aim to continue delivering profitable growth in 2024.

Jason Warnick: Now let's move to Q2 business results. Assets Under Custody finished Q2 at a record $140 billion, up 57% year-over-year.

Jason Warnick: A key driver of that asset growth was record Q2 net deposits of over $13 billion, which translates to a 41% annualized growth rate. It's also great to see how assets continue to diversify. For example, retirement AUC was nearly $9 billion in Q2, more than doubling from last quarter.

Jason Warnick: A key driver of that asset growth was record Q2 net deposits of over $13 billion, which translates to a 41% annualized growth rate.

Jason Warnick: It's also great to see how assets continue to diversify. Retirement AUC was nearly $9 billion in Q2, more than doubling from last quarter. And cash suite balances were a record $21 billion in Q2, up 76% year over year.

Jason Warnick: Adjusted EBITDA margins expanded by 13 points to 44%. As we make progress over time towards the 50% plus levels, comparable to what we see from incumbent brokerage firms. And net income was 188 million, or 21 cents per share, up seven times from a year ago. And taking a look at the past year, it's great to see how a number of strong quarters came together. For the last 12 months, revenues were over 2.2 billion, and adjusted EBITDA was over 800 million, both new highs. We're pleased with these results as we aim to continue delivering profitable growth in 2024.

Jason Warnick: And cash sweep balances were a record $21 billion in Q2, up 76% year over year. We're also driving growth in Robinhood Gold, which continues to deliver value to both our customers and our shareholders. As a reminder, gold subscribers, on average, are seven times larger than our customers overall, have been growing net deposits twice as fast, and adopt products at higher rates, leading to gold ARPU that is over seven times our customer average. In Q2, we grew gold subscribers to 2 million, up over 60% year over year. This represents an adoption rate of 8.2% of customers, up from 5.3% a year ago.

Jason Warnick: We're also driving growth in Robinhood Gold, which continues to deliver value to both our customers and our shareholders.

Jason Warnick: As a reminder, gold subscribers, on average, are seven times larger than our customers overall, have been growing net deposits twice as fast, and adopt products at higher rates, leading to gold ARPU that is over seven times our customer average.

Jason Warnick: In Q2, we grew Gold subscribers to 2 million, up over 60% year-over-year. This represents an adoption rate of 8.2% of customers, up from 5.3% a year ago.

Jason Warnick: Now let's move to Q2 business results. Asset's undercut city finished Q2 at a record 140 billion, up 57% year over year. A key driver of that asset growth was record Q2 net deposits of over 13 billion, which translates to a 41% annualized growth rate. It's also great to see how assets continue to diversify. Retirement AUC was nearly 9 billion in Q2 more than doubling from last quarter. And cash sweep balances were a record 21 billion in Q2 of 76% year over year.

Jason Warnick: We are excited to see continued momentum in our gold program, which now includes annualized recurring subscription revenue of over $100 million. Now, let's turn to our financial results, starting with Q2 revenues compared to last quarter. Transaction-based revenues were roughly flat as equities and options increased while crypto revenues declined with industry volume. Net interest revenues grew due to higher securities lending activity and higher interest-earning asset balances, and other revenues increased driven by proxy seasonality and continued growth in Robinhood Gold. Turning to second quarter expenses, combined adjusted OPEX and SBC was $493 million in Q2.

Jason Warnick: We are excited to see continued momentum in our gold program, which now includes annualized recurring subscription revenue of over $100 million.

Jason Warnick: This includes increased employee bonus accruals, given the strong start we've had to the year, as well as some costs related to our two recently announced acquisitions, Bitstamp and Pluto. All in, through the first half of the year, our expenses are on track with the middle of our full year outlook range of $1.85 to $1.95 billion. So we're keeping our outlook unchanged, and we'll continue actively managing our expenses based on the returns we see on our growth investments, as well as the macro environment.

Speaker Change: Now let's turn to our financial results, starting with Q2 revenues compared to last quarter. Transaction-based revenues were roughly flat as equities and options increased while crypto revenues declined with industry volumes.

Speaker Change: Net interest revenues grew due to higher securities lending activity and higher interest earning asset balances, and other revenues increased driven by proxy seasonality and continued growth in Robinhood Gold.

Jason Warnick: We're also driving growth in Robinhood Gold, which continues to deliver value to both our customers and our shareholders. As a reminder, gold subscribers on average are seven times larger than our customers overall. We have been growing net deposits twice as fast and adopt products at higher rates, leading to gold RPU that is over seven times our customer average. In Q2, we grew gold subscribers to 2 million, up over 60% year over year. This represents an adoption rate of 8.2% of customers, up from 5.3% a year ago. We are excited to see continued momentum in our gold program, which now includes annualized recurring subscription revenue of over 100 million.

Jason Warnick: Turning to second quarter expenses, combined adjusted OPEX and SBC was $493 million in Q2.

Jason Warnick: This includes increased employee bonus accruals given the strong start we've had to the year, as well as some costs related to our two recently announced acquisitions, Bitstamp and Pluto.

Jason Warnick: All in, through the first half of the year, our expenses are on track with the middle of our full year outlook range of $1.85 to $1.95 billion.

Jason Warnick: So, we're keeping our outlook unchanged and we'll continue actively managing our expenses based on the returns we see on our growth investments, as well as the macro environment.

Jason Warnick: Before I pass the call back to Vlad, I want to share some thoughts about how we are thinking about capital deployment. When we think about capital allocation, our primary objective is to maximize earnings and free cash flow per share over time.

Speaker Change: Before I pass the call back to Vlad, I want to share some perspectives about how we are thinking about capital deployment.

Jason Warnick: Now let's turn to our financial results starting with Q2 revenues compared to last quarter. Transactivity revenues were roughly flat as equities and options increased while crypto revenues declined with industry volumes. Net interest interest revenues grew due to higher securities lending activity and higher interest earning asset balances. And other revenues increased driven by proxy seasonality and continued growth in Robinhood Gold. Turning to second quarter expenses, combined adjusted off-ex and SBC was $493 million in Q2.

Speaker Change: When we think about capital allocation, our primary objective is to maximize earnings and free cash flow per share over time.

Jason Warnick: We do this by allocating capital to organic growth and M&A to drive earnings and free cash flow higher. And we complement that with share repurchases that can increase the value per share. And in Q2, we made good progress. First, we continue to invest in organic growth in areas like product development, marketing, and customer matching. We have a lot of momentum, and I like the economics we're driving. Second, we announced two acquisitions.

Jason Warnick: We do this by allocating capital to organic growth and M&A to drive earnings and free cash flow higher. And we complement that with share repurchases that can increase the value per share.

Jason Warnick: And in Q2, we made good progress.

Jason Warnick: This includes increased employee bonus accruals given the strong start we've had to the year, as well as some costs related to our two recently announced acquisitions, Fid Stamp and Pluto. All in, through the first half of the year, our expenses are on track with the middle of our full year outlook range of 1.85 to 1.95% So we're keeping our outlook unchanged and will continue actively managing our expenses based on the returns we see on our growth investments, as well as the macro environment.

Jason Warnick: First, we continue to invest in organic growth in areas like product development, marketing, and customer matches. We have a lot of momentum, and I like the economics we're driving.

Jason Warnick: In June, we signed an agreement to acquire Bitstamp, a global crypto exchange. We believe it will accelerate our crypto roadmap, enabling us to serve a broader user base, enhance our capabilities, and provide additional liquidity for crypto trading. Additionally, we acquired Pluto to help us move even faster in AI and advisory. We're excited to share more as we make progress here. And finally, we announced a 1 billion share repurchase authorization.

Jason Warnick: Second, we announced two acquisitions. In June , we signed an agreement to acquire Bitstamp, a global crypto exchange. We believe it will accelerate our crypto roadmap, enabling us to serve a broader user base, enhance our capabilities, and provide additional liquidity for crypto trading.

Jason Warnick: Additionally, we acquired Pluto to help us move even faster in AI and advisory. We're excited to share more as we make progress here.

Jason Warnick: Before I pass the call back to Vlad, I want to share some perspectives about how we are thinking about capital deployment. When we think about capital allocation, our primary objective is to maximize earnings and free cash flow per share over time. We do this by allocating capital to organic growth and M&A to drive earnings and free cash flow higher and we complement that with share repurchases that can increase the value per share and in Q2, we made good progress. First, we continued to invest in organic growth in areas like product development, marketing, and customer matches. We have a lot of momentum and I like the economics we're driving.

Jason Warnick: Second, we announced two acquisitions. In June, we signed an agreement to acquire Fid Stamp, a global crypto exchange. We believe it will accelerate our crypto roadmap enabling us to serve a broader user base, enhance our capabilities, and provide additional liquidity for crypto trading. Additionally, we acquired Pluto to help us move even faster in AI and advisory. We're excited to share more as we make progress here. Finally, we announced a 1 billion share repurchase authorization which we started executing in July and currently expect to execute over a 2-3 year period. This timeline could vary depending on market conditions and other capital allocation opportunities.

Jason Warnick: Looking ahead, we believe we are well positioned to drive higher earnings and free cash flow per share over time, driven by our 20% plus debt deposit growth, naturally hedged business model, and 90% fixed cost base. We have a lot of momentum entering the second half of the year as our business is having a great start to Q3. As context, June was a strong month with nearly record options volume close to a 24-month high for equities volume and over 4 billion of net deposits.

Jason Warnick: And in July, trading volumes were more than 20% higher than June across equities, options, and crypto, and net deposits were again over 4 billion. While August is just getting started, so far it looks a lot like July, including over 1 billion of net deposits in the first week of August.

Vladimir Tenev: With that, I'll turn the call back to black. Thanks, Jason. As I said earlier, the second part of our strategy is increasing wallet share with customers, including growing Robinhood Gold subscriptions, which hit an all-time high in Q2. And we've been busy rolling out additional value for Robinhood Gold customers, including a 1% unlimited deposit boost and a new Gold credit card with 3% cash back.

Vladimir Tenev: Now, I've talked before about how we've been seeing the flywheel accelerate, and I thought I would explain in a little bit more detail how it works. So here it goes. First, our Gold Members receive industry leading economics in a world-class customer experience across all of our products and services. This leads to double the net deposit growth and higher multi-product adoption, including retirement adoption that's five times that of average customers. And as the flywheel spins, it leads to growth.

Vladimir Tenev: [inaudible] We've got a lot of work to do. We've got a lot of work to do. Yes, as a matter of fact, this is one of the top things that we've been focused on this year, and we've been actually making sure that the platform is very, very good. I've seen some demos of it, and the demos are looking great. And I think it's going to be an amazing product that customers will love. So, stay tuned. We can't wait to share it with you.

Unknown Executive: Alright, thanks, Vlad. That concludes our shareholder questions from SAID Technologies. We appreciate our shareholders taking time to ask these questions of Vlad and Jason, and look forward to more next quarter.

Unknown Executive: Now I'll turn the corner of the call back over to the Lateef to lead Q&A from our analysts. Thank you. As a reminder to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. We ask that you please limit yourself to one question and then recute.

Unknown Executive: Please stand by while we compile the Q&A roster.

Dan Joseph: Our first question comes from the line of Dan Joseph of Mizzouho. Hey Vlad, hey guys, really good results here. Hey, really amazing results here as always. I want to know about all the growth you're seeing in the 24 hour markets. And can you give me some color on the outage from earlier? This week because we've got a lot of questions about it. Thank you and great stuff.

Vladimir Tenev: Yeah, yeah, I'll feel that one and thank you Dan. So about 24 hour market, I first want to say that with this product, we're on the bleeding edge of technology in trading. This product is not commonly available with such a large instrument base to customers. And with any new product, you know, there's there's some sometimes, you know, things don't go exactly right in this particular case. The third party ATS that we route orders to, which is called Blue Ocean ATS, had some technology issues they couldn't handle the extreme demand this Sunday.

Vladimir Tenev: And they had to shut down. And this is disappointing for customers. I mean, we've had our share of scaling pains in the past. This time it's a third party, which is nonetheless very, very frustrating. But we've been working with the team over at Blue Ocean, making sure that, you know, we're being as helpful as possible and them scaling their infrastructure, helping them with testing. And we are confident that they have a testing and scaling plan in place that allow us to release this product safely and handle much larger load across all the symbols we offer.

Vladimir Tenev: And I think that's planning to be instituted over in the next week or so. I should also mention 24-hour market has been incredibly successful. And that's partly the cause of all this attention. We're nearing 30 billion in volumes since launch in the overnight hours. And we're really excited because... This product is one of the reasons why we believe that customers would be advantaged on Robinhood and they would have access that they wouldn't have on other platforms.

Vladimir Tenev: So we're going to continue to invest in it as with any product on the bleeding edge of innovation. You should expect the reliability and the quality to improve consistently over time. And we're going to make sure we continue to work with our partners including Blue Ocean so that we can deliver that. That for you all. Amazing momentum. Thanks again. Thanks Dan. Thank you.

Steven Chubak: Our next question comes from the line of Steven Chubak of Wolf Research. Please go ahead, Steven. Glad Jason Chris, good afternoon. Hope you're well. Why did this. Hi out there.

Jason Warnick: So I wanted to start off with a question just on a bigger picture on the crypto strategy. There's been some speculation that we could get some improved regulatory clarity on the crypto side, especially with the change in administration. And we're just hoping you could speak to the incremental revenue opportunity or how the strategy might evolve from expanding your crypto offering, whether it's adding additional coins, staking or lending. And specific to the quarter what drove the higher crypto take rate in to queue.

Jason Warnick: So I'll go ahead and start as Jason here in black and contribute it with his thoughts as well. So in terms of what the implications would be of improved regulatory environment for crypto, I think what that would do is really allow us to innovate more rapidly and bring more to market what customers would like to see in crypto. And in the current situation, we're able to do that more in the EU than we are in the US.

Jason Warnick: And I know that can be frustrating for our customers. And so I think you hit on some of the top things we'd be able to offer more coins. And certainly there's a wide selection of coins that because of the regulatory environment, we're not comfortable listening today. We'd also be able to innovate in new products and services, things like lending and staking and bring that to market. So in terms of the revenue opportunity, I think for tokens, you could just estimate looking at a share of market and overall industry volumes as they are traded in other platforms here in the US and abroad, as well as the other services that we don't yet offer.

Jason Warnick: So I think it could be meaningful, you know, and we're continuing to work with our regulators to gain that clarity. Yeah, and I would just add that, of course, clarity is good. And we believe the US needs to be a leader in crypto and we will get the clarity here in the domestic market. We haven't felt constrained by this with regard to our crypto business. We've been really happy at the speed of execution and innovation.

Jason Warnick: Of course, we built a system that offers different products, you know, Solana staking, more asset selection in the EU. In the US, there's plenty of work to do and we believe we can be successful, regardless of what administration ultimately ends up taking power in November or if it's the same one. We've done a lot of work to innovate on pricing and you've seen your overyear increases in market share and volumes of our crypto business as well. So there's plenty of work to do.

Jason Warnick: The second part of your question, Stephen, was around take rates. And so in the quarter, the crypto take rate was 38 dips. That's up three dips, quarter of a quarter. And that's really due to pricing experiments. Looking at Q3 in July, the crypto take rates were in the low 40 cent range. And see how we go from there, but we continue to offer great pricing to customers and are excited to see how the quarter plays out. Goods for a color.

Jason Warnick: And if I could just squeeze in one more just on the rate outlook, Fed futures, now pricing in four additional cuts since the last earnings call, it might be helpful if you could just speak to the sensitivity to rate cuts or provide an update, but also what are some of the potential offsets you envisage on the revenue side that could help mitigate some of that pressure on that eye. Sure, I'll take that one.

Jason Warnick: So first of all, we've got a lot of experience operating in different rate environments, high rate environments, low rate environments. One thing that we really like about our business is the natural offset between rates and trading. So as rates fall, asset values and trading tend to increase. And overall, lower rates tend to be a tailwind for growth for our business. I think there's a couple of important things to call out. First, we've been growing our interest earning assets at a really nice pace, but not all of our interest earning assets are sensitive to rate changes.

Jason Warnick: So actually over half of the balance of interest earning assets relates to our cash sweep and the spread we earn there is relatively fixed, which minimizes the impact of changes and rates. Second, we're broadening the way that we serve our customers, and that's leading to a much more diversified business for us. Specific to the question you asked about what the rate impact is. So assuming a 25 basis point change or decline, that would affect NIM by $40 million.

Jason Warnick: And, you know, hard to predict the exact timing, but we feel good about the natural hedge. We have a billion dollars of transaction based revenue, and it takes a relatively small uptick in trading activity to offset that declining interest. That's great color. Thanks so much for taking my questions. Yeah, be back.

Unknown Executive: Thank you.

Craig Siegenthaler: Our next question comes from the line of Craig Siegen-Thaller, a bank of America. Good afternoon, everyone. Hope you're all doing well.

Craig Siegenthaler: So my question is on big picture organic growth. This was the second quarter in a row that your total organic growth has exceeded 40% annualized. Now, there's a lot of drivers in there like the matching efforts, but some of your initiatives like the UK brokerage and your crypto are very early innings. So we wanted to get your potential, your thoughts on the potential organic growth rate in the second half just given all the moving pieces.

Craig Siegenthaler: So it is 40% sustainable. So we have a long track record of 20% plus organic growth rate, and we have a really strong first half of the year as you pointed out. I think what I can say would be helpful here is that that's continuing so far into Q3. We're seeing an incredibly strong July with activity across the three trading categories of 20% over the June levels, and we're seeing that continue in August.

Craig Siegenthaler: So over 4 billion of net deposits in July and over 1 billion in the first week of August. So all signs at this point in the quarter are showing that our customers continue to engage with us, continue to deposit their money with us. And I think it's glad mentioned we now have eight businesses where the annualized revenue run rates over $100 million. And so we're much more diversified today than we were even just a couple of years ago, and I think very well positioned, especially as we continue innovating for customers and rolling out new products to continue driving outsized organic growth.

Craig Siegenthaler: And I just want to emphasize one other thing I mentioned earlier in the remarks, which is that we haven't really taken the lid off of the new active trader products. Our active trader business is the most mature and investments that we make there have the most immediate impact on our business relative to our investments growing wallet share and also internationally. And we've got an event for our active traders in October where we're going to unveil some new products.

Craig Siegenthaler: And I think we're getting very, very excited about it. So, you know, those results that you're seeing, I mean, they're good results. We're proud of them, but I think we have plenty of room to run on the active trader side. And that includes margin, but it also includes new product innovations that we've been we've been baking for the majority of the year. Glad that's great to hear.

Vladimir Tenev: On the innovation side, I think there's still a few product gaps versus some of the more established online brokers, and I'm thinking like custody and mutual funds, fixed income products, CDs. Now you do a vacat functionality now, and I think that helps, but can you provide us an update on some of the near term product gaps that you can fill? Yeah, well, what I'll tell you is that on the active trader front, we've talked a lot about futures, we've talked a lot about how we're great on mobile, but there's a lot of existing customers that need the more power of a web interface and a desktop interface so they can take advantage of extra screen real estate and use better tools and charting.

Vladimir Tenev: So those are gaps in a way, but also opportunities for us to really differentiate and innovate and jump ahead of what we've seen elsewhere. I think regarding more sort of like passive buy and hold assets, like CDs and mutual funds, we're climbing the capability curve with our ACAD Transverse product, and we made a ton of progress just this year, making the process of moving assets into Robinhood as easy as possible. I think that's really led to some of the bottom line results that you're seeing, including net positive account transfers from every major incumbent brokerage firm for several quarters running now, and the goal would be to actually accelerate that over time.

Vladimir Tenev: We see plenty of opportunity, we want to remove reasons that customers have for withdrawing and we think we can systematically reduce reasons for withdrawals over the long run and also increase reasons for customers to deposit. And so this is one thing we're really focused on and it's going to take some time to play out, but I think you should see that reflect over the long run and increase net deposit activity. We're going to go through and add all of the assets that are missing, we're going to add all the capabilities, and then we're going to make sure the process of transferring is better at Robinhood than anywhere else.

Vladimir Tenev: And then the incentives that we offer because of our economics are just kind of the cherry on top that I think will really accelerate asset growth into the platform. So I'm getting there's so much to do here in or just at the beginning and we only started offering incoming ACATs in the past couple of years and we've already made a ton of progress here.

Vladimir Tenev: Thank you.

Unknown Executive: Again we ask that you limit yourself to one question and fall back into the queue.

Devin Ryan: Our next question comes from the line of Devon Ryan of Citizens' JMP. Hi, good afternoon, Vlad. Jason, great quarter.

Jason Warnick: Question, would love to just dig in a little bit around how you guys are thinking about the incremental margin potential from here over the intermediate term. So you're obviously already at a mid 40% EBITDA margin, 90% of the current expense piece is fixed and I know 50% plus is the objective, but you really aren't that far away from 50. So just want to think about Like, what the feeling looks like here is there one because you have such an efficient tech stack and infrastructure.

Jason Warnick: And then, you know, is there anything on the road map that, you know, could drive a material acceleration at six expenses from the core piece and just trying to think about where we could go. I know what the targets are, but just the algorithm. Thanks.

Jason Warnick: Yeah, I view kind of the 50% Devin is more of a way station on our path to the longer term margins. You've seen us drive. And substantial incremental margins over the last few years, this quarter was 77% and it's, it's really a reflection of us driving up revenue and managing our costs closely. You know, I think a good analogy to how we're thinking about costs long term is looking at what we did in 2024.

Jason Warnick: We looked at our existing businesses and held those businesses to a low single digit. And in some cases, negative off X growth rate. And we use those savings to help fund specific growth investments for the business. And there are many that we've been talking about and alluding to on this call. And we set aside an extra $100 million in marketing budget. And all of that translated to, you know, operating expense guidance that was up 5% at the midpoint, which we continue to re-enerate. And so, you know, I think we have a lot of opportunity to see continuing leverage in our existing business. And then you're going to see us on top of that.

Jason Warnick: Continue to make very targeted high expected ROI investments for growth in terms of, you know, things that are out there on the road map. You know, it's too early to give specific guidance. You know, the one thing I'd point to is we are rolling out a credit card. And as Vlad talked about, we're being very patient in the short term in the way that we approach that. But that'll certainly be some incremental investments next year. But we'll stay tuned for specific guidance on next year.

Vladimir Tenev: Yeah, the only thing that I would add to that, which I think is interesting is, I think we've talked a lot. You hear a lot about AI and the impact on different sorts of companies. I think one area that we maybe haven't emphasized as much is how we've been making use of that operationally, including for engineering. And as we look at kind of the core engine of our business, we're creating software.

Vladimir Tenev: We're rolling out products to companies and our business, even though we're in financial services is technology at its core. And we've seen a lot of impact in applying these AI tools on the engineering side, just making different parts of software development process easier and simpler. That's an area we're investing a lot in. And I think there's a lot of room to run. We've already seen significant productivity gains in the past year. And we think we're just we're closer to the beginning than to the maturation point of that cycle.

Unknown Executive: Thank you.

Patrick Moley: Our next question comes from the line of Patrick Moli, a piper sensor. Thank you very much. Yes, good evening. Thanks for taking the question.

Vladimir Tenev: So I had one on the gold offering. You've added a number of things over the last few quarters. You're planning to add more before the end of the year with the web platform and options and futures trading or index options and futures trading rather. Just talk to us about your thoughts on pricing here. You're $5 a month now. What's the appetite to go higher? How do you kind of balance that? Pricing dynamic with your desire to kind of continue to grow that subscriber base? Thanks.

Vladimir Tenev: I'll go ahead and take this one. You know what I'd say is our focus right now is increasing the adoption rate of our customers in gold. And we're doing that by just continuing to invest in the gold program. And we love the economics. I mean it's great that we have the subscription revenue that's north of $100 million annually. But it leads to downstream effects, higher adoption, faster net deposits and seven times the RPU.

Vladimir Tenev: And so we're not feeling pressured in the short term to raise the price. It is something that we will continue to look at. And we don't have religion that we wouldn't touch the price over time. But right now it's not the top priority.

Unknown Executive: Thank you.

Kyle Voigt: Our next question comes from the line of Kyle Voit of KBW. Hi, good evening.

Jason Warnick: Maybe a question on margin balances. So you know that the impact of cutting your margin rates and the subsequent margin balance growth 20%. I guess is there any way you can disaggregate how much of that growth is coming from existing Robinhood margined clients, simply utilizing margin more versus maybe customers where you know they were utilizing margin elsewhere. And as simply transferred or switched that activity to Robinhood. And if there is some of that switching that's happening, can you comment on if the customer margin inflows have generally been from one firm or broad based from retail brokers across the industry.

Jason Warnick: Yeah, I'll go ahead and take this. So it's mostly from existing customers, but we're seeing both existing as well as new customers, you know, take advantage of the lower margin rates. And we continue to see this grow in July. You know, we talk about one of our top three strategic pillars is to be number one in active trading. And as Vlad mentioned, we've made a lot of progress on market share for both equities and options and overall or number two in active trading for those categories for trading.

Jason Warnick: But we're a distance fifth in market share in margins. So it's a huge opportunity for us. We just lowered the rates in May and we saw the 20% move to the end of the quarter that's continuing in July. And we think that, you know, this is a really big opportunity. And we're definitely starting to take share there. We grew much faster than our peers in the second quarter, even with the May change in the race.

Unknown Executive: Thank you.

Michael Cyprys: Our next question comes from the line of Michael Cyprys of Morgan Stanley. Thank you. Good afternoon. Thanks for taking the question.

Vladimir Tenev: Just wanted to ask for a little bit more color and update on the international expansion efforts, in particular the UK, in Europe and around the world. Just curious what sort of traction you're seeing so far. What steps are you're looking to take here in the second half and into 25 in order to accelerate growth? And as you think about and look at where I'm building out the platform overseas, just curious what challenges you face versus having built out the business in the US and how you're looking to overcome some of those hurdles.

Vladimir Tenev: Thank you. Yeah, thanks for the question. I'll feel that in a nutshell, we like the early signs that we're seeing so far account balances overseas are a little bit smaller than the US on average, but the trading characteristics are pretty similar. And what we really like is as we hear from customers both in the UK for brokerage and in the EU for crypto, they want things that we offer in the US.

Vladimir Tenev: So UK customers are requesting margin and options and EU customers are requesting the ability to trade stocks. So that I think validates in part our strategy of expanding with one unified platform internationally and having the same technology be available in as many markets worldwide as possible. So our focus really is rounding out the feature set in the UK and in the EU, making sure that all of the great products that we have available in the US can be made available there. And that involves working with the relevant regulators and these jurisdictions taking them along and giving their customers access to all these awesome products. We feel really, really good about that.

Vladimir Tenev: And then simultaneously, we are looking into expanding to other jurisdictions.

Unknown Executive: Thank you.

John Todaro: Our next question comes from the line of John Tadaro of Needham. Hey guys, congrats on the quarter. Good results here.

Vladimir Tenev: I just wanted to draw about a little bit more to fit stamp. They offer a number of crypto offerings and then also the trading pairs. The first part of that is do you anticipate growing products with that acquisition in the US, are you still a little bit hamstring on regulation? That is the deciding factor. And then just two within that bit stamp historically, it's at higher trading fees and hood. Do you think those feed on the platform could kind of go higher as we saw a great going higher here or should we not read into that the bit stamp?

Vladimir Tenev: I think there's two interesting things about the bit stamp acquisition that you should know. One of them is international. The second one is institutional. The business is a global business. It operates in a lot of jurisdictions. And we could see that accelerating our international expansion on the crypto side significantly. And also dub tailing quite nicely with the large retail business that we currently have at Robinhood and the great product innovation that we're driving there.

Vladimir Tenev: The other thing we're excited about is institutional business. And they have great relationships with institutions. It's an area that we believe were well positioned to tackle because we built great technology for consumers and institutions also want low costs for market access to crypto. And so we're really excited about the acquisition and working really closely with the team and making our joint products better and better. And I wouldn't over index on their fee structure at this point.

Vladimir Tenev: I tell you, you know, philosophically, we want to be the market share leader and we want to offer really competitive rates to customers. And that's kind of the north star that Robinhood operates under. We'd rather offer low fees and due to our investments in technology and infrastructure operate at larger scale than our competitors. So you should see us continuing to be aggressive there. But we don't have any specific, I think it's premature to talk about like the specific changes to the fee structure at this point.

Unknown Executive: Thanks.

Chris Allen: Thank you. Our next question comes from the line of Chris Allen of City.

Unknown Executive: Thanks for taking the question, guys. I wanted to dig in a little bit on sec lending if possible. I've seen some really nice growth in the customers enrolled and the customer custody enrolled. And just maybe talking about the outlook here, are you seeing customers enrolled put pretty more money to work here? Are you seeing just a momentum pick up? And just during the corner, how would you frame the environment from a sec lending perspective?

Unknown Executive: Because it looks slower at some of your competitors out there. Sure, I'll go ahead and take that. I mean, the primary inputs to the business are signing up more customers and we saw a really nice pick up there. About 400,000 customers joined the program in the quarter and the assets that are enrolled and that increased by a little over 6 billion. So really, really strong inputs into the business. I thought the trading desk did a really nice job.

Unknown Executive: The other input is just the rates that are available and the specific names that we call specials where there's a higher rebate that will earn on lending activity. And we saw some nice attractive returns in the quarter. So I'd say the inputs and the momentum of growing that program is really strong. The trading desk is just doing a great job and we'll have to see how the rest of the year plays out.

Unknown Executive: Thank you.

Matthew O'Neill: My next question comes from the line of Matthew O'Neill of FT Partners. Yeah, hi. Good afternoon. Good evening, everybody. Thanks so much for the question.

Vladimir Tenev: I just wanted to follow up really the only knit to pick here. Maybe was the monthly active user number and I fully recognize the importance of that number is probably coming down over time as you diversify into more products and some longer term and less frequently used. But just curious if there's anything to call out, maybe around crypto activity or otherwise. Thanks. Yeah, I'll feel bad and then maybe Jason will have some thoughts.

Vladimir Tenev: One of the reasons we deemphasized monthly active users. Besides, as you mentioned, you know, us investing in all these diversified products like Robinhood Gold, which is a yield based product and retirement. And us not directly monetizing monthly active users yet like we don't we don't have an advertising business, for instance. Is that it's just volatile quarter to quarter and a lot of the monthly active user variation is just driven by what's going on in the crypto market.

Vladimir Tenev: So since we're so large and retail crypto that can cause meaningful swings in monthly active users quarter over quarter. And that's pretty much what you see going on. You know, when the crypto markets are hot, there's a huge immediate spike in monthly active user engagement metrics. But then when crypto cools down, that tends to drop more acutely as well. And I think that's pretty similar to what you'd see across the entire crypto market. I think that's not an idiosyncratic Robinhood phenomenon.

Unknown Executive: Thank you.

Ken Worthington: My next question comes from the line of Ken Worthington of JP Morgan. Hi, thanks for taking the question. I love to get a bit more color on how the recent market to sell off has impacted your customers. You gave us some color on trading activity, but margin balances have been growing as you called out, sort of recovering with the market. But then growing with the more competitive market rates that you announced, sort of going right into this selloff.

Ken Worthington: So how did Robinhood customers perform in the selloff in August and recent days, and can you distinguish the health of your equity, sort of long only customers, given their access to leverage versus those with option capabilities where they can both hedge and speculate with options. Yeah, I'll go ahead and take this and Vlad you can add some contact. So first of all, customers who are trading options and those that are using leverage tend to be are more advanced customers.

Ken Worthington: And they're using a variety of trading strategies to create returns. The thing that I would point to is that we feel great about offering low price and attractive rates and the rates that we offer on the margin book as an example are on average leading across the industry. And so feel really good about that. I don't think we've shared any specifics on specific returns that individual customers are having or groups of customers.

Ken Worthington: But I'll tell you is almost every time I look at the daily summary reports when there's a selloff, our customers are buying or when prices are up, our customers are selling. And that contributes to kind of a pretty attractive return capability for customers. The only thing that I'd add Ken is, you know, there's a number of areas that were focused on and I outlined them in the call. One of them is being the leader in the active trader market.

Ken Worthington: And I think when the goal there is when people think of Robin Hood in the active trader space, they should associate us with being at the front here of technology and innovation in trading. And I think products like 24 hour market reinforce that. And we do have work to do both on the product side and kind of in how we tell the story to move away from sort of this like thought that were for novices.

Ken Worthington: The reality is most of our customers are in their 30s. You know, they're definitely adults and they're extremely sophisticated and we're in a competitive market for serving this very real use case and we're gaining market share and it's a big part of the core business. But we also have customers that are coming to us for Robin Hood Gold for our high yields products for our awesome retirement products that has been growing assets very, very tremendously and you know, they're less interested in trading actively and that's fine too.

Ken Worthington: We think that we can be a leader in wallet share, particularly for the millennial generation. And that's something that we're also focused on. There's going to be tens of trillions of assets going from baby boomers down to Gen X and Gen Y and beyond. And we're putting Robin Hood a position to be one of the if not the primary beneficiary of that long term long term shift in assets and that kind of how you're seeing the work we're doing in ACATs diversifying the business and adding support for different assets. And so we're very excited about that, but we think we can be leaders and folks.

Vladimir Tenev: Thank you.

Ben Budish: Our next question comes from the line of Ben Budish, of Barclays. Hi, good evening and thanks for taking the question.

Vladimir Tenev: I was wondering if maybe following up on some of your comments there Vlad, if you could unpack a little bit the growth and options over the course of the year. What are you seeing in terms of like for like growth or almost the same unit or same sales if you will, are you seeing any stats you can share around the number of customers enabled for options or is it sort of the existing base sort of getting more active.

Vladimir Tenev: And when you talk about market share, clearly your options activity is a percentage of overall industry activity is going up. What about on the customer side, what degree do you you know to center you seeing customers coming to Robinhood for options or how much of the growth is coming from new customers versus increased activity from from prior customers. Thank you. Yeah, I mean the thing I tell you and maybe Jason can jump into our option teams been doing a great job.

Vladimir Tenev: We we have one major advantage. I mean several major advantages relative to what you see elsewhere in the options market. First of all, we don't charge options contract fees. So most of our competitors charge 65 cents a contract, which can add up if you're an active trader. And so, you know, purely economic perspective, you're kind of at a disadvantage if you trade options outside of Robinhood, particularly for active traders. The other area is the user experience.

Vladimir Tenev: And we've built and announced some amazing tools in the past couple of quarters, including option simulated returns, which gives people pretty advanced analytic tool that they previously were downloading other products and paying subscription fees to get. Now that's built in with Robinhood and we've done awesome improvements to the user experience to make it easier for customers to do the transactions that they want to do. And we've got a lot of a lot of remaining work to do.

Vladimir Tenev: We know a lot of our customers like trading options on desktop where they get additional screen real estate and have the opportunity to do more research on platform. And so we're confident that we can keep growing that market share even further. Yeah, I would just say that the number of customers trading options are up about 25% year over year. Yeah, the team's really been doing a great job.

Jason Warnick: Thank you.

Vladimir Tenev: I would now like to turn the conference back to Vlad 10F for closing remarks, sir. Okay, well, thank you everyone for listening. We really appreciate the engagement from shareholders and the analyst community and also special shout out to the retail analyst. We have a lot of retail analysts that cover the company as well. Maybe they're not on these calls, but they're on YouTube and on X. We appreciate you all and look out for us on podcasts and other things in the next couple of days where we'll share more about the company.

This concludes today's conference call. Thank you for participating human now.