Q4 2024 Robinhood Markets Inc Earnings Call Q&A
Yeah.
Thanks for watching!
Speaker Change: Thank you to everyone for joining Robinhood's Q4 and full year 2024 earnings call.
Jack Freeman: Joining today are CEO and co-founder Vlad Tenev, CFO Jason Warnick, and Senior Manager of Investor Relations Jack Freeman.
Jack Freeman: Vlad and Jason will offer opening remarks and then open the call to Q&A. During the Q&A portion of the call, we will answer questions from institutional research analysts and we will also answer questions from retail analysts who may hold an ownership position in Robinhood.
As a reminder, today's call will contain forward-looking statements.
Jack Freeman: Actual results could differ materially from our expectations, and we have no duty to provide updates unless legally required.
Jack Freeman: 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.
Speaker Change: all of which can be found at investors.robinhood.com. Today's discussion will also include non-GAAP financial measures. Reconciliations to the GAAP measures we consider most comparable can be found in the earnings presentation. With that, please welcome Vlad and Jason.
All right.
Good to see everyone.
Speaker Change: Thank you for being here for our first live video earnings call. Hopefully this is both informative but also also entertaining.
for everyone. Let me first start by
saying that this was a big quarter for us.
Speaker Change: So, we did over $1 billion in revenue for the first time as a public company.
Yeah, I would say that...
This was driven by a lot of things.
Speaker Change: And let me remind you the three priorities we have as a public company. So the first one is being
Number one in active traders.
Speaker Change: second one is being number one wallet share for the next generation and our long-term arc being the number one global financial ecosystem.
Speaker Change: I'm really proud of the product velocity in 2024. So, the team executed unbelievably well, and there's a couple of things to point out. We began scaling the Robinhood Gold Card, and Robinhood Gold Card
Speaker Change: It wasn't just a Me Too credit card. I think we did a nice job building a revolutionary credit card, and it has both best-in-class rewards and user experience.
Speaker Change: Robinhood Legend, which we announced at the Hood Summit event just a couple of months ago, our first desktop platform built from the ground up just for active traders.
Speaker Change: And I think what's been even more amazing than the initial launch is...
Speaker Change: We not only rolled it out, but the team's been executing really well and adding new things on a weekly basis. It's been energizing to see the customer feedback and to see the team respond to that. New things are landing, new indicators, new features pretty much every week.
Speaker Change: And as a result, oh, I should mention one other exciting thing, we added a whole new derivatives business.
Speaker Change: So Robinhood Derivatives launched also last year at the Hood Summit and we're offering both futures outrights and event contracts, which is an innovative new asset class that our customers are super excited about. So we're excited to do more there.
As a result of this product velocity
Speaker Change: We saw fantastic business results. I mentioned the $1 billion in revenue quarter, $3 billion for the full year, which, by the way, up 58% from 2023 and 2x from two years ago.
Speaker Change: and some of the things we track on a more input-oriented basis. Market share up 30% year-over-year, both for equities and options.
Speaker Change: record net deposits of over 50 billion which is over a 50 nearly 50% growth rate multiples of what traditional brokerages are seeing.
Speaker Change: and gold subscribers also had a banner year up to a record of 2.6 million which is 80% growth year-over-year and now we're at over 10% attach rate if you look at the overall customer base over 10% gold attach rate.
Speaker Change: And we've continued to see strength actually through 2025. We're closing in on 3 million gold subscribers.
Speaker Change: and perhaps the thing that I'm most excited by is if you look at the net new customer funded accounts in Q4
Speaker Change: of those new customers that joined Robinhood in Q4, over 30% have adopted gold. So that that 10% attach rate increases to well north of 30% if you look at new customers.
Speaker Change: So the team's been really executing well, and there's more to do, but we're proud of the progress we've made there. There's going to be three events in 2025, three new product events.
Speaker Change: And the agendas are already packed. So we're very excited for them. Gold event is coming up in March in San Francisco.
Speaker Change: We're going to be launching a bunch of new products and features for the GOLD program, including Advisory, which we've been working on, and I think you guys are going to like what you see there.
Speaker Change: our first crypto event in June, which will be in France, and then of course Hood Summit, our active trader event. We got great feedback, we're going to bring that back, and that will be later this year.
Speaker Change: So I'll talk a little bit about what you can expect in 2025 But first, let me turn turn it over to Jason for business and finance results
Jason: Thanks Vlad. Q4 was a record-setting quarter and 2024 a record-setting year. In both, we reached new highs for many of our financial measures and KPIs.
Jason: including assets under custody, net deposits, gold subscribers, revenues, adjusted EBITDA, and earnings per share.
Here's some of the full year 2024 highlights.
Jason: Revenues up 58% to nearly $3 billion. Adjusted EBITDA up over 160% to $1.4 billion. And adjusted EBITDA margin grew to 48%. This really shows the operating leverage in our business with over 80%
of Top Line Growth, Dropping to the Bottom Line.
Jason: and in our first full year of positive net income, earnings per share was $1.56. We've built strong momentum entering 2025 and we're staying focused on delivering another year of profitable growth.
Jason: So, let's talk a bit about Q4. Revenues more than doubled year-over-year to $1 billion, driven by strong revenue growth, strong growth across the board, including transaction volumes, interest-earning assets,
Speaker Change: securities lending and gold subscriptions and like you said Vlad Robinhood gold subscribers are closing in on three million driving annualized gold subscription revenue higher to now above a hundred and seventy million
Speaker Change: We also stayed disciplined on expenses in Q4. This brought full year adjusted OPEX and SBC to $1.94 billion, up 7% year-over-year and within our original outlook.
Speaker Change: You may recall a couple years ago, we set a goal to bring share-based compensation as a percentage of revenue into the zone of 10% down from higher levels in the past.
Speaker Change: So, it feels really great we achieved that milestone in 2024, and we're staying focused on managing this even lower over time.
Speaker Change: And as you saw, we had a large tax benefit in Q4.
Speaker Change: Given our recent strong performance and forecast of continued profits, we released most of our valuation allowance. We now expect our long-term tax rate to be more normalized in the mid-20 percent zone before any quarterly items.
Speaker Change: Now, as we look to 2025, we want to keep investing for profitable growth while driving efficiency. So, for revenues, we're planning on another year of double-digit growth, driven by product innovation, market share gains, and expanding into new markets.
Speaker Change: And we're keeping our hands on the wheel as we monitor the environment and evaluate potential investment opportunities.
Speaker Change: So, our outlook for adjusted OPEX and SBC is a range of $2.0 to $2.1 billion.
Speaker Change: Now, it's important to note that this does not include provisions for credit losses, any large regulatory charges.
or anything related to our acquisitions of trade PMR.
or Bitstamp.
Speaker Change: and the midpoint of our outlook range is up about 10% from 2024.
As for provisions for credit losses.
Speaker Change: These have been in the zone of about $20 million for the past couple of quarters, and we expect they'll gradually increase over time from here. As you know, this will really depend on balancing how quickly we onboard more customers and the underwriting risk, which we continue to manage closely.
Speaker Change: There's a couple other areas I'd like to highlight. First, we're now more than a quarter of the way through our $1 billion share buyback program, and we're on track for a two to three year total timeline.
Speaker Change: As a result of repurchases and other actions that we've taken over the past couple years, we anticipate our diluted share count will be roughly flat in 2025. This means shareholders will benefit even more as we grow earnings and free cash flow over time.
Speaker Change: Second, we have a strong momentum to start the year. In January, net deposits were our second highest month ever.
Speaker Change: and equities options and crypto trading volumes were all up double to triple digit growth rates from a year ago. In fact January option volumes were an all-time high.
Speaker Change: It's also great to see January margin balances crossed $8 billion, doubling in the eight months since we moved to industry-leading pricing.
Speaker Change: And while it's early, we love the progress we're seeing with new products that we launched in the past few months. For example, looking at annualized trading revenue, legend is now up to 50 million and index options are up to 15 million.
Speaker Change: and both are showing nice incrementality and strong week-over-week growth rates.
Speaker Change: So we feel great about our business and financial results and remain focused on driving another year of profitable growth in 2025. We're continuing to work to maximize earnings per share and free cash flow per share over time. Back to you Vlad.
Speaker Change: It's really amazing to see how quickly Legend has become a 50 million dollar business. I mean that that product launched and rolled out about two months ago, so index options too at 15 million, incredibly strong.
Speaker Change: Many of you joined us for Investor Day just in December in New York where we outlined the long-term strategy.
Speaker Change: So in a nutshell, we believe there are multiple ways to grow Robinhood 10x over the next 10 years and it's it's an ambitious plan But we believe we have the right team the right talent and the right culture to deliver upon that
Speaker Change: So, let me tell you a little bit about what you can expect throughout 2025. So, on the active trader front, we're going to keep pushing to make Legend the best platform for active traders on the market today. Our active traders should feel like they would be at a disadvantage using any other platform.
Speaker Change: on the share of wallet front. We're going to grow the Robinhood gold card from about 100K cardholders today to multiples of that size. And that's very exciting. You'll hear more about that and a bunch more gold products for our members at our gold event in March.
Speaker Change: And for Global Financial Ecosystem, our 10-year arc, there's actually a lot that we're going to get done this year. So maybe I'll go a little bit deeper here.
So one, more selection of crypto tokens.
So, in the existing app, the Robinhood main app,
Speaker Change: We're going to keep adding and we're going to continue to...
Speaker Change: accelerate. In fact, we've added seven new assets since the election, and as we continue to get more and more regulatory clarity, you should expect to see that continue and accelerate.
Speaker Change: We're also investing in the Robinhood Wallet, which is a separate app, and it's our non-custodial crypto wallet, and that's the gateway to thousands of additional coins for our customers.
Speaker Change: We've seen a lot of good signs, increased engagement, increased usage, and we're going to keep making it better and better.
and then we have Bitstamp.
So, as we integrate Bitstamp, it...
Speaker Change: both allows us access to the exchange market, which is an institutional market.
Speaker Change: And we really see an opportunity there to drive the same sort of Robin Hood effect that we've brought to retail to the institutional space with crypto. It also allows us to tap into Bitstamp's global reach where they're live in 50 plus countries.
Speaker Change: And so you should expect that to continue to accelerate this year. But what I'm perhaps most excited about is tokenization.
Speaker Change: So I think Robinhood is uniquely positioned at the intersection of traditional finance and DeFi. We're one of the few players that has scale both in traditional financial assets and in cryptocurrencies.
Speaker Change: And what that means for us is bringing real assets onto crypto technology and giving people access to real world productive assets using crypto rails where they benefit from the liquidity and the other advantages of that technology.
And what that means is equities, private investments, and more.
Speaker Change: should be brought onto crypto technology to really unleash the true power of the crypto revolution.
Speaker Change: I talk a lot more about this in my op-ed in the Washington Post, so I encourage you guys to check that out. And I think we can make a lot of progress on that, not just globally outside the U.S., but even in the U.S. as well.
Speaker Change: So with that, I'll just close by saying teams have been working incredibly hard. The roadmap is full. There's so much to do. And let's open it up to questions.
Speaker Change: Thanks, 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 we already addressed on this call or in prior quarters and grouped together questions that shared a common theme. After the Say questions, we'll turn to live questions from our analysts.
Speaker Change: So I'll kick it off with our first question from Say.
Speaker Change: First question is from Allie D., who asks, When will the gold credit card be available to a broader audience? Flab?
Speaker Change: Thanks, Ali. Very soon. So thank you, by the way, to all the customers who have expressed interest and continue to express interest in the gold card. The demand for the card has been extreme, and I think that's really been driven by
Speaker Change: really amazing reviews and we hear from customers every day how much they love it and how they can't believe that other credit cards don't have these features.
Speaker Change: So today we have a little over 100,000 cardholders. We're working to roughly double that number in the next few months.
Speaker Change: And that's going to be on the way to growing that multiples of the 100,000 level this year.
Speaker Change: So we'd love to move even faster here, but this is about the speed at which successful credit card programs in recent years have rolled out. And I think it's just important to balance
Speaker Change: the speed of rollout and satisfying the demand with being incredibly prudent regarding the spending and borrowing activity. Jason, do you want to add anything to that? Yeah, I'd just say, you know, Vlad, you and I have both heard Ravi, who runs credit at Robinhood several times, say how important it is
Speaker Change: that we be cautious in the short term so that we can be ambitious in the long term. And I think we're striking the right balance, but obviously we want to move as quickly as possible for customers. Yeah, and the rollout's increasing, so hopefully you'll get one soon.
Speaker Change: Thank you both. Our next question comes from Alex B., who asks, Will Robinhood offer the ability to do deeper analysis on individual stocks within the app? Will it have charts for financial data over time, such as revenue, net income, etc., and have a feature to compare metrics versus other companies?
Speaker Change: Yeah, thank you. I recognize that, Alex B. Congrats on having the two of the top three voted questions.
In short, yes.
Speaker Change: So one of our goals is for Robinhood to have the very best information, research, and tools in-app. I think we started out offering the best service for you to actually place the transaction, and over time we've been
Speaker Change: moving more upstream and the goal is to not just be the best place to complete the transaction, but also the best place to do your research and to generate ideas.
Speaker Change: And over the past year, we've really been focusing on furthering that.
across the charting and the technical analysis.
Speaker Change: experience across the product. You've seen that with Robinhood Legend, which, as we mentioned earlier, is already up to a 50 million annualized revenue rate.
just after a few months.
Speaker Change: So we've been focusing on making the charting experience really, really good. Customers are now asking us to bring that into mobile and the team's continuing to execute, constantly shipping new features. But there's more to do. You mentioned fundamental analysis and some of these more fundamental indicators. Those are on the list as well.
Speaker Change: There's plenty more to do, and the team is on it. We're excited to share more later this year at Hood Summit, which is our active trader event.
Speaker Change: Thanks, Vlad. And to round out today's Q&A, we have another question from Alex B., who asks, Will Robinhood offer loans, such as microloans, autoloans, etc.?
So over the long term
Speaker Change: The company seeks and aims to fill all of our customers' financial needs.
Speaker Change: So we want to be the place where you can buy, sell, or hold any financial asset and conduct any financial transaction. And that's a big part of our second arc, which is being number one in wallet share for the next generation.
Speaker Change: So, of course, lending needs are a big part of that. Customers have borrowing needs, and we're going to address that in a number of ways. So, first,
Speaker Change: we've really been focusing on the margin product. So, a little bit under, I guess, a year ago, about six to seven months ago, we revamped our margin offering and we started offering industry-leading rates.
Since then, the margin book has more than doubled.
So, we've really made tremendous progress there.
even after that doubling, where...
Speaker Change: We've got a long way to go to being competitive in terms of size with some of our incumbent competitors. So I think margin has a lot of room to run. We're gonna continue to invest there.
Speaker Change: On the credit card side, which as well as a lending product, we've been making tremendous progress. That loan book's been growing as we get more and more customers onboarded.
Speaker Change: And as you guys know, we've got a lot more customers to go.
Speaker Change: So, our focus is on nailing those two products, which obviously have a sizable lending component. But once we do that, you should expect to see us cover the wide range of customer borrowing needs.
Speaker Change: So, I encourage you guys, once again, the Robinhood Gold Customer Event in March is going to be exciting.
Speaker Change: Thanks Vlad. 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. Now we will open the call to Q&A. We ask that each person limit themselves to one question and return to the queue if they would like to ask a follow-up.
Speaker Change: To enter the queue, please press star 1 1 on your phone. If you would like to remove yourself from the queue Please press star 1 1 again. Our first question comes from Mike Cypress from Morgan Stanley, Mike
Mike Cypress: Great. Hey, Vlad. Hey, Jason. Congrats on the strong results here. Great to see. So, you guys outlined an ambitious goal here to be number one in wallet share for the next generation and to broaden out services beyond trading. Given the early success that you've had so far with retirement and the wait list for credit card, can you just maybe talk about what hurdles you might face to achieve this ambitious goal, how you might overcome them, and the progress you expect to make here in 2025? Thank you.
Mike Cypress: Yeah, I'll take that one, Mike. Thanks for the question. I think we have a huge opportunity. The goal is over the long run to be the place where customers can buy, sell, or hold any financial asset or conduct any financial transaction and to not get stuck with
Vlad: what worked for millennials, but also make sure that we're relevant as the financial home for the next generation. Now, there's a couple of things that we have to continue to do. Number one,
their customers' financial needs.
and so it's going to involve us.
continuing to innovate, invest in technology.
Vlad: continue to pick the right products to focus on and make sure we're well positioned relative to our competitors in the two big technological shifts that are going to transform the financial industry.
Artificial Intelligence and Cryptotechnology
Vlad: And I think we're well-positioned. We've got the team, the culture, and the people to do this.
Vlad: and you should see us accelerate more products, more features to further wallet share and put us in a position where I think relatively few companies are in to capture the 84 plus trillion in assets that are going to be
Flowing down to younger generations in the next few decades
Speaker Change: Great, thank you Vlad. In just a moment we'll get our next person here. Our next question comes from Dan Dolev at Mizzou. Dan?
Dan Dolev: Hey team, great job as always, epic results again. I have a quick question on sports contracts, you mentioned it at the analyst day. Piqued our interest, we did our own internal survey work which showed
Dan Dolev: massive opportunity with, you know, significant amount of your users also engaged in sports betting. You know, you started it out, it was, you know, it was shut down temporarily. So can you maybe lay out some of the long term plans or medium term plans for this, you know, very important
Dan Dolev: part of the universe. Appreciate it. Thanks, Dan. Yeah, I'll field that one.
Dan Dolev: I think prediction markets are the future. I think they're the future, not just as an active trading asset, but also news and information. And Robinhood is going to be right there, leading the way.
Dan Dolev: I think we're going to continue to innovate. And you saw this last year when we launched the presidential election market. So we were one of the few platforms that offered the ability to trade the election.
Dan Dolev: And that was very successful for us. We had over half a billion contracts traded in right around a week leading up to the election. And so what you should expect from us is a comprehensive events platform that will give access to prediction markets across
a wide variety.
Dan Dolev: of contracts later this year. So the team's been hard at work.
Dan Dolev: at that. As with any new innovative asset class, we're pushing the boundaries here, and there's not regulatory clarity across all of it yet, in particular sports, which you mentioned. But we believe in it, and we're going to be a leader. So you should expect us to...
Dan Dolev: not just offer it, but continue to drive and push for regulatory clarity industry-wide.
Thank you, Vlad.
Speaker Change: And just a moment, please. Our next question comes from Patrick Molle at Piper Sandler. Patrick?
Patrick Molle: Yes, good afternoon. Thanks for taking the question. I have a kind of a two-parter, Jack, so don't get mad at me. But first, both on the crypto offering, first,
Speaker Change: In terms of, you mentioned that the available tokens on the platform, you're going to accelerate the rollout of tokens as we get more regulatory clarity. Can you maybe just specify what you mean by regulatory clarity? Are we waiting for comprehensive legislation or do you feel like there's going to be something else that can give you the green light to expand that offering?
Speaker Change: And then secondly, I noticed that you didn't mention staking, I think, in your remarks. Is that still something that you're looking into on the crypto front? Thanks.
Speaker Change: Yeah, absolutely. I mean, let me just say that we don't have any technological barriers to adding tokens or services like staking. They're live in the EU, for example, where we've been seeing great
Speaker Change: great adoption, and we have the engineering and the infrastructure capability to add tokens remarkably quickly. You guys might have seen that
Speaker Change: We were able to list the Trump token very quickly while maintaining the rigor and the approach around Inauguration Day.
Speaker Change: As I mentioned earlier, I think the real power of crypto technology is when it's able to be applied to real world productive assets, which would be under the securities regime. So we still need a comprehensive, a comprehensive
Speaker Change: set of rules and regulations for listing crypto asset securities that will allow us to tokenize private companies as well as as well as public securities and that's one of those things that we're going to be continuing to to work on both overseas and in the US.
Speaker Change: A couple things that I would just add in, in terms of clarity that would be helpful, particularly for coins.
Speaker Change: that have the characteristics of a security, I think it would be helpful to get.
Speaker Change: additional guidance on being able to safely list those coins, and I know the SEC is
Speaker Change: have had remarks recently suggesting that they're looking at that. And I think that there's also a need for additional clarity on staking as well.
And again, it's encouraging to see the improved backdrop.
Speaker Change: The administration appears very supportive of innovation in the crypto space, which I think is going to be great for customers as well as great for the companies like Robinhood that are competing in this space.
Thank you both, Vlad and Jason.
Speaker Change: Our next question comes from Tanner from Future Investing. Tanner? Tanner.
Tanner: Hey guys, thank you so much for having me. I just wanted to say you guys have some of the best pricing for crypto on the market for retail and yet even then your take rate is essentially going up quite quite substantially. Can you give us some insight on your pricing strategy and where you perceive the pricing will settle over time?
Speaker Change: Sure. Thanks, Tanner. I'll start. I'm glad you can feel free to add in.
You know, if you go back far enough,
Speaker Change: you know our our take rate was only 10 basis points and it was just a starting point and since then what you've seen is that we've been experimenting uh
Speaker Change: over time, balancing, ensuring customers continue to get a great value proposition, but we balance that with shareholder returns. And we have been
Speaker Change: experimenting and we have been giving customers a great a great price even as the take rate.
Speaker Change: has increased. I think it's up nine basis points this quarter versus last quarter. We're not done experimenting. It doesn't mean that it's going to keep going up. One of the areas that we're focused on is how to give
Speaker Change: more compelling pricing to the highest volume traders and so we'll be experimenting there as well. But when we think of take rates for crypto, when we look at January take rates are pretty much in line with what we saw in Q4.
Speaker Change: Yeah, and the only thing I would add is one of the things we're pretty excited about is a feature called smart exchange routing that we rolled out just a couple of weeks ago. And this was really preparing for.
when we integrate Bitstamp and we have an exchange business.
Speaker Change: and also part of the integration with Robinhood Legend, which is our active trader platform.
Speaker Change: A lot of active traders on the crypto side want to engage directly with the order book.
Speaker Change: So, giving customers an option to route to exchange, see the exact exchange pricing, and pay a fee on top of that, rather than rebate, I think is
Speaker Change: is something that people have been requesting. So we're going to continue to work on that. Early results are promising and we want to give customers more options while still maintaining industry-leading pricing across the board.
Thanks Vlad, thanks Jason.
Speaker Change: Our next question here comes from Steven Schuback of Wolf Research.
Stephen
Speaker Change: I wanted to double-click into the crypto discussion and the evolving competitive landscape.
Speaker Change: So as you both noted, just given the strength of your crypto offering, enabling you to grow meaningfully while still flexing some pricing power. Once we have regulatory clarity, how would you frame the incremental revenue opportunity from launching additional altcoins and leaning into opportunities for just staking and lending?
Speaker Change: And we're hoping you could also speak to the risks. One of the questions we get quite often is, how do you handicap the risk of larger competitors entering the space and potentially at more competitive price points?
Speaker Change: Yeah, I'd maybe take the risk point first, you know, I think.
consistent with more competitors entering the space. I think
Speaker Change: it's right to assume that crypto is becoming more mainstream and more accepted. And I think we're beginning to see that. You saw the strength of crypto in the quarter. A lot more customers were trading crypto. So while there may be more
Speaker Change: More competition over time. I do expect that there will be greater demand for crypto as well. And sorry, the first part of the question you had for me?
Speaker Change: You know, what customers really love about trading crypto on Robinhood is that they not only have access to crypto, but they can trade equities, options, now futures, soon a comprehensive suite of event contracts, all in one place.
are going to be front and center in.
Thanks for the question.
Speaker Change: Our next question comes from Brian Bedell at Deutsche Bank. Brian.
Speaker Change: accelerating, and if you can comment on all three of those areas. You want to take that? Sure. I mean, as we mentioned, Legend is now up to a $50 million annual revenue run rate, index options.
Speaker Change: 15 million. Index options just recently rolled out to everyone and then futures we've just started.
rolling out in terms of
Speaker Change: The growth rates, these are strong week over week growth rates. We feel really good about that.
Speaker Change: stepping back looking at the long term I would say you know each of these represent pretty substantial portions of the overall market and you know we're demonstrating I think an ability to take market share and compete and so early signals are strong.
Speaker Change: The week-over-week growth rates are strong and we've got really positive feedback from customers. So, where I'm sitting today, I'm really optimistic.
Speaker Change: Yeah, and I'd say these things are compounding upon one another. So we rolled out index options on Robin Hood Legend, and that further accelerated the growth.
Speaker Change: and we see continued opportunities that I think will be tailwinds. Not only is it going to continue to penetrate the customer base, but I think we see more opportunities on the option side for Robinhood Legend.
Speaker Change: Our customers are really happy with the equities trading experience. I think that's world class on Legend. And I think we see some more opportunity on options to make it even better.
Thanks for the question. Thanks Vlad and Jason.
Speaker Change: All right. And our next question comes from Devin Ryan at Citizens JMP. Devin.
Devin Ryan: Thanks so much. Hi, Vlad. Hi, Jason. How are you? Hey, Devin.
Devin Ryan: And congratulations on the great end of the year and the business momentum.
Devin Ryan: I want to shift gears a little bit and dig in on the custody opportunity for advisors, where obviously
Speaker Change: By by far the number one thing that gets everyone very excited is access to the Robin Hood customer base I think what gets Robin Hood customers excited is being able to talk to
Speaker Change: a human advisor. I think in particular for customers that are a little bit older, closer to retirement, and have a lot of assets, being able to access a human advisor to help them with their financial needs.
Speaker Change: is absolutely critical. So I think we can solve both problems. I think we can appeal to customers that may be a little bit older, that have more comprehensive needs, and they love the digital experience of Robinhood, but would love a human advisor. And for a lot of these advisors, including Trade PMR customers,
Speaker Change: These guys are entrepreneurs, and they see an opportunity for Robinhood to help them tap into the 25 million customers in the U.S. that are going to have
their wealth growing tremendously over the next several decades.
particularly as they
inherit
Speaker Change: you know, tens of trillions of dollars from older generations. So we see this as a big part of
being the number one platform.
Speaker Change: for WalletShare for the next generation, and really being the first truly multi-generational platform.
Speaker Change: for the entire family. And I think not a lot are trying. We're having some success. The initial rollout there will be of the credit card, where it's actually a wonderful experience for the entire family.
Speaker Change: and you should expect to see us bringing more of that into investment management and advisory.
Thanks Vlad. One moment for our next question.
Speaker Change: Our next question comes from Amit from Amit is investing. Amit? Never heard of him.
Amit: Hey, Vlad. Hey, Jason. Thanks for taking my question and congrats again on an incredible quarter.
Speaker Change: Last year, you all told investors that as rates come down, you can expect more trading volumes, and that thesis has basically played out.
Speaker Change: I think right now we're in kind of a Goldilocks zone where rates are strong enough for your net interest income to sustain itself, but not low enough to take away that income. So is the guide for 2025 similar to rates coming down would lead to an increase in trading volumes, or is there a diversified view that investors should have on the impact of rates on the business?
Speaker Change: Yeah, I'll go ahead and take that. Thanks for the question. So the comments I gave on revenue is that we expect another year of double digit.
Speaker Change: revenue growth. So the precision that we were providing on guidance was really around OPEX at $2 to $2.1 billion.
Speaker Change: You know, I think there's still room for rates to come down this year. Perhaps it's one cut or maybe two.
But I feel like our business is really...
Speaker Change: designed to thrive regardless of the the macro backdrop on on interest rates and we've seen the pickup in trading rates have come down we're still to your point making strong
interest.
Speaker Change: and we've been diversifying our business. As I mentioned at Investor Day a couple of months ago, we now have nine business areas with revenues over a hundred million dollars. So we feel like we're really well positioned and it has been nice to see our thesis play out that there's a natural hedge in this in this business and and it's really been playing out and showcasing Q4.
Speaker Change: Yeah, I just want to add there, you know, we're building a business that's intended to not be reliant on external factors for revenue. So that's why, you know, even with our yield products like the Gold Sweep,
Speaker Change: Vary that with the rates, but we want to be competitive and offer customers a great deal
Speaker Change: regardless of the rate environment and generate a small but healthy margin regardless of the environment as well. Same goes for margin on the other side. That'll become more compelling with rates going down.
Speaker Change: But, you know, it's still going to be a great business for us that we think we can continue to grow market share very quickly in.
Thanks for the question.
in just a moment.
Our next question comes from Alex Markgraf at KeyBank. Alex?
Alex Markgraf: Hi, everyone. Thanks for taking my question. Maybe just as we think about some of the growth drivers for 2025, we'd be curious to get your thoughts on how you're thinking about the approach to deposit incentive offerings in 2025.
Alex Markgraf: I think proved pretty successful in 24. So any updated thinking there for 25 would be great. And, then, Jason, if you could just clarify on the legend revenue account, or the legend revenue number of 50 million. Is that viewed as entirely incremental at this point?
Thank you
Alex Markgraf: Yeah, I'll start with the incrementality. So the data is still pretty early, but we've seen enough to be confident that there's strong incrementality.
Alex Markgraf: here on on Legend. We're going to let it play out a little bit more before we provide additional clarity, but it is nice to see we are seeing a very strong uptake on Legend from existing customers. We're also seeing new customers and I think over time there's going to be particularly as we round out the product suite and the user experience.
Alex Markgraf: an opportunity to really grow incrementally with existing customers and bringing on more new customers.
Alex Markgraf: Vlad, do you want to take deposit incentives? Yeah, yeah. On the deposit incentives front, we've got one going right now for retirement. That's going to be on incoming transfers and rollovers.
Alex Markgraf: And that's very exciting. Actually, we've been seeing a lot of rollovers, the rollovers experience.
Alex Markgraf: than it was last year. So, there's been tremendous improvement there. We also are offering and experimenting with APY boost incentives on the GOLD program, and those are much more personalized. So,
Alex Markgraf: I think the future is more personalization, where we actually really lean into our strengths as a technology organization.
And, yeah, we expect to continue to make great progress.
$50 billion in net deposits over 2024.
Alex Markgraf: was a big number, multiples of how fast incumbents are growing, and we see plenty more opportunity to grow our business.
Speaker Change: Yeah, and I would just add that we love the economics on these deposit matches, the payback periods and the overall economics are very attractive and growing assets is just great for business. So we'll keep that going.
Thank you both.
Speaker Change: And our next question here comes from Ben Budish at Barclays. Ben?
Ben Budish: Hi, good evening and thanks for taking the question. I was wondering if you could unpack a little bit more detail around your new gold members. How many of them are net new to Robinhood? What's the sort of activity associated with the credit cards? How many of them are net new to Robinhood? How many of them are new gold members? And what sort of activities are you seeing associated with the adoption of the card itself? Are you seeing bigger balances, stronger deposits?
approach to the customer.
Yeah, I mean first off
They adopt our products at a much higher rate.
Ben Budish: The journey is basically someone joins Robinhood, they become a gold member relatively quickly, and then their rate of assets under custody, net deposit growth, and multi-product adoption increases.
Ben Budish: And so we've really made a ton of progress growing the attach rate.
Ben Budish: particularly early on in the customer's journey with Robinhood. I think we mentioned in Q4, out of the new net funded accounts to Robinhood, 30% north of 30% into the quarter as gold subscribers.
Ben Budish: which I think is just tremendous as an attach rate. And I think we can continue to work on that. With the gold card in particular, one of the really interesting things, I think we're actually one of the few that are capable of measuring this.
Ben Budish: as an integrated platform, but we are seeing strong second-order effects between users of the credit card and the core brokerage business.
Ben Budish: which I think validates our thesis that there's a gold flywheel and if we sort of like make each of the individual pieces better, the overall customer value to the Robin Hood ecosystem benefits tremendously. And in terms of the cardholders, so we're a little over 100,000 cardholders at this point.
Ben Budish: We plan to increase that by several hundred thousand this year. In terms of the mix between new customers or new to gold customers, there's a healthy portion of our waitlist that are not currently gold members, so we see that as a big opportunity.
One moment for our next question.
Our next question comes from Roy from Crossroads Investing. Roy?
Roy: Thanks for having me, guys. Tremendous quarter. I loved seeing the rollout of options at the UK this week, and I'd really like to hear more about the international expansion, specifically if future international expansions are going to follow a similar roadmap as the UK launched, starting with equities, building on products from there, and then specific country products such as ICES and SIPs in the UK. And I'd also like to know if those are coming out later this year in the UK as well.
well.
Speaker Change: Yeah, we're spending a lot of, we're going to make a lot of progress internationally.
Speaker Change: And the response to that from customers, maybe you saw on socials, was quite positive.
Speaker Change: Customers in the UK wanted it, we were happy to deliver.
Speaker Change: And I think in the future, we're going to continue to round out the offering and the benefits of having an integrated platform with a single technology stack is as we continue to roll out things in the U.S., they'll accrue to international markets.
Speaker Change: 24-hour market is an example. Now that we have futures, you know, once we get regulatory clarity, we'll look to be offering that.
Speaker Change: in the UK as well, and in the EU, the focus is again on rounding out the product suite as well. And we're also looking ahead to other markets.
Speaker Change: The goal is for Robinhood to be everywhere, be anywhere where customers have smartphones. You should be able to open up a Robinhood account and benefit from our suite of best-in-class financial services.
Speaker Change: So, you should expect us to not just round out the products we had in our current geos,
Speaker Change: expand from there. And the team's been doing a nice job accelerating that. And I think in terms of the sequence of products, if you look to the EU, we started with crypto and in the UK, we started
Speaker Change: with brokerage. I don't think that there's necessarily a set playbook on what goes first. It's going to depend on the market that we that we enter.
Speaker Change: Yeah, I tell you, yeah, look out for that. I think we've been talking a lot about the gold event, but we're going to have our first crypto event, which is going to be in France around mid-year. So we've got that agenda already packed.
Speaker Change: Thanks Vlad and Jason. Our next question comes from Ken Worthington of JPMorgan. Ken? Hey Ken.
Ken Worthington: Hey, good afternoon. Thanks for taking the question. So, I wanted to dig in a little bit deeper on the credit card. You have balances, I think, both on and off balance sheet. How do the economics work between on and off balance sheet and what happens with credit risk between those two buckets?
Ken Worthington: Yes, so credit risk is very similar between the two. We're holding the risk and the economics are also very similar as well and I think as we go forward this is something that the team is evaluating and will be optimizing over time.
Thank you for watching!
Thank you, Jason. Thanks, Ken.
Our next question comes from John Todaro from Needham. John?
John Todaro: Hey guys, congrats on a great quarter. A question on the crypto side. Vlad, I remember you called out Stablecoins pretty positively back in December and they've obviously grown a ton over the last few months. Just wondering if there's more possibilities of kind of doing some direct product launches around Stablecoins and monetizing that adoption a bit more?
Yeah, absolutely. As you guys probably know.
John Todaro: We entered into, we have USDG that we partnered with a few other great companies on the global dollar network.
John Todaro: which is going to be a stable coin that passes back yield to holders.
John Todaro: dollars in that form. So, you know, you see a lot of use for transaction, moving money back and forth, but in terms of actually like holding dollars in stablecoin form, yield is an important piece.
I should say that, you know, we're
John Todaro: We see the power of the stablecoin ourselves as a company. So I don't think it's just...
John Todaro: interesting for retail, but there's benefits to the technology and the 24-hour instant settlements.
John Todaro: for us as a business, and in particular, we're using stablecoin to power a lot of our weekend settlements now, and we're using it increasingly. And I think Robinhood's
John Todaro: going to be an early adopter of that, but we should expect that those benefits that we're seeing other companies will eventually come to realize.
and that'll be a tailwind for institutional stablecoin adoption industry-wide.
John Todaro: So stay tuned, there's going to be a lot more on the Dollar Global Network.
And yeah, we're going to be investing in this space.
That's great. Thanks, Vlad.
Speaker Change: Our next question comes from Evan from Stock Market News. Evan?
Speaker Change: Awesome. I appreciate you guys for having me. Thank you for taking the question. Congratulations to you guys on the quarter. We've talked about a lot of very different opportunities here and I appreciate it. Good job passing 1 billion. We talked about a lot of different opportunities here, crypto, active traders, international opportunities, prediction markets.
Speaker Change: How do you go about ranking these different opportunities, maybe in both the scale of them and how immediate you might be deploying these finite resources to them? And do you guys think you need more people, more resources to go in and attack all these opportunities you guys see?
Speaker Change: Yeah, yeah. Capital allocation is kind of the job, right? Resource allocation, capital allocation is what we do. I'd say these are the three arcs of our business.
a handful of months after launch.
Speaker Change: legends already at a 50 million annualized revenue rate, which is pretty amazing. And, you know, active traders were scaled. New product enhancements immediately result in more revenue for the business, more business value. That gives us fuel to pursue our other two arcs.
which are longer term.
So, I would think about it not as...
Speaker Change: we're going to nail active traders, then we're going to be number one in wallet share, and then 10 years from now, we'll start working on international. We're pursuing these independently. They're going to build off of each other. And the tool, the revenue and the resources we get from active traders are going to...
fuel expansion into bigger and broader markets.
Thank you. Bye-bye.
Speaker Change: And I think that just comes down to our embrace of technology. I think we've seen a lot of benefits from, you know, adopting AI technologies becoming more efficient. We've seen that on the software engineering side, but really across the board. And I think.
Speaker Change: I think there's more tailwinds there. There's a lot more we can do, but we do believe we can continue to increase product velocity, roll out more features, and grow while keeping OPEX growth in check.
I think that's just...
Speaker Change: from any good company leveraging AI. You should expect to see that in the future. Yeah, there's no no shortage of ambitions to drive growth and we've been allocating headcount where necessary.
Speaker Change: But you saw the tremendous growth that we drove in 2024, yet the OPEX did not go up that much. And that's not an accident. We have a very expense-light business model. I've talked a lot in the past about how 90 percent of our
Speaker Change: Our OPEX is fixed cost and that was really showcased this quarter in Q4.
Speaker Change: as over 80% of the incremental revenue dropped to the bottom line.
Speaker Change: in terms of profit. But when we look around, we're not constraining the business with resources. We're really doing as much as we think we can prudently manage and roll out with a high quality product for customers.
Speaker Change: Thanks, Jason. Thanks, Vlad. That concludes the Q&A portion of our call. Before we end the stream, I'd like to give it back to Vlad for any closing remarks. Vlad?
Vlad: Well, I'd like to thank Jack. I know we promised Chris in the flesh, but he was under the weather. Jack, I think you did a very, very nice job with that.
Speaker Change: Yeah, I think that you know, I want to thank you guys. Hopefully you enjoyed the new format both retail analysts and institutional analysts who've been along for the journey
Speaker Change: It's been a strong quarter, but we're nowhere close to done. This is going to be a big, intense year for us, and I think the team is super energized at the opportunity ahead and delivery even more for our customers.
Thank you.
Thanks, everyone.
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