Q1 2025 Robinhood Markets Inc Earnings Call
Joining today, our chairman and CEO fled tennis, CFO, Jason warning and VP of corporate finance and Investor Relations Chris Cagle.
Speaker Change: Flat 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 and robinhood as a reminder, today's call will contain forward looking statements.
Speaker Change: Actual results could differ materially from our current expectations and we may not provide updates unless legally required potential risk factors that could cause differences, including regulatory developments that we continue to monitor are described in the press release, we issued today the earnings presentation, and our SEC filings all of which can be found.
Speaker Change: And investors Robinhood dotcom two.
Speaker Change: Today's discussion will also include non-GAAP financial measures reconciliations to the GAAP measures. We consider most directly comparable can be found in the earnings presentation.
Speaker Change: With that please welcome flat and Jason.
Speaker Change: Uh huh.
Speaker Change: [music].
Speaker Change: Alright, hey, everyone great to speak with you again today. Thank you for joining US. This is our second why video earnings call I think the last one hopefully it was informative and entertaining so we're happy to be with you again.
Speaker Change: If I had to sum up the quarter what I'm. Most excited about is the incredible product velocity.
Speaker Change: And it was across our three focus areas, which if you remember our building the number one platform for active traders being number one in wallet share for the next generation and building the number one global financial ecosystem.
Speaker Change: So let's get into it in a little bit more detail.
Speaker Change: When I look at our active trader offering it just keeps getting more disruptive we launched futures in prediction markets in Q1.
Speaker Change: And futures are accelerating nicely. So about 4.5 million contracts traded in April alone, which is more than all of Q1, So Q1, which was a strong quarter greatly greatly was accelerated in April and prediction.
Speaker Change: Kids have done over 1 billion contracts in the last six months and we've recently started to increase the breadth of the contracts. We offer. So we're we're still very much in the early stages there.
Speaker Change: On Robin Hood legend, which if you remember we announced at hoods summit late last year and launched fully a few months after that.
Speaker Change: We've been making a lot of improvements we've upgraded speed, we brought in new asset classes like crypto and index options. We've added support for joint accounts more indicators and charts and really more features being shipped on a weekly basis. So the team has just been executing incredibly quickly on making Robin Hood legend and the best.
Speaker Change: Platform for active traders and all of that has been driving strong incremental volume on the legend platform, there's actually a lot more to come the team's already spending a lot of time preparing for the second annual active trader event, which will be holding this fall.
Speaker Change: We're also working to serve far more of our customers' assets. So at our last city of gold event.
Speaker Change: Just this past March we announced three new products Robinhood strategies, Robinhood cortex and of course, robinhood banking pretty awesome that robinhood strategies already has over 40000 customers and over 100 million in assets. So that's that's gone off to a to a very wrap.
Speaker Change: Would start.
Speaker Change: Robinhood gold so when you look at the gold credit card, we double B gold cardholders to 200 K just in the past few weeks and we love what we're seeing we know that there's there's a ton of excitement about getting the credit card from customers, we see it on social media and in the questions and we're excited.
Speaker Change: To accelerate the rollout from here, so already doubled and and it's going to continue.
Speaker Change: Retirement assets, they're now up to $16 billion, which is up about 20% and just from the start of the year and we closed the acquisition of trade PMI, which was bringing over 40 billion of of platform assets to Robin Hood. So a lot of progress on wallet share and on global financial ecosystem. This.
Speaker Change: Our tenure arc, we continue to make the U K brokerage offering better and better and we're working on launching in Asia are so excited about that Bitstamp acquisition is still on track to close mid year.
Speaker Change: And we're heads down getting things ready for the crypto event, which will be in France in two months. So we're very excited about that theres going to be some new things unveiled.
Speaker Change: And wrapping it all up.
Speaker Change: As a result of the strong product velocity, we saw strong business results as well revenues up 50% year over year trading volumes, all up double digits year over year, including a record quarter for options trading record net deposits as well $18 billion of net deposits in the quarter. So.
Speaker Change: I'm glad to see the strategy's working customers are not only trading more with us, but they're entrusting us with more of their assets.
Speaker Change: Gold subscribers nearly doubling year over year to $3 2 million as of the end of the quarter and actually now $3 3 million in April and that's a 12% plus adoption rate overall, but if you look at new customers, who joined Robinhood in Q1 about one in three BK.
Speaker Change: Same gold subscribers relatively quickly and.
Speaker Change: And we look on international that's continuing to accelerate.
Speaker Change: We are now up to over 150000 international customers and that's just going to keep going and going.
Speaker Change: So we feel great about our product velocity.
Speaker Change: And the business results that it's driving I'll turn it over to you Jason to talk through financials, and then we'll go straight to Q&A. Okay. Thanks flat Q1 was another quarter of profitable growth as revenues grew 50% year over year and EPS more than doubled.
Speaker Change: Our focus on profitable growth drove 72% incremental margins as adjusted EBITDA margin expanded by 11 points from a year ago.
Speaker Change: And over the past 12 months revenues reached $3 3 billion and adjusted EBITDA was $1 7 billion as we continue to grow and diversify our business it.
Speaker Change: It's also great to see momentum continuing into the second quarter April net deposits are around $6 5 billion <unk>.
Speaker Change: Equities trading is a four year high opt.
Speaker Change: Options are in the zone of an all time high and crypto trading is north of 8 billion.
Speaker Change: Also margin balances are about $8 4 billion, which is up two <unk> from last year.
Speaker Change: I am pleased with our customers' continued engagement, it's driven by a greater share of active traders who tend to stay resilient through volatility continued market share gains and diversification into newer areas like Robin had legend advisory futures and index options.
Speaker Change: Let's take a closer look at our Q1 financials compared to a year ago Q1 revenues were $927 million driven by strong growth across the board transaction volumes increased by double digits across all categories, including up 84% year over year in equities and we saw <unk>.
Record options volume in the quarter.
Speaker Change: Interest, earning assets and securities lending activity continued to grow more than offsetting short term rates and other revenues grew as gold subscriptions reached new highs.
Speaker Change: We also stayed disciplined on expenses, leading to 51% adjusted EBITDA margins in Q1, adjusted Opex and SPC was $533 million in the middle of our updated full year outlook range on a quarterly basis as.
Speaker Change: As we previously announced we anticipate approximately $85 million of costs from trade TMR in 2025, So we updated our full year outlook for adjusted Opex and SPC to 2.085 to 2.185 billion.
Speaker Change: As a reminder, this outlook does not include costs from our anticipated acquisition of Bitstamp.
Speaker Change: Provisions for credit losses.
Speaker Change: Let's talk for a moment about how we're diversifying our business you've heard me say that we have nine businesses that each generate over $100 million in annualized revenues nearly double the number we had just a couple of years ago and I'm excited to say we have many more that are quickly scaling for example, we've recently launched three.
Speaker Change: New products Futures index options and prediction markets, where the E. R. R for each of them individually is already around $20 million.
Speaker Change: And with the addition of trade TMR, we've added a business that has a $50 million run rate and a nice track record for growth and there are several more businesses that we recently announced and expect to begin contributing later this year, including Robin its strategies Robert had banking and.
Speaker Change: And our acquisition of bit stamp in the middle of the year.
Speaker Change: So we're incredibly excited about all of these new businesses and I like our opportunity to build many of them into additional $100 million revenue businesses in the coming years.
Speaker Change: I also want to give an update on our share repurchase program. You will recall, we began executing on our $1 billion share repurchase plan in Q3 last year with target completion over two to three years. Since then we've moved faster and have deployed over $650 million at an average price of.
Speaker Change: $33 per share. This includes over $300 million of buybacks in Q1, which more than offset share issuance for trade TMR.
Speaker Change: Given our strong performance and positive outlook. Our board has increased the authorization by 500 million, taking the program up to a total of $1 5 billion we.
Speaker Change: We expect to deploy the remaining 800 million plus over roughly the next two years, but we're keeping flexibility to accelerate if market conditions warrant. So we feel great about our business and financial results and remain focused on driving another year of profitable growth in 2025, we're continuing to work to maximize earnings.
Speaker Change: Per share and free cash flow per share overtime.
Speaker Change: With that Chris let's move to Q&A alright, Thank you Jason.
Speaker Change: For the Q&A session, we will start by answering the top few questions from say technologies ranked by the number of votes. We passed over questions that were already addressed on this call or in prior quarters and grouped together questions. The chair to common theme.
Speaker Change: After the same questions, we will turn to live questions from our analysts so let's kick it off with our first question from say.
Speaker Change: Patrick asks what is robinhood doing to accelerate credit cards and checking accounts to the gold members.
Speaker Change: Thanks for the questions I'll start with the gold card and maybe turn it over to use Ladd for banking as I've mentioned, it's really important for us to study customer behavior as we rollout the card we've been doing that and have increased the number of cardholders from 100000 to over 200000 just in Q1.
Speaker Change: So far what we're seeing in terms of customer behavior is in line with our expectations. So we feel good and we plan to continue increasing the number of cardholders throughout the year, but along the way we're going to continue to be measured in the near term.
Jason: But thanks, Jason Yeah on the banking side, So we announced at velocity of gold event back in March.
Speaker Change: Robin Hood banking and the philosophy behind this product is that we want to build a compelling banking experience for the top of market. So if you're someone who's a high net worth individual with more assets. We wanted to provide a digital banking experience, where you would feel like.
Youre, not making compromises relative to.
Speaker Change: Your brick and mortar bank and I don't think any digital bank has taken that approach. So we're extremely excited we've been testing the product internally. It's looking really good I think I think youre going to like it and at the event, we announced rolling out to the public in Q3, and we feel good about that date.
Speaker Change: So stay tuned the teams have been working incredibly hard.
Speaker Change: Awesome Alright. Thanks. The next question is from Niko, who asks when will users be able to invest in private companies such as Spacex yeah.
Speaker Change: Yeah. So.
Speaker Change: This is actually one of our top policy priorities, we believe that.
Speaker Change: It's actually quite crazy that.
Speaker Change: Now customers can't invest in private companies given that private companies companies are staying private longer the days of you know Microsoft going public a multi hundred million market cap or Apple are at relatively low market caps and.
Speaker Change: You being able to take advantage of a lot of the appreciation in public markets. There are fewer and far between now you have companies like open AI and Spacex are still private and in valuations of hundreds of billions. So those those gains are accruing to a smaller and smaller group of insiders.
Speaker Change: We have the technology to do this and in fact I wrote an op Ed for the Washington post that toque.
Speaker Change: <unk> private equities is a huge unlock both for individuals but also for these companies and for crypto technology, which which can actually solve a lot of the problems in a secondary market transactions that have been tried thus far.
Speaker Change: What's needed is comprehensive security legislation in the U S and also for us to rethink the accredited investor rules, which shut out north of 80% of the public currently so both of those we're making progress on we're in active discussions there's definitely a willingness from.
Speaker Change: The administration of lawmakers to engage in these issues. So stay tuned, but we believe we're going to make progress here.
Speaker Change: Great. Thank you for that and then the last question is from Paul who asks when will robinhood offer 401, K plans to businesses.
Speaker Change: Yeah. Thanks, Paul.
Speaker Change: Our 10 year arc, our long term arc is to build the number one global financial ecosystem and what that means is expanding our business from retail only which pretty much is now to also serving businesses and institutions and also expanding from primarily U S to being a full.
Speaker Change: Global platform, serving customers everywhere, regardless of whether they're individual retail businesses or institutions.
Speaker Change: And so when we look at that B to B opportunity.
Speaker Change: We think businesses and institutions have fundamentally similar needs are in many ways to retail the things that we're building the innovations we're building for retail things like 24 hour trading rock bottom margin rates.
Speaker Change: Also appeal to institutions.
Speaker Change: And businesses and there's so many opportunities for.
Speaker Change: <unk> hundred one K administration for businesses as one you also look at things like employee stock plan administration for public companies you look at institutional Prime brokerage.
Speaker Change: And of course, serving registered investment advisors, which which we're now getting into through trade PMI.
Speaker Change: And we think that's an enormous opportunity to serve businesses. If we look at registered investment advisors.
Speaker Change: Business that has an additional layer of compounding so not only are we taking advantage of the great wealth transfer where young people are going to be making more and more money over time, we're getting more customers, but as we get more advisors. That's a third layer of asset growth. So for the near term, we're working really hard to inter.
Speaker Change: The <unk> team and technology build a great experience serving registered investment advisors, we want to make sure we stay Super focused and we don't take on too much. So that's been our <unk> focus for the near term, but over the long term. We do think 401 case, a sizable opportunity that we'd be excited to tackle it.
Speaker Change: Long side, all the other things in our tenure arc.
Speaker Change: Great Alright. Thank you I'll add that concludes our shareholder questions from say technologies now we will open the call to Q&A, we ask that each person limit themselves to one question and return to the queue. If they would like to ask a follow up tender the queue. Please press star one on your phone and if you'd like to leave the queue. Please.
Speaker Change: First our one one again the.
Speaker Change: The first question comes from Chris Allen at Citi, Chris.
Chris Allen: Good afternoon, guys I appreciate the question.
Chris Allen: The health of the retail cost or is it a big focus in the current environment. I was wondering if you could peel back who will provide some additional color on the on the April metrics. You've provided we're very sad curious if margin balances kind of improve towards the back half of the month, whether you've seen net new account openings and the strong deposit numbers are those coming from existing customers or new <unk>.
Chris Allen: Customers.
Chris Allen: Hey, Chris Thanks, It's Jason I'll take it and flat feel free to add in so we we saw incredibly strong engagement across the board not just in Q1, but it continued into April as we said and it was it was throughout the month of April So I wouldn't say it was front loaded or back loaded it was really a strong month.
Chris Allen: In total we're.
Chris Allen: We're seeing strong additions as lad alluded to to Robinhood gold.
Chris Allen: And the strength in net deposits is pretty diverse and what's different about us today than perhaps a few years ago is theres, just a lot more options for customers to place their assets.
Chris Allen: It's the growth in retirement, the nascent growth in strategies certainly brokerage. We're also seeing it go into crypto. So I'd say that there's a pretty broad based strength of retail engagement that we're that we're seeing and all signs are positive throughout the month of April yeah. The only thing I'd add to that is unlike.
Chris Allen: Where the business was back in 2022.
Chris Allen: We were predominantly focused on novice investors the new focus on being the best platform for active traders has made us more resilient in times like these because we used to just not have a lot of mechanisms for customers that were more sophisticated that wanted to trade sideways or declining markets.
Chris Allen: They just couldn't engage in that super easily on robinhood, but just recently, we've launched futures and as we shared futures had.
Chris Allen: A very very significant growth in April with over $4 5 million contracts traded outright contracts, we've rolled out an amazing experience for multi leg options trading on mobile the side by side chain.
Chris Allen: Which will make it easier for advanced traders to to engage in the multi leg strategies and Robin Hood legend continues to grow and get better. So now we have a multiple mechanisms for these active traders to engage no matter what the market environment is in so even though we're diversifying the business with <unk>.
Chris Allen: <unk> business lines of over $100 million, and we're getting less reliant upon treating in the revenue mix even within trading.
Chris Allen: It's becoming more resilient and so.
Chris Allen: I think I think we're very excited about that and there is still more more to come.
Speaker Change: Great. Thank you Jason. Thank you. The next question is from Dan <unk> from Mizuho.
Speaker Change: Hey, guys, Hey, Jason Hey, great quarter as always.
Speaker Change: Very impressive really quick looks like Robinhood gold is doing really really well.
Speaker Change: And hopefully I didn't miss and it was already addressed but this seems to be growing way faster than we had expected.
Speaker Change: What should we be thinking about in terms of like the trajectory of the growth here because it seems to be at.
Speaker Change: 550000 quarter over quarter over quarter increase.
Speaker Change: This quarter. So maybe just some color on like how big it could be and just the velocity, there which seems to be very impressive. Thank you.
Speaker Change: Yeah.
Jason: Oh, maybe I'll share some some higher level thoughts Jason feel free to add in.
Jason: Yeah, our our aspiration I already think robinhood gold is the best deal in financial services.
Jason: But I think the aspiration is to actually make it.
Jason: On par with the best membership loyalty programs out there. So we're not just looking at financial services as a benchmark and in reality of these types of products are until we came along relatively unique in our industry.
Jason: But we're looking at things like the Costco membership Amazon Prime as an inspiration and we're really sort of like students of this and I think that the improvements that we've made in.
Jason: Day, one in Q1 attach rate, which had been tremendous are just the beginning.
Jason: I think that when you keep hearing.
Jason: How crazy high value gold is and.
Jason: While we don't raise the price not just from analysts but also customers.
Jason: I think we feel very good we're on the right track and credit card is continuing to rollout. That's in the relatively early stages banking, which is going to be a gold's only products.
Jason: That's looking really really good so.
Jason: As far as we can see the gold roadmap is looking very solid.
Jason: Yeah.
Speaker Change: Great Alright. The next question is from Devin Ryan at citizens.
Devin: Hey, Vlad Hi, Jason how are you Hey, Devin.
What I ask the question on crypto.
Devin: Specifically, you seemed a little bit of a pullback in our record fourth quarter, and we know that was kind of particularly elevated.
Devin: Love to just get a little bit of color from what you're seeing or hearing from customers. There. So still very active and I know youre going to have the update in June so don't want to front run it but at the same time I'm curious kind of the level of urgency to do more.
He is getting a lot of what we're hearing more about kind of a race on stable coins and so just love to kind of get a sense of how hard you guys are pushing there and then also just the engagement from customers just given that we're off the highs of little bit. Thanks.
Devin: Yes, yes.
Devin: So I mean.
Devin: Crypto had.
Devin: An awesome quarter, we add.
Devin: We had about $260 million in revenue for the quarter, which was the second highest quarter in recent years last quarter, obviously was a was higher than that but.
Devin: It's going to go up and down in terms of trading volumes.
Devin: But what we like to look at is market share and if industry volumes are going down but market share is going up for Robin Hood, and we're continuing to unlock and add more selection and add more products.
Devin: We feel like we are a we're doing very very well. So the team has been cranking there've been a slew of improvements both for traders and coming down the Pike.
Devin: But more selection smart exchange routing.
Devin: And.
Devin: The teams have been executing a lot and there is so much to do so we're excited for the June event, but I'd also tell you.
Devin: We're diversifying the business outside of the crypto business, which will make us less reliant on crypto transaction volumes.
Devin: But also within crypto theres going to be diversification over time.
Devin: So crypto itself will will diversify and be less reliant on transaction volumes in the future.
Devin: Great. Thanks, a lot.
Speaker Change: The next question is from ROI at Crossroads.
Devin: Roy.
Devin: Thanks for taking my question.
Devin: <unk>.
Devin: Really enjoyed getting that early look at robinhood strategies and seeing what that platform is about what you guys have been building and I'm curious if you could give us any early read on that product as far as how it's being approached by customers. How many are actually looking at that.
Devin: Yeah, Yeah, absolutely. So we we shared earlier over 40000 customers already over 100 million in assets on strategies.
Devin: I'm sure you've seen some of the engagement on social customers sharing their portfolios and talking about how despite sort of like the volatility of of the times we're in.
Devin: Product has been holding up very very well, so it's continuing to grow.
Devin: We're adding more and more features based on demand, but early read has been tremendously positive from the customers that habit.
Speaker Change: Thanks, a lot. The next question is from Patrick Moly at Piper.
Patrick Moly: Yeah. Good evening, thanks for taking the question.
Patrick Moly: So I wanted to touch on the futures.
Speaker Change: Offering again, you mentioned that you saw $4 5 million contracts traded in April so it sounds like thats picking up pretty nicely. So just curious where that volume is coming from is that existing customers are you finding that.
Speaker Change: Youre winning customers from other brokerage platforms, there and then any specific commentary that you can give on.
Speaker Change: Whether there are specific products or specific asset classes that you're finding your customers are migrating to thanks, yeah yeah.
Speaker Change: So I think it's a little bit early to <unk>.
Speaker Change: Give you a sort of like the full read but were seeing good signs of these volumes being incremental actually and the reason we can tell is we look at a lot of our futures traders. They also are trading.
Speaker Change: Equities and other assets.
Youre actually seeing the power of.
Speaker Change: Having multiple assets in one platform shine through there and really the thing that futures allows customers to do.
Speaker Change: Z ability to take short positions, which we still don't have equity shorting and while that's coming.
Speaker Change: It's sort of an outlet for that type of advanced systematic trading.
Speaker Change: We have the ladder and we also have those markets trading.
Speaker Change: Around the clock, so it's really opening up new behaviors and new styles of trading for our active traders. So that's I think why it seen such such good adoption plus the product experience of the team. The futures team has built they've done a really nice job, particularly on the mobile ladder and theres more to do.
Speaker Change: Futures on legend for example, and.
Speaker Change: Making it available also to outside the U S. As we continue to expand there.
Speaker Change: Great. The next question is from Craig Siegenthaler at Bank of America.
Craig Siegenthaler: Thanks, Good afternoon, everyone. So my question is on core tax.
Speaker Change: Or are you going to charge for this product or is it offered or will be offered for free tier of gold subscribers. Since the launch plan towards the end of the year working 25.
Craig Siegenthaler: For cortex.
Speaker Change: Yeah.
Speaker Change: Yeah, we'd like to.
Speaker Change: I think I think we'd like to get a little bit before then our teams have been working hard to get that out and cortex is.
Speaker Change: But what you saw announced in the in the last city of gold events, just the beginning so we announced cortex for stock digests that'll help customers answer the question of what's going on with the stock also trade builder, which will help customers execute on and options trading strategy.
Speaker Change: <unk> given a viewpoint in and a selection of a particular stock and it will be for gold subscribers. So right now no plans to charge additional fees. We wanted to give this technology to our gold customers.
Speaker Change: And.
Speaker Change: You should see it actually permeating the entire robinhood experience. So that this is just the start but we're already thinking about how to how to integrated more deeply into flows for active traders across different platforms.
Speaker Change: And also we're continuing to make progress improving.
Speaker Change: The operations of the company and also the customer service through AI, So while maybe that's less overt it's.
Speaker Change: It's incredibly powerful because it gives customers a resolution really effective resolution whenever they run into issues.
Speaker Change: Great. The next question is from James <unk> at Goldman Sachs.
James Goldman: Good afternoon, and thanks for taking my question.
James Goldman: But I wanted to ask a longer term crypto one for you. We've now seen all three U S banking regulators shift their posture.
James Goldman: To allow them to participate in the crypto ecosystem.
James Goldman: Raul do you expect U S banks to play across both retail and wealth versus institutional crypto and what does this mean for competition and pricing in the U S crypto markets.
James Goldman: Yeah.
James Goldman: I was just put out there I like our positioning it's always hard to speculate on what.
James Goldman: Competitors may or may not do before they have products in market.
James Goldman: And we're focused on driving innovation here. So obviously, we've done well on the trading side, we think crypto as interesting as a foundational technology that could actually improve a wide variety of financial services, not just spot crypto trading so.
James Goldman: We think we're just in the early innings of having this technology permeate the financial system.
James Goldman: And we're excited to see what not just we bring to market, but what others can do.
James Goldman: Partnering with us and just independently as well I think as as more competitors enter the market. It makes crypto more mainstream which makes the market bigger and I think we've been demonstrating our ability to take market share. So I really like our competitive position.
James Goldman: Thank you.
Speaker Change: Our next question is from Amit Amit is investing.
Speaker Change: Hey, Brad Hey, Jason Congrats again on a great quarter.
Speaker Change: My question here is on the promotion you guys ran for the 2% matching March.
Speaker Change: Jason I know you've said you've loved the unit economics on these markets can you give us a little bit of insight on the types of customers you brought over in March and if you think that 2% matching sustainable they continue bringing over more of the wealthier clients. Thanks, guys. You bet. So first of all incredible.
Engagement by customers record level of net deposits.
Speaker Change: The the promotions were not the majority of that in fact they were.
Speaker Change: In Q1 less than 15%.
Speaker Change: Customers Love It we love it and Youre right, Amit I love the economics of it the payback periods are really attractive consistently below.
Across all of our promotions below the clawback periods.
Speaker Change: On that in terms of the kinds of customers that we're getting we're getting large customers.
Speaker Change: The average customer transfer per user was $90000 overall, so we're getting large customers and then what's really interesting is for taxable accounts, because we had taxable and nontaxable promotions for taxable accounts. It was double that so over $180000 average.
Speaker Change: A cat transfer in.
Speaker Change: For the promotion so we.
Speaker Change: We really love these promotions, we like the customers that we're getting and they tend to have larger balances.
Speaker Change: Thanks, Jason The next question is from Matt Oneill <unk> partners.
Matt Oneill: Yes. Thanks, so much for taking my question I only have a little bit late so apologies. If this has already been discussed but I was just curious around crypto pricing. It seems like things are moving in the direction that they have been for a number of quarters now maybe you could just discuss kind of where that stands.
Matt Oneill: As far as the experimentation that continues as well as I believe there.
Matt Oneill: Further experimentation going on with volume based pricing. Thanks.
Speaker Change: Yeah, you want to hit that Jason sure I mean, we're continuing to experiment, we've been seeing the take rates.
Matt Oneill: Come up.
Matt Oneill: Sequentially for several quarters now what I'd say is the when we look at take rates for crypto for the month of April.
Matt Oneill: It's in a similar zone to where we were at in in in Q1, I do think the big opportunity for us on experimenting is tiered pricing, while robinhood has really attractive pricing on average I think that there's a big opportunity for us for the highest volume traders of crypto to get a better a better price.
Matt Oneill: Robin Hood and Thats, what were really experimenting with.
Matt Oneill: We like what we're seeing so far but we're still pretty early in those experiments.
Speaker Change: Alright, Thanks, Jason. The next question is from Brian Bedell Deutsche Bank.
Brian Bedell: Thanks, Good afternoon, guys maybe.
Brian Bedell: Maybe just going back to the net deposits in in March and that continued traction in April.
Brian Bedell: Actual active trader mix within that deposits that you talked about the 180000 average balance on the taxable side either.
Brian Bedell: They're either adjacent or flat can you talk about.
Brian Bedell: What youre seeing from active traders coming into the complex and the usage on the legend I think the last time you quoted there was about a $50 million run rate I don't know if theres, an update to that and maybe just talk about the plans for legend is.
Brian Bedell: As we roll out through the year.
Speaker Change: Maybe I'll start ladder, then you can kind of fill in so last quarter, we said $50 million.
Speaker Change: We didn't update it this quarter it will just update that periodically, but I can tell you that we've seen strong.
Speaker Change: Growth sequentially in volumes through legend is active traders continue to adopt and engage with the product and as we continue.
Speaker Change: Two two.
Speaker Change: One thing that's really nice is that when we look at.
Speaker Change: Incremental <unk> <unk>.
Speaker Change: The vast majority of the volumes that are coming through legend are incremental so that's super encouraging.
Speaker Change: Yeah and in terms of roadmap for legend throughout the year.
Speaker Change: Rounding out the feature set so futures on legend is off requested.
Speaker Change: Customers want to see the ladder, which they love on mobile on legend as well and then continuing to refine and improve the active trader experience and also the live streamer experience. So we've added a bunch of new widgets snapshot.
Speaker Change: To make live streaming on legend, better and better so that the velocity of this team.
Speaker Change: Continues to be really really strong and we've got we've got more in store.
Speaker Change: Even prior to the active trader event in the latter half of the year.
Speaker Change: Great. The next question is from Ben British at Barclays.
Ben British: Hi, good evening and thanks for taking the question.
Speaker Change: I was wondering if you could just Jason if you could talk a little bit more about what youre seeing on the credit side I'm, particularly curious about your expectations for credit loss provisioning for the year I know, it's a hard one to model.
Speaker Change: And probably a hard one to guide too I think in the last quarter, you said it should run maybe like around like the $20 million range. It came at a little bit higher than that.
Speaker Change: And somewhat in response to the changing macro backdrop, but how are you thinking about how should we be thinking about that line and any other color you can provide in terms of credit behavior are people using this card is.
Speaker Change: Accruing balances are they maximizing for points what sort of activity are you seeing how you think about sort of managing credit risk in this environment. Thank you, yes sure. So so first of all we really like what we're seeing.
Speaker Change: From our customers.
Speaker Change: Delinquency rates write offs are all.
Speaker Change: Very very low and in line with our expectations.
Speaker Change: And when we look at broader industry data.
Speaker Change: Nothing that we're seeing that's particularly concerning that said, we're continuing to have.
Speaker Change: Pretty tight underwriting standards, so that we build a book of business that can be resilient regardless of.
Speaker Change: Of the backdrop in terms of the provision for credit losses this quarter.
Speaker Change: I'd actually point you to on the brokerage side not on the credit card side, we had a step up in some brokerage related.
Speaker Change: Losses, not related to margin book, but more kind of fraud related teams all over it not something I'm worried about.
Speaker Change: But in terms of the gold card, we like what we're seeing in terms of the customer behavior. We are seeing a nice ramp in the revolve rates, which is in line with our expectations.
Speaker Change: And customers are engaging with the card and a variety of ways using it for all types of purchases.
Speaker Change: And there are certainly enjoying the 3% rewards on the on the card so.
Speaker Change: So so far so good we continue to.
Speaker Change: Hold the path, we added 100000 cardholders in Q1, and we intend to continue to to add cardholders.
Speaker Change: Throughout the year in terms of the expectations for provision I would expect it to just to increase gradually through the year as we rollout more cards, yes.
Speaker Change: Yeah and product experience for their credit card App.
Speaker Change: He is getting better and better.
Speaker Change: It's going to continue to improve particularly when it becomes the banking app. So we're excited for that in the coming months.
Speaker Change: Excellent Alright. The next question is from Alex Mark Graff.
Speaker Change: Keybanc.
Speaker Change: Hey, Hey, Jason Thanks for taking my question.
Speaker Change: Jason maybe one for you on just sort of taking all of these new products together and understanding that there might be some.
Speaker Change: Yield differential if you will.
Speaker Change: Alright advisory and things like that could you just sort of speak to contribution margin and how you manage that that line as you launch and scale new products.
Speaker Change: At different price points different monetization levels, yeah, absolutely.
Speaker Change: Every business that we go into has different economic characteristics characteristics.
Speaker Change: Somewhat might have lower return on assets.
Speaker Change: Be more monetize just directly from trading activity, what I would tell you is that what we're trying to optimize for over time is just increasing earnings per share and free cash flow.
Speaker Change: For share and I think as a technology company.
Speaker Change: We're incredibly well positioned to serve a variety of different businesses with a variety of different economic.
Speaker Change: Characteristics.
Speaker Change: At a really low Inc.
Speaker Change: Incremental cost and that's leading to to pretty high incremental margins you can see this kind of in our overall business as.
Speaker Change: As we are growing revenue much much faster than our bottom line.
Speaker Change: Costs. So we're seeing really nice leverage in 100% increase year over year and earnings per share. So.
Speaker Change: So we feel really good about just continuing to stay focused on the customer our three priorities of number one in active traders number one in wallet share for the next generation and number one in global financial ecosystem and if we think we think if we stay focused on the customer and keep our primary financial lens on <unk>.
Speaker Change: Growth of earnings per share.
Speaker Change: We're heading in the right direction.
John: Thanks, Jason The next question is from John <unk> at Needham.
John: Hey, guys. Thanks for taking my question.
Speaker Change: It's unpredictable market, so $1 billion traded over the last six months.
Speaker Change: Does that basically leave us with $500 million or so that are out what that was outside the November election, and then any sense. How much was kind of March madness or sports related versus other events.
Speaker Change: Yeah, that's right I'll be I'll be happy to feel that one so out of the 1 billion contracts traded.
Speaker Change: Yeah, just just less than half of that has been sports.
Speaker Change: And that's you know March madness, but we also had the masters and now there's NHL and NBA contracts as well so.
Speaker Change: The plan is still continue making the product better now that we have so many contracts discover ability in the organization something that the team is looking at and we think that this is an incredibly powerful nascent asset class and you should see more and more contracts in a wide variety of contracts.
Speaker Change: Overtime, So we love what we're seeing and it's so early that the potential of this is is vast.
Speaker Change: Alright. The next question is from tenor at future investing.
Speaker Change: Hey, guys great quarter can you hear me, yes, we hear you how're you doing okay perfect.
Speaker Change: So within the new verticals like you guys have with seven contracts in credit cards are you guys, attracting new users onto the platform without simply going to brokerage first any insights on that and if they're upgrading to gold or eventually cross selling to other products would be great.
Speaker Change: Yeah absolutely.
Speaker Change: <unk>, it's a mix.
Speaker Change: I think what you're starting what you typically see to begin with is.
Speaker Change: We like to test it among existing users, particularly the most active users tend to be.
Speaker Change: Yes, the earliest to adopt and we have a large installed base of north of 25 million funded accounts, which I think has been a huge differentiator for us relative to the other business is launching products.
Speaker Change: So we have lots of channels, where customers can discover products different Cros Cross channel cross sell services in product.
Speaker Change: And also our marketing activities and referral activities, so depending on the product.
Speaker Change: We use one or multiple of those.
Speaker Change: And credit cards, a little bit unique because that one top of funnel has been relatively easy you know as you know there's about $3 million on the waitlist and we're rolling it out rapidly but.
Speaker Change: Our thesis for that.
Speaker Change: That by offering a great product experience with great economics, we wouldn't have to pay the gigantic cost of customer acquisition that the incumbents have gotten used to paying seems to be bearing out. So we're excited about that I would just add that private had gold does play a pretty important.
Speaker Change: And this when you become a robinhood gold customer you bring in more balances you deposit at a higher rate and importantly on the cross sell point, you're much more likely to adopt more products and so it take retirement accounts as an example, like for Forex more likely as a gold customer versus an average customer.
Speaker Change: To have a retirement account and so I think you know.
Speaker Change: When they have five times the assets and so.
Speaker Change: Being a gold customer is kind of central to our strategy for cross sell and then as we continue to offer new and interesting products.
Speaker Change: Our customers are discovering them at a faster rate.
Speaker Change: Thanks Jayson.
Speaker Change: The next question is from Brett Knoblauch at Cantor.
Tom: I'm glad I hasten this is Tom <unk> on for Brett Allebach. Thank you for taking my question and congrats on another great quarter. Thanks, Tom.
Speaker Change: I just wanted to touch on the launch of Destiny.
Speaker Change: And now we've touched a little bit on crypto pricing here, but I just wanted to see how adoption that's been amongst traders for the foreign exchange routing and how we should think about <unk>.
Speaker Change: Impact on your blended ASP.
Craig Siegenthaler: Hey, Craig here over the next few quarter as adoption for this for this new product to gross.
Speaker Change: Yeah, Yeah, it's still early.
Speaker Change: In the relatively early stages of rolling out and we're experimenting with it so.
Speaker Change: So far results look good in particular for the active traders that are engaging with the order book directly through.
Speaker Change: Tools like legend or or even on mobile they want to be able to interact with the order book and see the price.
Speaker Change: And it also gives us the ability as Jason mentioned earlier too.
Speaker Change: Give preferential pricing to customers that trade more so overall philosophy is.
Speaker Change: You know as you bring more and more of your activity to robinhood, whether that means crypto trading activity. If you are an active trader or just assets.
The experience should get even better for you. So that's kind of the long term goal the more of your activity of the more of your assets you bring to Robin Hood and the longer you are with us the better the experience gets and I don't think Thats actually universal most most other financial services products are the opposite they kind of get worse.
Speaker Change: For you the more money you have.
Speaker Change: So, yes stay tuned, but but that's kind of where cryptos headed I think in the future of there'll be more customization and pricing depending on your activity.
Speaker Change: Sort of your engagement with the overall robinhood platform and I don't I would just add that I don't think that tiered pricing necessarily means a lower blended rate I think the big opportunity is bringing in volumes trading volumes that are today not coming to Robin Hood.
Speaker Change: And so we'll have to see how that plays out as we mentioned, it's small today and April take rates are in line with what we sign in Q1.
Speaker Change: Alright. The next question is from Edward Engel at Compass point.
Edward Engel: Hi, Thanks for taking my question most of my questions been asked already but I just wanted to touch on trade TMR.
Edward Engel: Talked about $85 million of incremental costs for this year I guess accident year. It was 226, what does kind of that core run rate cost base are it looks like is there any opportunities for savings there.
Edward Engel: I would just say that.
Edward Engel: In that 85 is including deal.
Edward Engel: Related costs.
Edward Engel: So so we have an opportunity to take that number down, particularly by the <unk>.
Edward Engel: Next quarter, even as we as we move forward.
Speaker Change: Okay. The next question is from Kyle Voigt at K B W.
Kyle Voigt: Hey, good evening.
Kyle Voigt: Maybe another question on crypto, but on the regulatory side.
Kyle Voigt: Last quarter, you noted that more regulatory clarity was needed to after offer crypto staking I just wanted to get an update on that and really wondering whether you'd be satisfied with guidance from the SEC or do you need to see a more comprehensive crypto market infrastructure Bill our regulatory framework past ticket comfort there.
Kyle Voigt: And then in terms of the comprehensive kind of crypto Bill was there anything proposed in the prior fit 21 digital asset Bill that would cause there necessitate any material changes to your current operating model for crypto more broadly.
Kyle Voigt: Yeah, we don't see anything that's concerning with regards to the crypto operating model.
Kyle Voigt: But there are opportunities I think the big opportunity is.
Kyle Voigt: Clarity on listing crypto asset securities and and actually not just for brokers to be able to list. These assets, but also for issuers to issue. These assets I think that will unlock a ton of economic value for the crypto industry in the U S. So that's been kind of our.
Kyle Voigt: Our primary policy objective in Washington, when it comes to to Crypto I think it's been good in the sense like not having a regulation by enforcement posture has been a boon to the industry, but now we have an opportunity to go further and make this technology.
Kyle Voigt: Useful to everyday people and to institutions in a in a real big way. So that's kind of what we're working towards and Washington.
Speaker Change: Great. The next question is from Evan at stock stock market News.
Speaker Change: My question Congrats to the entire team on a fantastic quarter I wanted to talk a little bit more about you guys are adding a bunch of new products and features and business lines I wanted to ask a little bit about time spent on the app and users minutes and if you guys have seen any changes and if that's something you guys are watching and optimizing for.
Speaker Change: Yeah, Yeah, great question.
Speaker Change: We've we've traditionally done very very well.
Speaker Change: On those types of metrics I mean people find the Robin Hood have very engaging despite the fact that we don't spend a ton of time or efforts driving that the efforts are all on making great products.
Sure that customers retain really well and build a great product experience and more recently driving gold subscription and the retention of gold subscribers, so really thus far.
Speaker Change: The focus has been on making it easy for customers to yet in making it easy for them to adopt the gold subscription and once they have gold sort of like facilitating them seeing the value across all.
Speaker Change: All of the products that are better on the platform and then making sure we uphold the commitment to having a great product experience throughout the journey.
Speaker Change: Not to say that there arent opportunities and we're actually investing more in our in building out our related teams there on the growth in the marketing side, but thus far it's been focused on making sure. The products are really really high quality and customers are experiencing tremendous Val.
Speaker Change: From from using that and Robinhood gold in particular, one of the things I'm excited about is the potential for cortex to make the app, even that much more engaging throughout a day so.
Speaker Change: But looking forward to seeing the team execute on that one.
Speaker Change: Great. The next question is from Ken Worthington at Jpmorgan.
Speaker Change: Question and squeezing me in.
Ken Worthington: I'd love to get some better insights into sort of the bank and prediction market business.
Ken Worthington: These are these participants more like your equity option or Krista crypto customers today.
Ken Worthington: What sort of penetration would you expect.
Ken Worthington: Mhm prediction markets of these customers over time.
Ken Worthington: And then do prediction market customers have.
Ken Worthington: Sort of higher or lower velocity than the other segments of your business or do you just like Super active are they.
Ken Worthington: More or less active like where do they fit into the <unk>.
Ken Worthington: Continuum of your other customers Yeah I think.
Ken Worthington: The great thing about this business.
Ken Worthington: About the prediction markets business as it appeals to a broad range of customers and we actually see.
Ken Worthington: Very very different behaviors, even within prediction markets. When you talk about a different different contracts. So for example, the group of customers that engages with.
Ken Worthington: The economic prediction markets is not the same group of customers that engages with the Masters for instance.
Ken Worthington: And so many of young people, who are our customer base.
Ken Worthington: Love Sports and Love following news and current events. So so actually what you see is like pretty pretty wide dispersion.
Speaker Change: Yes, it's not like you know other assets where if.
Ken Worthington: If youre an options trader.
Ken Worthington: A number of options traders are coming in primarily engaging with that you see these customers engaging in a wide spectrum of assets and sort of like a.
Ken Worthington: Trading activity quite quite broad and varied among the rest of our products.
Okay, great. Thank you thanks, Ken.
Speaker Change: Alright. The next question is from Stephen Toback at Wolf.
Ken Worthington: Okay.
Stephen Toback: Hi, good afternoon, and thanks for squeezing me in here.
Stephen Toback: And you typically provide near term guidance on NII and I was hoping you could speak to where you expect NII to land into Q based on spot or current balances and with four costs reflected in the forward curve might be helpful. If you could provide an updated sensitivity to interest rate cuts, yes. Thank you Stephen So we didn't.
Stephen Toback: Provide specific guidance for NII, what I would tell you is that when we look at the effect again, just isolating for a 25 basis point cut the.
Stephen Toback: The impact would be on a standalone basis about $50 million.
Stephen Toback: Dollars is as a headwind now when we look at over the last year the rates have come down quite a bit yet we have grown our interest earning assets at a pace that is outpaced the effect of dropping rates and so it's a little misleading to just hold everything constant and say $50 million. So we're continuing to.
Stephen Toback: Gather assets from customers and we've seen a really nice growth in interest, earning assets and then I know you've heard me say.
Stephen Toback: Many times, we also believe that we've got a really nice natural hedge between interest rates and trading so as rates come down there's an expectation that we have that the trading what would go up and provide a nice offset to any impact there.
Michael Cyprus: Alright. The next question is from Michael Cyprus at Morgan Stanley.
Michael Cyprus: Hey, good afternoon. Thanks for squeezing me in here as well just a question on 24 five markets I was hoping you could talk about the traction that youre seeing from clients in your overnight sessions.
Michael Cyprus: Contributing to that.
Michael Cyprus: Some of the steps that you're taking to drive greater customer uptake of this and if you look out three to five years. What does success look like here for your 24 or five markets what portion of equities options volume do you think this could represent for Robyn.
Michael Cyprus: Yeah I mean.
Michael Cyprus: 24 market 24 hour market is continuing to grow.
Michael Cyprus: Obviously, you see bursts of engagement.
When macro events are happening after hours or on weekends and there you've just you see it in 24 hour market first and I think youre seeing it become a standard so probably five years from now youre not really going to be talking about 24 hour market and sort of like core mark.
Michael Cyprus: <unk>.
Michael Cyprus: It'll it'll become table stakes for for.
Michael Cyprus: For any platform servicing active traders to offer this type of feature and to kind of follow us in there and then youre going to see the exchanges offered as well so it'll be an anomaly for something to not be available on on 24 hour market I think it becomes even more imperative when you start looking at international.
Michael Cyprus: National expansion.
Michael Cyprus: As we get into.
Michael Cyprus: Europe, and Asia, where there is less and less overlap with U S East coast working hours.
Michael Cyprus: That's just going to be another tailwind for increased volumes in an adoption, but I think the long term trend is.
Michael Cyprus: 24, seven for for every tradable asset.
Speaker Change: Alright, and then the last question is a follow up from James Euro Goldman Sachs.
James Goldman: Thanks for taking the follow up I just wanted to touch on Bitstamp. When the deal is closed could you just help us think about what that acquisition could mean for the way you route your crypto orders in terms of internalization as well as the crypto take rate and obviously recognizing the deal that institutional volumes, so that could pressure the blended take rate.
James Goldman: If you don't break that out, but so maybe if you could just isolate the impact on your retail crypto take rate, yes, we're very excited about bit stamp.
Speaker Change: The older.
James Goldman: Oldest and longest running crypto.
James Goldman: Change out there so that.
James Goldman: That makes robinhood, the oldest and the longest continuously running a crypto exchange, which is very exciting still middle of the year for clothes.
James Goldman: I don't want to front run any specific announcements on what we're going to do but.
James Goldman: What I'll tell you is institutional as a big opportunity for us, we're obviously not really in that space, yet, but we see a lot of opportunity and also international Bitstamp has a global presence cryptos increasingly global we're going to do more and more there.
James Goldman: And in terms of customer execution quality at the end of the day. The goal is to give customers choice.
James Goldman: And to provide.
James Goldman: Great execution experience and Bitstamp, certainly will play a role in that.
James Goldman: And we think it just gives us another another lever to give our active traders more ways to execute their orders.
James Goldman: Okay, well that concludes the Q&A portion of our call before we end the call I will turn it back to you for any closing comments, yes, I mean, just wanted to say thank you guys for joining us again second.
James Goldman: Second live video earnings call I think.
James Goldman: We're going to continue to do it.
James Goldman: I think theyre going to get better and better.
James Goldman: But really we've got a lot of work.
James Goldman: To do it's going to be a busy year. The roadmap is incredibly full.
James Goldman: So thank you for being on this journey with us and for listening in to the.
James Goldman: Analysts and investors retail and institutional who are continuing to engage with the company. So.
James Goldman: We're by no means slowing down it's going to be a busy year for us.
James Goldman: And looking forward to seeing many of you at the France Crypto event.
James Goldman: Yeah.
James Goldman: Q1.
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