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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
______________________
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  ________ to ________
Commission File Number: 001-40691
______________________
Robinhood Markets, Inc.
(Exact name of registrant as specified in its charter)
______________________
Delaware   46-4364776
(State or other jurisdiction of
incorporation or organization)		   (IRS Employer
Identification No.)
85 Willow Rd
Menlo Park, CA 94025
(Address of principal executive offices, including zip code)
(844) 428-5411
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Class A Common Stock
$0.0001 par value per share		 HOOD The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ý     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý     Accelerated filer o    Non-accelerated filer o  Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  ☒
As of May 4, 2023, the numbers of shares of the issuer’s Class A and Class B common stock outstanding were 775,510,054 and 127,445,988.



TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
 PAGE
ITEM 1.
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ITEM 2.
ITEM 3.
ITEM 4.
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.

1

CAUTIONARY NOTE REGARDING FORWARD‑LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) of Robinhood Markets, Inc (together with its subsidiaries, “we”, “Robinhood”, or the “Company”) contains forward-looking statements (as such phrase is used in the federal securities laws), which involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “believe,” “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “estimate,” “predict,” “potential”, or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. This Quarterly Report includes, among others, forward-looking statements regarding:
•our expectations regarding legal and regulatory proceedings and investigations;
•our intent to expand our operations outside of the United States and our goal to offer brokerage services in the U.K. by the end of 2023;

•our expectations for no credit losses for our held-to-maturity investments that are obligations of states and political subdivisions and securities issued by U.S. government sponsored agencies;

•our belief that, based on our current level of operations, our primary sources of liquidity will be adequate to meet our current liquidity needs for the next 12 months; and
•our belief that the 2021 Founders Award Cancellation (defined below) will lower our operating expenses by up to $50 million per quarter starting in the second quarter of 2023.
Our forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other factors that may cause our actual future results, performance, or achievements to differ materially from any future results expressed or implied in this Quarterly Report. Reported results should not be considered an indication of future performance. Factors that contribute to the uncertain nature of our forward-looking statements include, among others:
•our limited operating experience at our current scale;
•the difficulty of managing our business effectively, including the size of our workforce, and the risk of continued declining or negative growth;
•the fluctuations in our financial results and key metrics from quarter to quarter;
•our reliance on transaction-based revenue, including payment for order flow (“PFOF”), and the risk of new regulation or bans on PFOF and similar practices;
•our exposure to fluctuations in interest rates and rapidly changing interest rate environments;
•the difficulty of raising additional capital (to provide liquidity needs and support business growth and objectives) on reasonable terms, if at all;
•the need to maintain capital levels required by regulators and self-regulatory organizations (“SROs”);
•the risk that we might mishandle the cash, securities, and cryptocurrencies we hold on behalf of customers, and our exposure to liability for processing, operational, or technical errors in clearing functions;
2
•the impact of negative publicity on our brand and reputation;
•the risk that changes in business, economic, or political conditions that impact the global financial markets, or a systemic market event, might harm our business;
•our dependence on key employees and a skilled workforce;
•the difficulty of complying with an extensive, complex, and changing regulatory environment and the need to adjust our business model in response to new or modified laws and regulations;
•the possibility of adverse developments in pending litigation and regulatory investigations;
•the effects of competition;
•our need to innovate and invest in new products and services in order to attract and retain customers and deepen their engagement with us in order to maintain growth;
•our reliance on third parties to perform some key functions and the risk that processing, operational or technological failures could impair the availability or stability of our platform;
•the risk of cybersecurity incidents, theft, data breaches, and other online attacks;
•the difficulty of processing customer data in compliance with privacy laws;
•our need as a regulated financial services company to develop and maintain effective compliance and risk management infrastructures;
•the volatility of cryptocurrency prices and trading volumes;
•the risk that our platform could be exploited to facilitate illegal payments; and
•the risk that substantial future sales of Class A common shares in the public market, or the perception that they may occur, could cause the price of our stock to fall.
Because some of these risks and uncertainties cannot be predicted or quantified and some are beyond our control, you should not rely on our forward-looking statements as predictions of future events. More information about potential risks and uncertainties that could affect our business and financial results is included in the section of this Quarterly Report titled “Risk Factors” and our other filings with the U.S. Securities and Exchange Commission (“SEC”), which are available on the SEC’s web site at www.sec.gov. Moreover, we operate in a very competitive and rapidly changing environment; new risks and uncertainties may emerge from time to time and it is not possible for us to predict all risks nor identify all uncertainties. The events and circumstances reflected in our forward-looking statements might not be achieved and actual results could differ materially from those projected in the forward-looking statements. Except as otherwise noted, all forward-looking statements are made as of the date we file this Quarterly Report, and are based on information and estimates available to us at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by law, Robinhood assumes no obligation to update any of the statements in this Quarterly Report whether as a result of any new information, future events, changed circumstances, or otherwise. You should read this Quarterly Report with the understanding that our actual future results, performance, events, and circumstances might be materially different from what we expect.
We use the "Overview" tab of our Investor Relations website (accessible at investors.robinhood.com/overview) and its blog, Under the Hood (accessible at blog.robinhood.com), as means of disclosing information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (“Reg. FD”). Investors should routinely monitor those web pages, in addition to our press
3
releases, SEC filings, and public conference calls and webcasts, as information posted on them could be deemed to be material information. The contents of our websites are not intended to be incorporated by reference into this Quarterly Report or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
4
ROBINHOOD MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited)

December 31, March 31,
(in millions, except share and per share data) 2022 2023
Assets
Current assets:
Cash and cash equivalents $ 6,339  $ 5,459 
Cash segregated under federal and other regulations 2,995  4,213 
Receivables from brokers, dealers, and clearing organizations 76  112 
Receivables from users, net 3,218  3,152 
Securities borrowed 517  844 
Deposits with clearing organizations 186  247 
Asset related to user cryptocurrencies safeguarding obligation 8,431  11,489 
User-held fractional shares 997  1,217 
Held-to-maturity investments —  290 
Prepaid expenses 86  90 
Other current assets 72  75 
Total current assets 22,917  27,188 
Property, software, and equipment, net 146  137 
Goodwill 100  100 
Intangible assets, net 25  23 
Non-current held-to-maturity investments —  195 
Non-current prepaid expenses 17  11 
Other non-current assets 132  131 
Total assets $ 23,337  $ 27,785 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses $ 185  $ 203 
Payables to users 4,701  4,986 
Securities loaned 1,834  2,609 
User cryptocurrencies safeguarding obligation
 8,431  11,489 
Fractional shares repurchase obligation 997  1,217 
Other current liabilities 105  113 
Total current liabilities 16,253  20,617 
Other non-current liabilities 128  122 
Total liabilities 16,381  20,739 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.0001 par value. 210,000,000 shares authorized, no shares issued and outstanding as of December 31, 2022 and March 31, 2023.
 —  — 
Class A common stock, $0.0001 par value. 21,000,000,000 shares authorized, 764,888,917 shares issued and outstanding as of December 31, 2022; 21,000,000,000 shares authorized, 772,702,942 shares issued and outstanding as of March 31, 2023.
 —  — 
Class B common stock, $0.0001 par value. 700,000,000 shares authorized; 127,862,654 shares issued and outstanding as of December 31, 2022; 700,000,000 shares authorized, 127,538,580 shares issued and outstanding as of March 31, 2023.
 —  — 
Class C common stock, $0.0001 par value. 7,000,000,000 shares authorized, no shares issued and outstanding as of December 31, 2022 and March 31, 2023.
 —  — 
Additional paid-in capital 11,861  12,462 
Accumulated deficit (4,905) (5,416)
Total stockholders’ equity
 6,956  7,046 
Total liabilities and stockholders’ equity $ 23,337  $ 27,785 
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
5
ROBINHOOD MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
 March 31,
(in millions, except share and per share data) 2022 2023
Revenues:
Transaction-based revenues $ 218  $ 207 
Net interest revenues 55  208 
Other revenues 26  26 
Total net revenues 299  441 
Operating expenses:
Brokerage and transaction 31  36 
Technology and development 268  199 
Operations 91  42 
Marketing 32  26 
General and administrative 268  647 
Total operating expenses 690  950 
Loss before income taxes (391) (509)
Provision for income taxes 1  2 
Net loss $ (392) $ (511)
Net loss attributable to common stockholders:
Basic $ (392) $ (511)
Diluted $ (392) $ (511)
Net loss per share attributable to common stockholders:
Basic $ (0.45) $ (0.57)
Diluted $ (0.45) $ (0.57)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic 867,769,168  896,924,695 
Diluted 867,769,168  896,924,695 
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
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ROBINHOOD MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended
 March 31,
(in millions) 2022 2023
Net loss $ (392) $ (511)
Foreign currency translation (1) — 
Total other comprehensive loss, net of tax (1) — 
Total comprehensive loss $ (393) $ (511)
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
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ROBINHOOD MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
 March 31,
(in millions) 2022 2023
Operating activities:
Net loss $ (392) $ (511)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 12  20 
Provision for credit losses 8  9 
Share-based compensation 220  598 
Other —  5 
Changes in operating assets and liabilities:
Receivables from brokers, dealers, and clearing organizations (36) (36)
Receivables from users, net 1,417  57 
Securities borrowed —  (327)
Deposits with clearing organizations 34  (61)
Current and non-current prepaid expenses 26  2 
Other current and non-current assets (24) (8)
Accounts payable and accrued expenses (2) 18 
Payables to users 673  285 
Securities loaned (1,500) 775 
Other current and non-current liabilities 1  2 
Net cash provided by operating activities 437  828 
Investing activities:
Purchase of property, software, and equipment (13) — 
Capitalization of internally developed software (8) (5)
Purchase of available-for-sale investments (14) — 
Proceeds from maturities of available-for-sale investments 1  9 
Purchase of held-to-maturity investments —  (485)
Net cash used in investing activities (34) (481)
Financing activities:
Taxes paid related to net share settlement of equity awards (3) (2)
Payments of debt issuance costs —  (10)
Draws on credit facilities 11  — 
Repayments on credit facilities (11) — 
Proceeds from exercise of stock options, net of repurchases 3  1 
Net cash provided by (used in) financing activities —  (11)
Effect of foreign exchange rate changes on cash and cash equivalents —  — 
Net increase in cash, cash equivalents, segregated cash and restricted cash 403  336 
Cash, cash equivalents, segregated cash and restricted cash, beginning of the period 10,270  9,357 
Cash, cash equivalents, segregated cash and restricted cash, end of the period $ 10,673  $ 9,693 
Cash and cash equivalents, end of the period $ 6,191  $ 5,459 
Segregated cash, end of the period 4,458  4,213 
Restricted cash (current and non-current), end of the period 24  21 
Cash, cash equivalents, segregated cash and restricted cash, end of the period $ 10,673  $ 9,693 
Supplemental disclosures:
Cash paid for interest $ 3  $ 3 
Cash paid for income taxes, net of refund received $ 1  $ — 
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
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ROBINHOOD MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(Unaudited)

Common stock Additional
paid-in
capital		 Accumulated other comprehensive
income		 Accumulated
deficit		 Total stockholders’
(deficit) equity
(in millions, except for number of shares) Shares Amount
Balance as of December 31, 2021 863,912,613  $ —  $ 11,169  $ 1  $ (3,877) $ 7,293 
Net loss —  —  —  —  (392) (392)
Shares issued in connection with stock option exercise, net of repurchases 1,438,358  —  4  —  —  4 
Issuance of common stock upon settlement of restricted stock units, net of shares withheld 4,457,038  —  (3) —  —  (3)
Change in other comprehensive income —  —  —  (1) —  (1)
Share-based compensation —  0 —  0 230  0 —  0 —  230 
Balance as of March 31, 2022 869,808,009  $ —  $ 11,400  $ —  $ (4,269) $ 7,131 

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ROBINHOOD MARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(Unaudited)


Common stock Additional
paid-in
capital		 Accumulated other comprehensive loss Accumulated
deficit		 Total stockholders’
(deficit) equity
(in millions, except for number of shares) Shares Amount
Balance as of December 31, 2022 892,751,571  $ —  $ 11,861  $ —  $ (4,905) $ 6,956 
Net loss —  —  —  —  (511) (511)
Shares issued in connection with stock option exercise, net of repurchases 502,862  —  1  —  —  1 
Issuance of common stock upon settlement of restricted stock units, net of shares withheld 6,987,089  —  (2) —  —  (2)
Share-based compensation —  —  602  —  —  602 
Balance as of March 31, 2023 900,241,522  $ —  $ 12,462  $ —  $ (5,416) $ 7,046 
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.


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ROBINHOOD MARKETS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Robinhood Markets, Inc. (“RHM” and, together with its subsidiaries, “Robinhood,” the “Company,” “we,” or “us”) was incorporated in the State of Delaware on November 22, 2013. Our most significant, wholly-owned subsidiaries are:
•Robinhood Financial LLC (“RHF”), a registered introducing broker-dealer;
•Robinhood Securities, LLC (“RHS”), a registered clearing broker-dealer;
•Robinhood Crypto, LLC (“RHC”), which provides users the ability to buy, sell, and transfer cryptocurrencies and is responsible for the custody of user cryptocurrencies held on our platform; and
•Robinhood Money, LLC (“RHY”), which offers a pre-paid debit card (the “Robinhood Cash Card”) and a spending account that help customers invest, save, and earn rewards.
Acting as the agent of the user, we facilitate the purchase and sale of options, cryptocurrencies, and equities through our platform by routing transactions through market makers, who are responsible for trade execution. Upon execution of a trade, users are legally required to purchase options, cryptocurrencies, or equities for cash from the transaction counterparty or to sell options, cryptocurrencies, or equities for cash to the transaction counterparty, depending on the transaction. We facilitate and confirm trades only when there are binding, matched legal obligations from the user and the market maker on both sides of the trade. Our users have ownership of the securities they transact on our platform, including those that collateralize margin loans, and, as a result, such securities are not presented on our unaudited condensed consolidated balance sheets, other than user-held fractional shares which are presented gross. Our users also have ownership of the cryptocurrencies they transact on our platform (none of which are allowed to be purchased on margin and which do not serve as collateral for margin loans), and we recognize a liability to reflect our safeguarding obligation along with a corresponding asset on our balance sheet related to the cryptocurrencies we hold in custody for users.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC for interim financial reporting. The condensed consolidated financial statements are unaudited, and in management’s opinion, include all adjustments, including normal recurring adjustments and accruals necessary for a fair presentation of the results for the interim periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2023 or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”).
There have been no material changes in our significant accounting policies as described in our audited consolidated financial statements included in our 2022 Form 10-K. The unaudited condensed consolidated financial statements include the accounts of RHM and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
Certain prior-period amounts have been reclassified to conform to the current period’s presentation. The impact of these reclassifications is immaterial to the presentation of the unaudited condensed
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consolidated financial statements and had no impact on previously reported total assets, total liabilities and net loss.
During the three months ended March 31, 2023, we reorganized our management reporting structure from a single entity-level reporting unit into four reporting units. As a result, we performed a goodwill impairment assessment immediately before and after the reorganization. This quantitative assessment did not result in impairment, considering the fair value of each reporting unit significantly exceeded the corresponding carrying amount of net assets. We continue to operate and report financial information in one operating segment.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts in the unaudited condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience, and other assumptions we believe to be reasonable under the circumstances. Assumptions and estimates used in preparing our unaudited condensed consolidated financial statements include, but are not limited to, those related to revenue recognition and share-based compensation, the determination of allowances for credit losses, valuation of user cryptocurrencies safeguarding obligation and corresponding asset, investment valuation, capitalization of internally developed software, useful lives of property, software, and equipment, valuation and useful lives of intangible assets, incremental borrowing rate used to calculate operating lease right-of-use assets and related liabilities, impairment of long-lived assets, uncertain tax positions, income taxes, accrued and contingent liabilities. Actual results could differ from these estimates and could have a material adverse effect on our operating results.
Concentrations of Revenue and Credit Risk
Concentrations of Revenue
We derived transaction-based revenues from individual market makers in excess of 10% of total revenues, as follows:
Three Months Ended
March 31,
2022 2023
Market maker:
Citadel Securities, LLC 22  % 13  %
Entities affiliated with Susquehanna International Group, LLP(1)
 12  % 5  %
Entities affiliated with Wolverine Holdings, L.P.(2)
 10  % 5  %
All others individually less than 10% 28  % 22  %
Total as percentage of total revenue: 72  % 45  %
________________
(1)Consists of Global Execution Brokers, LP and G1X Execution Services, LLC
(2)Consists of Wolverine Execution Services, LLC and Wolverine Securities, LLC

Concentrations of Credit Risk
We are engaged in various trading and brokerage activities in which the counterparties primarily include broker-dealers, banks, and other financial institutions. In the event our counterparties do not fulfill their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. Default of a counterparty in equities and options trades, which are facilitated through
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clearinghouses, would generally be spread among the clearinghouse's members rather than falling entirely on us. It is our policy to review, as necessary, the credit standing of each counterparty.
In March 2023, certain U.S. banks failed and were taken over by the U.S. Federal Deposit Insurance Corporation (“FDIC”). Our exposure to impacted U.S. banks is immaterial as of March 31, 2023. However, we have taken steps to help ensure that the loss of all or a significant portion of any uninsured amount would not have an adverse effect on our ability to pay our operational expenses or make other payments.
Investments
We invest in marketable debt securities and determine the classification at the time of purchase.
Available-for-sale investments are recorded at fair value. We have elected the fair value option for our available-for-sale investments as we believe carrying these investments at fair value and taking changes in fair value through earnings best reflects their underlying economics. Fair value adjustments are presented in other expense (income), net and interest earned on the debt securities as net interest revenues in our unaudited condensed consolidated statements of operations.
Held-to-maturity investments are securities that we have both the ability and positive intent to hold until maturity and are recorded at amortized cost. Interest income is calculated using the effective interest method, adjusted for deferred fees or costs, premium, or discount existing at the date of purchase. Interest earned is included in interest revenues, net in our unaudited condensed consolidated statements of operations. We evaluate held-to-maturity investment for credit losses on a quarterly basis. We do not expect credit losses for our held-to-maturity investments that are obligations of states and political subdivisions and securities issued by U.S. government sponsored agencies. We monitor remaining securities by type and standard credit rating. There was no reserve for credit losses as of March 31, 2023.
NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Accounting Pronouncements
There are no recently adopted accounting pronouncements that are material to us as of March 31, 2023.
Recently Issued Accounting Pronouncements Not Yet Adopted
There are no new accounting pronouncements that we have not yet adopted that are material to us as of March 31, 2023.
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NOTE 3: REVENUES
Disaggregation of Revenues
The following table presents our revenue disaggregated by revenue source:
Three Months Ended
March 31,
(in millions) 2022 2023
Transaction-based revenues:
Options $ 127 $ 133
Cryptocurrencies 54 38
Equities 36 27
Other 1 9
Total transaction-based revenues 218 207
Net interest revenues:
Interest on corporate cash and investments
 1 68
Margin interest 35 53
Interest on segregated cash and cash equivalents and deposits 1 45
Securities lending, net 24 26
Cash sweep — 22
Interest expenses related to credit facilities (6) (6)
Total net interest revenues 55 208
Other revenues 26 26
Total net revenues $ 299 $ 441
For our fully-paid securities lending program under which we borrow fully-paid shares from participating users and lend them to third parties (“Fully-Paid Securities Lending”), we earn revenue for lending certain securities based on demand for those securities and portions of such revenues are paid to participating users, and those payments are recorded as interest expense. For the three months ended March 31, 2023, such interest revenue earned was $10 million and such interest expenses paid to participating users was $2 million. As the program was launched in the second quarter of 2022, no such interest revenue earned or expenses incurred for the three months ended March 31, 2022.
Contract Balances
Contract receivables are recognized when we have an unconditional right to invoice and receive payment under a contract and are derecognized when cash is received. Transaction-based revenue receivables due from market makers are reported in receivables from brokers, dealers, and clearing organizations while other revenue receivables related to proxy revenues due from issuers are reported in other current assets on the unaudited condensed consolidated balance sheets.
Contract liabilities, which consist of unearned subscription revenue, are recognized when users remit cash payments in advance of the time we satisfy our performance obligations and are recorded as other current liabilities on the unaudited condensed consolidated balance sheets.
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The table below sets forth contract receivables and liabilities for the period indicated:
(in millions) Contract Receivables Contract Liabilities
Beginning of period, January 1, 2023 $ 60  $ 3 
End of period, March 31, 2023 85  3 
Changes during the period $ 25  $ — 
The difference between the opening and ending balances of our contract receivables primarily results from increased revenues and timing differences between our performance and counterparties’ payments. We recognized all revenue from amounts included in the opening contract liability balances in the three months ended March 31, 2023.
NOTE 4: ALLOWANCE FOR CREDIT LOSSES
Substantially all of the allowance for credit losses relate to unsecured balances of receivables from users due to Fraudulent Deposit Transactions and losses on margin lending. Fraudulent Deposit Transactions occur when users initiate deposits into their accounts, make trades on our platform using a short-term extension of credit from us, and then repatriate or reverse the deposits, resulting in a loss to us of the credited amount. The following table summarizes the allowance for credit losses:
Three Months Ended
March 31,
(in millions) 2022 2023
Beginning balance $ 40  $ 18 
Provision for credit losses 8  9 
Write-offs (28) (7)
Ending balance $ 20  $ 20 
NOTE 5: INVESTMENTS AND FAIR VALUE MEASUREMENT
Investments
Available-for-sale
At December 31, 2022 and March 31, 2023, our available-for-sale investments which are included in other current assets on the unaudited condensed consolidated balance sheets were $10 million and $1 million, with no significant unrealized gains or losses. Refer to Fair Value of Instruments below for further details. As of December 31, 2022 and March 31, 2023, all of our available-for-sale investments had a stated contractual maturity or redemption date within one year.
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Held-to-maturity
We had no held-to-maturity investments as of December 31, 2022. The following table summarizes our held-to-maturity investments as of March 31, 2023:
March 31, 2023
(in millions) Amortized Cost Allowance for Credit Losses Unrealized Gains Unrealized Losses Fair Value
Debt securities:
Corporate debt securities $ 250  $ —  $ —  $ (1) $ 249 
U.S. Treasury securities 112  —  —  —  112 
Commercial paper 49  —  —  —  49 
Certificates of deposit 47  —  —  —  47 
U.S. government agency securities 27  —  —  —  27 
Total held-to-maturity investments $ 485  $ —  $ —  $ (1) $ 484 
There were no sales of held-to-maturity investments for the three months ended March 31, 2023.
The table below presents the amortized cost and fair value of held-to-maturity investments by contractual maturity and the maximum maturity per security is two years:
March 31, 2023
(in millions) Within 1 Year 1 to 2 Years Total
Amortized cost
Debt securities:
Corporate debt securities $ 80  $ 170  $ 250 
U.S. Treasury securities 91  21  112 
Commercial paper 49  —  49 
Certificates of deposit 47  —  47 
U.S. government agency securities 23  4  27 
Total held-to-maturity investments $ 290  $ 195  $ 485 
Fair value
Debt securities:
Corporate debt securities $ 80  $ 169  $ 249 
U.S. Treasury securities 91  21  112 
Commercial paper 49  —  49 
Certificates of deposit 47  —  47 
U.S. government agency securities 23  4  27 
Total held-to-maturity investments $ 290  $ 194  $ 484 
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Fair Value of Financial Instruments
Financial assets and liabilities measured at fair value on a recurring basis were presented on our unaudited condensed consolidated balance sheets as follows:
December 31, 2022
(in millions) Level 1 Level 2 Level 3 Total
Assets
Cash equivalents:
Money market funds $ 735  $ —  $ —  $ 735 
Other current assets:
Available-for-sale investments:
Commercial paper —  5  —  5 
Government bonds 3  —  —  3 
Corporate bonds —  2  —  2 
Equity securities - securities owned 8  —  —  8 
Asset related to user cryptocurrencies safeguarding obligation —  8,431  —  8,431 
User-held fractional shares 997  —  —  997 
Total financial assets $ 1,743  $ 8,438  $ —  $ 10,181 
Liabilities
User cryptocurrencies safeguarding obligation $ —  $ 8,431  $ —  $ 8,431 
Fractional share repurchase obligations 997  —  —  997 
Total financial liabilities $ 997  $ 8,431  $ —  $ 9,428 
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March 31, 2023
(in millions) Level 1 Level 2 Level 3 Total
Assets
Cash equivalents:
Money market funds $ 45  $ —  $ —  $ 45 
Commercial paper —  2  —  2 
Corporate debt securities —  2  —  2 
Other current assets:
Equity securities - securities owned 9  —  —  9 
Available-for-sale investments:
Corporate bonds —  1  —  1 
Asset related to user cryptocurrencies safeguarding obligation —  11,489  —  11,489 
User-held fractional shares 1,217  —  —  1,217 
Total financial assets $ 1,271  $ 11,494  $ —  $ 12,765 
Liabilities
User cryptocurrencies safeguarding obligation $ —  $ 11,489  $ —  $ 11,489 
Fractional share repurchase obligations 1,217  —  —  1,217 
Total financial liabilities $ 1,217  $ 11,489  $ —  $ 12,706 
The fair value for certain financial instruments that are not required to be measured or reported at fair value was presented on our unaudited condensed consolidated balance sheets as follows:
March 31, 2023
(in millions) Level 1 Level 2 Level 3 Total
Assets
Held-to-maturity investments:
Corporate debt securities $ —  $ 249  $ —  $ 249 
U.S. Treasury securities 112  —  —  112 
Commercial Paper —  49  —  49 
Certificates of deposit —  47  —  47 
U.S. government agency securities —  27  —  27 
Total financial assets $ 112  $ 372  $ —  $ 484 
The fair values used for held-to-maturity investments are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, relevant yield curves, credit spreads and prices from market makers and live trading systems. Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment of the reasonableness of the fair values provided.
During the three months ended March 31, 2023, we did not have any transfers in or out of Level 3 assets or liabilities.
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Safeguarded user cryptocurrencies
Safeguarded user cryptocurrencies were as follows:
December 31, March 31,
(in millions) 2022 2023
Bitcoin (BTC) $ 2,327  $ 3,887 
Ethereum (ETH) 2,341  3,292 
Dogecoin (DOGE) 2,802  3,017 
Other 961  1,293 
Total user cryptocurrencies safeguarding obligation and corresponding asset $ 8,431  $ 11,489 
The fair value of the user cryptocurrencies safeguarding obligation and the corresponding asset were determined based on observed market pricing representing the last price executed for trades of each cryptocurrency as of December 31, 2022 and March 31, 2023.
NOTE 6: INCOME TAXES
Three Months Ended
March 31,
(in millions, except percentages) 2022 2023
Loss before income taxes $ (391) $ (509)
Provision for income taxes 1  2 
Effective tax rate (0.3) % (0.5) %
Our tax provision for interim periods is determined using an estimated annual effective tax rate (“ETR”), adjusted for discrete items arising in the period. In each quarter, we update our estimated annual ETR and make a year-to-date calculation of the provision.
For the three months ended March 31, 2022 and March 31, 2023 the ETR was lower than the U.S. federal statutory rate primarily due to the full valuation allowance on our U.S. federal and state deferred tax assets offset by current taxes payable.
The realization of tax benefits of net deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence during the three months ended March 31, 2023, we believe it is more likely than not that the tax benefits of the remaining U.S. net deferred tax assets may not be realized.
Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and tax credits before utilization.
NOTE 7: SECURITIES BORROWING AND LENDING
When we lend securities to third parties we receive cash as collateral for the securities loaned. In the table below, the cash collateral we hold related to loaned securities is presented in “securities loaned” and the fair value of securities lent is presented in “security collateral pledged.” Similarly, when we borrow securities from third parties or fully-paid securities from users, we provide cash collateral. In the table below, the amount of that cash collateral is presented in “securities borrowed” and the fair value of the securities received is presented in “security collateral received.”
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Our securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities borrowing and lending transactions. Therefore, activity related to securities borrowing and lending activities are presented gross in our unaudited condensed consolidated balance sheets.
The following tables set forth certain balances related to our securities borrowing and lending activities as of December 31, 2022 and March 31, 2023:
December 31, March 31,
(in millions) 2022 2023
Assets Securities borrowed
Gross amount of securities borrowed $ 517  $ 844 
Gross amount offset on the consolidated balance sheets —  — 
Amounts of assets presented on the consolidated balance sheets 517  844 
Gross amount of securities borrowed not offset on the consolidated balance sheets:
Securities borrowed 517  844 
Security collateral received (509) (846)
Net amount $ 8  $ (2)
Liabilities Securities loaned
Gross amount of securities loaned $ 1,834  $ 2,609 
Gross amount of securities loaned offset on the consolidated balance sheets —  — 
Amounts of liabilities presented on the consolidated balance sheets 1,834  2,609 
Gross amount of securities loaned not offset on the consolidated balance sheets:
Securities loaned 1,834  2,609 
Security collateral pledged (1,629) (2,368)
Net amount $ 205  $ 241 

We obtain securities on terms that permit us to pledge and/or transfer securities to others. As of December 31, 2022 and March 31, 2023, we were permitted to re-pledge securities with a fair value of $4.36 billion for both periods under margin account agreements with users, and securities with a fair value of $18.4 million and $1.0 million that we had borrowed under master securities loan agreements (“MSLAs”) with third parties. Under the Fully-Paid Securities Lending program, as of March 31, 2023, we were permitted to re-pledge securities with a fair value of $6.34 billion including securities with a fair value of $845.0 million that we had borrowed from users.
As of December 31, 2022 and March 31, 2023, we had re-pledged securities with a fair value of $1.63 billion and $2.37 billion, in each case under MSLAs and fixed-term securities lending agreements with third parties. In addition, as of December 31, 2022 and March 31, 2023, we had re-pledged $231.2 million and $430.7 million of the permitted amounts under the Margin Securities Lending program with clearing organizations to meet deposit requirements.

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NOTE 8: FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK
Revolving Credit Facilities
October 2019 Credit Facility
In October 2019, we entered into a $200 million committed and unsecured revolving line of credit with a syndicate of banks maturing in October 2023 (the “October 2019 Credit Facility”). The October 2019 Credit Facility was subsequently amended to, among other things, increase the aggregate committed and unsecured revolving line of credit amount to $625 million with a maturity date of October 29, 2024 and change the applicable interest rates. Refer to Note 12 - Financing Activities and Off-Balance Sheet Risk, of the 2022 Form 10-K for more information.
April 2023 Credit Agreement
On March 24, 2023, RHS, our wholly-owned subsidiary, entered into the Second Amended and Restated Credit Agreement (the “April 2023 Credit Agreement”) among RHS, as borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, amending and restating the $2.275 billion 364-day senior secured revolving credit facility entered into in April 2022 (Refer to Note 12 - Financing Activities and Off-Balance Sheet Risk, of the 2022 Form 10-K for more information).
The April 2023 Credit Agreement provides for a 364-day senior secured revolving credit facility with a total commitment of $2.175 billion. Under circumstances described in the April 2023 Credit Agreement, the aggregate commitments may be increased by up to $1.0875 billion, for a total commitment under the April 2023 Credit Agreement of $3.2625 billion. Borrowings under the credit facility must be specified to be Tranche A, Tranche B, Tranche C or a combination thereof. Tranche A loans are secured by users’ securities purchased on margin and are used primarily to finance margin loans. Tranche B loans are secured by the right to the return from National Securities Clearing Corporation (“NSCC”) of NSCC margin deposits and cash and property in a designated collateral account and used for the purpose of satisfying NSCC deposit requirements. Tranche C loans are secured by the right to the return of eligible funds from any reserve account of the borrower and cash and property in a designated collateral account and used for the purpose of satisfying reserve requirements under Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Borrowings under the April 2023 Credit Agreement will bear interest at a rate per annum equal to the greatest of (i) Daily Simple Secured Overnight Financing Rate ("SOFR") plus 0.10%, (ii) the Federal Funds Effective Rate (as defined in the April 2023 Credit Agreement) and (iii) the Overnight Bank Funding Rate (as defined in the April 2023 Credit Agreement), in each case, as of the day the loan is initiated, plus an applicable margin rate. The applicable margin rate is 1.25% for Tranche A loans and 2.50% for Tranche B and Tranche C loans. Undrawn commitments will accrue commitment fees at a rate per annum equal to 0.50%.
The April 2023 Credit Agreement requires RHS to maintain a minimum consolidated tangible net worth and a minimum excess net capital, and subjects RHS to a specified limit on minimum net capital to aggregate debit items. In addition, the April 2023 Credit Agreement contains certain customary affirmative and negative covenants, including limitations with respect to debt, liens, fundamental changes, asset sales, restricted payments, investments and transactions with affiliates, subject to certain exceptions. Amounts due under the April 2023 Credit Agreement may be accelerated upon an “event of default,” as defined in the April 2023 Credit Agreement, such as failure to pay amounts owed thereunder when due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject in some cases to cure periods.
As of December 31, 2022 and March 31, 2023, there were no borrowings outstanding under our revolving credit facilities.
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We were in compliance with all covenants, as applicable, under our revolving credit facilities as of December 31, 2022 and March 31, 2023.

Off-Balance Sheet Risk
In the normal course of business, we engage in activities involving settlement and financing of securities transactions. User securities transactions are recorded on a settlement date basis, which is generally two business days after the trade date for equities and one business day after the trade date for options. These activities may expose us to off-balance sheet risk in the event that the other party to the transaction is unable to fulfill its contractual obligations. In such events, we may be required to purchase financial instruments at prevailing market prices in order to fulfill our obligations.
NOTE 9: COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
Preferred Stock
As of March 31, 2023, no terms of the preferred stock were designated, and no shares of preferred stock were outstanding.
Common Stock
We have three authorized classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock are entitled to one vote per share on all matters to be voted upon by our stockholders, holders of our Class B common stock are entitled to 10 votes per share on all matters to be voted upon by our stockholders and, except as otherwise required by applicable law, holders of our Class C common stock are not entitled to vote on any matter to be voted upon by our stockholders. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by our Amended and Restated Certificate of Incorporation (our "Charter") or applicable law.
Warrants
As of March 31, 2023, warrants outstanding consisted of warrants to purchase 14.3 million shares of Class A common stock with a strike price of $26.60 per share. The warrants expire on February 12, 2031 and can be exercised with cash or net shares at the holder’s option. In aggregate, the maximum purchase amount of all warrants is $380 million. As of March 31, 2023, the warrants have not been exercised and are included as a component of additional paid in capital on the unaudited condensed consolidated balance sheets.
Equity Incentive Plans
Amended and Restated 2013 Stock Plan and 2020 Equity Incentive Plan
Our Amended and Restated 2013 Stock Plan, as amended (the “2013 Plan”), and our 2020 Equity Incentive Plan, as amended (the “2020 Plan”), provided for share-based awards to eligible participants, granted as incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), restricted stock units ("RSUs"), stock appreciation rights (“SARs”) or restricted stock awards (“RSAs”). Our 2013 Plan was terminated in connection with adoption of our 2020 Plan, and our 2020 Plan was terminated in connection with the adoption of our 2021 Omnibus Incentive Plan (the "2021 Plan") but any awards outstanding under our 2013 Plan and 2020 Plan remain in effect in accordance with their terms. Any shares that were or otherwise would become available for grant under the 2013 Plan or 2020 Plan will be available for grant under the 2021 Plan. No new awards may be granted under our 2013 Plan or 2020 Plan.
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2021 Omnibus Incentive Plan
Our 2021 Plan became effective on July 27, 2021, and provides for the grant of share-based awards (such as options, including ISOs and NSOs, SARs, RSAs, RSUs, performance units, and other equity-based awards) and cash-based awards.
As of March 31, 2023, an aggregate of 405 million shares had been authorized for issuance under the 2013 Plan, 2020 Plan, and 2021 Plan, of which 106 million shares had been issued under the plans, 101 million shares were reserved for issuance upon the exercise or settlement of outstanding equity awards under the plans, and 198 million shares remained available for new grants under the 2021 Plan.
Time-Based RSUs
We grant RSUs that vest upon the satisfaction of a time-based service condition (“Time-Based RSUs”). The following table summarizes the activity related to our Time-Based RSUs for the three months ended March 31, 2023, which is the period we grant our company-wide annual refresh grants:
Number of RSUs Weighted- average grant date fair value
Unvested at December 31, 2022 56,116,782  $ 18.55 
Granted 19,251,484  9.72 
Vested (7,078,184) 15.53 
Forfeited (4,700,651) 17.24 
Unvested at March 31, 2023 63,589,431  $ 17.33 
Market-Based RSUs
In 2019 and 2021, we granted to our founders RSUs under which vesting is conditioned upon both the achievement of share price targets and the continued employment by each recipient over defined service periods (“Market-Based RSUs”).
In February 2023, we cancelled the 2021 Market-Based RSUs of 35.5 million unvested shares (the “2021 Founders Award Cancellation”). We recognized $485 million share-based compensation (“SBC”) expense related to the cancellation during the three months ended March 31, 2023, which was included in the general and administrative expense in our unaudited condensed statement of operations. No further expense associated with these awards were recognized after the cancellation. No other payments, replacement equity awards or benefits were granted in connection with the cancellation.
The following table summarizes the activity related to our Market-Based RSUs for the three months ended March 31, 2023:
Eligible to Vest(1)
Not Eligible to Vest(2)
 Total Number of RSUs Weighted- average grant date fair value
Unvested at December 31, 2022 806,858  57,650,926  58,457,784  $ 23.67 
Granted —  —  — 
Vested (115,266) —  (115,266) 2.34 
Cancelled —  (35,520,000) (35,520,000) 22.68 
Unvested at March 31, 2023 691,592  22,130,926  22,822,518  $ 25.32 
________________
(1)Represents RSUs that became eligible to vest upon achievement of share price targets and vest upon satisfaction of time-based service requirements.
(2)Represents RSUs that have not yet become eligible to vest because share price targets have not yet been achieved.
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Share-Based Compensation
The following table presents SBC on our unaudited condensed consolidated statements of operations for the periods indicated:
Three Months Ended
March 31,
(in millions) 2022 2023
Brokerage and transaction $ 1  $ 2 
Technology and development 82  54 
Operations 4  2 
Marketing 5  1 
General and administrative 128  539 
Total(1)
 $ 220  $ 598 
________________
(1) For the three months ended March 31, 2023 and 2022, SBC expense primarily consisted of $528 million and $84 million related to Market-Based RSUs and $67 million and $130 million related to Time-Based RSUs.
We capitalized SBC expense related to internally developed software of $4 million and $10 million during the three months ended March 31, 2023 and March 31, 2022, respectively.
As of March 31, 2023, there was $0.7 billion of unrecognized SBC expense that is expected to be recognized over a weighted-average period of 1.3 years.

NOTE 10: NET LOSS PER SHARE
We present net loss per share using the two-class method required for multiple classes of common stock. The rights, including the liquidation and dividend rights, of the holders of Class A common stock and Class B common stock are identical, except with respect to voting. As the liquidation and dividend rights are identical for Class A common stock and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting loss per share will, therefore, be the same for both Class A common stock and Class B common stock on an individual or combined basis.
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The following table presents the calculation of basic and diluted loss per share:
(in millions, except share and per share data) Three Months Ended
March 31,
2022 2023
Net loss $ (392) $ (511)
Net loss attributable to common stockholders $ (392) $ (511)
Weighted-average common shares outstanding - basic 867,769,168  896,924,695 
Dilutive effect of stock options and unvested shares —  — 
Weighted-average common shares used to compute diluted loss per share 867,769,168  896,924,695 
Net loss per share attributable to common stockholders:
Basic $ (0.45) $ (0.57)
Diluted $ (0.45) $ (0.57)
The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:
  Three Months Ended
March 31,
2022 2023
Time-Based RSUs 77,721,705  63,632,646 
Market-Based RSUs 58,803,580  22,822,518 
Stock options 17,486,667  14,540,171 
Early-exercised stock options 7,362  — 
Warrants 14,278,034  14,278,034 
ESPP shares 634,603  1,070,783 
Total anti-dilutive securities 168,931,951  116,344,152 
NOTE 11: RELATED PARTY TRANSACTIONS
Related party transactions may include any transaction between entities under common control or with a related party. We have defined related parties as members of the board of directors, executive officers, principal owners of our outstanding stock and any immediate family members of each such related party, as well as any other person or entity with significant influence over our management or operations and any other affiliates.
For the three months ended March 31, 2023, we did not have any material related party transactions.
NOTE 12: LEASES
Our operating leases are comprised of office facilities, with the most significant leases relating to our corporate headquarters in Menlo Park, CA and our office in New York City, NY. We do not have any finance leases.
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Lease assets and liabilities recognized on our unaudited condensed consolidated balance sheets were as follows:
December 31, March 31,
(in millions) Classification 2022 2023
Lease right-of-use assets:
Operating lease assets Other non-current assets $ 92  $ 87 
Lease liabilities:
Current operating lease liabilities Other current liabilities 21  23 
Non-current operating lease liabilities Other non-current liabilities 127  120 
Total lease liabilities $ 148  $ 143 
Cash flows related to leases were as follows:
Three Months Ended
March 31,
(in millions) 2022 2023
Operating cash flows:
Payments for operating lease liabilities $ 3  $ 7 
Supplemental cash flow data:
Lease liabilities arising from obtaining right-of-use assets $ 32  $ — 
NOTE 13: COMMITMENTS & CONTINGENCIES
We are subject to contingencies arising in the ordinary course of our business, including contingencies related to legal, regulatory, non-income tax and other matters. We record an accrual for loss contingencies at management’s best estimate when we determine that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If the reasonable estimate is a range and no amount within that range is considered a better estimate than any other amount, an accrual is recorded based on the bottom amount of the range. If a loss is not probable, or a probable loss cannot be reasonably estimated, no accrual is recorded. Amounts accrued for contingencies in the aggregate were $85 million as of December 31, 2022 and $88 million as of March 31, 2023. In our opinion, an adequate accrual had been made as of each such date to provide for the probable losses of which we are aware and for which we can reasonably estimate an amount.
Legal and Regulatory Matters
The securities industry is highly regulated and many aspects of our business involve substantial risk of liability. In past years, there has been an increase in litigation and regulatory investigations involving the brokerage and cryptocurrency industries. Litigation has included and may in the future include class action suits that generally seek substantial and, in some cases, punitive damages. Federal and state regulators, exchanges, or other SROs investigate issues related to regulatory compliance that may result in enforcement action. We are also subject to periodic regulatory audits and inspections that have in the past and could in the future lead to enforcement investigations or actions.
We have been named as a defendant in lawsuits and from time to time we have been threatened with, or named as a defendant in arbitrations and administrative proceedings. The outcomes of these matters are inherently uncertain and some may result in adverse judgments or awards, including penalties, injunctions, or other relief, and we may also determine to settle a matter because of the uncertainty and risks of litigation.
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With respect to matters discussed below, we believe, based on current knowledge, that any losses (in excess of amounts accrued, if applicable) as of March 31, 2023 that are reasonably possible and can be reasonably estimated will not, in the aggregate, have a material adverse effect on our business, financial position, operating results, or cash flows. However, for many of the matters disclosed below, particularly those in early stages, we cannot reasonably estimate the reasonably possible loss (or range of loss), if any. In addition, the ultimate outcome of legal proceedings involves judgments and inherent uncertainties and cannot be predicted with certainty. Any judgment entered against us, or any adverse settlement, could materially and adversely impact our business, financial condition, operating results, and cash flows. We might also incur substantial legal fees, which are expensed as incurred, in defending against legal and regulatory claims.
Described below are certain pending matters in which there is at least a reasonable possibility that a material loss could be incurred. We intend to continue to defend these matters vigorously.
Best Execution, Payment for Order Flow, and Sources of Revenue Civil Litigation
Beginning in December 2020, multiple putative securities fraud class action lawsuits were filed against RHM, RHF, and RHS. Five cases were consolidated in the United States District Court for the Northern District of California. An amended consolidated complaint was filed in May 2021, alleging violations of Section 10(b) of the Exchange Act and various state law causes of action based on claims that we violated the duty of best execution and misled putative class members by publishing misleading statements and omissions in customer communications relating to the execution of trades and revenue sources (including PFOF). Plaintiffs seek damages, restitution, disgorgement, and other relief. In February 2022, the court granted Robinhood’s motion to dismiss the amended consolidated complaint without prejudice. In March 2022, plaintiffs filed a second consolidated amended complaint, alleging only violations of Section 10(b) of the Exchange Act, which Robinhood moved to dismiss. In October 2022, the court granted Robinhood’s motion in part and denied it in part. In November 2022, Robinhood filed a motion for judgment on the pleadings, which the court denied in January 2023.
March 2020 Outages
A consolidated putative class action lawsuit relating to the service outages on our stock trading platform on March 2-3, 2020 and March 9, 2020 (“March 2020 Outages”) is pending in the United States District Court for the Northern District of California. The lawsuit generally alleges that putative class members were unable to execute trades during the March 2020 Outages because our platform was inadequately designed to handle customer demand and we failed to implement appropriate backup systems. The lawsuit includes, among other things, claims for breach of contract, negligence, gross negligence, breach of fiduciary duty, unjust enrichment and violations of certain California consumer protection statutes. The lawsuit generally seeks damages, restitution, and/or disgorgement, as well as declaratory and injunctive relief. In May 2022, the parties notified the court that they had reached an agreement in principle resolving this action. The settlement agreement has been preliminarily approved by the court.
In addition, in September 2021, approximately 400 jointly-represented customers initiated an arbitration of individual claims against us arising out of the March 2020 Outages and other alleged system outages. The parties have reached an agreement to resolve this matter.
State Regulatory Matters
Certain state regulatory authorities have conducted investigations regarding RHF’s options trading and related customer communications and displays, options and margin trading approval process, the March 2020 Outages, and customer support prior to June 2020. RHF reached settlements with several state regulators including the Alabama Securities Commission, the California Department of Financial Protection and Innovation, the Colorado Division of Securities, the Delaware Department of Justice - Investor Protection Unit, the New Jersey Bureau of Securities, the South Dakota Division of Insurance,
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and the Texas State Securities Board, under which we have agreed to pay a monetary penalty of $200,000 per state. RHF anticipates additional potential state settlements as part of a multi-state settlement related to these issues totaling up to approximately $10 million. The Financial Industry Regulatory Authority (“FINRA”) previously conducted an investigation and reached a settlement with RHF regarding many of these issues.
Brokerage Enforcement Matters
FINRA Enforcement staff are conducting investigations related to, among other things, RHS’s reporting of fractional share trades, as applicable, to a Trade Reporting Facility, the Over-the-Counter Reporting Facility, the Order Audit Trail System, and the Consolidated Audit Trail; RHS’s reporting of accounts holding significant options positions to the Large Option Position Report system; processing of certain requests for transfers of assets from Robinhood through the Automated Customer Account Transfer System; responses to Electronic Blue Sheets requests from FINRA; the delays in notification from third parties and process failures within our brokerage systems and operations in connection with the handling of a 1-for-25 reverse stock split transaction of Cosmo Health, Inc, in December 2022 (the “Q4 2022 Processing Error”); RHF’s compliance with FINRA registration requirements for member personnel; marketing involving social media influencers and affiliates; collaring the prices of certain trade orders; and RHS’ compliance with best execution obligations. We are cooperating with these investigations.

RHS has received requests from the SEC Division of Enforcement regarding its compliance with Regulation SHO’s trade reporting and other requirements in connection with securities lending, fractional share trading, and the Q4 2022 Processing Error, and previously received similar requests from FINRA examinations staff. RHS and RHF have also received requests from the SEC Division of Enforcement and FINRA Enforcement staff related to the Firms’ compliance with recordkeeping requirements, including requests regarding off-channel communications. We are cooperating with these investigations.

Robinhood Crypto Matters
RHC has received subpoenas from the California Attorney General’s Office seeking information about, among other things, RHC’s trading platform, business and operations, custody of customer assets, customer disclosures, and coin listings. RHC is cooperating with this investigation.

Account Takeovers, Anti-Money Laundering, and Cybersecurity Matters
FINRA Enforcement and the SEC Division of Enforcement are investigating account takeovers (i.e., circumstances under which an unauthorized actor successfully logs into a customer account), as well as anti-money laundering compliance and cybersecurity issues. The SEC’s Division of Enforcement is also investigating issues related to compliance with the Electronic Funds Transfer Act. We are cooperating with these investigations.
In January 2021, Siddharth Mehta filed a putative class action in California state court against RHF and RHS, purportedly on behalf of approximately 2,000 Robinhood customers whose accounts were allegedly accessed by unauthorized users. RHF and RHS removed this action to the United States District Court for the Northern District of California. Plaintiff generally alleges that RHF and RHS breached commitments made and duties owed to customers to safeguard customer data and assets and seeks monetary damages and injunctive relief. In April 2022, the parties reached a settlement in principle to resolve this matter. The settlement agreement has been preliminarily approved by the court.
Massachusetts Securities Division Matter
In December 2020, the Enforcement Section of the Massachusetts Securities Division (“MSD”) filed an administrative complaint against RHF, which stems from an investigation initiated by the MSD in July 2020. The complaint alleged three counts of Massachusetts securities law violations regarding alleged unethical and dishonest conduct or practices, failure to supervise, and failure to act in accordance with the Massachusetts fiduciary duty standard, which became effective on March 6, 2020 and had an
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effective enforcement date beginning September 1, 2020. Among other things, the MSD alleged that our product features and marketing strategies, outages, and options trading approval process constitute violations of Massachusetts securities laws. MSD subsequently filed an amended complaint that seeks, among other things, injunctive relief (a permanent cease and desist order), censure, restitution, disgorgement, appointment of an independent consultant, an administrative fine, and revocation of RHF's license to operate in Massachusetts. If RHF were to lose its license to operate in Massachusetts, we would not be able to acquire any new customers in Massachusetts, and we expect that our current customers in Massachusetts would be unable to continue utilizing any of the services or products offered on our platform (other than closing their positions) and that we may be forced to transfer such customers’ accounts to other broker-dealers. Additionally, revocation of RHF’s Massachusetts license could trigger similar disqualification or proceedings to restrict or condition RHF’s registration by other state regulators. A revocation of RHF’s license to operate in Massachusetts would result in RHF and RHS being subject to statutory disqualification by FINRA and the SEC, which would then result in RHF needing to obtain relief from FINRA subject to SEC review in order to remain a FINRA member and RHS possibly needing relief from FINRA or other SROs.
In April 2021, RHF filed a complaint and motion for preliminary injunction and declaratory relief in Massachusetts state court seeking to enjoin the MSD administrative proceeding and challenging the legality of the Massachusetts fiduciary duty standard. In September 2021, the parties filed cross-motions for partial judgment on the pleadings. In March 2022, the court ruled in favor of RHF, declaring that the Massachusetts fiduciary duty regulation was unlawful. The MSD is appealing the ruling and it is scheduled to be heard by the Massachusetts Supreme Judicial Court in May 2023. A hearing on the two remaining counts alleged by the MSD in its amended administrative complaint has been continued pending resolution of the appeal.
Text Message Litigation
In August 2021, Cooper Moore filed a putative class action against RHF alleging that RHF initiated or assisted in the transmission of commercial electronic text messages to Washington State residents without their consent in violation of Washington state law. The complaint seeks statutory and treble damages, injunctive relief, and attorneys’ fees and costs. The case is currently pending in the U.S. District Court for the Western District of Washington. RHF filed a motion to dismiss the complaint. In February 2022, Moore and Andrew Gillette filed an amended complaint, which RHF again moved to dismiss. In August 2022, the court denied RHF’s motion to dismiss.
Early 2021 Trading Restrictions Matters
Beginning on January 28, 2021, due to increased deposit requirements imposed on RHS by the NSCC in response to unprecedented market volatility, particularly in certain securities, RHS temporarily restricted or limited its customers’ purchase of certain securities, including GameStop Corp. and AMC Entertainment Holdings, Inc., on our platform (the “Early 2021 Trading Restrictions”).
A number of individual and putative class actions related to the Early 2021 Trading Restrictions were filed against RHM, RHF, and RHS, among others, in various federal and state courts. In April 2021, the Judicial Panel on Multidistrict Litigation entered an order centralizing the federal cases identified in a motion to transfer and coordinate or consolidate the actions filed in connection with the Early 2021 Trading Restrictions in the United States District Court for the Southern District of Florida. The court subsequently divided plaintiffs’ claims against Robinhood into three tranches: federal antitrust claims, federal securities law claims, and state law claims. In July 2021, plaintiffs filed consolidated complaints seeking monetary damages in connection with the federal antitrust and state law tranches. The federal antitrust complaint asserted one violation of Section 1 of the Sherman Act; the state law complaint asserted negligence and breach of fiduciary duty claims. In August 2021, we moved to dismiss both of these complaints.
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In September 2021, plaintiffs filed an amended complaint asserting state law claims of negligence, breach of fiduciary duty, tortious interference with contract and business relationship, civil conspiracy, and breaches of the covenant of good faith and fair dealing and implied duty of care. In January 2022, the court dismissed the state law complaint with prejudice. Plaintiffs have appealed the court’s order to the United States Court of Appeals for the Eleventh Circuit.
In November 2021, the court dismissed the federal antitrust complaint without prejudice. In January 2022, plaintiffs filed an amended complaint in connection with the federal antitrust tranche and Robinhood moved to dismiss the amended complaint. In May 2022, the court dismissed the federal antitrust complaint with prejudice. Plaintiffs have appealed the court’s order to the United States Court of Appeals for the Eleventh Circuit.
In November 2021, plaintiffs for the federal securities tranche filed a complaint alleging violations of Sections 9(a) and 10(b) of the Exchange Act. In January 2022, we moved to dismiss the federal securities law complaint. In August 2022, the court granted in part and denied in part Robinhood’s motion to dismiss.
RHM, RHF, RHS, and our Co-Founder and CEO, Vladimir Tenev, among others, have received requests for information, and in some cases, subpoenas and requests for testimony, related to investigations and examinations of the Early 2021 Trading Restrictions from the United States Attorney’s Office for the Northern District of California (“USAO”), the U.S. Department of Justice ("DOJ”), Antitrust Division, the SEC’s Division of Enforcement, FINRA, the New York Attorney General’s Office, other state attorneys general offices, and a number of state securities regulators. Also, a related search warrant was executed by the USAO to obtain Mr. Tenev's cell phone. There have been several inquiries based on specific customer complaints. We have also received requests from the SEC Division of Enforcement and FINRA related to employee trading in certain securities that were subject to the Early 2021 Trading Restrictions, including GameStop Corp. and AMC Entertainment Holdings, Inc., during the week of January 25, 2021. These matters include requests related to whether any employee trading in these securities may have occurred after the decision to impose the Early 2021 Trading Restrictions and before the public announcement of the Early 2021 Trading Restrictions on January 28, 2021. We are cooperating with these investigations. FINRA Enforcement has also requested information about policies, procedures, and supervision related to employee trading generally.
In January 2023, approximately 4,700 jointly represented customers filed a statement of claim with FINRA to initiate arbitration of individual claims against RHF and RHS arising out of the Early 2021 Trading Restrictions.
IPO Litigation
In December 2021, Philip Golubowski filed a putative class action in the U.S. District Court for the Northern District of California against RHM, the officers and directors who signed Robinhood’s initial public offering (“IPO”) offering documents, and Robinhood’s IPO underwriters. Plaintiff’s claims are based on alleged false or misleading statements in Robinhood’s IPO offering documents allegedly in violation of Sections 11 and 12(a) of the Securities Act of 1933, as amended (the “Securities Act”). Plaintiff seeks compensatory damages, rescission of shareholders’ share purchases, and an award for attorneys’ fees and costs. In February 2022, certain alleged Robinhood stockholders submitted applications seeking appointment by the court to be the lead plaintiff to represent the putative class in this matter, and in March 2022, the court appointed lead plaintiffs. In June 2022, plaintiffs filed an amended complaint. In August 2022, Robinhood filed a motion to dismiss the complaint. In February 2023, the court granted Robinhood’s motion without prejudice. In March 2023, plaintiffs filed a second amended complaint.
In January 2022, Robert Zito filed a complaint derivatively on behalf of Robinhood against Robinhood’s directors at the time of its IPO in the U.S. District Court for the District of Delaware. Plaintiff alleges breach of fiduciary duties, waste of corporate assets, unjust enrichment, and violations of Section 10(b) of the Exchange Act. Plaintiff’s claims are based on allegations of false or misleading statements in
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Robinhood’s IPO offering documents, and plaintiff seeks an award of damages and restitution to the Company, injunctive relief, and an award for attorney’s fees and costs. In March 2022, the district court entered a stay of this litigation pending resolution of Robinhood’s motion to dismiss in the Golubowski securities action discussed above.
In August 2022, a shareholder sent a letter to the RHM board of directors demanding, among other things, that the board of directors pursue causes of action on behalf of the Company related to allegations of misconduct in connection with the Early 2021 Trading Restrictions, Robinhood’s IPO offering documents, and the data security incident we experienced in November 2021 when an unauthorized third-party socially engineered a customer support employee by phone and obtained access to certain customer support systems (the “November 2021 Data Security Incident”). The Board has formed a Demand Review Committee that is reviewing the demand.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section presents management’s perspective on our financial condition and results of operations, including performance metrics that management uses to assess company performance. The following discussion and analysis is intended to highlight and supplement data and information presented elsewhere in this Quarterly Report, and should be read in conjunction with our interim unaudited condensed consolidated financial statements and notes elsewhere in this Quarterly Report and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2022 Form 10-K. It is also intended to provide you with information that will assist you in understanding our consolidated financial statements, the changes in key items in those consolidated financial statements from year to year, and the primary factors that accounted for those changes. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which might not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”
Data as of and for the three months ended March 31, 2022 and 2023 has been derived from our unaudited condensed consolidated financial statements appearing at the beginning of this Quarterly Report. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period.
We refer to our “users” and our “customers” interchangeably throughout this Quarterly Report to refer to individuals who hold accounts on our platform.
Glossary Terms
•Automated Customer Account Transfer Service (“ACATS”): A system that automates and standardizes procedures for the transfer of assets in a customer account from one brokerage firm and/or bank to another.
•Churned Account: An account is considered “Churned” if it was ever a New Funded Account whose account balance (measured as the fair value of assets in the account less any amount due from the user and excluding certain Company-initiated Credits) drops to or below zero for at least 45 consecutive calendar days. Negative balances typically result from Fraudulent Deposit Transactions (as defined below) and unauthorized debit card use, and less often, from margin loans.
•Company-initiated Credits: Company-initiated Credits are amounts that are deposited into a Robinhood Account by the Company with no action taken by the user. Examples of Company-initiated Credits excluded for purposes of identifying Churned Accounts and Resurrected Accounts are price correction credits, related interest adjustments, and fee adjustments.
•Daily Average Revenue Trades (“DARTs”): We define DARTs for any asset class as the total number of revenue generating trades for such asset class executed during a given period divided by the number of trading days for such asset class in that period.
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•Fraudulent Deposit Transactions: Occur when users initiate deposits into their accounts, make trades on our platform using a short-term extension of credit from us, and then repatriate or reverse the deposits, resulting in a loss to us of the credited amount.
•Margin Book: We define Margin Book as our period-end aggregate outstanding margin loan balances receivable (i.e., the period-end total amount we are owed by customers on loans made for the purchase of securities, supported by a pledge of assets in their margin-enabled brokerage accounts).
•New Funded Account: We define a New Funded Account as a Robinhood Account into which the user makes an initial deposit, money transfer or asset transfer, of any amount during the relevant period.
•Notional Trading Volume: We define Notional Trading Volume for any specified asset class as the aggregate dollar value (purchase price or sale price as applicable) of trades executed in that asset class over a specified period of time.
•Options Contracts Traded: We define Options Contracts Traded as the total number of options contracts bought or sold over a specified period of time. Each contract generally entitles the holder to trade 100 shares of the underlying stock.
•Resurrected Account: An account is considered “Resurrected” in a stated period if it was a Churned Account as of the end of the immediately preceding period and its balance (excluding certain Company-initiated Credits) rises above zero.
•Robinhood Account: We define a Robinhood Account as a unique log-in that provides the account user access to any and all of the Robinhood products offered on our platform.
Key Performance Metrics
•Net Cumulative Funded Accounts (“NCFA”): We define Net Cumulative Funded Accounts as New Funded Accounts less Churned Accounts plus Resurrected Accounts.
•Monthly Active Users (“MAU”): We define MAUs as the number of unique Robinhood Accounts who meet one of the following criteria at any point during a specified calendar month: a) executes a debit card transaction, b) transitions between two different screens on a mobile device while logged into their Robinhood Account or c) loads a page in a web browser while logged into their Robinhood Account. A user need not satisfy these conditions on a recurring monthly basis or have a funded account to be included in MAU. MAU figures in this Quarterly Report reflect MAU for the last month of the relevant period presented. We utilize MAU to measure how many customers interact with our products and services during a given month. MAU does not measure the frequency or duration of the interaction, but we consider it a useful indicator for engagement. Additionally, MAUs are positively correlated with, but are not indicative of, the performance of revenue and other key performance indicators.
•Assets Under Custody (“AUC”): We define AUC as the sum of the fair value of all equities, options, cryptocurrency and cash held by users in their accounts, net of receivables from users, as of a stated date or period end on a trade date basis. Net Deposits and net market gains (losses) drive the change in AUC in any given period.
•Net Deposits: We define Net Deposits as all cash deposits and asset transfers received from customers, net of reversals, customer cash withdrawals, and other assets transferred out of our platform (assets transferred in or out include debit card transactions, ACATS transfers, and custodial crypto wallet transfers) for a stated period.
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•Growth Rate and Annualized Growth Rate with respect to Net Deposits: When used with respect to Net Deposits, "growth rate" and "annualized growth rate" provide information about Net Deposits relative to total AUC. "Growth rate" is calculated as aggregate Net Deposits over a specified 12 month period, divided by AUC for the fiscal quarter that immediately precedes such 12 month period. "Annualized growth rate" is calculated as Net Deposits for a specified quarter multiplied by 4 and divided by AUC for the immediately preceding quarter.
•Average Revenue Per User (“ARPU”): We define ARPU as total revenue for a given period divided by the average of Net Cumulative Funded Accounts on the last day of that period and the last day of the immediately preceding period.
Overview
Robinhood was founded on the belief that everyone should be welcome to participate in our financial system. We are creating a modern financial services platform for everyone, regardless of their wealth, income, or background.
Our mission is to democratize finance for all. We use technology to provide access to the financial system in a way that is simple and convenient for our customers. We believe investing should be familiar and welcoming, with a simple design and an intuitive interface, so that customers are empowered to achieve their goals. We started with a revolutionary, bold brand and design in the Robinhood app which makes investing approachable for millions. We pioneered commission-free stock trading with no account minimums, which the rest of the industry emulated, and we continue to build relationships with our customers by introducing new products that further expand access to the financial system. Through these efforts, we believe we have made investing culturally relevant and understandable, and that our platform is enabling our customers to become long-term investors and take greater control of their finances.
Financial Results and Performance
With respect to the three months ended March 31, 2023, as compared to the three months ended March 31, 2022:
•we generated total net revenues of $441 million compared to $299 million, for a year-over-year increase of 47%.
•we incurred a net loss of $511 million, or -$0.57 per share, compared to net loss of $392 million, or -$0.45 per share;
•operating expenses were $950 million compared to $690 million, for a year-over-year increase of 38%;
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◦SBC expense totaled $598 million, of which $485 million related to the 2021 Founders Award Cancellation, compared to $220 million, for a year-over-year increase of 172%;
•our Adjusted EBITDA (non-GAAP) was positive $115 million compared to negative $143 million, for year-over-year increase of $258 million;
•we had NCFA of 23.1 million compared to 22.8 million, for year-over-year growth of 1%;
•we had MAU of 11.8 million compared to 15.9 million, for a year-over-year decrease of 26%, as our customers continued to navigate the volatile market environment;
•we had AUC of $78.4 billion compared to $93.1 billion, for a year-over-year decrease of 16%, primarily due to decreasing asset values between the periods;
•Net Deposits were $4.4 billion, which translates to an annualized growth rate of 29%, compared to $5.7 billion, which translates to an annualized growth rate of 23%. Over the past twelve months, Net Deposits were $17.1 billion, which translates to a growth rate of 18% relative to AUC at March 31, 2023;
•we had ARPU of $77 compared to $53, for a year-over-year increase of 45%.
Adjusted EBITDA is a non-GAAP financial measure. For more information about Adjusted EBITDA, including the definition and limitations of such measure, and a reconciliation of net income (loss) to Adjusted EBITDA, please see “—Non-GAAP Financial Measures” below.
Recent Developments
2021 Founders Award Cancellation
In February 2023, we cancelled the 2021 Market-Based RSUs granted to our founders of 35.5 million unvested shares. We recognized $485 million SBC expense related to the cancellation during the three months ended March 31, 2023. No further expense associated with these awards will be recognized after the cancellation. No other payments, replacement equity awards or benefits were granted in connection with the cancellation. The 2021 Founders Award Cancellation will lower our operating expenses by up to $50 million per quarter starting in the second quarter of 2023.
2023 Banking Events
In March 2023, certain U.S. banks failed and were taken over by the FDIC. As of March 31, 2023, our exposure to impacted U.S. banks is immaterial, and we have taken steps to help ensure that the loss of all or a significant portion of any uninsured amount would not have an adverse effect on our ability to pay our operational expenses or make other payments.

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Key Performance Metrics
In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following key performance metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions:
Three Months Ended
March 31,
2022 2023
NCFA(1) (in millions)
 22.8  23.1 
MAU (in millions)
 15.9  11.8 
AUC(2) (in billions)
 $ 93.1  $ 78.4 
Net Deposits (in billions)
 $ 5.7  $ 4.4 
ARPU (in dollars)
 $ 53  $ 77 
________________
(1)The following table describes the annual changes within NCFA:
Three Months Ended
 March 31,
(in millions) 2022 2023
Beginning NCFA 22.7  23.0 
New funded accounts 0.5  0.3 
Resurrected accounts 0.1  0.1 
Churned accounts (0.5) (0.3)
Ending NCFA 22.8  23.1 
(2)The following table sets out the components of AUC by type of asset:
Three Months Ended
March 31,
(in billions) 2022 2023
Equities $ 68.5  $ 55.3 
Cryptocurrencies 19.7  11.5 
Options 1.1  0.4 
Cash held by users 9.2  14.2 
Receivables from users (5.4) (3.0)
AUC $ 93.1  $ 78.4 
The following table describes the changes within AUC:
Three Months Ended
March 31,
(in billions) 2022 2023
Beginning AUC $ 98.0  $ 62.2 
Net Deposits 5.7  4.4 
Net market gains (losses) (10.6) 11.8 
Ending AUC $ 93.1  $ 78.4 

Non-GAAP Financial Measures
Adjusted EBITDA
We collect and analyze operating and financial data to evaluate the health of our business, allocate our resources and assess our performance. In addition to total net revenues, net income (loss), and other
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results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”). Adjusted EBITDA is defined as net income (loss), excluding (i) interest expenses related to credit facilities, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) SBC, (v) significant legal and tax settlements and reserves, and (vii) other significant gains, losses, and expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that we believe are not indicative of our ongoing results. This non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items are unpredictable, are not driven by core results of operations, and render comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.
The following table presents a reconciliation of net loss, which is the most directly comparable GAAP measure, to Adjusted EBITDA:
Three Months Ended
March 31,
(in millions) 2022 2023
Net loss $ (392) $ (511)
Add:
Interest expenses related to credit facilities 6  6 
Provision for income taxes 1  2 
Depreciation and amortization 12  20 
EBITDA (non-GAAP) (373) (483)
2021 Founders Award Cancellation —  485 
SBC excluding 2021 Founders Award Cancellation 220  113 
Significant legal and tax settlements and reserves
 10  — 
Adjusted EBITDA (non-GAAP) $ (143) $ 115 



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Results of Operations
The following table summarizes our unaudited condensed consolidated statements of operations data:
(in millions) Three Months Ended
March 31,
2022 2023
Revenues:
Transaction-based revenues $ 218  $ 207 
Net interest revenues 55  208 
Other revenues 26  26 
Total net revenues 299  441 
Operating expenses:(1)
Brokerage and transaction 31  36 
Technology and development 268  199 
Operations 91  42 
Marketing 32  26 
General and administrative 268  647 
Total operating expenses 690  950 
Loss before income taxes (391) (509)
Provision for income taxes 1  2 
Net loss $ (392) $ (511)
_______________
(1)Includes SBC expense as follows:
Three Months Ended
March 31,
(in millions) 2022 2023
Brokerage and transaction $ 1  $ 2 
Technology and development 82  54 
Operations 4  2 
Marketing 5  1 
General and administrative 128  539 
Total SBC expense $ 220  $ 598 

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Comparison of the Three Months Ended March 31, 2022 and 2023
Revenues
Transaction-Based Revenues
Three Months Ended
March 31,
(in millions, except for percentages) 2022 2023 % Change
Transaction-based revenues
Options $ 127 $ 133 5  %
Cryptocurrencies 54 38 (30) %
Equities 36 27 (25) %
Other 1 9 800  %
Total transaction-based revenues $ 218 $ 207 (5) %
Transaction-based revenues as a % of total net revenues:
Options 42% 30%
Cryptocurrencies 18% 9%
Equities 12% 6%
Other —% 2%
Total transaction-based revenues 72% 47%
Transaction-based revenues decreased by $11 million primarily driven by the market environment, which had a negative impact on the number of traders across all asset classes, and a decrease in Notional Trading Volumes across cryptocurrencies and equities, partially offset an increase in Options Contracts Traded.
Options Contracts Traded was up 15%, while options DARTs decreased from 0.7 million to 0.6 million and the number of users placing option trades decreased 26%. Additionally, we experienced lower option rebate rates due to reduced market volatility and the mix of ticker symbols traded as different ticker symbols pay different rebate rates.
Crypto DARTs decreased from 0.3 million to 0.2 million. Additionally, the number of users placing cryptocurrency trades decreased 38% and the average Notional Trading Volume traded per trader decreased 25%. The decrease was partially offset by a higher rebate rate from crypto market makers (increase was effective in May 2022).
Equities DARTs decreased from 1.8 million to 1.6 million. The number of users placing equity trades decreased 20% and the average Notional Trading Volume per trader increased 3%. Additionally, we experienced lower equity rebate rates due to reduced spreads in securities pricing.

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Net Interest Revenues
Three Months Ended
March 31,
(in millions, except for percentages) 2022 2023 % Change
Net interest revenues:
Interest on corporate cash and investments
 $ 1  $ 68  NM
Margin interest 35  53  51%
Interest on segregated cash and cash equivalents and deposits 1  45  NM
Securities lending, net 24  26  8%
Cash sweep —  22  NM
Interest expenses related to credit facilities (6) (6) —%
Total net interest revenues $ 55  $ 208  278%
Net interest revenues as a % of total net revenues:
Margin interest 12  % 12  %
Securities lending, net 8  % 6  %
Interest on corporate cash and investments —  % 15  %
Interest on segregated cash and cash equivalents and deposits —  % 10  %
Cash sweep —  % 5  %
Interest expenses related to credit facilities (2) % (1) %
Total net interest revenues 18  % 47  %
Net interest revenues increased by $153 million primarily due to $67 million higher interest revenues earned from corporate cash and investments, $44 million from segregated cash and cash equivalents and deposits, $22 million from cash sweep, and $18 million from margin interest. These increases were primarily driven by the higher short term interest rate environment due to the rise in the federal funds rate, which is an input to our floating margin rate calculation and impacts the interest rate we receive on investable assets. Net interest revenues from margin interest also increased due to the higher interest rate while our Margin Book balance declined year-over-year. Segregated cash and cash equivalents and deposits as well as cash sweep balances increased year-over-year, which also contributed to the higher net interest revenues.
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The following table summarizes interest-earning assets, the revenue or expense generated by these assets, and their respective annualized yields (computed based on average balance over the quarter):
(in millions, except for annualized yield)
Margin Book(1)
Cash and deposits(2)
Cash sweep
(off-balance sheet)(3)
 Total interest-earning assets Securities lending, net Interest
expenses
related to credit facilities
 Net interest revenue
Three Months Ended March 31, 2023
March 31, 2023 $ 3,117  $ 10,405  $ 8,881  $ 22,403 
December 31, 2022 3,089  9,530  5,837  18,456 
Average(4)
 3,103  9,968  7,359  20,430 
Revenue/(expense) 53  113  22  188  $ 26  $ (6) $ 208 
Annual yield(5)
 6.83% 4.53% 1.20% 3.68% 4.07  %
Three Months Ended December 31, 2022
December 31, 2022 $ 3,089  $ 9,530  $ 5,837  $ 18,456 
September 30, 2022 4,085  9,374  2,969  16,428 
Average(4)
 3,587  9,452  4,403  17,442 
Revenue/(expense) 55  93  12  160  $ 13  $ (6) $ 167 
Annual yield(5)
 6.13% 3.94% 1.09% 3.67% 3.83  %
Three Months Ended March 31, 2022
March 31, 2022 $ 5,292  $ 10,983  $ 2,275  $ 18,550 
December 31, 2021 6,467  10,600  2,095  19,162 
Average(4)
 5,879  10,792  2,185  18,856 
Revenue/(expense) 35  2  —  37  $ 24  $ (6) $ 55 
Annual yield(5)
 2.38% 0.07% —% 0.78% 1.17  %
__________
(1) Margin Book is the aggregate outstanding margin loan balances receivable.
(2) Includes cash and cash equivalents, cash segregated under federal and other regulations, deposits with clearing organizations and investments.
(3) Cash sweep is an off-balance-sheet amount. Robinhood earns a net interest spread on Cash Sweep balances based on the interest rate offered by the partner banks less the interest rate given to users as stated in our program terms.
(4) Average balance rows present a simple average of the ending balances as of each of the indicated dates for the relevant period.
(5) Annual yield is calculated by annualizing revenue/expense for the given period then dividing by the applicable average asset balance.


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Other Revenues
Three Months Ended
March 31,
(in millions, except for percentages) 2022 2023 % Change
Other revenues $ 26  $ 26  —  %
Other revenues as a % of total net revenues 9% 6%
Other revenues remained flat and primarily consisted of revenues generated from Robinhood Gold, our monthly subscription service.
Operating Expenses
Three Months Ended
March 31,
(in millions, except for percentages) 2022 2023 % Change
Operating expenses:
Brokerage and transaction $ 31 $ 36 16  %
Technology and development 268 199 (26) %
Operations 91 42 (54) %
Marketing 32 26 (19) %
General and administrative 268 647 141  %
Total operating expenses $ 690 $ 950 38  %
Percent of net revenues:
Brokerage and transaction 10  % 8  %
Technology and development 90  % 45