Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today
announced financial results for the second quarter of 2022, which
ended June 30, 2022.
- Total net revenues increased 6% sequentially
to $318 million.
- Transaction-based revenues decreased 7%
sequentially to $202 million.
- Options decreased 11% sequentially to $113 million.
- Cryptocurrencies increased 7% sequentially to $58 million.
- Equities decreased 19% sequentially to $29 million.
- Net interest revenue increased 35%
sequentially to $74 million.
- Net loss was $295 million, or $0.34 per
diluted share, compared with net loss of $392 million, or
$0.45 per diluted share in the first quarter of 2022.
- Operating expenses decreased 12% sequentially
to $610 million.
- Operating expenses excluding share-based
compensation decreased 5% sequentially to
$446 million, which included $17 million of restructuring
charges related to the reduction-in-force announced in April
2022.
- Share-based compensation expense decreased 25%
sequentially to $164 million. The decrease was primarily driven by
a $24 million reversal related to our April workforce reduction and
our reduced pace of hiring this year.
- Adjusted EBITDA (non-GAAP) was negative $80
million, a sequential improvement of $63 million. We continue
to challenge ourselves to reach a positive run-rate for Adjusted
EBITDA by the end of 2022.
- Net Cumulative Funded Accounts were 22.9
million, an increase of 100 thousand sequentially.
- Monthly Active Users (MAU) decreased
1.9 million sequentially to 14.0 million for June 2022,
as customers navigated the volatile market environment.
- Assets Under Custody (AUC) decreased 31%
sequentially to $64.2 billion, primarily driven by lower market
asset valuations.
- Net Deposits were $5.2 billion, which
translates to an annualized growth rate of 22% relative to prior
period AUC. Over the past twelve months, Net Deposits were $17.5
billion, which translates to a growth rate of 17%.
- Average Revenues Per User (ARPU) increased to
$56 from $53 in the first quarter of 2022.
- Cash and cash equivalents totaled $6.0 billion
at June 30, 2022, compared with $6.2 billion at March 31,
2022.
“In the second quarter we continued to make
strong progress on our roadmap and delivered products that will
help our customers navigate an environment marked by higher
interest rates and rising inflation,” said Vlad Tenev, CEO and
Co-Founder of Robinhood Markets. “With the introduction of Stock
Lending, extended hours for trading, improved options offerings,
new coins, and the announcement of our non-custodial wallet, we’ve
built an even better and more robust customer experience in the
first half of the year and look forward to bringing our customers
additional products and services throughout the remainder of
2022.”
“This quarter saw Robinhood make important
strides on both our business and financial goals,” said Jason
Warnick, Chief Financial Officer of Robinhood Markets. “In the
second quarter, we were encouraged to see our customers continue to
engage with us through the volatile environment. We saw Net
Deposits of $5.2 billion, representing a 22% annualized growth
rate. Revenues in the quarter were up 6% and we managed our costs
down 5%, leading to a $97 million sequential improvement in net
loss and a $63 million improvement in Adjusted EBITDA. While
the decision to make an additional reduction in force was a
difficult one, we believe that it was the right decision and
positions us to deliver on our mission of democratizing finance for
all.”
Highlights
Robinhood delivers enhanced user experience for all brokerage
customers
- In the first half of 2022, Robinhood has launched several new
products focused on delivering the top feature requests and
addressing pain points for more advanced customers.
- This quarter, Robinhood rolled out Stock Lending to give
customers an additional source of income on their stocks, with over
$3 billion of equity value already enrolled and available to
lend.
- Robinhood has also made improvements to its options offering,
including introducing options in cash accounts, the top requested
feature among advanced customers.
- In the back half of the year, Robinhood plans to further
enhance the customer experience by introducing advanced charting
and screening tools, delivering improvements to the core trading
flow, and rolling out retirement accounts.
Robinhood continues to build momentum in
crypto
- Despite the challenging environment for the whole crypto
ecosystem, Robinhood has continued to build in this space. In the
second quarter, Robinhood introduced a number of new coins in a
deliberate and considered manner, and customers have been pleased
with the offerings to date.
- Robinhood is working to give customers even more control over
their crypto. In April, the company rolled out crypto Wallets,
allowing customers to move their crypto in and out of Robinhood in
a simple, safe, and seamless way. Robinhood also announced its plan
to introduce a non-custodial wallet later this year. The standalone
app will allow customers to trade and swap crypto with no network
fees and maintain full custody of their crypto throughout, all with
the simplicity and great user experience they have come to expect
from Robinhood.
Robinhood makes progress on its money
offering
- In March, Robinhood rolled out the Robinhood Cash Card, a debit
card that features spending roundups as well as roundup bonuses and
merchant rewards.
- Since launch, the company has been making steady improvements
to the user experience. Through the Cash Card, Robinhood sees an
opportunity to become the primary place where customers deposit
their paychecks and drive additional customer loyalty as well as
diversify revenue over time.
Webcast and Conference Call
Information
Robinhood will host a conference call to discuss
its results at 2 p.m. PT / 5 p.m. ET tomorrow, August 3, 2022. The
live webcast of Robinhood's earnings conference call can be
accessed at investors.robinhood.com, along with the earnings press
release and accompanying slide presentation.
Following the call, a replay and transcript will
also be available at the same website.
Financial Outlook
As a result of the progress we have made on our
cost reduction initiatives, including the reductions in force
announced April 26, 2022 (the “April 2022 Restructuring”) and
August 2, 2022 (the “August 2022 Restructuring”) we expect:
- GAAP total operating expenses for full-year 2022 to be in the
range of $2.46 billion to $2.60 billion, representing a
decrease of approximately 25% to 29% from the prior
year;
- total operating expenses, excluding share-based compensation,
for full-year 2022 to be in the range of $1.70 billion to
$1.76 billion, representing a decrease of approximately 7% to
10% from the prior year. (These amounts include severance and other
restructuring charges of $17 million in connection with the
April 2022 Restructuring and an estimated $45 million to $60
million in connection with the August 2022 Restructuring);
and
- share-based compensation for full-year 2022 to be in the range
of $760 million to $840 million, representing a decrease
of approximately 47% to 52% percent from the prior year.
(These amounts include the benefit of share-based compensation
reversal of $24 million in connection with the April 2022
Restructuring and an estimated share-based compensation reversal of
$40 million to $50 million in connection with the August 2022
Restructuring.)
Actual results might differ materially from our
outlook due to several factors, including the rate of growth in net
new funded accounts which affects several costs including variable
marketing costs, the degree to which we are successful in
preventing fraud, our ability to manage web-hosting expenses
efficiently, and our ability to achieve productivity improvements
in customer service, among other factors. In connection with the
August 2022 Restructuring, our actual share-based compensation
reversal might differ from our estimate due to future changes in
our stock price.
About Robinhood
Robinhood Markets is on a mission to democratize
finance for all. With Robinhood, people can invest with no account
minimums through Robinhood Financial LLC, buy and sell crypto
through Robinhood Crypto, LLC, spend, save, and earn rewards
through Robinhood Money, LLC, and learn about investing through
easy-to-understand educational content.
Robinhood intends to use the "Overview" tab of
its Investor Relations website and its blog, Under the Hood, as
means of disclosing material information to the public in a broad,
non-exclusionary manner for purposes of the Securities and Exchange
Commission's ("SEC") Regulation Fair Disclosure (Reg. FD). The
Overview page can be accessed at investors.robinhood.com/overview
and Under the Hood can be accessed at blog.robinhood.com and
investors should routinely monitor those web pages, in addition to
Robinhood’s press releases, SEC filings, and public conference
calls and webcasts, as information posted on them could be deemed
to be material information.
"Robinhood" and the Robinhood feather logo are
registered trademarks of Robinhood Markets, Inc. All other names
are trademarks and/or registered trademarks of their respective
owners.
Contacts
Investors:ir@robinhood.com
Press:press@robinhood.com
ROBINHOOD MARKETS,
INC.CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
December 31, |
|
June 30, |
(in millions, except share and per share data) |
2021 |
|
2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
6,253 |
|
|
$ |
5,962 |
|
Cash, cash equivalents, and securities segregated under federal and
other regulations |
|
3,992 |
|
|
|
3,420 |
|
Receivables from brokers, dealers, and clearing organizations |
|
88 |
|
|
|
89 |
|
Receivables from users, net |
|
6,639 |
|
|
|
4,146 |
|
Deposits with clearing organizations |
|
328 |
|
|
|
289 |
|
Asset related to user cryptocurrencies safeguarding obligation |
|
— |
|
|
|
8,593 |
|
User-held fractional shares |
|
1,834 |
|
|
|
1,297 |
|
Investments |
|
27 |
|
|
|
46 |
|
Prepaid expenses |
|
92 |
|
|
|
88 |
|
Other current assets |
|
30 |
|
|
|
115 |
|
Total current assets |
|
19,283 |
|
|
|
24,045 |
|
Property, software, and equipment, net |
|
146 |
|
|
|
170 |
|
Goodwill |
|
101 |
|
|
|
100 |
|
Intangible assets, net |
|
34 |
|
|
|
30 |
|
Restricted cash |
|
24 |
|
|
|
22 |
|
Operating lease right-of-use-assets |
|
129 |
|
|
|
128 |
|
Non-current prepaid expenses |
|
44 |
|
|
|
37 |
|
Other non-current assets |
|
8 |
|
|
|
16 |
|
Total assets |
$ |
19,769 |
|
|
$ |
24,548 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
252 |
|
|
$ |
243 |
|
Payables to users |
|
6,476 |
|
|
|
5,795 |
|
Securities loaned |
|
3,651 |
|
|
|
1,367 |
|
User cryptocurrencies safeguarding obligation |
|
— |
|
|
|
8,593 |
|
Fractional shares repurchase obligation |
|
1,834 |
|
|
|
1,297 |
|
Operating lease liabilities |
|
22 |
|
|
|
22 |
|
Other current liabilities |
|
112 |
|
|
|
82 |
|
Total current liabilities |
|
12,347 |
|
|
|
17,399 |
|
Operating lease liabilities, non-current |
|
129 |
|
|
|
132 |
|
Total liabilities |
|
12,476 |
|
|
|
17,531 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Class A common stock, $0.0001 par value. 21,000,000,000 shares
authorized, 735,957,367 shares issued and outstanding as of
December 31, 2021; 21,000,000,000 shares authorized, 750,301,918
shares issued and outstanding as of June 30, 2022. |
|
— |
|
|
|
— |
|
Class B common stock, par value $0.0001. 700,000,000 shares
authorized, 127,955,246 shares issued and outstanding as of
December 31, 2021; 700,000,000 shares authorized, 127,955,246
shares issued and outstanding as of June 30, 2022. |
|
— |
|
|
|
— |
|
Class C common stock, par value $0.0001. 7,000,000,000 shares
authorized, no shares issued and outstanding as of December 31,
2021; 7,000,000,000 shares authorized, no shares issued and
outstanding as of June 30, 2022. |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
11,169 |
|
|
|
11,581 |
|
Accumulated other comprehensive income |
|
1 |
|
|
|
— |
|
Accumulated deficit |
|
(3,877 |
) |
|
|
(4,564 |
) |
Total stockholders’ equity |
|
7,293 |
|
|
|
7,017 |
|
Total liabilities and stockholders’ equity |
$ |
19,769 |
|
|
$ |
24,548 |
|
ROBINHOOD MARKETS,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
Three Months EndedJune 30, |
|
YOY%Change |
|
Three MonthsEnded March 31, |
|
QOQ%Change |
(in millions, except share, per share, and percentage data) |
2021 |
|
2022 |
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Transaction-based revenues |
$ |
451 |
|
|
$ |
202 |
|
|
(55 |
)% |
|
$ |
218 |
|
|
(7 |
)% |
Net interest revenues |
|
68 |
|
|
|
74 |
|
|
9 |
% |
|
|
55 |
|
|
35 |
% |
Other revenues |
|
46 |
|
|
|
42 |
|
|
(9 |
)% |
|
|
26 |
|
|
62 |
% |
Total net revenues |
|
565 |
|
|
|
318 |
|
|
(44 |
)% |
|
|
299 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(1)(2): |
|
|
|
|
|
|
|
|
|
|
|
Brokerage and transaction |
|
38 |
|
|
|
30 |
|
|
(21 |
)% |
|
|
31 |
|
|
(3 |
)% |
Technology and development |
|
156 |
|
|
|
244 |
|
|
56 |
% |
|
|
266 |
|
|
(8 |
)% |
Operations |
|
101 |
|
|
|
86 |
|
|
(15 |
)% |
|
|
91 |
|
|
(5 |
)% |
Marketing |
|
94 |
|
|
|
24 |
|
|
(74 |
)% |
|
|
34 |
|
|
(29 |
)% |
General and administrative |
|
112 |
|
|
|
226 |
|
|
102 |
% |
|
|
268 |
|
|
(16 |
)% |
Total operating expenses |
|
501 |
|
|
|
610 |
|
|
22 |
% |
|
|
690 |
|
|
(12 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of
convertible notes and warrant liability |
|
528 |
|
|
|
— |
|
|
NM |
|
|
|
— |
|
|
NM |
|
Other income, net |
|
— |
|
|
|
2 |
|
|
NM |
|
|
|
— |
|
|
NM |
|
Loss before income taxes |
|
(464 |
) |
|
|
(294 |
) |
|
(37 |
)% |
|
|
(391 |
) |
|
(25 |
)% |
Provision for income
taxes |
|
38 |
|
|
|
1 |
|
|
(97 |
)% |
|
|
1 |
|
|
— |
% |
Net loss |
$ |
(502 |
) |
|
$ |
(295 |
) |
|
(41 |
)% |
|
$ |
(392 |
) |
|
(25 |
)% |
Net loss attributable to
common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(502 |
) |
|
$ |
(295 |
) |
|
|
|
|
$ |
(392 |
) |
|
|
|
Diluted |
$ |
(502 |
) |
|
$ |
(295 |
) |
|
|
|
|
$ |
(392 |
) |
|
|
|
Net loss per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(2.16 |
) |
|
$ |
(0.34 |
) |
|
|
|
$ |
(0.45 |
) |
|
|
|
Diluted |
$ |
(2.16 |
) |
|
$ |
(0.34 |
) |
|
|
|
$ |
(0.45 |
) |
|
|
Weighted-average shares used
to compute net loss per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
|
232,223,019 |
|
|
|
874,873,301 |
|
|
|
|
|
867,769,168 |
|
|
|
Diluted |
|
232,223,019 |
|
|
|
874,873,301 |
|
|
|
|
|
867,769,168 |
|
|
|
ROBINHOOD MARKETS,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
Six Months EndedJune 30, |
|
% Change |
(in millions, except share, per share, and percentage data) |
2021 |
|
2022 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Transaction-based revenues |
$ |
871 |
|
|
$ |
420 |
|
|
(52 |
)% |
Net interest revenues |
|
130 |
|
|
|
129 |
|
|
(1 |
)% |
Other revenues |
|
86 |
|
|
|
68 |
|
|
(21 |
)% |
Total net revenues |
|
1,087 |
|
|
|
617 |
|
|
(43 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses(1)(2): |
|
|
|
|
|
|
|
|
|
|
Brokerage and transaction |
|
79 |
|
|
|
61 |
|
|
(23 |
)% |
Technology and development |
|
273 |
|
|
|
510 |
|
|
87 |
% |
Operations |
|
168 |
|
|
|
177 |
|
|
5 |
% |
Marketing |
|
196 |
|
|
|
58 |
|
|
(70 |
)% |
General and administrative |
|
249 |
|
|
|
494 |
|
|
98 |
% |
Total operating expenses |
|
965 |
|
|
|
1,300 |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of
convertible notes and warrant liability |
|
2,020 |
|
|
|
— |
|
|
NM |
|
Other income, net |
|
(1 |
) |
|
|
2 |
|
|
NM |
|
Loss before income taxes |
|
(1,897 |
) |
|
|
(685 |
) |
|
(64 |
)% |
Provision for income
taxes |
|
50 |
|
|
|
2 |
|
|
(96 |
)% |
Net loss |
$ |
(1,947 |
) |
|
$ |
(687 |
) |
|
(65 |
)% |
Net loss attributable to
common stockholders: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(1,947 |
) |
|
$ |
(687 |
) |
|
|
|
Diluted |
$ |
(1,947 |
) |
|
$ |
(687 |
) |
|
|
|
Net loss per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(8.41 |
) |
|
$ |
(0.79 |
) |
|
|
|
Diluted |
$ |
(8.41 |
) |
|
$ |
(0.79 |
) |
|
|
|
Weighted-average shares used
to compute net loss per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
231,459,227 |
|
|
|
871,343,295 |
|
|
|
|
Diluted |
|
231,459,227 |
|
|
|
871,343,295 |
|
|
|
|
ROBINHOOD MARKETS,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
|
|
(1) |
The following table presents operating expenses as a percent of
total net revenues: |
|
Three Months EndedJune 30, |
|
Three Months Ended March 31, |
|
Six Months EndedJune 30, |
|
2021 |
|
2022 |
|
2022 |
|
2021 |
|
2022 |
Brokerage and transaction |
7 |
% |
|
9 |
% |
|
10 |
% |
|
7 |
% |
|
10 |
% |
Technology and
development |
28 |
% |
|
77 |
% |
|
89 |
% |
|
25 |
% |
|
83 |
% |
Operations |
18 |
% |
|
27 |
% |
|
30 |
% |
|
15 |
% |
|
29 |
% |
Marketing |
17 |
% |
|
8 |
% |
|
11 |
% |
|
18 |
% |
|
9 |
% |
General and
administrative |
20 |
% |
|
71 |
% |
|
90 |
% |
|
23 |
% |
|
80 |
% |
Total operating expenses |
90 |
% |
|
192 |
% |
|
230 |
% |
|
88 |
% |
|
211 |
% |
|
|
|
(2) |
The following table presents the share-based compensation in our
unaudited condensed consolidated statements of operations for the
periods indicated: |
|
Three Months EndedJune 30, |
|
Three Months Ended March 31, |
|
Six Months EndedJune 30, |
(in millions) |
2021 |
|
2022 |
|
2022 |
|
2021 |
|
2022 |
Brokerage and transaction |
$ |
— |
|
$ |
1 |
|
|
$ |
1 |
|
$ |
— |
|
$ |
2 |
Technology and
development |
|
1 |
|
|
59 |
|
|
|
82 |
|
|
2 |
|
|
141 |
Operations |
|
— |
|
|
1 |
|
|
|
4 |
|
|
— |
|
|
5 |
Marketing |
|
— |
|
|
(2 |
) |
|
|
5 |
|
|
— |
|
|
3 |
General and
administrative |
|
— |
|
|
105 |
|
|
|
128 |
|
|
8 |
|
|
233 |
Total share-based compensation expense |
$ |
1 |
|
$ |
164 |
|
|
$ |
220 |
|
$ |
10 |
|
$ |
384 |
ROBINHOOD MARKETS,
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
(in millions) |
2021 |
|
2022 |
|
2021 |
|
2022 |
Operating
activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(502 |
) |
|
$ |
(295 |
) |
|
$ |
(1,947 |
) |
|
$ |
(687 |
) |
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
5 |
|
|
|
17 |
|
|
|
9 |
|
|
|
29 |
|
Provision for credit losses |
|
21 |
|
|
|
11 |
|
|
|
37 |
|
|
|
19 |
|
Share-based compensation |
|
1 |
|
|
|
164 |
|
|
|
10 |
|
|
|
384 |
|
Change in fair value of convertible notes and warrant
liability |
|
528 |
|
|
|
— |
|
|
|
2,020 |
|
|
|
— |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
Segregated securities under federal and other regulations |
|
(350 |
) |
|
|
(20 |
) |
|
|
(215 |
) |
|
|
(20 |
) |
Receivables from brokers, dealers, and clearing organizations |
|
(34 |
) |
|
|
35 |
|
|
|
(85 |
) |
|
|
(1 |
) |
Receivables from users, net |
|
(75 |
) |
|
|
1,056 |
|
|
|
(2,104 |
) |
|
|
2,473 |
|
Deposits with clearing organizations |
|
50 |
|
|
|
5 |
|
|
|
(47 |
) |
|
|
39 |
|
Operating lease right-of-use assets |
|
(20 |
) |
|
|
27 |
|
|
|
(26 |
) |
|
|
1 |
|
Current and non-current prepaid expenses |
|
(15 |
) |
|
|
(15 |
) |
|
|
(35 |
) |
|
|
11 |
|
Other current and non-current assets |
|
145 |
|
|
|
(78 |
) |
|
|
761 |
|
|
|
(76 |
) |
Accounts payable and accrued expenses |
|
56 |
|
|
|
(5 |
) |
|
|
182 |
|
|
|
(7 |
) |
Payables to users |
|
1,927 |
|
|
|
(1,353 |
) |
|
|
1,871 |
|
|
|
(680 |
) |
Securities loaned |
|
612 |
|
|
|
(784 |
) |
|
|
722 |
|
|
|
(2,284 |
) |
Current and non-current operating lease liabilities |
|
26 |
|
|
|
(29 |
) |
|
|
33 |
|
|
|
3 |
|
Other current and non-current liabilities |
|
(94 |
) |
|
|
1 |
|
|
|
(787 |
) |
|
|
(30 |
) |
Net cash provided by (used in) operating activities |
|
2,281 |
|
|
|
(1,263 |
) |
|
|
399 |
|
|
|
(826 |
) |
Investing
activities: |
|
|
|
|
|
|
|
Purchase of property, software, and equipment |
|
(13 |
) |
|
|
(6 |
) |
|
|
(22 |
) |
|
|
(19 |
) |
Capitalization of internally developed software |
|
(4 |
) |
|
|
(6 |
) |
|
|
(6 |
) |
|
|
(14 |
) |
Purchase of investments |
|
— |
|
|
|
(13 |
) |
|
|
— |
|
|
|
(27 |
) |
Sales of investments |
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
5 |
|
Other |
|
— |
|
|
|
(5 |
) |
|
|
— |
|
|
|
(5 |
) |
Net cash used in investing activities |
|
(17 |
) |
|
|
(26 |
) |
|
|
(28 |
) |
|
|
(60 |
) |
Financing
activities: |
|
|
|
|
|
|
|
Proceeds from issuance of common stock under the Employee Stock
Purchase Plan |
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
13 |
|
Taxes paid related to net share settlement of equity awards |
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
(7 |
) |
Proceeds from issuance of convertible notes and warrants |
|
— |
|
|
|
— |
|
|
|
3,552 |
|
|
|
— |
|
Payments of debt issuance costs |
|
— |
|
|
|
(10 |
) |
|
|
— |
|
|
|
(10 |
) |
Draws on credit facilities |
|
348 |
|
|
|
— |
|
|
|
1,348 |
|
|
|
11 |
|
Repayments on credit facilities |
|
(348 |
) |
|
|
— |
|
|
|
(1,348 |
) |
|
|
(11 |
) |
Proceeds from exercise of stock options, net of repurchases |
|
1 |
|
|
|
2 |
|
|
|
7 |
|
|
|
5 |
|
Net cash provided by (used in) financing activities |
|
1 |
|
|
|
1 |
|
|
|
3,559 |
|
|
|
1 |
|
Net increase (decrease) in cash, cash equivalents,
segregated cash and restricted cash |
|
2,265 |
|
|
|
(1,288 |
) |
|
|
3,930 |
|
|
|
(885 |
) |
Cash, cash equivalents, segregated cash
and restricted cash, beginning of the period |
|
7,855 |
|
|
|
10,673 |
|
|
|
6,190 |
|
|
|
10,270 |
|
Cash, cash equivalents, segregated cash
and restricted cash, end of the period |
$ |
10,120 |
|
|
$ |
9,385 |
|
|
$ |
10,120 |
|
|
$ |
9,385 |
|
Cash and cash equivalents, end
of the period |
$ |
5,078 |
|
|
$ |
5,962 |
|
|
$ |
5,078 |
|
|
$ |
5,962 |
|
Segregated cash, end of the
period |
|
5,025 |
|
|
|
3,400 |
|
|
|
5,025 |
|
|
|
3,400 |
|
Restricted cash (current and
non-current), end of the period |
|
17 |
|
|
|
23 |
|
|
|
17 |
|
|
|
23 |
|
Cash, cash equivalents, segregated
cash and restricted cash, end of the period |
$ |
10,120 |
|
|
$ |
9,385 |
|
|
$ |
10,120 |
|
|
$ |
9,385 |
|
Supplemental
disclosures: |
|
|
|
|
|
|
|
Cash paid for interest |
$ |
2 |
|
|
$ |
3 |
|
|
$ |
3 |
|
|
$ |
6 |
|
Cash paid for income taxes, net of refund received |
$ |
— |
|
|
$ |
2 |
|
|
$ |
3 |
|
|
$ |
3 |
|
Non-cash operating activities: |
|
|
|
|
|
|
|
Asset related to user cryptocurrencies safeguarding obligation |
$ |
— |
|
|
$ |
8,593 |
|
|
$ |
— |
|
|
$ |
8,593 |
|
User cryptocurrencies safeguarding obligation |
$ |
— |
|
|
$ |
8,593 |
|
|
$ |
— |
|
|
$ |
8,593 |
|
Reconciliation of GAAP to Non-GAAP
Results(Unaudited)
|
Three Months EndedJune 30, |
|
Three Months Ended March 31, |
|
Six Months EndedJune 30, |
(in millions) |
2021 |
|
2022 |
|
2022 |
|
2021 |
|
2022 |
Net loss |
$ |
(502 |
) |
|
$ |
(295 |
) |
|
$ |
(392 |
) |
|
$ |
(1,947 |
) |
|
$ |
(687 |
) |
Add: |
|
|
|
|
|
|
|
|
|
Interest expenses related to
credit facilities |
|
5 |
|
|
|
6 |
|
|
|
6 |
|
|
|
8 |
|
|
|
12 |
|
Provision for income
taxes |
|
38 |
|
|
|
1 |
|
|
|
1 |
|
|
|
50 |
|
|
|
2 |
|
Depreciation and
amortization |
|
5 |
|
|
|
17 |
|
|
|
12 |
|
|
|
9 |
|
|
|
29 |
|
EBITDA (non-GAAP) |
|
(454 |
) |
|
|
(271 |
) |
|
|
(373 |
) |
|
|
(1,880 |
) |
|
|
(644 |
) |
Share-based
compensation(1) |
|
1 |
|
|
|
164 |
|
|
|
220 |
|
|
|
10 |
|
|
|
384 |
|
Change in fair value of
convertible notes and warrant liability |
|
528 |
|
|
|
— |
|
|
|
— |
|
|
|
2,020 |
|
|
|
— |
|
Restructuring charges(2) |
|
— |
|
|
|
17 |
|
|
|
— |
|
|
|
— |
|
|
|
17 |
|
Significant legal and tax
settlements and reserves |
|
15 |
|
|
|
10 |
|
|
|
10 |
|
|
|
55 |
|
|
|
20 |
|
Adjusted EBITDA
(non-GAAP) |
$ |
90 |
|
|
$ |
(80 |
) |
|
$ |
(143 |
) |
|
$ |
205 |
|
|
$ |
(223 |
) |
|
|
|
(1) |
Share-based compensation included a net reduction of
$24 million as a result of the reversal of previously
recognized expense for stock awards that were forfeited in
connection with the April 2022 Restructuring. |
(2) |
Restructuring charges related to the April 2022 Restructuring and
primarily consisted of employee-related wages and benefits and
severance expenses. |
Reconciliation of GAAP to Non-GAAP
Results(Unaudited)
|
Three Months EndedJune 30, |
|
Three Months Ended March 31, |
|
2021 |
|
2022 |
|
2022 |
(in millions, except
percentage data) |
$ |
|
% ofTotal Net Revenues |
|
$ |
|
% ofTotal Net Revenues |
|
$ |
|
% ofTotal Net Revenues |
Brokerage and transaction (GAAP) |
$ |
38 |
|
7 |
% |
|
$ |
30 |
|
|
9 |
% |
|
$ |
31 |
|
10 |
% |
Less: SBC |
|
— |
|
— |
% |
|
|
1 |
|
|
— |
% |
|
|
1 |
|
— |
% |
Brokerage and transaction excluding SBC
(non-GAAP) |
|
38 |
|
7 |
% |
|
|
29 |
|
|
9 |
% |
|
|
30 |
|
10 |
% |
Technology and development
(GAAP) |
|
156 |
|
28 |
% |
|
|
244 |
|
|
77 |
% |
|
|
266 |
|
89 |
% |
Less: SBC |
|
1 |
|
— |
% |
|
|
59 |
|
|
19 |
% |
|
|
82 |
|
27 |
% |
Technology and development excluding SBC
(non-GAAP) |
|
155 |
|
28 |
|
|
|
185 |
|
|
58 |
|
|
|
184 |
|
62 |
% |
Operations (GAAP) |
|
101 |
|
18 |
% |
|
|
86 |
|
|
27 |
% |
|
|
91 |
|
30 |
% |
Less: SBC |
|
— |
|
— |
% |
|
|
1 |
|
|
— |
% |
|
|
4 |
|
1 |
% |
Operations excluding SBC (non-GAAP) |
|
101 |
|
18 |
% |
|
|
85 |
|
|
27 |
% |
|
|
87 |
|
29 |
% |
Marketing (GAAP) |
|
94 |
|
17 |
% |
|
|
24 |
|
|
8 |
% |
|
|
34 |
|
11 |
% |
Less: SBC |
|
— |
|
— |
% |
|
|
(2 |
) |
|
(1) % |
|
|
5 |
|
2 |
% |
Marketing excluding SBC (non-GAAP) |
|
94 |
|
17 |
% |
|
|
26 |
|
|
9 |
% |
|
|
29 |
|
9 |
% |
General and administration
(GAAP) |
|
112 |
|
20 |
% |
|
|
226 |
|
|
71 |
% |
|
|
268 |
|
90 |
% |
Less: SBC |
|
— |
|
— |
% |
|
|
105 |
|
|
33 |
% |
|
|
128 |
|
43 |
% |
General and administration excluding SBC
(non-GAAP) |
|
112 |
|
20 |
% |
|
|
121 |
|
|
38 |
% |
|
|
140 |
|
47 |
% |
Total operating expenses
(GAAP) |
$ |
501 |
|
90 |
% |
|
$ |
610 |
|
|
192 |
% |
|
$ |
690 |
|
230 |
% |
Less: SBC |
|
1 |
|
— |
% |
|
|
164 |
|
|
51 |
% |
|
|
220 |
|
73 |
% |
Total operating expenses excluding SBC
(non-GAAP) |
$ |
500 |
|
90 |
% |
|
$ |
446 |
|
|
141 |
% |
|
$ |
470 |
|
157 |
% |
Reconciliation of GAAP to Non-GAAP
Results(Unaudited)
|
Six Months EndedJune 30, |
|
2021 |
|
2022 |
(in millions, except
percentage data) |
$ |
|
% ofTotal Net Revenues |
|
$ |
|
% ofTotal Net Revenues |
Brokerage and transaction (GAAP) |
$ |
79 |
|
7 |
% |
|
$ |
61 |
|
10 |
% |
Less: SBC |
|
— |
|
— |
% |
|
|
2 |
|
— |
% |
Brokerage and transaction excluding SBC
(non-GAAP) |
|
79 |
|
7 |
% |
|
|
59 |
|
10 |
% |
Technology and development
(GAAP) |
|
273 |
|
25 |
% |
|
|
510 |
|
83 |
% |
Less: SBC |
|
2 |
|
— |
% |
|
|
141 |
|
23 |
% |
Technology and development excluding SBC
(non-GAAP) |
|
271 |
|
25 |
|
|
|
369 |
|
60 |
% |
Operations (GAAP) |
|
168 |
|
15 |
% |
|
|
177 |
|
29 |
% |
Less: SBC |
|
— |
|
— |
% |
|
|
5 |
|
1 |
% |
Operations excluding SBC (non-GAAP) |
|
168 |
|
15 |
% |
|
|
172 |
|
28 |
% |
Marketing (GAAP) |
|
196 |
|
18 |
% |
|
|
58 |
|
9 |
% |
Less: SBC |
|
— |
|
— |
% |
|
|
3 |
|
— |
% |
Marketing excluding SBC (non-GAAP) |
|
196 |
|
18 |
% |
|
|
55 |
|
9 |
% |
General and administration
(GAAP) |
|
249 |
|
23 |
% |
|
|
494 |
|
80 |
% |
Less: SBC |
|
8 |
|
1 |
% |
|
|
233 |
|
38 |
% |
General and administration excluding SBC
(non-GAAP) |
|
241 |
|
22 |
% |
|
|
261 |
|
42 |
% |
Total operating expenses
(GAAP) |
$ |
965 |
|
88 |
% |
|
$ |
1,300 |
|
211 |
% |
Less: SBC |
|
10 |
|
1 |
% |
|
|
384 |
|
62 |
% |
Total operating expenses excluding SBC
(non-GAAP) |
$ |
955 |
|
87 |
% |
|
$ |
916 |
|
149 |
% |
Reconciliation of GAAP to Non-GAAP
Financial Outlook(Unaudited)
|
Year Ended December 31, 2021 |
|
Financial Outlookfor the Year Ending
December 31, 2022 |
|
(in millions) |
|
(year- over-year change) |
|
(in millions) |
Total operating expenses
(GAAP) |
$3,456 |
|
decrease by 25% – 29% |
|
$2,460 – $2,600 |
Less: SBC |
$1,572 |
|
decrease by 47% – 52% |
|
$760 – $8402 |
Total operating expenses excluding SBC (non-GAAP) |
$1,884 |
|
decrease by 7% – 10% |
|
$1,700 – $1,7601 |
|
|
|
(1) |
These amounts include severance and other restructuring charges of
$17 million in connection with the April 2022 Restructuring and an
estimated $45 million to $60 million in connection with the August
2022 Restructuring. |
(2) |
These amounts include the benefit of share-based compensation
reversal of $24 million in connection with the April 2022
Restructuring and an estimated share-based compensation reversal of
$40 million to $50 million in connection with the August 2022
Restructuring. |
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking
statements regarding the expected financial performance of
Robinhood Markets, Inc. and its consolidated subsidiaries (“we,”
“Robinhood,” or the “Company”) and our strategic and operational
plans, including (among others) the statements regarding our plans
to bring our customers additional products and services throughout
the remainder of 2022; our plans for brokerage to introduce
advanced charting and screening tools, deliver improvements to the
core trading flow, and roll out retirement accounts; our plans for
crypto to launch a non-custodial crypto wallet app later this year
as a standalone app that will allow customers to trade and swap
crypto with no network fees and maintain full custody of their
crypto throughout, all with simplicity and a great user experience;
our view that our money offering has an opportunity through the
Cash Card to become the primary place where customers deposit their
paychecks and to drive additional customer loyalty as well as to
diversify revenue over time; as well as all statements and
information under the headings “Financial Outlook" and
"Reconciliation of GAAP to Non-GAAP Financial Outlook." 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 press release. 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 history; the difficulty of managing
our business effectively, including our recent workforce
reductions, 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; the difficulty of
raising additional capital (to satisfy any liquidity needs and
support business growth and objectives) on reasonable terms or at
all; the need to maintain capital levels required by regulators and
self-regulatory organizations; the risk that we might mishandle the
cash, securities, and cryptocurrencies we hold on behalf of
customers, and our exposure to liability for operational errors in
clearing functions; the impact of negative publicity on our brand
and reputation; the risk that changes in business, economic, or
political conditions, or systemic market events, might harm our
business; our dependence on key employees and a skilled workforce;
the difficulty of complying with an extensive and complex
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 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 of cash or cryptocurrency;
and the risk that substantial future sales of Class A common shares
in the public market 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 Part II,
Item 1A of our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2022 as well as our other filings with the 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 of this press release,
August 2, 2022, 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 press release
whether as a result of any new information, future events, changed
circumstances, or otherwise. You should read this press release
with the understanding that our actual future results, performance,
events, and circumstances might be materially different from what
we expect. All second quarter 2022 financial information in this
press release is preliminary, based on our estimates and subject to
completion of our financial closing procedures. Final results for
the period, which will be reported in our Quarterly Report on Form
10-Q for the three months ended June 30, 2022, might vary from the
information in this press release. In particular, until our
financial statements are issued in our Quarterly Report on Form
10-Q, we might be required to recognize certain subsequent events
(such as in connection with contingencies or the realization of
assets) which could affect our final results.
Non-GAAP Financial Measures
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 results under GAAP, we utilize non-GAAP
calculations of adjusted earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA”) and operating
expense excluding share-based compensation. 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. Reconciliations of these non-GAAP measures to the most
directly comparable financial measures calculated and presented in
accordance with GAAP are provided in the financial tables included
in this release.
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) share-based compensation, (v) change in fair
value of convertible notes and warrant liability, (vi) 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.
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.
Operating Expense excluding Share-Based Compensation
Operating expense excluding share-based
compensation is defined as the applicable GAAP operating expense
line item minus the share-based compensation (or SBC) included
within such line item. We believe operating expense excluding SBC
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
cost structure.
Key Performance Metrics
In addition to the measures presented in our
unaudited condensed consolidated financial statements, we use the
key performance metrics described below to help us evaluate our
business, identify trends affecting our business, formulate
business plans, and make strategic decisions.
Net Cumulative Funded Accounts
A Robinhood account is designed to provide a
user with access to any and all of the products offered on our
platform. We define “Net Cumulative Funded Accounts” as New Funded
Accounts less Churned Accounts plus Resurrected Accounts (each as
defined below). A “New Funded Account” is a Robinhood account into
which the account user makes an initial deposit or money or asset
transfer, of any amount, during the relevant period. An account is
considered “Churned” if it was ever a New Funded Account and its
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, less often,
from margin loans. 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. Examples of credits
excluded for purposes of identifying Churned Accounts and
Resurrected Accounts are price correction credits, related interest
adjustments, and fee adjustments.
“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.
Monthly Active Users (“MAU”)
We define MAU as the number of Monthly Active
Users during a specified calendar month. A “Monthly Active User” is
a unique user who makes a debit card transaction, or who
transitions between two different screens on a mobile device or
loads a page in a web browser while logged into their account, at
any point during the relevant month. A user need not satisfy these
conditions on a recurring monthly basis or have a Funded Account to
be included in MAU. Figures in this release reflect MAU for the
last month of each 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 drive the change in AUC in any given period. 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, Automated Customer Account
Transfer Service (“ACATS”) transfers, and custodial crypto wallet
transfers) for a stated period.
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. Figures in this release represent annualized ARPU
for each three-month period presented.
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.
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