HOOD
Earnings call · Mar 2025 (Q1 FY25)

Robinhood Markets Q1 FY25 earnings call HOOD

Apr 30, 2025 Source

Executive summary

Robinhood Q1 FY25 — Strong Product Velocity Drives Profitable Growth

Robinhood delivered a quarter of profitable growth, driven by significant product velocity across active trading, wallet share expansion, and global ecosystem initiatives. The company is successfully diversifying its revenue streams and attracting wealthier clients, while maintaining a focus on increasing earnings and free cash flow per share. Management highlighted the resilience gained from serving active traders and the strong engagement with Robinhood Gold.

Highlights

5

  • Revenue increased 50% year-over-year to $927 million.

  • Adjusted EBITDA margin expanded by 11 points year-over-year, reaching 51%.

  • Net deposits reached a record $18 billion in Q1, with an additional $6.5 billion in April.

  • Robinhood Gold subscribers nearly doubled year-over-year to 3.2 million by quarter-end, reaching 3.3 million in April.

  • Share repurchase program authorization increased by $500 million to a total of $1.5 billion, with $650 million already deployed.

Concerns

3

  • Updated full-year FY25 adjusted OpEx and SBC outlook to $2.085 billion to $2.185 billion, including $85 million from TradePMR.

  • Experienced a step-up in brokerage-related fraud losses in Q1, unrelated to the margin book.

  • Anticipates a potential $50 million headwind to Net Interest Income (NII) for every 25 basis point Fed rate cut, though typically offset by asset growth and trading.

Guidance & targets

CategoryTargetConfidence
Adjusted OpEx and SBC
$2.085 billion to $2.185 billion
high materiality
High
Share Repurchase Program Authorization
$1.5 billion total
high materiality
High
Share Repurchase Program Deployment
$800 million+
high materiality
High
Robinhood Banking Launch
Public rollout in Q3
medium materiality
High
Bitstamp Acquisition Close
Mid-year
medium materiality
High
Gold Card Rollout
Continue increasing cardholders
medium materiality
High
Provision for Credit Losses
Increase gradually
low materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Robinhood Gold
Gold is central to the cross-sell strategy, with Gold customers 4x more likely to have a retirement account and 5x more assets. The company aims to make Gold on par with the best membership loyalty programs.
Subscribers: 3.2 million (end of Q1)Subscribers: 3.3 million (April)YoY Subscriber Growth: nearly doubledAdoption Rate: 12%+New Q1 Customer Adoption Rate: 1 in 3
————
Futures Trading
Futures launched in Q1 and accelerated significantly in April, showing strong incremental volume. It allows for easy short positions and around-the-clock trading, opening new behaviors for active traders.
Contracts Traded (April): 4.5 millionAnnualized Run Rate (ARR): ~$20 million
————
Prediction Markets
Recently increased breadth of contracts. Appeals to a broad range of customers, with less than half of the volume being sports-related. The company sees vast potential in this nascent asset class.
Contracts Traded (last 6 months): >1 billionAnnualized Run Rate (ARR): ~$20 million
————
Robinhood Strategies
Launched recently and has seen a rapid start with tremendously positive early customer feedback, holding up well despite market volatility.
Customers: >40,000Assets: >$100 million
————
Robinhood Gold Credit Card
Customer behavior is in line with expectations, and the rollout will continue to accelerate. Revolve rates are ramping, and customers are enjoying 3% rewards. The product experience is continuously improving.
Cardholders: 200,000 (doubled in Q1 from 100,000)Waitlist: ~3 million
————
Retirement Assets
Strong growth in retirement assets, contributing to wallet share expansion and demonstrating customers entrusting more assets to Robinhood.
Assets: $16 billionGrowth from start of year: ~20%
————
TradePMR
Acquisition closed, bringing significant platform assets and a track record for growth. Integration is a near-term B2B focus to serve registered investment advisors.
Platform Assets: >$40 billionAnnualized Run Rate (ARR): $50 million
————
Crypto Trading
Q1 was the second-highest revenue quarter in recent years. The company is focused on market share, product selection, and diversification within crypto. Smart exchange routing is being experimented with to offer preferential pricing to high-volume traders.
Q1 Revenue: $260 millionApril Trading Volume: >$8 billion
$260 million———
Index Options
Recently launched and quickly scaling, contributing to the diversification of revenue streams.
Annualized Run Rate (ARR): ~$20 million
————

Operational metrics

Revenue growth
50 YoY
Q1 FY25

Driven by strong product velocity and diversification.

Adjusted EBITDA margin
51
Q1 FY25

Reflects 72% incremental margins due to focus on profitable growth.

Adjusted EBITDA
1.7
TTM

Over the past 12 months, demonstrating continued business growth and diversification.

Net deposits
18 Record quarter
Q1 FY25

Followed by $6.5 billion in April, indicating strong customer trust and asset consolidation.

Average customer transfer per user (promotions)
90,000
Q1 FY25

Promotions were less than 15% of Q1 net deposits, attracting large and wealthier clients with attractive payback periods.

Equities trading volume growth
84 YoY
Q1 FY25

Reached a 4-year high in April, indicating strong engagement from active traders.

Options trading volume
Record
Q1 FY25

In the zone of an all-time high in April, reflecting increased active trader engagement.

Margin balances
8.4 2x from last year
April

Reflects increased customer activity and leverage usage.

International customers
>150,000
Q1 FY25

Continuing to accelerate as Robinhood expands its global financial ecosystem.

NII sensitivity to rate cuts
50
per 25 bps cut

On a standalone basis, but often offset by growth in interest-earning assets and a natural hedge with trading volumes.

Brokerage-related losses
— step-up
Q1 FY25

Fraud-related, not related to margin book, with the team actively addressing the issue.

Share repurchase executed
300
Q1 FY25

More than offset share issuance for TradePMR, demonstrating commitment to shareholder returns.

Share repurchase executed (total)
650
Since Q3 FY24

Part of the $1.5 billion authorized program, with $800 million+ remaining to be deployed over the next two years.

Number of businesses > $100M annualized revenue
9 Nearly doubled from a couple of years ago
Q1 FY25

Reflects successful diversification, with many more businesses quickly scaling.

Annualized Run Rate (new products)
20
Q1 FY25

Each of these newly launched products individually generates around $20 million in ARR.

TradePMR costs
85
FY25

Included in the updated adjusted OpEx and SBC outlook, with opportunities for future savings.

Crypto take rates
in a similar zone to Q1 FY25
April

Sequentially increasing for several quarters, with ongoing experimentation in tiered pricing to attract higher volumes.

Funded accounts
>25 million
Q1 FY25

Represents a large installed base for cross-selling new products.

Product announcements

ProductTypeDetails
Futureslaunch
Prediction Marketslaunch
Robinhood Legend (improvements)update
Robinhood Strategieslaunch
Robinhood Cortex (Stock Digest, Trade Builder)launch
Robinhood Bankinglaunch
Smart Exchange Routing (Crypto)launch

Deals & partnerships

TradePMR Acquisition of a platform for registered investment advisors.

The acquisition closed in Q1, expanding Robinhood's B2B offerings.

Bitstamp Acquisition of a crypto exchange.

The acquisition is still on track to close mid-year, making Robinhood the oldest and longest continuously running crypto exchange.

Risks & headwinds

Regulatory developments (general) ongoing

Potential risk factors that could cause differences, including regulatory developments that we continue to monitor

Mitigation:Actively monitoring and described in SEC filings.

Regulatory uncertainty for private company investments long-term

Accredited investor rules shut out north of 80% of the public currently.

Mitigation:Actively advocating for comprehensive security legislation and rethinking accredited investor rules in the U.S. to allow retail access to private companies.

Brokerage-related fraud losses Q1 FY25

A step-up in some brokerage-related losses

Mitigation:Team is actively addressing the issue, not considered a long-term concern.

NII headwind from Fed rate cuts near-term

A 25 basis point cut would be about $50 million as a headwind on a stand-alone basis.

Mitigation:Growth in interest-earning assets and a natural hedge with trading volumes (trading tends to increase as rates fall) are expected to offset this impact.

Credit loss provisioning increase FY25

Expected to just increase gradually through the year

Mitigation:Tight underwriting standards are maintained, and Gold Card delinquency rates and write-offs are currently very low and in line with expectations.

What to watch in Q2 FY25

Robinhood Banking Launch

Q3 FY25
Current Internal testing
Target Public rollout

Why it matters

This new Gold-only product targets high-net-worth individuals, crucial for wallet share expansion and enhancing the Gold subscriber value proposition.

And at the event, we announced rolling out to the public in Q3, and we feel good about that date.

Q&A highlights

Seeking more color on April engagement, margin balance trends, new account openings, and source of strong deposit numbers (existing vs. new customers).

April engagement was strong and consistent throughout the month, with diverse strength in net deposits coming from various products like retirement, strategies, and crypto. The business is more resilient due to its focus on active traders and diversified offerings, allowing engagement in various market conditions.

“We're seeing strong additions, as Vlad alluded to, to Robinhood Gold, and the strength in net deposits is pretty diverse.”

asked by Chris Allen · answered by Jason Warnick

2 min read 7 chapters

Detailed narrative

Product Velocity and Diversification

Robinhood emphasized its strong product velocity across three focus areas: active traders, wallet share for the next generation, and building a global financial ecosystem. This strategy has led to the development of nine business lines each generating over $100 million in annualized revenues, nearly double the number from a few years ago, with several more scaling quickly, contributing to a more resilient business model.

Active Trader Platform Enhancements

The company launched futures and prediction markets in Q1, with futures accelerating significantly in April to 4.5 million contracts traded. Robinhood Legend, the platform for active traders, has seen continuous improvements including speed upgrades, new asset classes like crypto and index options, joint account support, and more indicators, driving strong incremental volume and catering to sophisticated trading strategies.

Wallet Share Expansion Initiatives

Robinhood is focused on serving more of its customers' assets. Robinhood Strategies, launched recently, already has over 40,000 customers and $100 million in assets. Robinhood Gold cardholders doubled to 200,000 in Q1, with plans for accelerated rollout. Retirement assets grew to $16 billion, up 20% from the start of the year, and the acquisition of TradePMR added over $40 billion in platform assets.

Global Expansion and Crypto Strategy

The company continues to enhance its UK brokerage offering and is working on launching in Asia. The Bitstamp acquisition is on track to close mid-year, expanding institutional and international crypto presence. A crypto event in France in two months is expected to unveil new developments, as Robinhood views crypto as a foundational technology to improve a wide variety of financial services.

Customer Acquisition and Engagement

Record net deposits of $18 billion in Q1, with an average customer transfer of $90,000 ($180,000 for taxable accounts in promotions), indicate strong customer trust and asset consolidation. Robinhood Gold subscribers nearly doubled year-over-year to 3.2 million, with a 1 in 3 adoption rate for new Q1 customers, highlighting the success of its membership loyalty program approach and its ability to attract larger balances.

Regulatory Advocacy for Private Markets

Robinhood is actively advocating for comprehensive security legislation and a rethinking of accredited investor rules in the U.S. to allow retail investors to access private companies. The company highlighted that companies are staying private longer, accruing significant value before public listings, and believes tokenizing private equities could be a significant unlock for individuals and the crypto industry.

B2B Opportunities and TradePMR Integration

While currently focused on integrating TradePMR to serve registered investment advisors, Robinhood views B2B opportunities like 401(k) administration and employee stock plan administration as significant long-term growth avenues. This aligns with its 10-year arc to build a global financial ecosystem serving retail, businesses, and institutions, leveraging innovations built for retail customers.

AI-generated summary of the company's earnings call. Not investment advice.