Skip to content
    HOOD
    Earnings call· Mar 2025(Q1 FY25)

    Robinhood Markets, Inc. 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

    7
    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

    9
    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

    18
    Revenue growth
    50YoY
    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
    18Record 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
    84YoY
    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
    8.42x 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
    9Nearly 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 zoneto 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

    7
    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

    2
    TradePMRAcquisition of a platform for registered investment advisors.

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

    BitstampAcquisition 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

    5
    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 investmentslong-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 lossesQ1 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 cutsnear-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 increaseFY25

    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

    5

    Robinhood Banking Launch

    Q3 FY25
    CurrentInternal testing
    TargetPublic 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

    6

    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 read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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.