Robinhood Markets Q1 FY26 earnings call HOOD

Robinhood announced a historic partnership with the U.S. Department of the Treasury and BNY to be the broker and sole initial trustee for the Trump Accounts. This program aims to provide equity ownership to over 5.5 million American children already signed up, with 60 million eligible. Robinhood is developing a new app for this initiative, viewing it as a significant opportunity to extend its mission to the public sector and build a best-in-class government technology product. The company expects revenues to exceed costs for this project, which is contracted on a cost-plus basis with a small margin.

Robinhood continues to prioritize active traders, reporting record levels across Prediction Markets, Futures, Index Options, Shorting, and Margin in Q1. Equity and option volumes saw double-digit year-over-year growth. The upcoming Q2 launch of Rothera, a joint venture with Susquehanna, will provide vertical integration for prediction markets, offering end-to-end control over customer experience, product selection, and pricing. Robinhood Social is also gaining traction with verified profiles and returns, with new features being added weekly.

The company is successfully broadening its offerings to capture more wallet share, with customers adding 500,000 funded accounts in Q1 and over 1.5 million in the past year across Retirement, Gold credit card, Strategies, and Banking. Robinhood Banking has grown 5x since the last earnings call, accumulating over $2 billion in net deposits and 125,000 funded customers. A 40% direct deposit attach rate indicates customers are using it as a primary bank account. Gold credit cards surpassed 800,000 customers with $15 billion in annualized purchase volume, and demand for the new Platinum Card has exceeded expectations.

Robinhood is leveraging AI in three key areas: driving internal efficiency, providing AI-powered tools to customers, and empowering participation in AI-driven markets. Internally, over 90% of employees use AI tooling, leading to a 50% increase in commits per engineer since early last year. Customer-facing tools like Robinhood Cortex and Cortex Assistant are used by nearly 1 million customers for portfolio analysis and stock research. Robinhood Ventures, with its first fund (RVI) having an IPO in March and a recent investment in OpenAI, aims to democratize access to emerging AI companies, with a second fund (RVII) already building its initial portfolio.

International expansion is gaining momentum, approaching 1 million funded customers. Robinhood plans to launch crypto in Canada around midyear via its WonderFi acquisition and has received in-principle approval from Singapore regulators for brokerage services. Bitstamp continues to gain institutional market share, with growing interest in institutional lending. The company's crypto strategy focuses on applying crypto infrastructure to real-world assets through tokenization, with a major crypto event planned for early July in the UK to showcase these initiatives.

Robinhood remains disciplined on costs, with Q1 adjusted OpEx and SBC significantly lower than outlook, even with $14 million in costs for Rothera and Trump Accounts. The company repurchased over $300 million of shares in Q1 and refreshed its share repurchase authorization to $1.5 billion. Management is increasing its focus on top-of-funnel customer growth, both domestically and internationally, while continuing to prioritize strong annualized net deposit growth. The long-term financial North Star is to maximize earnings per share and free cash flow per share.

Vlad Tenev expressed enthusiasm for FINRA's proposed elimination of the Pattern Day Trader (PDT) rule, which currently restricts day trading for accounts under $25,000. He views the rule as vestigial and outdated, disproportionately affecting Robinhood due to its large base of new customers. The company is ready to implement new logic following the rule change, seeing it as a positive step towards modernizing and democratizing trading, and aligning with Robinhood's mission to remove barriers for retail investors.