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    HOOD
    Earnings call· Dec 2024(Q4 FY24)

    Robinhood Markets, Inc. HOOD

    Feb 12, 2025 Source

    Executive summary

    Robinhood Q4 FY24 — Record Revenue and Strong Product Velocity

    Robinhood delivered a record-setting quarter and year, driven by significant product velocity and strong customer adoption across its offerings, particularly Robinhood Gold and new trading platforms. The company is focused on expanding wallet share for the next generation and building a global financial ecosystem, with strategic investments in new products and international markets while maintaining disciplined expense management.

    Highlights

    5

    • Record revenue of over $1 billion in Q4 FY24, and over $3 billion for the full year, up 58% YoY.

    • Adjusted EBITDA up over 160% to $1.4 billion for FY24, with adjusted EBITDA margin growing to 48%.

    • Robinhood Gold subscribers reached a record 2.6 million, up 80% YoY, and are closing in on 3 million, driving annual Gold subscription revenue above $170 million.

    • Net deposits of over $50 billion in FY24, representing nearly 50% growth.

    • Diluted share count anticipated to be roughly flat in 2025 due to share buyback program and other actions.

    Concerns

    1

    • Provisions for credit losses expected to gradually increase over time from current zone of about $20 million per quarter.

    Guidance & targets

    7
    CategoryTargetConfidence
    Revenue growth
    double-digit growth
    high materiality
    High
    Adjusted Operating Expenses and Share-Based Compensation
    $2.0 billion to $2.1 billion
    high materiality
    High
    Long-term effective tax rate
    mid-20% zone
    medium materiality
    High
    Provisions for credit losses
    gradually increase over time
    medium materiality
    Medium
    Share buyback program timeline
    2- to 3-year total timeline
    medium materiality
    High
    Diluted share count
    roughly flat
    high materiality
    High
    Marketing spend increase
    another $100 million or so
    medium materiality
    High

    Operational metrics

    26
    Total revenue
    $1 billionmore than doubled year-over-year
    Q4 FY24

    First time exceeding $1 billion in company history.

    Total revenue
    $3 billionup 58% from 2023
    FY24

    Almost 2x from 2 years ago.

    Adjusted EBITDA
    $1.4 billionup over 160%
    FY24

    Adjusted EBITDA margin grew to 48%.

    Adjusted EBITDA margin
    48%
    FY24

    Over 80% of top line growth dropping to the bottom line.

    Earnings per share
    $1.56
    FY24

    First full year of positive net income.

    Market share
    30%year-over-year
    FY24
    Net deposits
    $50 billionnearly 50% growth rate multiples of what traditional brokerages are seeing
    FY24
    Gold subscribers
    2.6 million80% growth year-over-year
    FY24

    Now over 10% attach rate of overall customer base.

    Gold subscribers
    closing in on 3 million
    Early 2025

    Continued strength through 2025.

    Gold attach rate
    over 30%
    Q4 FY24
    Annual Gold subscription revenue
    above $170 million
    Annualized, early 2025
    Adjusted Operating Expenses and Share-Based Compensation
    $1.94 billionup 7% year-over-year
    FY24

    Within original outlook.

    Share-based compensation as % of revenue
    in the zone of 10%down from higher levels
    FY24

    Goal to manage even lower over time.

    Provisions for credit losses
    about $20 million
    Past couple of quarters

    Expected to gradually increase over time.

    Share buyback program progress
    more than 1/4
    Q4 FY24

    On track for a 2- to 3-year total timeline.

    Net deposits
    second highest month ever
    January 2025

    Strong momentum to start the year.

    Trading volumes growth
    double to triple digit growth ratesfrom 1 year ago
    January 2025

    January option volumes were all-time high.

    Margin balances
    $8 billiondoubling in the 8 months since we moved to industry-leading pricing
    January 2025
    Legend annualized trading revenue
    $50 million
    Annualized, early 2025

    Launched about 2 months ago, showing nice incrementality and strong week-over-week growth.

    Index options annualized trading revenue
    $15 million
    Annualized, early 2025

    Showing nice incrementality and strong week-over-week growth.

    Robinhood Gold Card holders
    a little over 100,000
    Early 2025

    Working to roughly double that number in the next few months, on the way to growing multiples of that level this year.

    Crypto take rate
    up 9 bpsvs last quarter
    Q4 FY24 vs Q3 FY24

    Experimenting with pricing to balance value proposition and shareholder returns. January take rates in line with Q4.

    Crypto tokens added
    7
    Post-election

    Expect to continue and accelerate with more regulatory clarity.

    Bitstamp global reach
    50-plus
    Current

    Expected to accelerate this year.

    Prediction market contracts traded
    over 0.5 billion
    Leading up to election

    For the presidential election market.

    Number of business areas with >$100M revenue
    9
    Current

    Demonstrates diversification.

    Product announcements

    6
    ProductTypeDetails
    Robinhood Gold Cardlaunch
    Robinhood Legendlaunch
    Robinhood Derivatives (Futures outrights and Event contracts)launch
    Robinhood Gold Advisoryroadmap
    Robinhood Walletupdate
    Smart Exchange Routinglaunch

    Deals & partnerships

    3
    BitstampAcquisition of crypto exchange

    Integration will accelerate this year. Robinhood is uniquely positioned at the intersection of traditional finance and DeFi.

    TradePMRAcquisition to expand into RIA custody market

    Aims to be a 'multigenerational platform' by serving both younger and older customers with comprehensive needs.

    a few other great companiesPartnership for USDG stablecoin

    Robinhood is using stablecoin to power weekend settlements and increasingly for internal business operations, expecting institutional adoption tailwinds.

    Risks & headwinds

    4
    Lack of comprehensive regulatory clarity for crypto asset securities and staking.Ongoing

    Not quantified, but impacts ability to list more tokens and offer services like staking.

    Mitigation: Actively pushing for regulatory clarity industry-wide, especially for tokenization of real-world assets under securities regime; leveraging improved administration support for crypto innovation.

    Balancing speed of Gold Card rollout with prudent management of spending and borrowing activity.Short-term to long-term

    Currently over 100,000 cardholders, aiming to double in next few months, then multiples of that.

    Mitigation: Being cautious in the short term to be ambitious in the long term; increasing rollout speed while maintaining prudence.

    Competitive landscape for becoming the primary financial home for customers, with other companies also pursuing wallet share.Long-term

    Not quantified.

    Mitigation: Continuous innovation, investment in technology, picking the right products, leveraging AI and crypto technology as differentiators.

    Gradual increase in provisions for credit losses.Over time

    Currently in the zone of about $20 million per quarter, expected to increase.

    Mitigation: Careful balancing of customer onboarding speed and underwriting risk management.

    What to watch in Q1 FY25

    5

    Robinhood Gold Card holders

    next few months
    Currenta little over 100,000
    Targetroughly double that number

    Why it matters

    Indicates progress in expanding wallet share and adoption of a key lending product.

    So today, we have a little over 100,000 cardholders. We're working to roughly double that number in the next few months⏳, and that's going to be on the way to growing that multiples of the 100,000 level this year.

    Q&A highlights

    6

    What challenges does Robinhood face in expanding wallet share and how will they overcome them, especially with retirement and credit card success?

    Vlad highlighted the competitive landscape and the need to continuously innovate, invest in technology, and pick the right products. He emphasized leveraging AI and crypto technology as key differentiators and accelerating product development to capture the $84+ trillion in assets flowing to younger generations.

    “this opportunity isn't one that we're alone in wanting to pursue. I think that everyone wants to be the home for their customers' financial needs.”

    asked by Michael Cyprys · answered by Vladimir Tenev

    2 min read6 chapters

    Detailed Narrative

    01

    Product Velocity and Innovation

    Robinhood demonstrated significant product velocity in 2024, launching the Robinhood Gold Card, Robinhood Legend desktop platform for active traders, and Robinhood Derivatives (futures outrights and event contracts). These innovations contributed to record revenues and market share gains in equities and options, with Legend reaching a $50 million annualized revenue run rate and index options $15 million within months of launch.

    02

    Gold Program Expansion

    The Robinhood Gold program saw substantial growth, reaching 2.6 million subscribers (up 80% YoY) and now closing in on 3 million, driving over $170 million in annual subscription revenue. The attach rate for new funded accounts in Q4 exceeded 30%, indicating strong early adoption. The company plans to launch new Gold products, including advisory services, at an upcoming event in March.

    03

    Strategic Focus on Wallet Share and Global Ecosystem

    Robinhood aims to be the #1 in wallet share for the next generation and ultimately the #1 global financial ecosystem. This involves expanding lending products like margin (which has doubled since revamping rates) and the Gold Card (targeting multiples of 100,000 cardholders), as well as accelerating international expansion and crypto offerings.

    04

    Crypto Strategy and Regulatory Clarity

    The company is actively expanding its crypto offerings, adding 7 new assets since the election and investing in the non-custodial Robinhood Wallet. With the Bitstamp acquisition, Robinhood aims to access the institutional exchange market and leverage Bitstamp's global reach in 50+ countries. Management emphasized the need for regulatory clarity, particularly for crypto asset securities and staking, to further tokenization of real-world assets.

    05

    Disciplined Expense Management and Operating Leverage

    Despite significant revenue growth (58% YoY for FY24), adjusted OpEx and SBC grew only 7% YoY to $1.94 billion, demonstrating strong operating leverage with over 80% of top-line growth dropping to the bottom line. The company achieved its goal of bringing share-based compensation as a percentage of revenue into the 10% zone in 2024 and aims to manage it even lower.

    06

    Natural Hedge and Diversification

    Robinhood's business model exhibits a natural hedge where declining interest rates tend to boost trading volumes, while higher rates support net interest income. The company has diversified its revenue streams, with 9 business areas now generating over $100 million in revenue, positioning it to thrive across various macro environments.

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