Robinhood Reports Fourth Quarter And Full Year 2023 Results

2023 Record Revenues of $1.9 billion, up 37% year-over-year, including $471 million in Q4

Net positive transfers from every major brokerage competitor fuels strong Net Deposits
of $4.6 billion in Q4

Q4 GAAP net income of $30 million, or $0.03 per share, and Adjusted EBITDA of $133 million

Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today announced financial results for the fourth quarter and full year 2023, which ended December 31, 2023.

“2023 was a strong year as our product velocity continued to accelerate, our trading market share increased, and we started to expand globally,” said Vlad Tenev, CEO and Co-Founder of Robinhood. “And we're off to an even better start in 2024, as we've already brought in more Funded Customers and Net Deposits through the first half of Q1 than we did in all of Q4 2023.”

“We delivered significant profitable growth in 2023,” said Jason Warnick, Chief Financial Officer of Robinhood. “We drove record full-year revenues and substantially higher margins, and in Q4 we had positive GAAP net income. In 2024, we aim to continue delivering profitable growth as we work to maximize earnings per share over time to drive long-term shareholder value.”

Fourth Quarter Results:

Total net revenues increased 24% year-over-year to $471 million, due to higher net interest, transaction-based, and other revenues.
- Net interest revenues increased 41% year-over-year to $236 million, driven by growth in interest-earning assets and higher short term interest rates.
- Transaction-based revenues increased 8% year-over-year to $200 million, primarily driven by cryptocurrencies revenue of $43 million, up 10%, equities revenue of $25 million, up 19%, partially offset by options revenue of $121 million, down 2%.
- Other revenues increased 30% year-over-year to $35 million, primarily driven by higher revenues from Gold subscriptions and Sherwood Media.
Net income increased year-over-year to $30 million, or earnings per share (EPS) of $0.03, compared with a net loss of $166 million, or EPS of -$0.19, in Q4 2022.
Total operating expenses decreased 17% year-over-year to $445 million.
- Adjusted Operating Expenses(non-GAAP) increased 14% year-over-year to $364 million.
- Share-based compensation (SBC) decreased 49% year-over-year to $81 million.
Adjusted EBITDA (non-GAAP) increased 62% year-over-year to $133 million.
Funded Customers (previously Net Cumulative Funded Accounts, please see "Key Performance Metrics" below for more information) increased by 420 thousand year-over-year to 23.4 million.
Assets Under Custody (AUC) increased 65% year-over-year to $102.6 billion, primarily driven by continued Net Deposits and higher equity valuations.
Net Deposits were $4.6 billion, which translates to an annualized growth rate of 21% relative to AUC at the end of Q3 2023. Over the past twelve months, Net Deposits were $17.1 billion, which translates to a growth rate of 27% relative to AUC at the end of Q4 2022.
Gold subscribers increased 25% year-over-year to 1.42 million.
Average Revenue Per User (ARPU) increased by 23% year-over-year to $81.
Cash and cash equivalents totaled $4.8 billion compared with $6.3 billion at the end of Q4 2022. The decrease was primarily driven by the purchase of 55 million Robinhood shares, movement of some corporate cash into investments, and the acquisition of X1 Inc. (now "Robinhood Credit").
Monthly Active Users (MAU) decreased 4% year-over-year to 10.9 million.

Full Year Results:

Total net revenues increased 37% year-over-year to $1.87 billion.
Net loss improved $487 million year-over-year to $541 million, or EPS of -$0.61 per share, compared with a net loss of $1.03 billion, or EPS of -$1.17, in 2022.
- 2023 includes $589 million in expenses, or -$0.66 EPS impact, from the combination of the $485 million 2021 Founders Award Cancellation and a $104 million regulatory accrual recorded in Q3 2023.
Total o perating expenses increased 1% year-over-year to $2.40 billion.
- Adjusted Operating Expenses (non-GAAP) decreased 7% year-over-year to $1.43 billion.
- SBC increased 33% year-over-year to $871 million. SBC excluding the 2021 Founders Award Cancellation decreased 41% year-over-year to $386 million.
Adjusted EBITDA (non-GAAP) increased $630 million year-over-year to positive $536 million, compared to negative $94 million in 2022.

Highlights

Accelerated product velocity as Robinhood continues to aggressively invest for the future

1% bonus drives $3 billion in asset transfers in - Customers increased their investment potential, taking advantage of Robinhood's three month 1% bonus promotion, by transferring over $3 billion of assets from brokerage competitors with an average transfer of over $100 thousand.
The most for retirement with Robinhood Gold - Through April 30, Robinhood is offering customers subscribed to Robinhood Gold up to 3% extra on every dollar contributed to their Robinhood Retirement accounts, including IRA transfers and 401(k) rollovers.
Robinhood Gold subscribers continue to grow - Robinhood Gold grew to $1.42 million subscribers as of December 31, 2023 (up 25% year-over-year) and increased their FDIC-insured cash sweep balances to over $15 billion (up over 200% year-over-year) with an average of more than $10 thousand per subscriber.
11 Spot Bitcoin ETFs added on first day available - On January 11, 2024, Robinhood added 11 spot Bitcoin ETFs on the 1st day available following their approval by the SEC.
Global expansion kicks off in UK and EU - Building on early progress following the UK brokerage waitlist launch and the EU crypto launch, Robinhood plans to explore opportunities to continue growing its customer base outside the US.
Building features for active traders - Further expanding offerings for active traders, the Company will move forward on creating a pro trader web experience and plans to introduce futures and index options.

Webcast and Conference Call Information

Robinhood will host a conference call to discuss its results at 2 p.m. PT / 5 p.m. ET today, February 13, 2024. 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

Our 2024 expense plan includes growth investments in new products, features, and international expansion while also getting more efficient in our existing businesses. Taken together, we expect both GAAP total operating expenses and Non-GAAP combined Adjusted Operating Expenses and SBC for full-year 2024 to be in the range of $1.85 billion to $1.95 billion.

Actual results might differ materially from our outlook due to several factors, including the rate of growth in Funded Customers and our effectiveness to cross-sell products which affects variable marketing costs, the degree to which we are successful in managing credit losses and preventing fraud, and our ability to manage web-hosting expenses efficiently, among other factors. The above expense outlook does not include potential significant regulatory matters or other significant expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that may arise or accruals or expenses we may determine in the future are required, as we are unable to accurately predict the size or timing of such matters or accruals at this time. See “Non-GAAP Financial Measures” for more information on Adjusted Operating Expenses and SBC, including significant items that we believe are not indicative of our ongoing expenses that would be adjusted out of total operating expenses (GAAP) to get to Adjusted Operating Expenses and SBC (non-GAAP) should they occur.