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Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today announced financial results for the third quarter of 2023, which ended September 30, 2023.
Third Quarter Results:
- Total net revenues increased 29% year-over-year to $467 million, primarily due to higher net interest and other revenues, partially offset by lower transaction-based revenues.
- Net interest revenues increased 96% year-over-year to $251 million, driven by growth in interest earning assets and higher short term interest rates.
- Transaction-based revenues decreased 11% year-over-year to $185 million.
- Options was unchanged at $124 million.
- Equities decreased 13% to $27 million.
- Cryptocurrencies decreased 55% to $23 million.
- Net loss was $85 million, or earnings per share (EPS) of -$0.09, compared with a net loss of $175 million, or EPS of -$0.20, in Q3 2022.
- Q3 2023 EPS of -$0.09 included -$0.11 per share impact from a regulatory accrual of $104 million.
- Operating expenses decreas ed 1% year-over-year to $540 million.
- Adjusted Operating Expenses(non-GAAP, previously Operating expenses prior to SBC) increased 5% year-over-year to $353 million.
- Share-based compensation (SBC) decreased by 25% year-over-year to $83 million.
- Adjusted EBITDA (non-GAAP) increased 191% year-over-year to $137 million.
- Net Cumulative Funded Accounts increased by 360 thousand year-over-year to 23.3 million.
- Assets Under Custody (AUC) increased 34% year-over-year to $87 billion, primarily driven by continued Net Deposits and higher equity valuations.
- Net Deposits were $4.0 billion, which translates to an annualized growth rate of 18% relative to AUC at the end of Q2 2023. Over the past twelve months, Net Deposits were $17.3 billion, which translates to a growth rate of 27% relative to AUC at the end of Q3 2022.
- Average Revenue Per User (ARPU) increased by 27% year-over-year to $80.
- Cash and cash equivalents totaled $4.9 billion compared with $6.2 billion at the end of Q3 2022.
- The year-over-year decrease was primarily driven by share purchases, movement of some corporate cash into investments, and the acquisition of X1 Inc. (now "Robinhood Credit").
- Monthly Active Users (MAU) decreased 16% year-over-year to 10.3 million.
“It's been nearly 10 years since we founded Robinhood and we're just getting started. Over the past year, we’ve put a lot more value in products like Robinhood Gold including a 4.9% annual yield on cash and a 3% match on IRA contributions,” said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. “Looking ahead, we remain focused on providing industry-leading products that serve far more of customers’ financial needs, gaining market share, expanding internationally, and continuing to change the industry for the better.”
“With growing market share of retail trading and increased customer adoption across Robinhood Retirement, Instant Withdrawals, Securities Lending and Robinhood Gold, we're excited to see momentum building,” said Jason Warnick, Chief Financial Officer of Robinhood Markets. “As we continue to grow revenues and stay lean on expenses, we're focused on delivering strong operating leverage over time to drive shareholder value.”
Highlights
Robinhood’s industry-leading offerings fuel product adoption
- Robinhood Retirement continues to grow ahead of IRA season with nearly 400 thousand accounts and assets over $1 billion less than one year after launch.
- Customers are taking advantage of broadening Robinhood Gold offerings. Subscriptions grew to more than 1.3 million in the quarter, with 100 thousand added in Q3 alone.
- We have more than doubled the stocks and ETFs available in extended hours trading via Robinhood 24 Hour Market, now up to 95.
- In September, we introduced our Crypto Pricing Dashboard, showing that customers get the most crypto for their dollar at Robinhood. Check it out at: https://robinhood.com/us/en/about/crypto/.
Robinhood looks to the future as it explores and expands growth opportunities
- With an experienced team in place, we will soon launch brokerage operations in the UK.
- As another step in global expansion, we are also planning to launch crypto trading in the EU following our UK launch.
- We are continuing work to build futures trading, aiming to bring the intuitive mobile experience that customers know from Robinhood to the industry.
Robinhood purchased 55.3 million shares of its Class A common stock
- This return of capital helped drive shareholder value by reducing the company's share count by nearly 7 percent in the third quarter.
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, November 7, 2023. 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
Based on our Q3 2023 results, our expense outlook for 2023 has changed from our prior outlook at Q2 2023 earnings (August 2, 2023). We now expect:
- GAAP total operating expenses for full-year 2023 to be in the range of $2.399 billion to $2.439 billion (including a $104 million regulatory accrual in Q3 2023), updated from our prior outlook of $2.330 billion to $2.410 billion.
- Adjusted Operating Expenses for full-year 2023 to be in the range of $1.435 billion to $1.455 billion, an improvement of $5 million from the midpoint from our prior outlook (previously operating expenses prior to SBC) of $1.430 billion to $1.470 billion.
- SBC for full-year 2023 (including the 2021 Founders Award Cancellation of $485 million in Q1 2023) to be in the range of $860 million to $880 million, an improvement of $50 million at the midpoint of the range from our prior outlook of $900 million to $940 million.
Actual results might differ materially from our outlook due to several factors, including the rate of growth in net new funded accounts which affects several costs including variable marketing costs, the degree to which we are successful in preventing fraud, our ability to manage web-hosting expenses efficiently, and our ability to achieve productivity improvements in customer service, among other factors. The above expense outlook does not include potential significant regulatory matters that may arise or accruals we may determine in the future are required, as we are unable to accurately predict the size or timing of such matters or accruals. See “Non-GAAP Financial Measures” for more information on Adjusted Operating Expenses.
