Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2022 | Jul. 27, 2022 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-40691 | |
Entity Registrant Name | Robinhood Markets, Inc. | |
Entity Incorporation, State | DE | |
Entity Tax Identification Number | 46-4364776 | |
Entity Address, Street | 85 Willow Rd | |
Entity Address, City | Menlo Park | |
Entity Address, State | CA | |
Entity Address, Postal Zip Code | 94025 | |
City Area Code | 844 | |
Local Phone Number | 428-5411 | |
Title of each class | Class A Common Stock$0.0001 par value per share | |
Trading Symbol(s) | HOOD | |
Name of each exchange on which registered | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001783879 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Common Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 752,379,137 | |
Common Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 127,955,246 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 5,962 | $ 6,253 |
Cash, cash equivalents, and securities segregated under federal and other regulations | 3,420 | 3,992 |
Receivables from brokers, dealers, and clearing organizations | 89 | 88 |
Receivables from users, net | 4,146 | 6,639 |
Deposits with clearing organizations | 289 | 328 |
Asset related to user cryptocurrencies safeguarding obligation | 8,593 | 0 |
User-held fractional shares | 1,297 | 1,834 |
Investments | 46 | 27 |
Prepaid expenses | 88 | 92 |
Other current assets | 115 | 30 |
Total current assets | 24,045 | 19,283 |
Property, software, and equipment, net | 170 | 146 |
Goodwill | 100 | 101 |
Intangible assets, net | 30 | 34 |
Restricted cash | 22 | 24 |
Operating lease right-of-use-assets | 128 | 129 |
Non-current prepaid expenses | 37 | 44 |
Other non-current assets | 16 | 8 |
Total assets | 24,548 | 19,769 |
Current liabilities: | ||
Accounts payable and accrued expenses | 243 | 252 |
Payables to users | 5,795 | 6,476 |
Securities loaned | 1,366.6 | 3,651 |
User cryptocurrencies safeguarding obligation | 8,593 | 0 |
Fractional shares repurchase obligation | 1,297 | 1,834 |
Operating lease liabilities | 22 | 22 |
Other current liabilities | 82 | 112 |
Total current liabilities | 17,399 | 12,347 |
Operating lease liabilities, non-current | 132 | 129 |
Total liabilities | 17,531 | 12,476 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity: | ||
Additional paid-in capital | 11,581 | 11,169 |
Accumulated other comprehensive income | 0 | 1 |
Accumulated deficit | (4,564) | (3,877) |
Total stockholders’ equity | 7,017 | 7,293 |
Total liabilities and stockholders’ equity | 24,548 | 19,769 |
Common Class A | ||
Stockholders’ equity: | ||
Common stock, value | 0 | 0 |
Common Class B | ||
Stockholders’ equity: | ||
Common stock, value | 0 | 0 |
Common Class C | ||
Stockholders’ equity: | ||
Common stock, value | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
Common Class A | ||
Common stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 21,000,000,000 | 21,000,000,000 |
Common stock, shares issued (in shares) | 750,301,918 | 735,957,367 |
Common stock, shares outstanding (in shares) | 750,301,918 | 735,957,367 |
Common Class B | ||
Common stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 700,000,000 | 700,000,000 |
Common stock, shares issued (in shares) | 127,955,246 | 127,955,246 |
Common stock, shares outstanding (in shares) | 127,955,246 | 127,955,246 |
Common Class C | ||
Common stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 7,000,000,000 | 7,000,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues: | ||||
Net interest revenues | $ 74 | $ 68 | $ 129 | $ 130 |
Total net revenues | 318 | 565 | 617 | 1,087 |
Operating expenses: | ||||
Brokerage and transaction | 30 | 38 | 61 | 79 |
Technology and development | 244 | 156 | 510 | 273 |
Operations | 86 | 101 | 177 | 168 |
Marketing | 24 | 94 | 58 | 196 |
General and administrative | 226 | 112 | 494 | 249 |
Total operating expenses | 610 | 501 | 1,300 | 965 |
Change in fair value of convertible notes and warrant liability | 0 | 528 | 0 | 2,020 |
Other income (expense), net | 2 | 0 | 2 | (1) |
Loss before income taxes | (294) | (464) | (685) | (1,897) |
Provision for income taxes | 1 | 38 | 2 | 50 |
Net loss | (295) | (502) | (687) | (1,947) |
Net loss attributable to common stockholders: | ||||
Basic | (295) | (502) | (687) | (1,947) |
Diluted | $ (295) | $ (502) | $ (687) | $ (1,947) |
Net loss per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ (0.34) | $ (2.16) | $ (0.79) | $ (8.41) |
Diluted (in dollars per share) | $ (0.34) | $ (2.16) | $ (0.79) | $ (8.41) |
Weighted-average shares used to compute net loss per share attributable to common stockholders: | ||||
Basic (in shares) | 874,873,301 | 232,223,019 | 871,343,295 | 231,459,227 |
Diluted (in shares) | 874,873,301 | 232,223,019 | 871,343,295 | 231,459,227 |
Transaction-based revenues | ||||
Revenues: | ||||
Revenues | $ 202 | $ 451 | $ 420 | $ 871 |
Other revenues | ||||
Revenues: | ||||
Revenues | $ 42 | $ 46 | $ 68 | $ 86 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (295) | $ (502) | $ (687) | $ (1,947) |
Other comprehensive loss, net of tax: | ||||
Foreign currency translation | 0 | 0 | (1) | 0 |
Total other comprehensive loss, net of tax | 0 | 0 | (1) | 0 |
Total comprehensive loss | $ (295) | $ (502) | $ (688) | $ (1,947) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Operating activities: | ||
Net loss | $ (687) | $ (1,947) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 29 | 9 |
Provision for credit losses | 19 | 37 |
Share-based compensation | 384 | 10 |
Change in fair value of convertible notes and warrant liability | 0 | 2,020 |
Changes in operating assets and liabilities: | ||
Segregated securities under federal and other regulations | (20) | (215) |
Receivables from brokers, dealers, and clearing organizations | (1) | (85) |
Receivables from users, net | 2,473 | (2,104) |
Deposits with clearing organizations | 39 | (47) |
Operating lease right-of-use assets | 1 | (26) |
Current and non-current prepaid expenses | 11 | (35) |
Other current and non-current assets | (76) | 761 |
Accounts payable and accrued expenses | (7) | 182 |
Payables to users | (680) | 1,871 |
Securities loaned | (2,284) | 722 |
Current and non-current operating lease liabilities | 3 | 33 |
Other current and non-current liabilities | (30) | (787) |
Net cash provided by (used in) operating activities | (826) | 399 |
Investing activities: | ||
Purchase of property, software, and equipment | (19) | (22) |
Capitalization of internally developed software | (14) | (6) |
Purchase of investments | (27) | 0 |
Sales of investments | 5 | 0 |
Other | (5) | 0 |
Net cash used in investing activities | (60) | (28) |
Financing activities: | ||
Proceeds from issuance of common stock under the Employee Stock Purchase Plan | 13 | 0 |
Taxes paid related to net share settlement of equity awards | (7) | 0 |
Proceeds from issuance of convertible notes and warrants | 0 | 3,552 |
Payments of debt issuance costs | (10) | 0 |
Draws on credit facilities | 11 | 1,348 |
Repayments on credit facilities | (11) | (1,348) |
Proceeds from exercise of stock options, net of repurchases | 5 | 7 |
Net cash provided by financing activities | 1 | 3,559 |
Net increase (decrease) in cash, cash equivalents, segregated cash and restricted cash | (885) | 3,930 |
Cash, cash equivalents, segregated cash and restricted cash, beginning of the period | 10,270 | 6,190 |
Cash, cash equivalents, segregated cash and restricted cash, end of the period | 9,385 | 10,120 |
Cash and cash equivalents, end of the period | 5,962 | 5,078 |
Segregated cash, end of the period | 3,400 | 5,025 |
Restricted cash (current and non-current), end of the period | 23 | 17 |
Cash, cash equivalents, segregated cash and restricted cash, end of the period | 9,385 | 10,120 |
Supplemental disclosures: | ||
Cash paid for interest | 6 | 3 |
Cash paid for income taxes, net of refund received | 3 | 3 |
Non-cash operating activities: | ||
Asset related to user cryptocurrencies safeguarding obligation | 8,593 | 0 |
Total user cryptocurrencies safeguarding obligation and corresponding asset | $ 8,593 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY - USD ($) $ in Millions | Total | Common stock | Additional paid-in capital | Accumulated other comprehensive income | Accumulated deficit | Redeemable convertible preferred stock | ||
Balance at beginning of period, Redeemable convertible preferred stock (in shares) at Dec. 31, 2020 | 412,742,897 | |||||||
Balance at beginning of period, Redeemable convertible preferred stock at Dec. 31, 2020 | $ 2,180 | |||||||
Balance at end of period, Redeemable convertible preferred stock (in shares) at Jun. 30, 2021 | 412,742,897 | |||||||
Balance at end of period, Redeemable convertible preferred stock at Jun. 30, 2021 | $ 2,180 | |||||||
Balance at beginning of period, Common stock (in shares) at Dec. 31, 2020 | 229,031,546 | |||||||
Balance at beginning of period at Dec. 31, 2020 | $ (55) | $ 0 | $ 134 | $ 1 | $ (190) | |||
Increase (decrease) in stockholder's equity | ||||||||
Net loss | (1,947) | (1,947) | ||||||
Shares issued in connection with stock option exercise, net of repurchases (in shares) | 3,578,411 | |||||||
Shares issued in connection with stock option exercise, net of repurchases | 7 | 7 | ||||||
Change in other comprehensive income | 0 | |||||||
Share-based compensation | 10 | 10 | ||||||
Balance at end of period, Common stock (in shares) at Jun. 30, 2021 | 232,609,957 | |||||||
Balance at end of period at Jun. 30, 2021 | (1,985) | $ 0 | 151 | 1 | (2,137) | |||
Balance at beginning of period, Redeemable convertible preferred stock (in shares) at Mar. 31, 2021 | 412,742,897 | |||||||
Balance at beginning of period, Redeemable convertible preferred stock at Mar. 31, 2021 | $ 2,180 | |||||||
Balance at end of period, Redeemable convertible preferred stock (in shares) at Jun. 30, 2021 | 412,742,897 | |||||||
Balance at end of period, Redeemable convertible preferred stock at Jun. 30, 2021 | $ 2,180 | |||||||
Balance at beginning of period, Common stock (in shares) at Mar. 31, 2021 | 232,257,374 | |||||||
Balance at beginning of period at Mar. 31, 2021 | (1,485) | $ 0 | 149 | 1 | (1,635) | |||
Increase (decrease) in stockholder's equity | ||||||||
Net loss | (502) | (502) | ||||||
Shares issued in connection with stock option exercise, net of repurchases (in shares) | 352,583 | |||||||
Shares issued in connection with stock option exercise, net of repurchases | 1 | 1 | ||||||
Change in other comprehensive income | 0 | |||||||
Share-based compensation | 1 | 1 | ||||||
Balance at end of period, Common stock (in shares) at Jun. 30, 2021 | 232,609,957 | |||||||
Balance at end of period at Jun. 30, 2021 | (1,985) | $ 0 | 151 | 1 | (2,137) | |||
Balance at beginning of period, Redeemable convertible preferred stock (in shares) at Dec. 31, 2021 | 0 | |||||||
Balance at beginning of period, Redeemable convertible preferred stock at Dec. 31, 2021 | $ 0 | |||||||
Balance at end of period, Redeemable convertible preferred stock (in shares) at Jun. 30, 2022 | 0 | |||||||
Balance at end of period, Redeemable convertible preferred stock at Jun. 30, 2022 | $ 0 | |||||||
Balance at beginning of period, Common stock (in shares) at Dec. 31, 2021 | [1] | 863,912,613 | ||||||
Balance at beginning of period at Dec. 31, 2021 | 7,293 | $ 0 | [1] | 11,169 | 1 | (3,877) | ||
Increase (decrease) in stockholder's equity | ||||||||
Net loss | (687) | (687) | ||||||
Shares issued in connection with stock option exercise, net of repurchases (in shares) | [1] | 1,862,954 | ||||||
Shares issued in connection with stock option exercise, net of repurchases | 5 | 5 | ||||||
Issuance of common stock upon settlement of RSUs (in shares) | [1] | 11,437,202 | ||||||
Shares withheld related to net share settlement (in shares) | [1] | (485,332) | ||||||
Shares withheld related to net share settlement | (7) | (7) | ||||||
Change in other comprehensive income | (1) | (1) | ||||||
Share-based compensation | 401 | 401 | ||||||
Balance at end of period, Common stock (in shares) at Jun. 30, 2022 | [1],[2] | 878,257,164 | ||||||
Balance at end of period at Jun. 30, 2022 | 7,017 | $ 0 | [1],[2] | 11,581 | 0 | (4,564) | ||
Balance at beginning of period, Redeemable convertible preferred stock (in shares) at Mar. 31, 2022 | 0 | |||||||
Balance at beginning of period, Redeemable convertible preferred stock at Mar. 31, 2022 | $ 0 | |||||||
Balance at end of period, Redeemable convertible preferred stock (in shares) at Jun. 30, 2022 | 0 | |||||||
Balance at end of period, Redeemable convertible preferred stock at Jun. 30, 2022 | $ 0 | |||||||
Balance at beginning of period, Common stock (in shares) at Mar. 31, 2022 | [2] | 869,808,009 | ||||||
Balance at beginning of period at Mar. 31, 2022 | 7,131 | $ 0 | [2] | 11,400 | 0 | (4,269) | ||
Increase (decrease) in stockholder's equity | ||||||||
Net loss | (295) | (295) | ||||||
Shares issued in connection with stock option exercise, net of repurchases (in shares) | [2] | 424,596 | ||||||
Shares issued in connection with stock option exercise, net of repurchases | 1 | 1 | ||||||
Shares issued in connection with employee stock plans (in shares) | [2] | 1,529,727 | ||||||
Stock Issued During Period, Value, Employee Stock Purchase Plan | 13 | 13 | ||||||
Issuance of common stock upon settlement of RSUs (in shares) | [2] | 6,764,433 | ||||||
Shares withheld related to net share settlement (in shares) | [2] | (269,601) | ||||||
Shares withheld related to net share settlement | (4) | (4) | ||||||
Change in other comprehensive income | 0 | |||||||
Share-based compensation | 171 | 171 | ||||||
Balance at end of period, Common stock (in shares) at Jun. 30, 2022 | [1],[2] | 878,257,164 | ||||||
Balance at end of period at Jun. 30, 2022 | $ 7,017 | $ 0 | [1],[2] | $ 11,581 | $ 0 | $ (4,564) | ||
[1]The share amounts listed above combine common stock, Class A common stock and Class B common stock. In connection with the completion of our initial public offering, all previously outstanding shares of common stock were reclassified into Class A common stock and Class B common stock. Refer to Note 1 for more information.[2]The share amounts listed above combine common stock, Class A common stock and Class B common stock. In connection with the completion of our initial public offering, all previously outstanding shares of common stock were reclassified into Class A common stock and Class B common stock. Refer to Note 1 of the Annual Report on Form 10-K for the year ended December 31, 2021 for more information. |
DESCRIPTION OF BUSINESS AND SUM
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Robinhood Markets, Inc. (“RHM” and, together with its subsidiaries, “Robinhood,” the “Company,” “we,” or “us”) was incorporated in the State of Delaware on November 22, 2013. Our most significant, wholly-owned subsidiaries are: • Robinhood Financial LLC (“RHF”), a registered introducing broker-dealer; • Robinhood Securities, LLC (“RHS”), a registered clearing broker-dealer; • Robinhood Crypto, LLC (“RHC”), which provides users the ability to buy, sell, and transfer cryptocurrencies; and • Robinhood Money, LLC (“RHY”), which offers a pre-paid debit card (the “Robinhood Cash Card”) and a spending account that help customers invest, save, and earn rewards. Acting as the agent of the user, we facilitate the purchase and sale of options, cryptocurrencies, and equities through our platform by routing transactions through market makers, who are responsible for trade execution. Upon execution of a trade, users are legally required to purchase options, cryptocurrencies, or equities for cash from the transaction counterparty or to sell options, cryptocurrencies, or equities for cash to the transaction counterparty, depending on the transaction. We facilitate and confirm trades only when there are binding, matched legal obligations from the user and the market maker on both sides of the trade. Our users have ownership of the securities they transact on our platform, including those that collateralize margin loans, and, as a result, such securities are not presented on our unaudited condensed consolidated balance sheets, other than user-held fractional shares which are presented gross. Our users also have ownership of the cryptocurrencies they transact on our platform (none of which are allowed to be purchased on margin and which do not serve as collateral for margin loans); however, following our adoption of Staff Accounting Bulletin 121 (“SAB 121”), we recognize a liability to reflect our safeguarding obligation along with a corresponding asset on our balance sheet related to the cryptocurrencies we hold in custody for users (refer to Note 2 for more information on the recent adoption of SAB 121). Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC for interim financial reporting. The condensed consolidated financial statements are unaudited, and in management’s opinion, include all adjustments, including normal recurring adjustments and accruals necessary for a fair presentation of the results for the interim periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2022 or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”). There have been no material changes in our significant accounting policies as described in our consolidated financial statements included in our audited annual consolidated financial statements for the year ended December 31, 2021, other than recently adopted accounting pronouncements as described in Note 2. The unaudited condensed consolidated financial statements include the accounts of RHM and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Certain prior-period amounts have been reclassified to conform to the current period’s presentation. The impact of these reclassifications is immaterial to the presentation of the unaudited condensed consolidated financial statements. Use of Estimates In accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosures, on the unaudited condensed consolidated financial statements. We base our estimates on current and historical experience and other assumptions we believe to be reasonable under the circumstances. Assumptions and estimates used in preparing our unaudited condensed consolidated financial statements include those related to revenue recognition, the determination of allowances for credit losses, the capitalization and estimated useful life of internally developed software, investment valuation, valuation of user cryptocurrencies safeguarding obligation and the corresponding asset, contingent liabilities, useful lives of property and equipment, the incremental borrowing rate used to determine the present value of lease payments, the valuation and recognition of share-based compensation, the valuation of the convertible notes and warrant liability, the valuation and estimated useful lives of acquired intangible assets, uncertain tax positions, accrued liabilities, and the recognition and measurement of current and deferred income tax assets and liabilities. Actual results could differ from these estimates and could have a material adverse effect on our operating results. Concentration of Revenue and Credit Risk Concentrations of Revenue We derived transaction-based revenues from individual market makers in excess of 10% of total revenues, as follows: Three Months Ended Six Months Ended 2021 2022 2021 2022 Market maker: Citadel Securities, LLC 15 % 19 % 21 % 21 % Entities affiliated with Susquehanna International Group, LLP (1) 9 % 9 % 11 % 11 % B2C2 USA Inc. — % 10 % — % 9 % Entity affiliated with Jane Street Group 12 % 7 % 9 % 6 % Tai Mo Shan Limited (2) 29 % 3 % 21 % 5 % All others individually less than 10% 14 % 15 % 18 % 16 % Total as percentage of total revenue: 79 % 63 % 80 % 68 % ________________ (1) Consists of Global Execution Brokers, LP and G1X Execution Services, LLC (2) Member of Jump Trading Group Concentrations of Credit We are engaged in various trading and brokerage activities in which the counterparties primarily include broker-dealers, banks, and other financial institutions. In the event our counterparties do not fulfill their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. Default of a counterparty in equities and options trades, which are facilitated through clearinghouses, would generally be spread among the clearinghouse's members rather than falling entirely on us. It is our policy to review, as necessary, the credit standing of each counterparty. Cryptocurrencies We act as an agent in the cryptocurrency transactions of our users. We have determined we are an agent, for accounting purposes, because we do not control the cryptocurrency before delivery to the user, we are not primarily responsible for the delivery of cryptocurrency to our users, we are not exposed to risks arising from fluctuations of the market price of cryptocurrency before delivery to the user, and we do not set the prices charged to users. After purchasing cryptocurrency on the platform, users are the legal owners of cryptocurrency held under custody by us and users have all the rights and benefits of ownership, including the rights to appreciation and depreciation of the cryptocurrency. We do not allow users to purchase cryptocurrency on margin and cryptocurrency does not serve as collateral for margin loans. We hold cryptocurrency in custody for users in one or more omnibus cryptocurrency wallets; we do not utilize third-party custodians. We hold cryptographic key information and maintain internal record keeping for the cryptocurrencies we hold in custody for users, and we are obligated to secure such assets from loss or theft. Based on the terms of our user agreement and applicable law, we believe the cryptocurrency we hold in custody for users of our platform should be respected as users’ property (and should not be available to satisfy the claims of our general creditors) in the event we were to enter bankruptcy. For additional information relating to platform bankruptcy generally, see Item 2, Part II of this Quarterly Report on Form 10-Q, “Risk Factors—Risks Related to Cryptocurrency Products and Services—Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict. Changes in these laws and regulations, or our failure to comply with them, could negatively impact cryptocurrency trading on our platform.” Securities Borrowing and Lending We operate a securities lending program under which shares that users have pledged to us to collateralize their margin borrowing are lent by us to third parties (“Margin Securities Lending”) and a securities lending program under which we borrow fully-paid shares from participating users and lend them to third parties (“Fully-Paid Securities Lending”). We also occasionally borrow securities from third parties for operational purposes, and we occasionally lend to third parties securities that we hold for our own account (such as our holdings to support fractional share operations). When we lend securities to third parties, the borrower provides cash as collateral. We earn interest revenue on cash collateral deposited by borrowers, and we can also earn additional revenue for lending certain securities based on demand for those securities. For our Fully-Paid Securities Lending, portions of such revenues are paid to participating users, and those payments are recorded as interest expense. As of June 30, 2022, interest revenue earned and interest expenses incurred related to the Fully-Paid Securities Lending program were not material. Our authorization from users to lend shares that collateralize their margin borrowing is found in our margin account agreement, our borrowing of fully-paid shares from users is conducted under the terms of our Fully-Paid Securities Lending program to which users consent when they enroll in that program, and substantially all of our securities lending and borrowing transactions with third parties are conducted under the terms of an industry-standard master securities loan agreement (“MSLA”), which has an open contractual term and may be terminated upon notice by either party. We have also entered into fixed-term securities lending agreements with two financial institution counterparties (the “Fixed-Term Securities Lending Agreements”). One of these agreements has a contractual term of 30 days per lending transaction with a daily minimum commitment of $25 million and another has a contractual term of 21 days per lending transaction with a daily minimum commitment of $35 million. Under these two agreements we lend to the counterparties (for a fixed term) securities that collateralize users’ margin borrowing, and we obtain cash collateral from the counterparties that we use to provide liquidity support for our margin lending to users. Each of the MSLAs and Fixed-Term Securities Lending Agreements establishes a master netting arrangement between the lender and the borrower. A master netting arrangement is an agreement between two counterparties that creates a right of set-off for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. In connection with our securities borrowing and lending activities, however, our policy is to recognize all amounts that are subject to master netting arrangements on a gross basis in our consolidated balance sheets even though some of those amounts may be eligible for offset (i.e., to be presented on a net basis) under GAAP. Refer to Note 8 for more information and the gross presentation in tabular format. Workforce Reduction |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In March 2022, the staff of the SEC issued SAB 121, which provides guidance to entities that have obligations to safeguard crypto-assets held in custody on behalf of their platform users. SAB 121 states that the entity should recognize a liability representing its obligation to safeguard such crypto-assets accompanied by a corresponding asset on its balance sheet representing the platform users’ crypto-assets held in custody measured at fair value initially and at each subsequent reporting period. SAB 121 also states that accompanying disclosures should be considered regarding the entity’s obligation to safeguard crypto-assets for platform users. We adopted SAB 121 as part of the financial statements covering the interim period ended June 30, 2022, with retrospective application as of the beginning of fiscal year 2022. As a result of (and solely by virtue of) our adoption of SAB 121, we recognized an asset captioned “Asset related to user cryptocurrencies safeguarding obligation” and a liability captioned “User cryptocurrencies safeguarding obligation,” each in the amount of $8.6 billion as of June 30, 2022, on our unaudited condensed consolidated balance sheets. We also added disclosures to Note 1 - Description of business and summary of significant accounting policies and Note 6 - Investments and fair value measurement. Recently Issued Accounting Pronouncements Not Yet Adopted In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This guidance requires contract assets and contract liabilities from contracts with customers that are acquired in a business combination to be recognized and measured as if the acquirer had originated the original contract. The guidance is effective for fiscal years beginning after December 15, 2022 on a prospective basis, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new guidance on our financial statements. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 6 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATIONS | NOTE 3: BUSINESS COMBINATIONS Pending Acquisition of Ziglu On April 16, 2022, we entered into a definitive agreement to acquire all outstanding equity of Ziglu Limited (“Ziglu”), a U.K.-based electronic money institution and crypto-asset firm that allows customers to buy and sell eligible cryptocurrencies, earn yield via its ‘Boost’ products, pay using a debit card, and move and spend money without fees. The aggregate consideration to be paid by us is estimated to be approximately $170 million, subject to customary purchase price adjustments set forth in the definitive agreement and payable primarily in cash while the remainder will be paid with a number of shares of our stock to be determined at closing. The transaction is subject to regulatory approval and other customary closing conditions and is expected to close no later than the fourth quarter of 2022. |
REVENUES
REVENUES | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | NOTE 4: REVENUES Disaggregation of Revenues The following table presents our revenue disaggregated by revenue source: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Transaction-based revenues: Options $ 165 $ 113 $ 363 $ 240 Cryptocurrencies 233 58 321 112 Equities 52 29 185 65 Other 1 2 2 3 Total transaction-based revenues 451 202 871 420 Net interest revenues: Margin interest 31 39 59 74 Securities lending 40 23 75 47 Interest on investments and corporate cash 1 10 1 11 Interest on segregated cash and securities 1 6 2 7 Other interest revenue — 2 1 2 Interest expenses related to credit facilities (5) (6) (8) (12) Total net interest revenues 68 74 130 129 Other revenues 46 42 86 68 Total net revenues $ 565 $ 318 $ 1,087 $ 617 Contract Balances Contract receivables are recognized when we have an unconditional right to invoice and receive payment under a contract and are derecognized when cash is received. Transaction-based revenue receivables due from market makers are reported in receivables from brokers, dealers, and clearing organizations while other revenue receivables due from our relationship with a third-party investor communications company are reported in other current assets on the unaudited condensed consolidated balance sheets. Contract liabilities, which consist of unearned subscription revenue, are recognized when users remit cash payments in advance of the time we satisfy our performance obligations and are recorded as other current liabilities on the unaudited condensed consolidated balance sheets. The table below sets forth contract receivables and liabilities for the period indicated: (in millions) Contract Receivables Contract Liabilities Beginning of period, January 1, 2022 $ 83 $ 3 End of period, June 30, 2022 100 4 Changes during the period $ 17 $ 1 |
ALLOWANCE FOR CREDIT LOSSES
ALLOWANCE FOR CREDIT LOSSES | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
ALLOWANCE FOR CREDIT LOSSES | NOTE 5: ALLOWANCE FOR CREDIT LOSSES The following table summarizes the allowance for credit losses, which substantially all relate to unsecured balances of receivables from users due to “Fraudulent Deposit Transactions” and losses on margin lending. Fraudulent Deposit Transactions are fraudulent, unlawful or otherwise inappropriate customer behavior, such as when customers initiate deposits into their accounts, make trades on our platform using a short-term extension of credit from us, and then repatriate or reverse the deposits, resulting in a loss to us of the credited amount. Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Beginning balance $ 31 $ 20 $ 34 $ 40 Provision for credit losses 20 11 37 19 Write-offs (16) (13) (36) (41) Ending balance $ 35 $ 18 $ 35 $ 18 |
INVESTMENTS AND FAIR VALUE MEAS
INVESTMENTS AND FAIR VALUE MEASUREMENT | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
INVESTMENTS AND FAIR VALUE MEASUREMENT | NOTE 6: INVESTMENTS AND FAIR VALUE MEASUREMENT Investments We invest in marketable debt securities which are classified as available-for-sale. We elected the fair value option on our available-for-sale debt securities and carry them at fair value with adjustments to fair value presented in other expense (income), net on our unaudited condensed consolidated statements of operations. Investments on our unaudited condensed consolidated balance sheet consisted of the following: December 31, 2021 (in millions) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Debt securities: Asset-backed securities $ 5 $ — $ — $ 5 Commercial paper 14 — — 14 Corporate bonds 7 — — 7 Government bonds 1 — — 1 Total investments $ 27 $ — $ — $ 27 June 30, 2022 (in millions) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Debt securities: Asset-backed securities $ 8 $ — $ — $ 8 Commercial paper 21 — — 21 Corporate bonds 10 — — 10 Government bonds 7 — — 7 Total investments $ 46 $ — $ — $ 46 All of our debt securities as of December 31, 2021 and June 30, 2022 had a stated contractual maturity or redemption date within one year. Fair Value of Financial Instruments Financial assets and liabilities measured at fair value on a recurring basis were presented on our unaudited condensed consolidated balance sheets as follows: December 31, 2021 (in millions) Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 4,004 $ — $ — $ 4,004 Investments: Asset-backed securities — 5 — 5 Commercial paper — 14 — 14 Corporate bonds — 7 — 7 Government bonds 1 — 1 User-held fractional shares 1,834 — — 1,834 Other current assets: Equity securities - securities owned 14 — — 14 Total financial assets $ 5,853 $ 26 $ — $ 5,879 Liabilities Fractional share repurchase obligations $ 1,834 $ — $ — $ 1,834 Total financial liabilities $ 1,834 $ — $ — $ 1,834 June 30, 2022 (in millions) Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 1,285 $ — $ — $ 1,285 Cash and securities segregated under federal and other regulations: U.S. Treasury securities 20 — — 20 Investments: Asset-backed securities — 8 — 8 Commercial paper — 21 — 21 Corporate bonds — 10 — 10 Government bonds 7 — — 7 Asset related to user cryptocurrencies safeguarding obligation — 8,593 — 8,593 User-held fractional shares 1,297 — — 1,297 Other current assets: Equity securities - securities owned 9 — — 9 Total financial assets $ 2,618 $ 8,632 $ — $ 11,250 Liabilities User cryptocurrencies safeguarding obligation $ — $ 8,593 $ — $ 8,593 Fractional shares repurchase obligations 1,297 — — 1,297 Total financial liabilities $ 1,297 $ 8,593 $ — $ 9,890 During the six months ended June 30, 2022, we did not have any transfers in or out of Level 3 assets or liabilities. Safeguarded user cryptocurrencies Safeguarded user cryptocurrencies were as follows: (in millions) June 30, 2022 Dogecoin (DOGE) $ 2,845 Bitcoin (BTC) 2,722 Ethereum (ETH) 2,173 Other 853 Total user cryptocurrencies safeguarding obligation and corresponding asset $ 8,593 The fair value of the user cryptocurrencies safeguarding obligation and the corresponding asset were determined based on observed market pricing representing the last price executed for trades of each cryptocurrency as of June 30, 2022. Convertible Notes and Warrant Liability In February 2021, we issued two tranches of convertible notes (the “convertible notes”) and granted to each purchaser of the Tranche I convertible notes a warrant to purchase equity securities (the “warrant liability”). We elected the fair value option for both tranches of the convertible notes as we believe it best reflects their underlying economics. Under the fair value option, the convertible notes were initially measured at their issuance date estimated fair value and subsequently remeasured at their estimated fair value at the end of each reporting period. Upon the closing of our IPO, all of our outstanding convertible notes and warrants were reclassified from liability to equity and the fair value was no longer required to be remeasured. For the three and six months ended June 30, 2021, we recorded expense due to changes in fair value of $515 million and $1.9 billion for the convertible notes and $13 million and $129 million for the warrant liability in our unaudited condensed consolidated statements of operations. No such expense related to the convertible notes was attributable to the change in the instrument-specific credit risk. We elected to present the component related to accrued interest in the change in fair value of convertible notes and warrant liability. The significant unobservable inputs used in the fair value measurement of the convertible notes and warrant liability included: June 30, 2021 Convertible notes Warrant liability Fair value of common stock $ 38.00 $ 38.00 Volatility N/A 56 % Risk free rate N/A 1.42 % The following table sets forth a summary of the changes in the estimated fair value of our convertible notes and warrant liability: (in millions) Convertible notes Warrant liability Beginning of period, January 1, 2021 $ — $ — Issued during the period 3,299 253 Change in fair value 1,891 129 End of period, June 30, 2021 $ 5,190 $ 382 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7: INCOME TAXES Three Months Ended Six Months Ended (in millions, except percentages) 2021 2022 2021 2022 Loss before income taxes $ (464) $ (294) $ (1,897) $ (685) Provision for income taxes 38 1 50 2 Effective tax rate (8.2) % (0.3) % (2.6) % (0.3) % Our tax provision for interim periods is determined using an estimated annual effective tax rate (“ETR”), adjusted for discrete items arising in the period. In each quarter, we update our estimated annual ETR and make a year-to-date calculation of the provision. For the three and six months ended June 30, 2021, the ETR was lower than the U.S. federal statutory rate primarily due to the non-deductible change in fair value of the convertible notes and warrant liability, and the change in valuation allowance on our U.S. federal and state deferred tax assets partially offset by our current federal and state taxes payable. For the three and six months ended June 30, 2022, the ETR was lower than the U.S. federal statutory rate primarily due to the full valuation allowance on our U.S. federal and state deferred tax assets offset by our current state taxes payable. The realization of tax benefits of net deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence during the six months ended June 30, 2022, we believe it is more likely than not that the tax benefits of the remaining U.S. net deferred tax assets may not be realized. Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and tax credits before utilization. |
SECURITIES BORROWING AND LENDIN
SECURITIES BORROWING AND LENDING | 6 Months Ended |
Jun. 30, 2022 | |
Offsetting [Abstract] | |
SECURITIES BORROWING AND LENDING | NOTE 8: SECURITIES BORROWING AND LENDING When we lend securities to third parties we receive cash as collateral for the securities loaned. In the table below, the cash collateral we hold related to loaned securities is presented in “securities loaned” and the fair value of securities lent is presented in “security collateral pledged.” Similarly, when we borrow securities from third parties or fully-paid securities from users, we provide cash collateral. In the table below, the amount of that cash collateral is presented in “securities borrowed” and the fair value of the securities received is presented in “security collateral received.” Our securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities borrowing and lending transactions. Therefore, activity related to securities borrowing and lending activities are presented gross in our consolidated balance sheets (refer to Note 1 for more information). The following tables set forth certain balances related to our securities borrowing and lending activities as of December 31, 2021 and June 30, 2022: December 31, June 30, (in millions) 2021 2022 Assets Securities borrowed Gross amount of securities borrowed $ 0.3 $ 65.6 Gross amount offset on the consolidated balance sheets — — Amounts of assets presented on the consolidated balance sheets 0.3 65.6 Gross amount of securities borrowed not offset on the consolidated balance sheets: Securities borrowed 0.3 65.6 Security collateral received (0.3) (63.3) Net amount $ — $ 2.3 Liabilities Securities loaned Gross amount of securities loaned $ 3,651.0 $ 1,366.6 Gross amount of securities loaned offset on the consolidated balance sheets — — Amounts of liabilities presented on the consolidated balance sheets 3,651.0 1,366.6 Gross amount of securities loaned not offset on the consolidated balance sheets: Securities loaned 3,651.0 1,366.6 Security collateral pledged (3,426.8) (1,226.5) Net amount $ 224.2 $ 140.1 As described in Note 1, we obtain securities on terms that permit us to pledge and/or transfer securities to others. As of December 31, 2021 and June 30, 2022, we were permitted to re-pledge securities with a fair value of $9.21 billion and $5.69 billion under margin account agreements with users, and securities with a fair value of $0.3 million and $3.9 million that we had borrowed under MSLAs with third parties. Under the Fully-Paid Securities Lending program, as of June 30, 2022, we were permitted to re-pledge securities with a fair value of $1.1 billion including securities with a fair value of $59.4 million that we had borrowed from users. |
FINANCING ACTIVITIES AND OFF-BA
FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK | NOTE 9: FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK Revolving Credit Facilities In October 2019, we entered into a $200.0 million committed and unsecured revolving line of credit with a syndicate of banks maturing in October 2023 (the “October 2019 Credit Facility”). In October 2020, we amended the October 2019 Credit Facility and, among other things, increased the aggregate committed and unsecured revolving line of credit amount to $600.0 million with a maturity date of October 29, 2024. In April 2021, we further increased the aggregate credit amount available under the October 2019 Credit Facility to $625.0 million. Loans under the October 2019 Credit Facility bear interest, at our option, at a per annum rate of either (a) the Eurodollar Rate plus 1.00% or (b) the Alternative Base Rate. The Eurodollar Rate is equal to the Eurodollar Base Rate, which is derived from London Interbank Offered Rate (“LIBOR”), multiplied by the Statutory Reserve Rate (as defined in the agreement) at the applicable time. The Alternative Base Rate is the greatest of (i) the prime rate then in effect, (ii) the Federal Reserve Bank of New York rate then in effect plus 0.50% and (iii) the Eurodollar Rate at such time for a one month interest period plus 1.00%. If LIBOR is unavailable or if we and the administrative agent elect, the Eurodollar Rate will be replaced by a rate calculated with reference to the Secured Overnight Financing Rate (as defined in the agreement) as set forth in the October 2019 Credit Facility agreement or an alternate benchmark rate selected by us and the administrative agent. There were no outstanding borrowings under the October 2019 Credit Facility at December 31, 2021 and June 30, 2022. We are obligated to pay a commitment fee calculated as a per annum rate equal to 0.10% on any unused amount of the October 2019 Credit Facility quarterly in arrears. In April 2021, we entered into a $2.18 billion committed and secured revolving line of credit, subject to certain borrowing base limitations, with a maturity date of April 15, 2022 (the “April 2021 Credit Facility”). Borrowings from the April 2021 Credit Facility must be specified to be Tranche A, Tranche B, Tranche C or a combination thereof. Tranche A loans are secured by users’ securities purchased on margin and are used primarily to finance margin loans. Tranche B loans are secured by the right to the return from National Securities Clearing Corporation (“NSCC”) of NSCC margin deposits and cash and property in a designated collateral account and used for the purpose of satisfying NSCC deposit requirements. Tranche C loans are secured by the right to the return of eligible funds from any reserve account of the borrower and cash and property in a designated collateral account and used for the purpose of satisfying reserve requirements under Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Interest for this line of credit is determined at the time a loan is initiated and the applicable interest rate is calculated as a per annum rate equal to 1.25% for Tranche A loans and 2.50% for Tranche B and Tranche C loans, plus the Short-Term Funding Rate at the applicable time. The Short-Term Funding Rate is equal to the greatest of (i) the Eurodollar Rate for a one month interest period on such day, which equals to the Eurodollar Base Rate that is derived from LIBOR, multiplied by the Statutory Reserve Rate at the applicable time, (ii) the Federal Funds Effective Rate (as defined in the agreement) and (iii) the Overnight Bank Funding Rate (as defined in the agreement) in effect on such day. There were no outstanding borrowings under the April 2021 Credit Facility at December 31, 2021. We are obligated to pay a commitment fee calculated as a per annum rate equal to 0.50% on any unused amount of the April 2021 Credit Facility quarterly in arrears. In April 2022, we entered into a $2.28 billion committed and secured revolving line of credit (the “April 2022 Credit Facility”) with a maturity date of April 10, 2023, amending and restating the April 2021 Credit Facility. Under circumstances described in the agreement for the April 2022 Credit Facility, the aggregate commitments may be increased by up to $1.14 billion, for a total commitment under the agreement of $3.65 billion. The April 2022 Credit Facility terms are the same as the April 2021 Credit Facility in all material aspects except for the Short-Term Funding Rate is equal to the greatest of (i) Daily Simple SOFR (as defined in the agreement) plus 0.10%, (ii) the Federal Funds Effective Rate (as defined in the agreement) and (iii) the Overnight Bank Funding Rate (as defined in the agreement), in each case, in effect on such day. There were no outstanding borrowings under the April 2022 Credit Facility at June 30, 2022. The October 2019 Credit Facility, April 2021 Credit Facility, and April 2022 Credit Facility contain customary covenants, including limitations with respect to debt, liens, fundamental changes, asset sales, restricted payments, investments and transactions with affiliates, subject to certain exceptions. We were in compliance with all covenants under these facilities as of December 31, 2021 and June 30, 2022, as applicable. Off-Balance Sheet Risk In the normal course of business, we engage in activities involving settlement and financing of securities transactions. User securities transactions are recorded on a settlement date basis, which is two one |
COMMON STOCK AND STOCKHOLDERS'
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY | NOTE 10: COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY Preferred Stock As of June 30, 2022, no terms of the preferred stock have been designated, no shares of preferred stock were outstanding and we have no present plan to issue any shares of preferred stock. Common Stock We have three authorized classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock are entitled to one vote per share on all matters to be voted upon by our stockholders, holders of our Class B common stock are entitled to 10 votes per share on all matters to be voted upon by our stockholders and, except as otherwise required by applicable law, holders of our Class C common stock are not entitled to vote on any matter to be voted upon by our stockholders. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by our Charter or applicable law. The convertible notes issued in February 2021 (see Note 6 for further information) were converted into 137.3 million shares of Class A common stock at a conversion price of $26.60 per share upon completion of our IPO. Warrants As of June 30, 2022, warrants outstanding consisted of warrants to purchase 14.3 million shares of Class A common stock with a strike price of $26.60 per share for a maximum purchase amount of $380 million. The warrants expire on February 12, 2031 and can be exercised in cash or for net shares at the holder’s option. As of June 30, 2022, the warrants have not been exercised and are included as a component of additional paid in capital on the unaudited condensed consolidated balance sheets. Equity Incentive Plans Amended and Restated 2013 Stock Plan and 2020 Equity Incentive Plan Our Amended and Restated 2013 Stock Plan, as amended (the “2013 Plan”), and our 2020 Equity Incentive Plan, as amended (the “2020 Plan”), provided for share-based awards to eligible participants, granted as incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), restricted stock units ("RSUs"), stock appreciation rights (“SARs”) or restricted stock awards (“RSAs”). Our 2013 Plan was terminated in connection with adoption of our 2020 Plan, and our 2020 Plan was terminated in connection with the adoption of our 2021 Plan (defined below) but any awards outstanding under our 2013 Plan and 2020 Plan remain in effect in accordance with their terms. Any shares that were or otherwise would become available for grant under the 2013 Plan or 2020 Plan will be available for grant under the 2021 Plan. No new awards may be granted under our 2013 Plan or 2020 Plan. 2021 Omnibus Incentive Plan Our 2021 Omnibus Incentive Plan (the “2021 Plan”) became effective on July 27, 2021, and provides for the grant of share-based awards (such as options, including ISOs and NSOs, SARs, RSAs, RSUs, performance units, and other equity-based awards) and cash-based awards. As of June 30, 2022, an aggregate of 360 million shares had been authorized for issuance under the 2013 Plan, 2020 Plan, and 2021 Plan, of which 84 million shares had been issued under the plans, 148 million shares were reserved for issuance upon the exercise or settlement of outstanding equity awards under the plans, and 128 million shares remained available for new grants under the 2021 Plan. Stock Option Activity A summary of stock option activity for the six months ended June 30, 2022 is as follows: Number of Shares Weighted-Average Exercise Price Weighted- Average Remaining Life Total Intrinsic Value (in millions) Balance at December 31, 2021 14,527,468 $ 2.20 5.37 $ 226 Granted during the period 4,463,248 14.15 Exercised during the period (1,986,252) 2.07 Cancelled and forfeited during the period (390,114) 11.92 Balance at June 30, 2022 16,614,350 $ 5.20 5.42 $ 75 Options vested and expected to vest at June 30, 2022 16,614,350 $ 5.20 5.42 $ 75 Options exercisable at June 30, 2022 12,103,301 $ 2.04 4.96 $ 75 Time-Based RSUs We grant RSUs that vest upon the satisfaction of a time-based service condition (“Time-Based RSUs”). The following table summarizes the activity related to our Time-Based RSUs for the six months ended June 30, 2022: Number of RSUs Weighted- average grant date fair value Unvested at December 31, 2021 49,428,070 $ 31.78 Granted 44,896,905 12.44 Vested (11,210,977) 24.60 Forfeited (10,650,056) 27.28 Unvested at June 30, 2022 72,463,942 $ 21.57 Market-Based RSUs In 2019 and 2021, we granted to our founders RSUs under which vesting is conditioned upon both the achievement of share price targets and the continued employment by each recipient over defined service periods (“Market-Based RSUs”). The following table summarizes the activity related to our Market-Based RSUs for the six months ended June 30, 2022: Eligible to Vest (1) Not Eligible to Vest (2) Total Number of RSUs Weighted- average grant date fair value Unvested at December 31, 2021 1,267,918 57,650,926 58,918,844 $ 23.50 Granted — — — — Vested (230,530) — (230,530) 2.34 Forfeited — — — — Unvested at June 30, 2022 1,037,388 57,650,926 58,688,314 $ 23.58 ________________ (1) Represents RSUs that became eligible to vest upon achievement of share price targets and vest upon satisfaction of time-based service requirements. (2) Represents RSUs that have not yet become eligible to vest because share price targets have not yet been achieved. Share-Based Compensation The following table presents share-based compensation on our unaudited condensed consolidated statements of operations for the periods indicated: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Brokerage and transaction $ — $ 1 $ — $ 2 Technology and development 1 59 2 141 Operations — 1 — 5 Marketing — (2) — 3 General and administrative — 105 8 233 Total $ 1 $ 164 $ 10 $ 384 The following table presents share-based compensation by award type for the periods indicated: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Time-Based RSUs $ — $ 78 $ — $ 208 Market-Based RSUs — 82 — 166 Employee Share Purchase Plan (“ESPP”) — 3 — 7 Options 1 1 10 3 Total $ 1 $ 164 $ 10 $ 384 The April 2022 Restructuring resulted in a net reduction of $24 million in share-based compensation expense, which was recognized in the three and six months ended June 30, 2022 and is reflected in the tables above. The $24 million was substantially all related to Time-Based RSUs, and primarily included $16 million in technology and development expense and $6 million in general and administrative expense. We capitalized share-based compensation expense related to internally developed software of $7 million and $17 million during the three and six months ended June 30, 2022. The corresponding amount during the three and six months ended June 30, 2021 was immaterial. As of June 30, 2022, there was $1.8 billion of unrecognized share-based compensation expense that is expected to be recognized over a weighted-average period of 2.2 years. Scheduled vesting for awards outstanding as of June 30, 2022, is as follows: (in millions, except for number of shares) Number of Shares (1) Expense Remainder of 2022 13,419,964 $ 415 2023 26,663,047 628 2024 20,916,833 406 2025 13,864,617 269 2026 3,173,437 39 Total 78,037,898 $ 1,757 ________________ (1) Excludes future ESPP shares and Market-Based RSUs for which the share price target has not been met as we cannot forecast the vesting of these shares. The above schedule describes awards actually outstanding on June 30, 2022, without any adjustments for potential subsequent forfeitures, which are recognized as they occur, or subsequent equity grants. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NOTE 11: NET LOSS PER SHARE We present net loss per share using the two-class method required for multiple classes of common stock. The rights, including the liquidation and dividend rights, of the holders of Class A common stock and Class B common stock are identical, except with respect to voting. As the liquidation and dividend rights are identical for Class A common stock and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting loss per share will, therefore, be the same for both Class A common stock and Class B common stock on an individual or combined basis. The following table presents the calculation of basic and diluted loss per share: (in millions, except per share data) Three Months Ended Six Months Ended 2021 2022 2021 2022 Net loss $ (502) $ (295) $ (1,947) $ (687) Less: allocation of earnings to participating securities — — — — Net loss attributable to common stockholders $ (502) $ (295) $ (1,947) $ (687) Weighted-average common stock outstanding - basic 232,223,019 874,873,301 231,459,227 871,343,295 Dilutive effect of stock options and unvested shares — — — — Weighted-average common stock outstanding - diluted 232,223,019 874,873,301 231,459,227 871,343,295 Net loss per share attributable to common stockholders: Basic $ (2.16) $ (0.34) $ (8.41) $ (0.79) Diluted $ (2.16) $ (0.34) $ (8.41) $ (0.79) The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period: Three Months Ended Six Months Ended 2021 2022 2021 2022 Redeemable convertible preferred stock 412,742,897 — 412,742,897 — RSUs 132,048,248 131,163,406 132,048,248 131,163,406 Stock options 17,685,650 16,614,350 17,685,650 16,614,350 Unvested shares 128,228 378 128,228 378 Warrants — 14,278,034 — 14,278,034 ESPP shares — 304,900 — 304,900 Total anti-dilutive securities 562,605,023 162,361,068 562,605,023 162,361,068 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12: RELATED PARTY TRANSACTIONS Related party transactions may include any transaction between entities under common control or with a related party. We have defined related parties as members of the Board of Directors, executive officers, principal owners of our outstanding stock and any immediate family members of each such related party, as well as any other person or entity with significant influence over our management or operations and any other affiliates. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 13: LEASES Our operating leases are comprised of office facilities, with the most significant leases relating to our corporate headquarters in Menlo Park and our office in New York City. Our leases have remaining terms of 1 to 11 years, and many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. We do not have any finance leases. During the second quarter of 2022, we executed an agreement to assign one of our operating leases to a third-party assignee who assumed all of our obligations, liabilities, covenants, and conditions under the assigned lease. As a result of this agreement, we derecognized the related right-of-use assets of $23 million and lease liability of $22 million and recognized an immaterial amount of loss. The components of lease expense were as follows: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Fixed operating lease costs $ 5 $ 9 $ 9 $ 18 Variable operating lease costs 2 1 3 3 Total lease costs $ 7 $ 10 $ 12 $ 21 Fixed operating lease costs primarily consist of monthly base rent amounts due. Variable operating lease expenses are primarily related to payments made to our landlords for common area maintenance, property taxes, insurance, and other operating expenses. Other information related to our operating leases was as follows: December 31, June 30, 2021 2022 Weighted-average remaining lease term 7.29 years 7.30 years Weighted-average discount rate 6.27 % 6.42 % Cash flows related to leases were as follows: Six Months Ended (in millions) 2021 2022 Operating cash flows: Payments for operating lease liabilities $ 1 $ 11 Supplemental cash flow data: Lease liabilities arising from obtaining right-of-use assets $ 32 $ 32 Future minimum lease payments under non-cancellable operating leases (with initial lease terms in excess of one year) as of June 30, 2022 are as follows: (in millions) Remainder of 2022 $ 16 2023 33 2024 31 2025 30 2026 22 Thereafter 85 Total undiscounted lease payments 217 Less: imputed interest (46) Less: lease incentives (17) Total lease liabilities $ 154 |
COMMITMENTS & CONTINGENCIES
COMMITMENTS & CONTINGENCIES | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14: COMMITMENTS & CONTINGENCIES We are subject to contingencies arising in the ordinary course of our business, including contingencies related to legal, regulatory, non-income tax and other matters. We record an accrual for loss contingencies at management’s best estimate when we determine that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If the reasonable estimate is a range and no amount within that range is considered a better estimate than any other amount, an accrual is recorded based on the bottom amount of the range. If a loss is not probable, or a probable loss cannot be reasonably estimated, no accrual is recorded. Amounts accrued for contingencies in the aggregate were $85 million as of December 31, 2021 and $110 million as of June 30, 2022. In our opinion, an adequate accrual had been made as of June 30, 2022 to provide for the probable losses of which we are aware and for which we can reasonably estimate an amount. Legal and Regulatory Matters The securities industry is highly regulated and many aspects of our business involve substantial risk of liability. In past years, there has been an increasing incidence of litigation involving the brokerage industry, including class action suits that generally seek substantial damages. Damages may include, in some cases, punitive damages. Compliance and trading problems that are reported to federal and state regulators, exchanges, or other SROs by dissatisfied users are investigated by such regulatory bodies, and, if pursued by such regulatory bodies or such users, may rise to the level of arbitration or disciplinary action. We are also subject to periodic regulatory audits and inspections. We have been named as a defendant in lawsuits and from time to time we have been threatened with, or named as a defendant in arbitrations and administrative proceedings. The outcomes of these matters are inherently uncertain and some may result in adverse judgments or awards, including penalties, injunctions, or other relief, and we may also determine to settle a matter because of the uncertainty and risks of litigation. With respect to matters discussed below, we believe, based on current knowledge, that any losses (in excess of amounts accrued, if applicable) as of June 30, 2022 that are reasonably possible and can be reasonably estimated will not, in the aggregate, have a material adverse effect on our business, financial position, operating results, or cash flows. However, for many of the matters disclosed below, particularly those in early stages, we cannot reasonably estimate the reasonably possible loss (or range of loss), if any. In addition, the ultimate outcome of legal proceedings involves judgments and inherent uncertainties and cannot be predicted with certainty. Any judgment entered against us, or any adverse settlement, could materially and adversely impact our business, financial condition, operating results, and cash flows. We might also incur substantial legal fees, which are expensed as incurred, in defending against legal and regulatory claims. Described below are certain pending matters in which there is at least a reasonable possibility that a material loss could be incurred. We intend to continue to defend these matters vigorously. Best Execution, Payment for Order Flow, and Sources of Revenue Matters Beginning in December 2020, multiple putative securities fraud class action lawsuits were filed against RHM, RHF, and RHS. Five cases were consolidated in the United States District Court for the Northern District of California. An amended consolidated complaint was filed in May 2021, alleging violations of Section 10(b) of the Exchange Act and various state law causes of action based on claims that we violated the duty of best execution and misled putative class members by publishing misleading statements and omissions in customer communications relating to the execution of trades and revenue sources (including PFOF). Plaintiffs seek damages, restitution, disgorgement, and other relief. In February 2022, the court granted Robinhood’s motion to dismiss the amended consolidated complaint without prejudice. In March 2022, plaintiffs filed a second consolidated amended complaint, alleging only violations of Section 10(b) of the Exchange Act, which Robinhood moved to dismiss. March 2020 Outages A consolidated putative class action lawsuit relating to service outages on our stock trading platform on March 2-3, 2020 and March 9, 2020 (the “March 2020 Outages”) is pending in the United States District Court for the Northern District of California. The lawsuit generally alleges that putative class members were unable to execute trades during the March 2020 Outages because our platform was inadequately designed to handle customer demand and we failed to implement appropriate backup systems. The lawsuit includes, among other things, claims for breach of contract, negligence, gross negligence, breach of fiduciary duty, unjust enrichment and violations of certain California consumer protection statutes. The lawsuit generally seeks damages, restitution, and/or disgorgement, as well as declaratory and injunctive relief. In May 2022, the parties notified the court that they had reached an agreement in principle resolving this action. The settlement agreement is subject to court approval. In September 2021, approximately 400 jointly-represented customers initiated an arbitration of individual claims against us arising out of the March 2020 Outages and other alleged system outages. Robinhood is contesting the claims, and a hearing has been scheduled for September 2022. Options Trading and Related Customer Communications and Displays Certain state regulatory authorities are conducting investigations regarding RHF’s options trading and related customer communications and displays and options trading approval process. RHF is cooperating with the regulators’ requests. FINRA previously conducted an investigation and reached a settlement with RHF regarding the same options trading issues. RHS Trade Reporting, Large Options Position Reporting, and ACATS Processing In June 2021, RHF resolved with FINRA, on a no admit, no deny basis, certain investigations and examinations. As previously disclosed, that resolution did not address all the matters FINRA is investigating. In April 2022, FINRA Enforcement staff requested additional information related to RHS’s reporting of fractional share trades, as applicable, to a Trade Reporting Facility (“TRF”), the Over-the-Counter Reporting Facility (“ORF”), the Order Audit Trail System (“OATS”), and the Consolidated Audit Trail (“CAT”); reporting of accounts holding significant options positions to the Large Option Position Report (“LOPR”) system; and processing of certain requests for transfers of assets from Robinhood through the Automated Customer Account Transfer Service (“ACATS”), an automated industry system for account asset transfers. RHS is cooperating with these investigations. In October 2021, RHS received requests from the SEC Division of Enforcement regarding its compliance with Regulation SHO, and previously received similar requests from FINRA examinations staff. During the second quarter of 2022, RHS received additional requests from the SEC for information related to, among other things, RHS’s compliance with Regulation SHO’s trade reporting and other requirements in connection with securities lending and fractional share trading. We are cooperating with this investigation. RHC Anti-Money Laundering, Cybersecurity, and Other Issues In July 2020, the New York State Department of Financial Services (“NYDFS”) issued a report of its examination of RHC citing a number of “matters requiring attention” focused primarily on anti-money laundering and cybersecurity-related issues. The matter was subsequently referred to the NYDFS’s Consumer Protection and Financial Enforcement Division for investigation. In March 2021, the NYDFS informed RHC of alleged violations of applicable (i) anti-money laundering and New York Banking Law requirements, including the failure to maintain and certify a compliant anti-money laundering program, (ii) notification provisions under RHC’s Supervisory Agreement with the NYDFS, and (iii) cybersecurity and virtual currency requirements, including deficiencies in our policies and procedures regarding risk assessment, lack of an adequate incident response and business continuity plan, and deficiencies in our application development security. RHC and the NYDFS have reached a settlement with respect to these allegations in connection with which, among other things, RHC will pay a monetary penalty of $30 million and engage an independent compliance consultant. Additionally, in April 2021, the California Attorney General’s Office issued an investigative subpoena to RHC, seeking documents and answers to interrogatories about RHC’s trading platform, business and operations, application of California’s commodities regulations to RHC, customer disclosures, and other matters. RHC is cooperating with this investigation. Account Takeovers In November 2020, FINRA Enforcement commenced an investigation into RHF concerning account takeovers, or circumstances under which an unauthorized actor successfully logs into a customer account, as well as anti-money laundering and cybersecurity issues. Since February 2021, RHF has received requests for documents and information from the SEC’s Division of Enforcement in connection with its investigation into account takeovers and, more recently, suspicious activity report filings and issues related to the Electronic Funds Transfer Act. Additionally, state regulators, including the New York Attorney General’s Office, have opened inquiries into RHM, RHF, and RHC related to account takeovers. We are cooperating with these investigations and inquiries. In January 2021, Siddharth Mehta filed a putative class action in California state court against RHF and RHS, purportedly on behalf of approximately 2,000 Robinhood customers whose accounts were allegedly accessed by unauthorized users. RHF and RHS removed this action to the United States District Court for the Northern District of California. Plaintiff generally alleges that RHF and RHS breached commitments made and duties owed to customers to safeguard customer data and assets and seek monetary damages and injunctive relief. In April 2022, the parties reached a settlement in principle to resolve this matter. The settlement agreement is subject to court approval. Massachusetts Securities Division Matter In December 2020, the Enforcement Section of the Massachusetts Securities Division (“MSD”) filed an administrative complaint against RHF, which stems from an investigation initiated by the MSD in July 2020. The complaint alleged three counts of Massachusetts securities law violations regarding alleged unethical and dishonest conduct or practices, failure to supervise, and failure to act in accordance with the Massachusetts fiduciary duty standard, which became effective on March 6, 2020 and had an effective enforcement date beginning September 1, 2020. Among other things, the MSD alleged that our product features and marketing strategies, outages, and options trading approval process constitute violations of Massachusetts securities laws. MSD subsequently filed an amended complaint that seeks, among other things, injunctive relief (a permanent cease and desist order), censure, restitution, disgorgement, appointment of an independent consultant, an administrative fine, and revocation of RHF's license to operate in Massachusetts. If RHF were to lose its license to operate in Massachusetts, we would not be able to acquire any new customers in Massachusetts, and we expect that our current customers in Massachusetts would be unable to continue utilizing any of the services or products offered on our platform (other than closing their positions) and that we may be forced to transfer such customers’ accounts to other broker-dealers. Additionally, revocation of RHF’s Massachusetts license could trigger similar disqualification or proceedings to restrict or condition RHF’s registration by other state regulators. A revocation of RHF’s license to operate in Massachusetts would result in RHF and RHS being subject to statutory disqualification by FINRA and the SEC, which would then result in RHF needing to obtain relief from FINRA subject to SEC review in order to remain a FINRA member and RHS possibly needing relief from FINRA or other SROs. In April 2021, RHF filed a complaint and motion for preliminary injunction and declaratory relief in Massachusetts state court seeking to enjoin the MSD administrative proceeding and challenging the legality of the Massachusetts fiduciary duty standard. In September 2021, the parties filed cross-motions for partial judgment on the pleadings. In March 2022, the court ruled in favor of RHF, declaring that the Massachusetts fiduciary duty regulation was unlawful. The MSD has filed a notice of appeal. A hearing on the two remaining counts alleged by the MSD in its amended administrative complaint is expected to begin in early 2023. Text Message Litigation In August 2021, Cooper Moore filed a putative class action against RHF alleging that RHF initiated or assisted in the transmission of commercial electronic text messages to Washington State residents without their consent in violation of Washington state law. The complaint seeks statutory and treble damages, injunctive relief, and attorneys’ fees and costs. The case is currently pending in the U.S. District Court for the Western District of Washington. RHF filed a motion to dismiss the complaint. In February 2022, Moore and Andrew Gillette filed an amended complaint, which RHF again moved to dismiss. Early 2021 Trading Restrictions Matters Beginning on January 28, 2021, due to increased deposit requirements imposed on RHS by the NSCC in response to unprecedented market volatility, particularly in certain securities, RHS temporarily restricted or limited its customers’ purchase of certain securities, including GameStop Corp. and AMC Entertainment Holdings, Inc., on our platform (the “Early 2021 Trading Restrictions”). A number of individual and putative class actions related to the Early 2021 Trading Restrictions were filed against RHM, RHF, and RHS, among others, in various federal and state courts. In April 2021, the Judicial Panel on Multidistrict Litigation entered an order centralizing the federal cases identified in a motion to transfer and coordinate or consolidate the actions filed in connection with the Early 2021 Trading Restrictions in the United States District Court for the Southern District of Florida (the “MDL”). The court subsequently divided plaintiffs’ claims against Robinhood into three tranches: federal antitrust claims, federal securities law claims, and state law claims. In July 2021, plaintiffs filed consolidated complaints seeking monetary damages in connection with the federal antitrust and state law tranches. The federal antitrust complaint asserted one violation of Section 1 of the Sherman Act; the state law complaint asserted negligence and breach of fiduciary duty claims. In August 2021, we moved to dismiss both of these complaints. In September 2021, plaintiffs filed an amended complaint asserting state law claims of negligence, breach of fiduciary duty, tortious interference with contract and business relationship, civil conspiracy, and breaches of the covenant of good faith and fair dealing and implied duty of care. In January 2022, the court dismissed the state law complaint with prejudice. Plaintiffs have appealed the court’s order to the United States Court of Appeals for the Eleventh Circuit. In November 2021, the court dismissed the federal antitrust complaint without prejudice. In January 2022, plaintiffs filed an amended complaint in connection with the federal antitrust tranche and Robinhood moved to dismiss the amended complaint. In May 2022, the court dismissed the federal antitrust complaint with prejudice. Plaintiffs have appealed the court’s order to the United States Court of Appeals for the Eleventh Circuit. In November 2021, plaintiffs for the federal securities tranche filed a complaint alleging violations of Sections 9(a) and 10(b) of the Exchange Act. In January 2022, we moved to dismiss the federal securities law complaint. In July 2022, plaintiffs in the federal securities tranche informed us of their intent to file an amended complaint. RHM, RHF, RHS, and our Co-Founder and CEO, Vladimir Tenev, among others, have received requests for information, and in some cases, subpoenas and requests for testimony, related to investigations and examinations of the Early 2021 Trading Restrictions from the United States Attorney’s Office for the Northern District of California (“USAO”), the U.S. Department of Justice, Antitrust Division, the SEC’s Division of Enforcement, FINRA, the New York Attorney General’s Office, other state attorneys general offices, and a number of state securities regulators. Also, a related search warrant was executed by the USAO to obtain Mr. Tenev’s cell phone. There have been several inquiries based on specific customer complaints. We have also received requests from the SEC’s Division of Examinations and Division of Enforcement and FINRA related to employee trading in certain securities that were subject to the Early 2021 Trading Restrictions, including GameStop Corp. and AMC Entertainment Holdings, Inc., during the week of January 25, 2021. These matters include requests related to whether any employee trading in these securities may have occurred after the decision to impose the Early 2021 Trading Restrictions and before the public announcement of the Early 2021 Trading Restrictions on January 28, 2021. We are cooperating with these investigations and examinations. The SEC’s Division of Examinations concluded their examinations related to the Early 2021 Trading Restrictions. In February 2022, SEC staff notified us of their findings to which we responded in April 2022. FINRA Enforcement has also requested information about policies, procedures, and supervision related to employee trading generally. In addition, we received information and testimony requests from certain committees and members of the U.S. Congress and Mr. Tenev, among others, provided testimony with respect to the Early 2021 Trading Restrictions. In June 2022, the majority staff of the U.S. House Committee on Financial Services released a report regarding its investigation. Registration Requirements for Member Personnel In July 2021, RHF received a FINRA investigative request seeking documents and information related to its compliance with FINRA registration requirements for member personnel, including related to the FINRA non-registration status of Mr. Tenev and Co-Founder and Chief Creative Officer Mr. Bhatt. Robinhood is cooperating with the investigation. IPO Litigation In December 2021, Philip Golubowski filed a putative class action in the U.S. District Court for the Northern District of California against RHM, the officers and directors who signed Robinhood’s IPO offering documents, and Robinhood’s IPO underwriters. Plaintiff’s claims are based on alleged false or misleading statements in Robinhood’s IPO offering documents allegedly in violation of Sections 11 and 12(a) of the Securities Act of 1933, as amended (the “Securities Act”). Plaintiff seeks compensatory damages, rescission of shareholders’ share purchases, and an award for attorneys’ fees and costs. In February 2022, certain alleged Robinhood stockholders submitted applications seeking appointment by the court to be the lead plaintiff to represent the putative class in this matter, and in March 2022, the court appointed lead plaintiffs. In June 2022, plaintiffs filed an amended complaint. In January 2022, Robert Zito filed a complaint derivatively on behalf of Robinhood against Robinhood’s directors at the time of its IPO in the U.S. District Court for the District of Delaware. Plaintiff alleges breach of fiduciary duties, waste of corporate assets, unjust enrichment, and violations of Section 10(b) of the Exchange Act. Plaintiff’s claims are based on allegations of false or misleading statements in Robinhood’s IPO offering documents, and plaintiff seeks an award of damages and restitution to the Company, injunctive relief, and an award for attorney’s fees and costs. In March 2022, the district court entered a stay of this litigation pending resolution of Robinhood’s motion to dismiss in the Golubowski securities action discussed above. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15: SUBSEQUENT EVENTS Workforce Reduction and Restructuring On August 2, 2022 we announced another reduction in force, the planned closure of two offices, and related matters (the “August 2022 Restructuring”). The reduction in force involved approximately 780 employees, representing approximately 23% of our full-time employees. We estimate that we will incur approximately $30 million to $40 million of cash restructuring and related charges primarily related to employee severance and benefits costs (excluding the impact of share-based compensation) and approximately $15 million to $20 million of charges related to the office closures and contract termination fees, substantially all of which we expect to incur in the third quarter of 2022. With respect to share-based compensation, as part of this reduction in force we will allow affected employees' awards to continue vesting over a transitional period (generally two months during which they remain employed but are not expected to provide active service), which we will generally account for as a modification allowing a portion of the awards to vest that otherwise would have been forfeited. However, as a result of the reversal of share-based compensation expense that had been previously recognized (under the accelerated attribution method, generally) for the forfeited portions of such employees’ stock awards, we expect the August 2022 Restructuring will result in a net reduction to share-based compensation of approximately $40 million to $50 million in the third quarter of 2022. This estimate may change due to future changes in our stock price. |
DESCRIPTION OF BUSINESS AND S_2
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC for interim financial reporting. The condensed consolidated financial statements are unaudited, and in management’s opinion, include all adjustments, including normal recurring adjustments and accruals necessary for a fair presentation of the results for the interim periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2022 or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”). There have been no material changes in our significant accounting policies as described in our consolidated financial statements included in our audited annual consolidated financial statements for the year ended December 31, 2021, other than recently adopted accounting pronouncements as described in Note 2. The unaudited condensed consolidated financial statements include the accounts of RHM and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Certain prior-period amounts have been reclassified to conform to the current period’s presentation. The impact of |
Use of Estimates | Use of Estimates In accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosures, on the unaudited condensed consolidated financial statements. We base our estimates on current and historical experience and other assumptions we believe to be reasonable under the circumstances. Assumptions and estimates used in preparing our unaudited condensed consolidated financial statements include those related to revenue recognition, the determination of allowances for credit losses, the capitalization and estimated useful life of internally developed software, investment valuation, valuation of user cryptocurrencies safeguarding obligation and the corresponding asset, contingent liabilities, useful lives of property and equipment, the incremental borrowing rate used to determine the present value of lease payments, the valuation and recognition of share-based compensation, the valuation of the convertible notes and warrant liability, the valuation and estimated useful lives of acquired intangible assets, uncertain tax positions, accrued liabilities, and the recognition and measurement of current and deferred income tax assets and liabilities. Actual results could differ from these estimates and could have a material adverse effect on our operating results. |
Concentrations of Credit | Concentrations of Credit We are engaged in various trading and brokerage activities in which the counterparties primarily include broker-dealers, banks, and other financial institutions. In the event our counterparties do not fulfill their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. Default of a counterparty in equities and options trades, which are facilitated through clearinghouses, would generally be spread among the clearinghouse's members rather than falling entirely on us. It is our policy to review, as necessary, the credit standing of each counterparty. |
Cryptocurrencies | Cryptocurrencies We act as an agent in the cryptocurrency transactions of our users. We have determined we are an agent, for accounting purposes, because we do not control the cryptocurrency before delivery to the user, we are not primarily responsible for the delivery of cryptocurrency to our users, we are not exposed to risks arising from fluctuations of the market price of cryptocurrency before delivery to the user, and we do not set the prices charged to users. After purchasing cryptocurrency on the platform, users are the legal owners of cryptocurrency held under custody by us and users have all the rights and benefits of ownership, including the rights to appreciation and depreciation of the cryptocurrency. We do not allow users to purchase cryptocurrency on margin and cryptocurrency does not serve as collateral for margin loans. We hold cryptocurrency in custody for users in one or more omnibus cryptocurrency wallets; we do not utilize third-party custodians. We hold cryptographic key information and maintain internal record keeping for the cryptocurrencies we hold in custody for users, and we are obligated to secure such assets from loss or theft. Based on the terms of our user agreement and applicable law, we believe the cryptocurrency we hold in custody for users of our platform should be respected as users’ property (and should not be available to satisfy the claims of our general creditors) in the event we were to enter bankruptcy. For additional information relating to platform bankruptcy generally, see Item 2, Part II of this Quarterly Report on Form 10-Q, “Risk Factors—Risks Related to Cryptocurrency Products and Services—Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict. Changes in these laws and regulations, or our failure to comply with them, could negatively impact cryptocurrency trading on our platform.” |
Fully-Paid Securities Lending | Securities Borrowing and Lending We operate a securities lending program under which shares that users have pledged to us to collateralize their margin borrowing are lent by us to third parties (“Margin Securities Lending”) and a securities lending program under which we borrow fully-paid shares from participating users and lend them to third parties (“Fully-Paid Securities Lending”). We also occasionally borrow securities from third parties for operational purposes, and we occasionally lend to third parties securities that we hold for our own account (such as our holdings to support fractional share operations). When we lend securities to third parties, the borrower provides cash as collateral. We earn interest revenue on cash collateral deposited by borrowers, and we can also earn additional revenue for lending certain securities based on demand for those securities. For our Fully-Paid Securities Lending, portions of such revenues are paid to participating users, and those payments are recorded as interest expense. As of June 30, 2022, interest revenue earned and interest expenses incurred related to the Fully-Paid Securities Lending program were not material. |
Recently Adopted Accounting Pronouncements/Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements In March 2022, the staff of the SEC issued SAB 121, which provides guidance to entities that have obligations to safeguard crypto-assets held in custody on behalf of their platform users. SAB 121 states that the entity should recognize a liability representing its obligation to safeguard such crypto-assets accompanied by a corresponding asset on its balance sheet representing the platform users’ crypto-assets held in custody measured at fair value initially and at each subsequent reporting period. SAB 121 also states that accompanying disclosures should be considered regarding the entity’s obligation to safeguard crypto-assets for platform users. We adopted SAB 121 as part of the financial statements covering the interim period ended June 30, 2022, with retrospective application as of the beginning of fiscal year 2022. As a result of (and solely by virtue of) our adoption of SAB 121, we recognized an asset captioned “Asset related to user cryptocurrencies safeguarding obligation” and a liability captioned “User cryptocurrencies safeguarding obligation,” each in the amount of $8.6 billion as of June 30, 2022, on our unaudited condensed consolidated balance sheets. We also added disclosures to Note 1 - Description of business and summary of significant accounting policies and Note 6 - Investments and fair value measurement. Recently Issued Accounting Pronouncements Not Yet Adopted In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This guidance requires contract assets and contract liabilities from contracts with customers that are acquired in a business combination to be recognized and measured as if the acquirer had originated the original contract. The guidance is effective for fiscal years beginning after December 15, 2022 on a prospective basis, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the timing of adoption and impact of this new guidance on our financial statements. |
DESCRIPTION OF BUSINESS AND S_3
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Concentration of Credit Risk | We derived transaction-based revenues from individual market makers in excess of 10% of total revenues, as follows: Three Months Ended Six Months Ended 2021 2022 2021 2022 Market maker: Citadel Securities, LLC 15 % 19 % 21 % 21 % Entities affiliated with Susquehanna International Group, LLP (1) 9 % 9 % 11 % 11 % B2C2 USA Inc. — % 10 % — % 9 % Entity affiliated with Jane Street Group 12 % 7 % 9 % 6 % Tai Mo Shan Limited (2) 29 % 3 % 21 % 5 % All others individually less than 10% 14 % 15 % 18 % 16 % Total as percentage of total revenue: 79 % 63 % 80 % 68 % ________________ (1) Consists of Global Execution Brokers, LP and G1X Execution Services, LLC (2) Member of Jump Trading Group |
REVENUES (Tables)
REVENUES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue Disaggregated by Revenue Source | The following table presents our revenue disaggregated by revenue source: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Transaction-based revenues: Options $ 165 $ 113 $ 363 $ 240 Cryptocurrencies 233 58 321 112 Equities 52 29 185 65 Other 1 2 2 3 Total transaction-based revenues 451 202 871 420 Net interest revenues: Margin interest 31 39 59 74 Securities lending 40 23 75 47 Interest on investments and corporate cash 1 10 1 11 Interest on segregated cash and securities 1 6 2 7 Other interest revenue — 2 1 2 Interest expenses related to credit facilities (5) (6) (8) (12) Total net interest revenues 68 74 130 129 Other revenues 46 42 86 68 Total net revenues $ 565 $ 318 $ 1,087 $ 617 |
Schedule of Contract Receivables and Liabilities Balances | The table below sets forth contract receivables and liabilities for the period indicated: (in millions) Contract Receivables Contract Liabilities Beginning of period, January 1, 2022 $ 83 $ 3 End of period, June 30, 2022 100 4 Changes during the period $ 17 $ 1 |
ALLOWANCE FOR CREDIT LOSSES (Ta
ALLOWANCE FOR CREDIT LOSSES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
Schedule of Allowance for Credit Losses Receivable | The following table summarizes the allowance for credit losses, which substantially all relate to unsecured balances of receivables from users due to “Fraudulent Deposit Transactions” and losses on margin lending. Fraudulent Deposit Transactions are fraudulent, unlawful or otherwise inappropriate customer behavior, such as when customers initiate deposits into their accounts, make trades on our platform using a short-term extension of credit from us, and then repatriate or reverse the deposits, resulting in a loss to us of the credited amount. Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Beginning balance $ 31 $ 20 $ 34 $ 40 Provision for credit losses 20 11 37 19 Write-offs (16) (13) (36) (41) Ending balance $ 35 $ 18 $ 35 $ 18 |
INVESTMENTS AND FAIR VALUE ME_2
INVESTMENTS AND FAIR VALUE MEASUREMENT (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Debt Securities, Available-for-sale | Investments on our unaudited condensed consolidated balance sheet consisted of the following: December 31, 2021 (in millions) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Debt securities: Asset-backed securities $ 5 $ — $ — $ 5 Commercial paper 14 — — 14 Corporate bonds 7 — — 7 Government bonds 1 — — 1 Total investments $ 27 $ — $ — $ 27 June 30, 2022 (in millions) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Debt securities: Asset-backed securities $ 8 $ — $ — $ 8 Commercial paper 21 — — 21 Corporate bonds 10 — — 10 Government bonds 7 — — 7 Total investments $ 46 $ — $ — $ 46 |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis were presented on our unaudited condensed consolidated balance sheets as follows: December 31, 2021 (in millions) Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 4,004 $ — $ — $ 4,004 Investments: Asset-backed securities — 5 — 5 Commercial paper — 14 — 14 Corporate bonds — 7 — 7 Government bonds 1 — 1 User-held fractional shares 1,834 — — 1,834 Other current assets: Equity securities - securities owned 14 — — 14 Total financial assets $ 5,853 $ 26 $ — $ 5,879 Liabilities Fractional share repurchase obligations $ 1,834 $ — $ — $ 1,834 Total financial liabilities $ 1,834 $ — $ — $ 1,834 June 30, 2022 (in millions) Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 1,285 $ — $ — $ 1,285 Cash and securities segregated under federal and other regulations: U.S. Treasury securities 20 — — 20 Investments: Asset-backed securities — 8 — 8 Commercial paper — 21 — 21 Corporate bonds — 10 — 10 Government bonds 7 — — 7 Asset related to user cryptocurrencies safeguarding obligation — 8,593 — 8,593 User-held fractional shares 1,297 — — 1,297 Other current assets: Equity securities - securities owned 9 — — 9 Total financial assets $ 2,618 $ 8,632 $ — $ 11,250 Liabilities User cryptocurrencies safeguarding obligation $ — $ 8,593 $ — $ 8,593 Fractional shares repurchase obligations 1,297 — — 1,297 Total financial liabilities $ 1,297 $ 8,593 $ — $ 9,890 |
Schedule of Safeguarded Cryptocurrencies | Safeguarded user cryptocurrencies were as follows: (in millions) June 30, 2022 Dogecoin (DOGE) $ 2,845 Bitcoin (BTC) 2,722 Ethereum (ETH) 2,173 Other 853 Total user cryptocurrencies safeguarding obligation and corresponding asset $ 8,593 |
Schedule of Significant Unobservable Inputs | The significant unobservable inputs used in the fair value measurement of the convertible notes and warrant liability included: June 30, 2021 Convertible notes Warrant liability Fair value of common stock $ 38.00 $ 38.00 Volatility N/A 56 % Risk free rate N/A 1.42 % |
Schedule of Changes in Estimated Fair Value of Convertible Notes and Warrant Liability | The following table sets forth a summary of the changes in the estimated fair value of our convertible notes and warrant liability: (in millions) Convertible notes Warrant liability Beginning of period, January 1, 2021 $ — $ — Issued during the period 3,299 253 Change in fair value 1,891 129 End of period, June 30, 2021 $ 5,190 $ 382 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision (Benefit) | Three Months Ended Six Months Ended (in millions, except percentages) 2021 2022 2021 2022 Loss before income taxes $ (464) $ (294) $ (1,897) $ (685) Provision for income taxes 38 1 50 2 Effective tax rate (8.2) % (0.3) % (2.6) % (0.3) % |
SECURITIES BORROWING AND LEND_2
SECURITIES BORROWING AND LENDING (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Offsetting [Abstract] | |
Schedule of Assets Subject to Master Netting Arrangement | The following tables set forth certain balances related to our securities borrowing and lending activities as of December 31, 2021 and June 30, 2022: December 31, June 30, (in millions) 2021 2022 Assets Securities borrowed Gross amount of securities borrowed $ 0.3 $ 65.6 Gross amount offset on the consolidated balance sheets — — Amounts of assets presented on the consolidated balance sheets 0.3 65.6 Gross amount of securities borrowed not offset on the consolidated balance sheets: Securities borrowed 0.3 65.6 Security collateral received (0.3) (63.3) Net amount $ — $ 2.3 Liabilities Securities loaned Gross amount of securities loaned $ 3,651.0 $ 1,366.6 Gross amount of securities loaned offset on the consolidated balance sheets — — Amounts of liabilities presented on the consolidated balance sheets 3,651.0 1,366.6 Gross amount of securities loaned not offset on the consolidated balance sheets: Securities loaned 3,651.0 1,366.6 Security collateral pledged (3,426.8) (1,226.5) Net amount $ 224.2 $ 140.1 |
Schedule of liabilities Subject to Master Netting Arrangement | The following tables set forth certain balances related to our securities borrowing and lending activities as of December 31, 2021 and June 30, 2022: December 31, June 30, (in millions) 2021 2022 Assets Securities borrowed Gross amount of securities borrowed $ 0.3 $ 65.6 Gross amount offset on the consolidated balance sheets — — Amounts of assets presented on the consolidated balance sheets 0.3 65.6 Gross amount of securities borrowed not offset on the consolidated balance sheets: Securities borrowed 0.3 65.6 Security collateral received (0.3) (63.3) Net amount $ — $ 2.3 Liabilities Securities loaned Gross amount of securities loaned $ 3,651.0 $ 1,366.6 Gross amount of securities loaned offset on the consolidated balance sheets — — Amounts of liabilities presented on the consolidated balance sheets 3,651.0 1,366.6 Gross amount of securities loaned not offset on the consolidated balance sheets: Securities loaned 3,651.0 1,366.6 Security collateral pledged (3,426.8) (1,226.5) Net amount $ 224.2 $ 140.1 |
COMMON STOCK AND STOCKHOLDERS_2
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Schedule of Stock Option Activity | A summary of stock option activity for the six months ended June 30, 2022 is as follows: Number of Shares Weighted-Average Exercise Price Weighted- Average Remaining Life Total Intrinsic Value (in millions) Balance at December 31, 2021 14,527,468 $ 2.20 5.37 $ 226 Granted during the period 4,463,248 14.15 Exercised during the period (1,986,252) 2.07 Cancelled and forfeited during the period (390,114) 11.92 Balance at June 30, 2022 16,614,350 $ 5.20 5.42 $ 75 Options vested and expected to vest at June 30, 2022 16,614,350 $ 5.20 5.42 $ 75 Options exercisable at June 30, 2022 12,103,301 $ 2.04 4.96 $ 75 |
Schedule of Activity Related to Time-Based and Market-Based RSUs | The following table summarizes the activity related to our Time-Based RSUs for the six months ended June 30, 2022: Number of RSUs Weighted- average grant date fair value Unvested at December 31, 2021 49,428,070 $ 31.78 Granted 44,896,905 12.44 Vested (11,210,977) 24.60 Forfeited (10,650,056) 27.28 Unvested at June 30, 2022 72,463,942 $ 21.57 Eligible to Vest (1) Not Eligible to Vest (2) Total Number of RSUs Weighted- average grant date fair value Unvested at December 31, 2021 1,267,918 57,650,926 58,918,844 $ 23.50 Granted — — — — Vested (230,530) — (230,530) 2.34 Forfeited — — — — Unvested at June 30, 2022 1,037,388 57,650,926 58,688,314 $ 23.58 ________________ (1) Represents RSUs that became eligible to vest upon achievement of share price targets and vest upon satisfaction of time-based service requirements. |
Schedule of Share-Based Compensation | The following table presents share-based compensation on our unaudited condensed consolidated statements of operations for the periods indicated: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Brokerage and transaction $ — $ 1 $ — $ 2 Technology and development 1 59 2 141 Operations — 1 — 5 Marketing — (2) — 3 General and administrative — 105 8 233 Total $ 1 $ 164 $ 10 $ 384 The following table presents share-based compensation by award type for the periods indicated: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Time-Based RSUs $ — $ 78 $ — $ 208 Market-Based RSUs — 82 — 166 Employee Share Purchase Plan (“ESPP”) — 3 — 7 Options 1 1 10 3 Total $ 1 $ 164 $ 10 $ 384 |
Schedule Of Vesting For Awards Outstanding | Scheduled vesting for awards outstanding as of June 30, 2022, is as follows: (in millions, except for number of shares) Number of Shares (1) Expense Remainder of 2022 13,419,964 $ 415 2023 26,663,047 628 2024 20,916,833 406 2025 13,864,617 269 2026 3,173,437 39 Total 78,037,898 $ 1,757 ________________ |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Income (Loss) Per Share | The following table presents the calculation of basic and diluted loss per share: (in millions, except per share data) Three Months Ended Six Months Ended 2021 2022 2021 2022 Net loss $ (502) $ (295) $ (1,947) $ (687) Less: allocation of earnings to participating securities — — — — Net loss attributable to common stockholders $ (502) $ (295) $ (1,947) $ (687) Weighted-average common stock outstanding - basic 232,223,019 874,873,301 231,459,227 871,343,295 Dilutive effect of stock options and unvested shares — — — — Weighted-average common stock outstanding - diluted 232,223,019 874,873,301 231,459,227 871,343,295 Net loss per share attributable to common stockholders: Basic $ (2.16) $ (0.34) $ (8.41) $ (0.79) Diluted $ (2.16) $ (0.34) $ (8.41) $ (0.79) |
Potential Common Shares Excluded from the Calculation of Diluted Net Income (Loss) Per Share | The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period: Three Months Ended Six Months Ended 2021 2022 2021 2022 Redeemable convertible preferred stock 412,742,897 — 412,742,897 — RSUs 132,048,248 131,163,406 132,048,248 131,163,406 Stock options 17,685,650 16,614,350 17,685,650 16,614,350 Unvested shares 128,228 378 128,228 378 Warrants — 14,278,034 — 14,278,034 ESPP shares — 304,900 — 304,900 Total anti-dilutive securities 562,605,023 162,361,068 562,605,023 162,361,068 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Schedule of Component of Lease Expense, Other Information and Cash Flows | The components of lease expense were as follows: Three Months Ended Six Months Ended (in millions) 2021 2022 2021 2022 Fixed operating lease costs $ 5 $ 9 $ 9 $ 18 Variable operating lease costs 2 1 3 3 Total lease costs $ 7 $ 10 $ 12 $ 21 Other information related to our operating leases was as follows: December 31, June 30, 2021 2022 Weighted-average remaining lease term 7.29 years 7.30 years Weighted-average discount rate 6.27 % 6.42 % Cash flows related to leases were as follows: Six Months Ended (in millions) 2021 2022 Operating cash flows: Payments for operating lease liabilities $ 1 $ 11 Supplemental cash flow data: Lease liabilities arising from obtaining right-of-use assets $ 32 $ 32 |
Schedule of Future Minimum Lease Payments | Future minimum lease payments under non-cancellable operating leases (with initial lease terms in excess of one year) as of June 30, 2022 are as follows: (in millions) Remainder of 2022 $ 16 2023 33 2024 31 2025 30 2026 22 Thereafter 85 Total undiscounted lease payments 217 Less: imputed interest (46) Less: lease incentives (17) Total lease liabilities $ 154 |
DESCRIPTION OF BUSINESS AND S_4
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF CONCENTRATION OF CREDIT RISK (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Apr. 26, 2022 USD ($) employee | Jun. 30, 2022 USD ($) institution counterparty agreement | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) institution counterparty agreement | Jun. 30, 2021 USD ($) | |
Concentration Risk [Line Items] | |||||
Number of financial institution counterparties | institution | 2 | 2 | |||
Number of agreements with contractual term of 30 days | agreement | 1 | 1 | |||
Number of fixed term agreements | agreement | 2 | 2 | |||
Number of fixed term counterparties | counterparty | 2 | 2 | |||
Share-based compensation | $ 164 | $ 1 | $ 384 | $ 10 | |
Workforce Reduction | April 2022 Restructuring | |||||
Concentration Risk [Line Items] | |||||
Number Of employees involved in workforce reduction | employee | 330 | ||||
Number of employees involved in workforce reduction, percentage | 9% | ||||
Share-based compensation | (24) | (24) | |||
Restructuring charges | $ 17 | ||||
Workforce Reduction | April 2022 Restructuring | Accounts Payable and Accrued Liabilities | |||||
Concentration Risk [Line Items] | |||||
Unpaid restructuring charges | 10 | $ 10 | |||
Agreement One | |||||
Concentration Risk [Line Items] | |||||
Contractual term | 30 days | ||||
Contractual obligation | 25 | $ 25 | |||
Agreement Two | |||||
Concentration Risk [Line Items] | |||||
Contractual term | 21 days | ||||
Contractual obligation | $ 35 | $ 35 | |||
Customer Concentration Risk | Revenue Benchmark | Citadel Securities, LLC | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 19% | 15% | 21% | 21% | |
Customer Concentration Risk | Revenue Benchmark | Tai Mo Shan Limited | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 3% | 29% | 5% | 21% | |
Customer Concentration Risk | Revenue Benchmark | Entities affiliated with Susquehanna International Group, LLP | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 9% | 9% | 11% | 11% | |
Customer Concentration Risk | Revenue Benchmark | Entity affiliated with Jane Street Group | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 7% | 12% | 6% | 9% | |
Customer Concentration Risk | Revenue Benchmark | B2C2 USA Inc. | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10% | 0% | 9% | 0% | |
Customer Concentration Risk | Revenue Benchmark | All others individually less than 10% | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 15% | 14% | 16% | 18% | |
Customer Concentration Risk | Revenue Benchmark | Total as percentage of total revenue | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 63% | 79% | 68% | 80% |
RECENT ACCOUNTING PRONOUCEMENTS
RECENT ACCOUNTING PRONOUCEMENTS (Details) $ in Billions | Jun. 30, 2022 USD ($) |
Accounting Policies [Abstract] | |
Crypto-asset at fair value | $ 8.6 |
Crypto-asset, corresponding liability | $ 8.6 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) $ in Millions | Apr. 16, 2022 USD ($) |
Ziglu | |
Business Acquisition [Line Items] | |
Total consideration | $ 170 |
REVENUES - REVENUE DISAGGREGATE
REVENUES - REVENUE DISAGGREGATED BY REVENUE SOURCE (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Margin interest | $ 39 | $ 31 | $ 74 | $ 59 |
Securities lending | 23 | 40 | 47 | 75 |
Interest on investments and corporate cash | 10 | 1 | 11 | 1 |
Interest on segregated cash and securities | 6 | 1 | 7 | 2 |
Other interest revenue | 2 | 0 | 2 | 1 |
Interest expenses related to credit facilities | (6) | (5) | (12) | (8) |
Net interest revenues | 74 | 68 | 129 | 130 |
Total net revenues | 318 | 565 | 617 | 1,087 |
Options | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 113 | 165 | 240 | 363 |
Cryptocurrencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 58 | 233 | 112 | 321 |
Equities | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 29 | 52 | 65 | 185 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2 | 1 | 3 | 2 |
Transaction-based revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 202 | 451 | 420 | 871 |
Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 42 | $ 46 | $ 68 | $ 86 |
REVENUES - RECEIVABLES AND CONT
REVENUES - RECEIVABLES AND CONTRACT LIABILITIES BALANCES (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Contract with Customer, Asset [Roll Forward] | |
Beginning of period, January 1, 2022 | $ 83 |
End of period, June 30, 2022 | 100 |
Changes during the period | 17 |
Contract with Customer, Liability [Roll Forward] | |
Beginning of period, January 1, 2022 | 3 |
End of period, June 30, 2022 | 4 |
Changes during the period | $ 1 |
ALLOWANCE FOR CREDIT LOSSES - A
ALLOWANCE FOR CREDIT LOSSES - ALLOWANCE FOR CREDIT LOSSES OF RECEIVABLES FROM USERS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Contract with Customer, Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | $ 20 | $ 31 | $ 40 | $ 34 |
Provision for credit losses | 11 | 20 | 19 | 37 |
Write-offs | (13) | (16) | (41) | (36) |
Ending balance | $ 18 | $ 35 | $ 18 | $ 35 |
INVESTMENTS AND FAIR VALUE ME_3
INVESTMENTS AND FAIR VALUE MEASUREMENT - DEBT SECURITIES AVAILABLE-FOR-SALE (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Amortized Cost | $ 46 | $ 27 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 46 | 27 |
Asset-backed securities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Amortized Cost | 8 | 5 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 8 | 5 |
Commercial paper | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Amortized Cost | 21 | 14 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 21 | 14 |
Corporate bonds | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Amortized Cost | 10 | 7 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 10 | 7 |
Government bonds | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Amortized Cost | 7 | 1 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | $ 7 | $ 1 |
INVESTMENTS AND FAIR VALUE ME_4
INVESTMENTS AND FAIR VALUE MEASUREMENT - SCHEDULE OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS (Details) - Fair Value, Recurring - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Total financial assets | $ 11,250 | $ 5,879 |
Liabilities | ||
Total financial liabilities | 9,890 | 1,834 |
Asset-backed securities | ||
Assets | ||
Investments | 8 | 5 |
Commercial paper | ||
Assets | ||
Investments | 21 | 14 |
Corporate bonds | ||
Assets | ||
Investments | 10 | 7 |
Government bonds | ||
Assets | ||
Investments | 7 | 1 |
Asset related to user cryptocurrencies safeguarding obligation | ||
Assets | ||
Other current assets | 8,593 | |
User-held fractional shares | ||
Assets | ||
Other current assets | 1,297 | 1,834 |
Equity securities - securities owned | ||
Assets | ||
Other current assets | 9 | 14 |
User cryptocurrencies safeguarding obligation | ||
Liabilities | ||
Other liabilities | 8,593 | |
Fractional share repurchase obligations | ||
Liabilities | ||
Other liabilities | 1,297 | 1,834 |
Money market funds | ||
Assets | ||
Cash equivalents | 1,285 | 4,004 |
U.S. Treasury securities | ||
Assets | ||
Cash equivalents | 20 | |
Level 1 | ||
Assets | ||
Total financial assets | 2,618 | 5,853 |
Liabilities | ||
Total financial liabilities | 1,297 | 1,834 |
Level 1 | Asset-backed securities | ||
Assets | ||
Investments | 0 | 0 |
Level 1 | Commercial paper | ||
Assets | ||
Investments | 0 | 0 |
Level 1 | Corporate bonds | ||
Assets | ||
Investments | 0 | 0 |
Level 1 | Government bonds | ||
Assets | ||
Investments | 7 | 1 |
Level 1 | Asset related to user cryptocurrencies safeguarding obligation | ||
Assets | ||
Other current assets | 0 | |
Level 1 | User-held fractional shares | ||
Assets | ||
Other current assets | 1,297 | 1,834 |
Level 1 | Equity securities - securities owned | ||
Assets | ||
Other current assets | 9 | 14 |
Level 1 | User cryptocurrencies safeguarding obligation | ||
Liabilities | ||
Other liabilities | 0 | |
Level 1 | Fractional share repurchase obligations | ||
Liabilities | ||
Other liabilities | 1,297 | 1,834 |
Level 1 | Money market funds | ||
Assets | ||
Cash equivalents | 1,285 | 4,004 |
Level 1 | U.S. Treasury securities | ||
Assets | ||
Cash equivalents | 20 | |
Level 2 | ||
Assets | ||
Total financial assets | 8,632 | 26 |
Liabilities | ||
Total financial liabilities | 8,593 | 0 |
Level 2 | Asset-backed securities | ||
Assets | ||
Investments | 8 | 5 |
Level 2 | Commercial paper | ||
Assets | ||
Investments | 21 | 14 |
Level 2 | Corporate bonds | ||
Assets | ||
Investments | 10 | 7 |
Level 2 | Government bonds | ||
Assets | ||
Investments | 0 | 0 |
Level 2 | Asset related to user cryptocurrencies safeguarding obligation | ||
Assets | ||
Other current assets | 8,593 | |
Level 2 | User-held fractional shares | ||
Assets | ||
Other current assets | 0 | 0 |
Level 2 | Equity securities - securities owned | ||
Assets | ||
Other current assets | 0 | 0 |
Level 2 | User cryptocurrencies safeguarding obligation | ||
Liabilities | ||
Other liabilities | 8,593 | |
Level 2 | Fractional share repurchase obligations | ||
Liabilities | ||
Other liabilities | 0 | 0 |
Level 2 | Money market funds | ||
Assets | ||
Cash equivalents | 0 | 0 |
Level 2 | U.S. Treasury securities | ||
Assets | ||
Cash equivalents | 0 | |
Level 3 | ||
Assets | ||
Total financial assets | 0 | 0 |
Liabilities | ||
Total financial liabilities | 0 | 0 |
Level 3 | Asset-backed securities | ||
Assets | ||
Investments | 0 | 0 |
Level 3 | Commercial paper | ||
Assets | ||
Investments | 0 | 0 |
Level 3 | Corporate bonds | ||
Assets | ||
Investments | 0 | 0 |
Level 3 | Government bonds | ||
Assets | ||
Investments | 0 | |
Level 3 | Asset related to user cryptocurrencies safeguarding obligation | ||
Assets | ||
Other current assets | 0 | |
Level 3 | User-held fractional shares | ||
Assets | ||
Other current assets | 0 | 0 |
Level 3 | Equity securities - securities owned | ||
Assets | ||
Other current assets | 0 | 0 |
Level 3 | User cryptocurrencies safeguarding obligation | ||
Liabilities | ||
Other liabilities | 0 | |
Level 3 | Fractional share repurchase obligations | ||
Liabilities | ||
Other liabilities | 0 | 0 |
Level 3 | Money market funds | ||
Assets | ||
Cash equivalents | 0 | $ 0 |
Level 3 | U.S. Treasury securities | ||
Assets | ||
Cash equivalents | $ 0 |
INVESTMENTS AND FAIR VALUE ME_5
INVESTMENTS AND FAIR VALUE MEASUREMENT - NARRATIVE (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Feb. 28, 2021 tranche | |
Convertible notes | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Change in fair value | $ 515 | $ 1,891 | $ 1,900 | |
Warrants | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Change in fair value | $ 13 | $ 129 | $ 129 | |
Convertible notes | Investor | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Number of tranches issued | tranche | 2 |
INVESTMENTS AND FAIR VALUE ME_6
INVESTMENTS AND FAIR VALUE MEASUREMENT - SUMMARY OF CRYPTO ASSETS HELD IN CUSTODY (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |||
Total user cryptocurrencies safeguarding obligation and corresponding asset | $ 8,593 | $ 0 | $ 0 |
Dogecoin (DOGE) | |||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |||
Total user cryptocurrencies safeguarding obligation and corresponding asset | 2,845 | ||
Bitcoin (BTC) | |||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |||
Total user cryptocurrencies safeguarding obligation and corresponding asset | 2,722 | ||
Ethereum (ETH) | |||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |||
Total user cryptocurrencies safeguarding obligation and corresponding asset | 2,173 | ||
Other | |||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |||
Total user cryptocurrencies safeguarding obligation and corresponding asset | $ 853 |
INVESTMENTS AND FAIR VALUE ME_7
INVESTMENTS AND FAIR VALUE MEASUREMENT - SCHEDULE OF SIGNIFICANT UNOBSERVABLE INPUTS (Details) | Jun. 30, 2021 $ / shares |
Convertible notes | Fair value of common stock | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Convertible notes, measurement input | 38 |
Warrants | Fair value of common stock | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 38 |
Warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 0.56 |
Warrants | Risk free rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrant liability, measurement input | 0.0142 |
INVESTMENTS AND FAIR VALUE ME_8
INVESTMENTS AND FAIR VALUE MEASUREMENT - SCHEDULE OF CHANGES IN ESTIMATED FAIR VALUE OF CONVERTIBLE NOTES AND WARRANT LIABILITY (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Convertible notes | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning of period, January 1, 2021 | $ 0 | ||
Issued during the period | 3,299 | ||
Change in fair value | $ 515 | 1,891 | $ 1,900 |
End of period, June 30, 2021 | 5,190 | ||
Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning of period, January 1, 2021 | 0 | ||
Issued during the period | 253 | ||
Change in fair value | $ 13 | 129 | $ 129 |
End of period, June 30, 2021 | $ 382 |
INCOME TAXES - SCHEDULE OF INCO
INCOME TAXES - SCHEDULE OF INCOME TAX PROVISION (BENEFIT) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Loss before income taxes | $ (294) | $ (464) | $ (685) | $ (1,897) |
Provision for income taxes | $ 1 | $ 38 | $ 2 | $ 50 |
Effective tax rate | (0.30%) | (8.20%) | (0.30%) | (2.60%) |
SECURITIES BORROWING AND LEND_3
SECURITIES BORROWING AND LENDING - NARRATIVE (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Offsetting Assets [Line Items] | ||
Security collateral received | $ 63.3 | $ 0.3 |
Security collateral pledged | 1,226.5 | 3,426.8 |
Amount re-pledged with clearing organizations to meet deposit requirements | 190.1 | 220.1 |
Third Parties | ||
Offsetting Assets [Line Items] | ||
Security collateral received | 3.9 | 0.3 |
Asset Pledged as Collateral | ||
Offsetting Assets [Line Items] | ||
Securities pledged | 5,690 | $ 9,210 |
Asset Pledged as Collateral | Securities Sold under Agreements to Repurchase | ||
Offsetting Assets [Line Items] | ||
Securities pledged | 1,100 | |
Security collateral received | $ 59.4 |
SECURITIES BORROWING AND LEND_4
SECURITIES BORROWING AND LENDING - SCHEDULE OF ASSETS AND LIABILITIES SUBJECT TO MASTER NETTING ARRANGEMENTS (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Gross amount of securities borrowed | $ 65.6 | $ 0.3 |
Gross amount offset on the consolidated balance sheets | 0 | 0 |
Amounts of assets presented on the unaudited condensed consolidated balance sheets | 65.6 | 0.3 |
Securities borrowed | 65.6 | 0.3 |
Security collateral received | (63.3) | (0.3) |
Net amount | 2.3 | 0 |
Liabilities | ||
Gross amount of securities loaned | 1,366.6 | 3,651 |
Gross amount of securities loaned offset on the consolidated balance sheets | 0 | 0 |
Amounts of liabilities presented on the consolidated balance sheets | 1,366.6 | 3,651 |
Securities loaned | 1,366.6 | 3,651 |
Security collateral pledged | (1,226.5) | (3,426.8) |
Net amount | $ 140.1 | $ 224.2 |
FINANCING ACTIVITIES AND OFF-_2
FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK - NARRATIVE (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||||
Apr. 30, 2022 | Apr. 30, 2021 | Oct. 31, 2019 | Jun. 30, 2022 | Dec. 31, 2021 | Oct. 31, 2020 | |
Debt Instrument [Line Items] | ||||||
Settlement date basis, equities | 2 days | |||||
Settlement date basis, options | 1 day | |||||
Revolving Credit Facility | October 2019 Credit Facility | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, amount entered into | $ 200,000,000 | |||||
Outstanding borrowings, long-term | $ 0 | $ 0 | ||||
Commitment fee percentage | 0.10% | |||||
Revolving Credit Facility | October 2019 Credit Facility | Eurodollar | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate on loan | 1% | |||||
Revolving Credit Facility | October 2019 Credit Facility | Federal Reserve Bank of New York Rate | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate on loan | 0.50% | |||||
Revolving Credit Facility | October 2019 Credit Facility | Eurodollar, One Month Interest Period | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate on loan | 1% | |||||
Revolving Credit Facility | October 2019 Credit Facility, As Amended | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, amount entered into | $ 625,000,000 | $ 600,000,000 | ||||
Revolving Credit Facility | Line of Credit | April 2021 Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, amount entered into | $ 2,180,000,000 | |||||
Commitment fee percentage | 0.50% | |||||
Outstanding borrowings, short-term | $ 0 | $ 0 | ||||
Revolving Credit Facility | Line of Credit | April 2021 Credit Facility, Tranche A | Short-Term Funding Rate | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate on loan | 1.25% | |||||
Revolving Credit Facility | Line of Credit | April 2021 Credit Facility, Tranche B and C | Short-Term Funding Rate | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate on loan | 2.50% | |||||
Revolving Credit Facility | Line of Credit | April 2022 Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, amount entered into | $ 2,280,000,000 | |||||
Agreement fee | 3,650,000,000 | |||||
Increase limit on credit facility | $ 1,140,000,000 | |||||
Revolving Credit Facility | Line of Credit | April 2022 Credit Facility, Tranche B and C | SOFR | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate on loan | 0.10% |
COMMON STOCK AND STOCKHOLDERS_3
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - NARRATIVE (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2022 USD ($) | Feb. 28, 2021 $ / shares shares | Jun. 30, 2022 USD ($) class vote $ / shares shares | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) class vote $ / shares shares | Jun. 30, 2021 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Preferred stock, shares outstanding (in shares) | shares | 0 | 0 | ||||
Number of classes of common stock | class | 3 | 3 | ||||
Share-based compensation | $ 164 | $ 1 | $ 384 | $ 10 | ||
Capitalized share-based compensation expense | 7 | 0 | 17 | 0 | ||
Unrecognized compensation cost | 1,800 | $ 1,800 | ||||
Unrecognized compensation cost related to outstanding stock options, weighted-average period | 2 years 2 months 12 days | |||||
Technology and development | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | 59 | 1 | $ 141 | 2 | ||
General and administrative | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | 105 | 0 | 233 | 8 | ||
Workforce Reduction | April 2022 Restructuring | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | (24) | (24) | ||||
Employee Severance | April 2022 Restructuring | Technology and development | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | $ 16 | |||||
Employee Severance | April 2022 Restructuring | General and administrative | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | $ 6 | |||||
Time-Based RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | 78 | 0 | 208 | 0 | ||
Market-Based RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | 82 | 0 | 166 | 0 | ||
Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | $ 1 | 1 | $ 3 | 10 | ||
2013 and 2020 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares of common stock authorized (in shares) | shares | 360,000,000 | 360,000,000 | ||||
Shares issued under plans (in shares) | shares | 84,000,000 | |||||
Common stock reserved for issuance (in shares) | shares | 148,000,000 | |||||
2020 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares remaining available for issuance (in shares) | shares | 128,000,000 | 128,000,000 | ||||
2021 ESPP | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | $ 3 | $ 0 | $ 7 | $ 0 | ||
Tranche 1 Convertible Note Holders | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Maximum amount of all warrants | $ 380 | $ 380 | ||||
Common Class A | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of voting rights per share | vote | 1 | 1 | ||||
Common Class A | IPO | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Conversion of common stock (in shares) | shares | 137,300,000 | |||||
Conversion price (in dollars per share) | $ / shares | $ 26.60 | |||||
Aggregate warrants exercisable (in shares) | shares | 14,300,000 | 14,300,000 | ||||
Exercise price (in dollars per share) | $ / shares | $ 26.60 | $ 26.60 | ||||
Common Class B | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of voting rights per share | vote | 10 | 10 |
COMMON STOCK AND STOCKHOLDERS_4
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Number of Shares | ||
Beginning balance (in shares) | 14,527,468 | |
Granted during the period (in shares) | 4,463,248 | |
Exercised during the period (in shares) | (1,986,252) | |
Cancelled and forfeited during the period (in shares) | (390,114) | |
Ending balance (in shares) | 16,614,350 | 14,527,468 |
Options vested and expected to vest (in shares) | 16,614,350 | |
Options exercisable (in shares) | 12,103,301 | |
Weighted-Average Exercise Price | ||
Beginning balance, Weighted-Average Exercise Price (in dollars per share) | $ 2.20 | |
Granted during the period, Weighted-Average Exercise Price (in dollars per share) | 14.15 | |
Exercised during the period, Weighted-Average Exercise Price (in dollars per share) | 2.07 | |
Cancelled and forfeited during the period, Weighted-Average Exercise Price (in dollars per share) | 11.92 | |
Ending balance, Weighted-Average Exercise Price (in dollars per share) | 5.20 | $ 2.20 |
Options vested and expected to vest, Weighted-Average Exercise Price (in dollars per share) | 5.20 | |
Options exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 2.04 | |
Weighted- Average Remaining Life | ||
Weighted- Average Remaining Life | 5 years 5 months 1 day | 5 years 4 months 13 days |
Options vested and expected to vest, weighted-average remaining life | 5 years 5 months 1 day | |
Options exercisable, weighted-average remaining life | 4 years 11 months 15 days | |
Total Intrinsic Value (in millions) | ||
Total Intrinsic Value (in millions) | $ 75 | $ 226 |
Options vested and expected to vest, total intrinsic value | 75 | |
Options exercisable, total intrinsic value | $ 75 |
COMMON STOCK AND STOCKHOLDERS_5
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY- SCHEDULE OF ACTIVITY RELATED TO TIME-BASED AND MARKET-BASED RSUs (Details) | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Time-Based RSUs | |
Number of RSUs | |
Unvested restricted stock, beginning balance (in shares) | 49,428,070 |
Granted (in shares) | 44,896,905 |
Vested (in shares) | (11,210,977) |
Forfeited (in shares) | (10,650,056) |
Unvested restricted stock, ending balance (in shares) | 72,463,942 |
Weighted- average grant date fair value | |
Unvested restricted stock, Weighted-average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 31.78 |
Granted, Weighted-average grant date fair value (in dollars per share) | $ / shares | 12.44 |
Vested, Weighted-average grant date fair value (in dollars per share) | $ / shares | 24.60 |
Forfeited, weighted-average grant date fair value (in dollars per share) | $ / shares | 27.28 |
Unvested restricted stock, Weighted-average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 21.57 |
Market-Based RSUs Eligible to Vest | |
Number of RSUs | |
Unvested restricted stock, beginning balance (in shares) | 1,267,918 |
Granted (in shares) | 0 |
Vested (in shares) | (230,530) |
Forfeited (in shares) | 0 |
Unvested restricted stock, ending balance (in shares) | 1,037,388 |
Market-Based RSUs Not Eligible to Vest | |
Number of RSUs | |
Unvested restricted stock, beginning balance (in shares) | 57,650,926 |
Granted (in shares) | 0 |
Vested (in shares) | 0 |
Forfeited (in shares) | 0 |
Unvested restricted stock, ending balance (in shares) | 57,650,926 |
Market-Based RSUs | |
Number of RSUs | |
Unvested restricted stock, beginning balance (in shares) | 58,918,844 |
Granted (in shares) | 0 |
Vested (in shares) | (230,530) |
Forfeited (in shares) | 0 |
Unvested restricted stock, ending balance (in shares) | 58,688,314 |
Weighted- average grant date fair value | |
Unvested restricted stock, Weighted-average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 23.50 |
Granted, Weighted-average grant date fair value (in dollars per share) | $ / shares | 0 |
Vested, Weighted-average grant date fair value (in dollars per share) | $ / shares | 2.34 |
Forfeited, weighted-average grant date fair value (in dollars per share) | $ / shares | 0 |
Unvested restricted stock, Weighted-average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 23.58 |
COMMON STOCK AND STOCKHOLDERS_6
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY - SCHEDULE OF SHARE-BASED COMPENSATION (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | $ 164 | $ 1 | $ 384 | $ 10 |
2021 ESPP | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 3 | 0 | 7 | 0 |
Time-Based RSUs | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 78 | 0 | 208 | 0 |
Market-Based RSUs | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 82 | 0 | 166 | 0 |
Options | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 1 | 1 | 3 | 10 |
Brokerage and transaction | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 1 | 0 | 2 | 0 |
Technology and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 59 | 1 | 141 | 2 |
Operations | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 1 | 0 | 5 | 0 |
Marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | (2) | 0 | 3 | 0 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | $ 105 | $ 0 | $ 233 | $ 8 |
COMMON STOCK AND STOCKHOLDERS_7
COMMON STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY- SCHEDULE OF VESTING FOR AWARDS OUTSTANDING (Details) - Outstanding Awards $ in Millions | 6 Months Ended |
Jun. 30, 2022 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares (in shares) | shares | 78,037,898 |
Expense | $ | $ 1,757 |
Remainder of 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares (in shares) | shares | 13,419,964 |
Expense | $ | $ 415 |
2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares (in shares) | shares | 26,663,047 |
Expense | $ | $ 628 |
2024 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares (in shares) | shares | 20,916,833 |
Expense | $ | $ 406 |
2025 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares (in shares) | shares | 13,864,617 |
Expense | $ | $ 269 |
2026 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares (in shares) | shares | 3,173,437 |
Expense | $ | $ 39 |
NET LOSS PER SHARE - CALCULATIO
NET LOSS PER SHARE - CALCULATION OF BASIC AND DILUTED INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (295) | $ (502) | $ (687) | $ (1,947) |
Less: allocation of earnings to participating securities | 0 | 0 | 0 | 0 |
Net loss attributable to common stockholders | (295) | (502) | (687) | (1,947) |
Net loss attributable to common stockholders | $ (295) | $ (502) | $ (687) | $ (1,947) |
Weighted-average common stock outstanding - basic (in shares) | 874,873,301 | 232,223,019 | 871,343,295 | 231,459,227 |
Dilutive effect of stock options and unvested shares (in shares) | 0 | 0 | 0 | 0 |
Weighted-average common stock outstanding - diluted (in shares) | 874,873,301 | 232,223,019 | 871,343,295 | 231,459,227 |
Basic (in dollars per share) | $ (0.34) | $ (2.16) | $ (0.79) | $ (8.41) |
Diluted (in dollars per share) | $ (0.34) | $ (2.16) | $ (0.79) | $ (8.41) |
NET LOSS PER SHARE - POTENTIAL
NET LOSS PER SHARE - POTENTIAL COMMON SHARES EXCLUDED FROM THE CALCULATION OF DILUTED NET INCOME (LOSS) PER SHARE (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 162,361,068 | 562,605,023 | 162,361,068 | 562,605,023 |
RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 131,163,406 | 132,048,248 | 131,163,406 | 132,048,248 |
Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 16,614,350 | 17,685,650 | 16,614,350 | 17,685,650 |
Unvested shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 378 | 128,228 | 378 | 128,228 |
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 14,278,034 | 0 | 14,278,034 | 0 |
ESPP shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 304,900 | 0 | 304,900 | 0 |
Redeemable convertible preferred stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 0 | 412,742,897 | 0 | 412,742,897 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Investor | Jun. 30, 2022 party | Feb. 28, 2021 tranche |
Related Party Transaction [Line Items] | ||
Number of related parties | party | 2 | |
Convertible notes | ||
Related Party Transaction [Line Items] | ||
Number of tranches issued | tranche | 2 |
LEASES - NARRATIVE (Details)
LEASES - NARRATIVE (Details) $ in Millions | 3 Months Ended |
Jun. 30, 2022 USD ($) option | |
Lessee, Lease, Description [Line Items] | |
Number of renewal options (or more) | option | 1 |
Derecognition of right-of-use assets | $ 23 |
Derecognition of lease liability | $ 22 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 11 years |
LEASES - SCHEDULE OF LEASE EXPE
LEASES - SCHEDULE OF LEASE EXPENSE AND OTHER INFORMATION AND CASH FLOWS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Lease, Cost [Abstract] | |||||
Fixed operating lease costs | $ 9 | $ 5 | $ 18 | $ 9 | |
Variable operating lease costs | 1 | 2 | 3 | 3 | |
Total lease costs | $ 10 | $ 7 | $ 21 | 12 | |
Weighted Average Remaining Lease Term and Discount Rate [Abstract] | |||||
Weighted-average remaining lease term | 7 years 3 months 18 days | 7 years 3 months 18 days | 7 years 3 months 14 days | ||
Weighted-average discount rate | 6.42% | 6.42% | 6.27% | ||
Operating cash flows: | |||||
Payments for operating lease liabilities | $ 11 | 1 | |||
Supplemental cash flow data: | |||||
Lease liabilities arising from obtaining right-of-use assets | $ 32 | $ 32 |
LEASES - SCHEDULE OF FUTURE MIN
LEASES - SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Leases [Abstract] | |
Remainder of 2022 | $ 16 |
2023 | 33 |
2024 | 31 |
2025 | 30 |
2026 | 22 |
Thereafter | 85 |
Total undiscounted lease payments | 217 |
Less: imputed interest | (46) |
Less: lease incentives | (17) |
Total lease liabilities | $ 154 |
COMMITMENTS & CONTINGENCIES (De
COMMITMENTS & CONTINGENCIES (Details) $ in Millions | 1 Months Ended | ||||||
Sep. 30, 2021 plaintiff | Jan. 31, 2021 customer | Dec. 31, 2020 count case | Jul. 31, 2020 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jan. 28, 2021 tranche | |
Loss Contingencies [Line Items] | |||||||
Accrued for legal and regulatory contingencies | $ 110 | $ 85 | |||||
Number of tranches | tranche | 3 | ||||||
Massachusetts Securities Law Violations | |||||||
Loss Contingencies [Line Items] | |||||||
Number of lawsuits | count | 3 | ||||||
Putative Securities Fraud Class Action Lawsuit | |||||||
Loss Contingencies [Line Items] | |||||||
Number of lawsuits | case | 5 | ||||||
March 2020 Outages | |||||||
Loss Contingencies [Line Items] | |||||||
Number of customers | plaintiff | 400 | ||||||
R H C Anti Money Laundering Cybersecurity And Other Issues | Unfavorable Regulatory Action | |||||||
Loss Contingencies [Line Items] | |||||||
Expected monetary penalty | $ 30 | ||||||
Putative Class Actions | |||||||
Loss Contingencies [Line Items] | |||||||
Number of customers | customer | 2,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Aug. 02, 2022 tranche | |
Subsequent Event [Line Items] | ||||||
Share-based compensation | $ 164,000 | $ 1,000 | $ 384,000 | $ 10,000 | ||
August 2022 Restructuring | Minimum | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Share-based compensation | $ 40,000 | |||||
August 2022 Restructuring | Maximum | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Share-based compensation | 50,000 | |||||
August 2022 Restructuring | Employee Severance | Minimum | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | 30,000 | |||||
August 2022 Restructuring | Employee Severance | Maximum | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | 40,000 | |||||
August 2022 Restructuring | Facility Closing And Contract Termination | Minimum | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | 15,000 | |||||
August 2022 Restructuring | Facility Closing And Contract Termination | Maximum | Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | $ 20,000 | |||||
August 2022 Restructuring | Subsequent Event | Workforce Reduction | ||||||
Subsequent Event [Line Items] | ||||||
Number Of employees involved in workforce reduction | tranche | 780 | |||||
Number of employees involved in workforce reduction, percentage | 23% |