- Earnings call transcript Q3 2022

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Operator

Hello, everyone, and good day. Thank you for standing by. Welcome to the Robinhood Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference call is being recorded. now Vice conference President to Chris over like our Kagal, of would hand call the to I Investor Relations. ahead. Go

Chris Koegel

Robinhood's Haley. Founder, and you, CFO, joining Call. Welcome, and us Third for With thank Earnings Quarter are Vlad Warrick. Tenev; Thank today XXXX you everyone, Jason us CEO for and

materially no have about Potential could on most to XX-Q plans. and earnings website SEC differences, be our outlook our we With release and to Investor operational I to we we our also Before that can turn issued it discussion expectations presentation provide required. found the Vlad. including today financial getting Relations described Investor to comparable that want and our filed XX, other over in started, unless legally Relations the are will our non-GAAP duty risk Form today's results from the filings. consider in could and updates differ developments Actual you at Today's let remind our include XXXX monitor contain our forward-looking statements factors cause will on press me presentation slide continue in results that to measures. regulatory GAAP August website, that, financial Reconciliation investors.robinhood.com. presentation related strategic

Vladimir Tenev

end of ambitious structure the of able intro, a quarter revenues our in for by demonstrate us simultaneously a place. of team. milestone thanks adjusted our decrease cost, backdrop, for cost I'm X to We schedule, we of that good the to an EBITDA we and is In were and had of to we EBITDA proud incredibly macro Chris, $XX to diversification profitability model. set our spite million, in goal this tough we feel a business increase Thanks and months proud QX, to the everyone year, ahead for ago, achieved joining. adjusted I'm return of

are here. products great look customers how focused business. take So you growing on our tell invest our us to long the we're cycle and they dollars with first, delivering each I'll as through and plans macro customers continue customers environment, our a the service of the now fully doing. But net billions quarter our let's for term. for trust Amidst deposits about of at challenging more

customers' our in billion deposits, again drove business $XX QX. S&P average, customer cycle those this customers' by Excluding under up importance the environment and diversifying our the values market needs custody, portfolios, NASDAQ equity trading. These financial of through beyond declining serving highlights outperformed factors quarter. of on X% assets the about slightly to our despite This and

with tell customers some Starting time, the let in money. the and highest loans with account. the their rate when for sweep more on customers an earn present rates with across to you they're helps products FDIC their of from can have seen they it limits, interest Xx this $X.X X% get gold a fantastic a X mortgages, excited even bank for up of customers crypto million, not opportunity uninvested not our insurance payments. decade. interest be So on a In At yields September, student about of on because about at investing. car levels our for challenging brokerage, cash brokerage. earn me cash our and what same high typical really CDs over to and working product Today's on we're We're cash no you the we of via program that commitments introduced members, time none balance available

This deal for is $X.X the Robinhood balances financial Fed billion following years by raised rate best we'll rate the see over another planning gold make we sweep of customers up with And raise today's coming just Gold hike, the even rates. X to interest in so far, we the we investments like for services. higher. we're since what cash And gold

We so we're Retirement, heart time Year to want in Robinhood for just IRA also to of excited provide Robinhood, New term the at great for the launch for customers, and value investing the season. long

For customers open share you, excited or new long-term a retirement existing an love our account and to product IRA it. in investing. you'll their first We're with know roll or taking we looking to over steps this

has fee same our of money saved levels contract options other our our fees. want for are flow not you customers customers. payment that I valuable incredibly of case love X may work advanced And per We're option don't lot year. like option those of past in about our a the platforms been of a more most this, trade each at $XXX for fees customers to the the Finally, lot of sophisticated this $X.XX sound team generate. offer for are we Recall, that products who more paying the charge options. money, very great a advanced our that's share paying for about order no options. like firms customers customers to like and contract use some brokerage is in place customers too of doing who addition a trade. We In know and saving not while trades. much for companies way trading million with like something few And this And over lot trade to think actively customers

average, of our than at year, the less other Now our with start on advanced satisfied customers. service our were, customers the

more extended in the starting products designed kept So tools we them, to hearing with they feedback and analytics their listen trading app. lending. on and and down data, wanted We double hyper stock trading hours building for

charts. We these So the simple, analysis user trading built interface. quick, for we without give to and out want advanced August, customers they rolled that in advanced natively in-depth customizable cluttering

in cash at advanced accounts. options in trade a customer years, level Additionally, churn driver able churn is being while not the to leading was lowest of

X flip where have the experience Robinhood a customers. other seen the now months, customers satisfaction to in this with advanced we are out feature So pleased higher And our we've roll July. than in past

Robinhood we're everyone. and always to a Of more make for to continuing invest do, platform course, to fantastic there's

move to everyone power and system is let's crypto. the web, financial operating the of we have Now the want decentralized future services. to low-cost believe of safe, to access which easy We

after last of a to Web wait XX,XXX than wallet So our people we since self-custody May, building list Robinhood of out that more beta excited Wallet, first X X the customers month. we're the million rolled the

available us customers early, to more the that blockchains add us and While hearing fees. They it's we're and roll the gas trade. and to like mobile response no to And encouraged tell of this experience Robinhood coins out internationally. the them they enhancing for planning to see simple and increase keep that swap to we're love wallet intuitive the wallet. they breadth we'll also really the love from We're early enthusiastic they'd

over this be people available product world. all the that will excited first to our we're So

We over also more out continue considered to the roll in quarter past coins and a manner. deliberate

these our from was coin One stable USDC Circle. first of

content. of to about give roll creating called gives our our a this educational customers more Learn learning program reasons earn engage excited we're this ability simply We're rollout, As new customers by educational out to and crypto to it. and free our part awesome the even with Earn that

out as which includes to Robinhood of Now tools let's as card our in about Robinhood. move cash talk Money, and well money

in on XXX,XXX today. cash it's our early card, March, focused launched We're still experience. improve to we have over customers which While continuing for the

more as card their top Cash in use the So customers Card wallet. the

the excited enjoy cash soon, management benefits. enhanced we're so also the ahead, our customers Looking X to be they card can new to introducing million legacy

some to weight able something Another their Robinhood deposits staple for instant up the money instantly withdraw seamless that invest we gold well of this rather to days traditional including to up customers to years, ACH customers is to loved is our in, have ability that as realized $XX,XXX. We than to make And business X deposits. transfers. giving be for continue instant customers want that

easy So experience will X.X% banks last ACH and customers we the think through money a rolling focus use withdraw a well. Robinhood our we've the positive month, point, in like to while and at posted iteration hard, to Stepping competitive we're going to financial outside our Robinhood a our quality ability transformation roll for fastest a customers of always participating on change you We to seen trimming geopolitics, maintaining with the price service transfers. customers from out while more new world instant for withdrawals, product really back the providing managed lot of past instantly options. started change I speed free within and seen. broadly, out been cash Despite economy, significantly this excited headcount has we've best year, as the want to new of in the this markets it's money incredibly as expanded movement velocity in I've here. change And option expedited expenses, bit, environment pricing think seen to keep our and been well itself. and and and an is gone choice of service the constraint progress and We've our in and We're having company. as to

turn tools lucky to of lives driving And it let profitability Our team. schedule. and to talented access ordinary rich. adjusted focus a with give for ahead open to for congratulate them quarter again that, their us I'm to to wanted giving remains EBITDA on such building be me Jason. that once people control over exceptional products reserved financial the I working over X With

Jason Warnick

deposits. continuing and revenues value. positive environment, good helped the adjusted pleased on increase accounts generated made Thanks, long-term business quarter, shareholder costs. maintain in team customers, drive macro focused third mentioned, funded growing quarters. we EBITDA I'm our steady lower In QX road by and today. net continued Vlad. as the And we've progress map, stayed by In we through first speak net everyone of X to Vlad XXXX the and spite strong the to which our deliver It's serving our to with driving on

with industry-leading XX.X by Monthly Despite churn Let's also encouraged low and quarter. business net million, in down million, tick look seen engagement we're starting up and environment, October quarter, increased up were accounts XX.X through active volatile funded difficult We QX. were We've X.X million. results. to another QX. users from at to our continue XX.X MAUs XX,XXX million continued the Net funded about third accounts the from

grew AUC strong from quarter. $XX than up lower AUC billion. Turning billion, back to offset about impact more assets were under X% move October, deposits $XX They the we net In market as valuations. about to up saw last of custody.

drive net which meaningful the long-term a month. asset asset can We've billion to net This contributing growth customers closely rate. see QX, deposits, in $X.X were in rising deposit time. over deposits with more in over net growth at as $X.X October for of strong growth XX% Looking the encouraging strength in annualized continued billion they is translates to combination markets

Now XX EBITDA and positive operating let's increased that improved results. quarters. $XX financial million. higher from from $XXX lower were was our EBITDA QX QX This points margin drove and by improvements more $XXX adjusted than and look over revenues by Adjusted QX, at the These costs driven leverage. over past X million million

delivering we're this emphasize While quarter profits important I'd drive to in journey higher milestone, positive early an adjusted over was time. our that EBITDA

$XXX net revenues, revenues. let's last by primarily a lower interest up were quarter. $XX, Now revenues was QX transaction $XX net This from partially review in was QX. increase by other Total XX% driven from our ARPU QX higher revenues. offset seasonally million,

but Notional decreased $XXX options to moving equities revenues. in transaction-based sequentially. in up million, X% They volumes Now and were crypto. increased

levels trading For X line saw with October, the roughly we September. across in categories

part total interest the Fed like our over high couple net continued driving which from revenue up highlight at of a million revenue I'd mix, QX growing it new to rates. of is XX% a increase and reached QX, of in as over XX% of a things. Looking revenues, to $XXX

growth assets week, to First, strong partially end billion up balances, sweep buying the into the market. $XX customer last by as in our of interest-earning net of offset cash by were over driven

last of including billion end were $X.X our cash $X.X to the of week, gold. up billion, in As sweep balances

largely deposits new things suite gold. is the majority really the gold that's rest from the the in upgrades to coming balances of are One of with from exciting increases

already program, securities launched of is QX, paid margin lending. $X start. just lending XX% a to our million reaching about which May securities fully in from off of good It revenues our generated Second, in revenue

likely of another by QX, ahead interest what growth. net Looking be we're looks to encouraged revenue quarter to

and QX. higher in far net see today so well what customer securities be Fed forward lower a how and that in are balances forward. sweep like quarter, As move out. QX added will decrease plays each customers to deposit give to as up for we consider in QX book from curve, than the This see that level, or monthly interest so we've we'll for net note come metrics and certainly interest how rates,as roughly we million help margin our We balances could revenues our the I'd cash by have through additional into QX we we to should Also, as trending our $XX insight quarter. anticipate revenues lending going

program. early our finding program of like from We $XX net seasonal in deposits. Moving ways offer The of on to We're customer add were the million. high-yield X% decrease gold looking They gold in to $XX at QX, more driver finished and sweeps other our million to due proxy-related subscribers, which gold to QX excited really million, forward investing are driving with revenues. be to largest this revenues these down to on the primarily revenues. $X.X strong value signal, we're

they at were $XXX at charges. compensation. If and to in to other versus was and which OpEx let's $XXX and of starting QX. several technology prior including $XX OpEx third-party in categories, which Now Progress improvement cost in of with QX, million They look share-based million $XX we SBC driven reductions infrastructure. labor was million includes primarily by expenses, prior workforce were restructuring over million, look improvements restructuring, an

expect progress, progress planned to the OpEx increases to reflecting position. getting level where be the the below that to we've range leaner year, is which we this note made million marketing. of we QX I'd to operating in million QX $XXX our $XXX $XXX started in a Given roughly SBC million, includes prior

million, Turning from which of million $XXX net to was reduction. compensation. reversal is share-based $XX August workforce It a our

$XXX million will expect to $XXX For QX, we SBC the be of in million. range

like dilution, here. I'd As a updates share couple for to of

First, year. quarters by share presentation quarterly our X up we're of X% adding count, which this through diluted first for is little new our more than disclosure earnings the a to

zone For year-end, we QX. as be to diluted expect shares the in same

today's for planning Second, count next grow our to from to change year, no looking level. by in less, share X% or we're our price diluted assuming stock

I to Now on acquisition. capital our an want management. Ziglu update to share

at whether While deal including Wallet there's international the launching parties we the it, hard early like regulatory at our I'd as is uncertainty quarter. know this deal close. close What won't emphasize some the will working are Robinhood next globally expansion, point several that to we this to that pathways year.

of the over our environment, strong cash it on and around excited world current time. cash position. position and with provides important evaluate combination That's strength, flexibility map over remain remains billion In So continue runway our no acquisitions. about product serving debt, customers we us like the customers, we $X opportunity to our to and have in road This for also serve the to and structure. a our execute financial balance improvements potential corporate why sheet cost

and opportunities Chris, for progress excess ahead of With cash As I scenarios. and mentioned to to in Q&A. pleased value let's $X.X the have billion really customers QX with last roughly deliver shareholders. of I'm us risk about that, optimistic closing, move In above quarter, we our the

Chris Koegel

a Jason. live common All together right. about answered this a that over answering Leading the questions dozen group shareholders we'll the questions share Technologies we'll questions call, theme. analysts. from start quarter's ranked our questions Q&A by of say that of turn Thank already that, questions you, in were number session, on votes. into After We'll any pass to from from by

top it X from say of questions. with kick to technologies. X I'll going pair I'm So off our questions together

this will from retirement to Robinhoo. is [indiscernible] there be any also [indiscernible] accounts first plans Roth to are from offered year? asks, RIA And asks, add another accounts The who

Vladimir Tenev

yes short is answer to both. The I'll field that one.

team at excited time we're just out roll been working season. for retirement the in The tax to has So hard it.

just prop I the the it you'll But is polishing for in look out that rolling value looks think for product it really like to we're making about and customers. like feel time we going what sure good and tax And the season. it great.

Chris Koegel

include as will IRA's that well, And Roth Vlad? Great.

Vladimir Tenev

will. Yes, it

So going we as it. really get think to but we'll we are like have context closer, additional people

Chris Koegel

-- product. add next available question there on there plans to The All also ii, investments? Terrific. are to Are right. bonds any any Brian

Vladimir Tenev

Thanks, Brian.

to have a products. to have customers plans don't solutions we for offer of fixed income that While near-term exposure We lot do want bonds.

bond And a course, we customers have we them of call, I the So interest uninvested very in already offering ETFs. as their offer on for gold we pay mentioned cash. competitive where

hike has Fed hike. and further will increase even rate that So today's Fed after rate the X% since last rate been actually

In terms adding as hearing to long-term investors for instruments with add about of and and that diversifying, tools who we understand might customers bonds feedback of those to requesting lot said, to Robinhood, we retirement more that. a That more been haven't we specifically. begin see are continue more we

and So products we're to able listening add to we're always care and they that customers the obviously most. excited about

continue to to that. on going we're So keep eye an

Chris Koegel

are One more who Robinhood? question right. credit All John product there from plans a at to card launch any asks,

Vladimir Tenev

today, near-term we here. with deposit paycheck. you and X-day cards, if your also pay we a offer early don't and debit rewards credit have any incentives, But direct For plans card merchant

So the Card this was the Cash introduced year. with this Robinhood earlier of launch

this to customers particularly access So we recognize may in want credit, environment.

at looking we're credit near-term no to for cards. but going So that, be plans immediate

Chris Koegel

question Vlad. a you, for probably Thanks, The capital is question, so Jason. Okay. next

in Erfan asks, are the future? So you dividends to planning give

Jason Warnick

on capital expansion. to We and think cash don't best the drive use our right development dividends now. growth is giving international of focused product We're using our through

priority. via acquisitions. shareholders is -- to to move. over right focused again, now, We But right we'll time, to continue higher growth also the But we're it's like to as returning the cash flexibility grow whether a on evaluate

Chris Koegel

Thanks, Jason. right. All

when IPO see from access? return Brian, question of Another we will a who asks,

Vladimir Tenev

this field I'll Yes, one.

platform. that the offer on So Robinhood we in of IPOs terms

of year would slow the really in this the to is has IPOs our of to a terms We have been for enough fact cap selection base. some feature be big matter criteria. And customer that market

as around is so this that IPO to meet and that that soon be hard participate. market we understanding our to as turns those at bring So the they customers more work those to IPOs we're criteria, cyclical see going can

Chris Koegel

Great. To couple X-parter. a ask a in of questions

Let's separately. take those

and So asks, -- will go when Robinhood he [indiscernible] global?

Vladimir Tenev

[indiscernible]. for answer one. year. is you take The question, that I'll next the Yes, Thank short

So internationally. roll out Wallet we the Robinhood to plan

as over So work customers to continue our that some this year. And product will available actually we world. uncertainty the available And on early or regulatory be all acquisition. our mentioned, next be that first Ziglu there internationally will to is Jason

Chris Koegel

All when its IPO right. think And Robinhood [indiscernible] also you might asks, regain do valuation?

Vladimir Tenev

Thanks, Yes. Atanu.

So value, as has shareholder that performance business. year. to as work, been hard And we value we recognize stock as think this the for the overall shareholders at about we're hard well our adding market

me thinking about how let tell we're So you this.

going First, focused to made be you couple we grow from as lot and quarters, structure. here. our as of seen, the for to manage in a And us on we're we've the important guys it's have here last cost very progress of

improvements new really got And to here we've we've well. products. We've that Second, have a existing tremendous we introduced lot of made as progress products.

get the the we're be value rolling products continue. are we're a probably As expect product focused that call, and velocity, be best really to new be market deliver the I and to to to I've a constrained, doing was able going quality as we going doing to improvements both But time. And over to the going if and good product we to think get starting of has of keep things I our not to And many the things to as and and quality we been I going improving lot things, shareholder velocity, since that service in product existing keep little in of we're some impactful the if bit we're seen mentioned earlier existing we if Robinhood. products for better. tremendous, out our to that products, of continue do going have the and think these quality

Chris Koegel

is next the Jason. Maybe right. All X for

benefit you about rates can affect how talk you the business asks, [indiscernible]? benefiting interest P. rising business see the John and So from where

Jason Warnick

Sure. one. take this I can

X the recently. we've billion But generate revenues With about trading seen Our from trading activity and that down rates on increasing, areas biggest interest X come we hand in $XX we revenues. that generate are assets interest interest. have

it's Customers So when rates us benefits just revenue that us. benefit. interest rates. interest for more increase, from also those But assets not rising generate

we've that earn can X%, today, Vlad As further really increased now the to rates gold members talking today. currently rate that increase cash. was the on increased we're and about excited that further Fed their It's

Chris Koegel

trading be All next who X right. asks, offered XX-hour is Heckman at Robinhood? from P The when will

Vladimir Tenev

something This field I'll that excited Yes, that about. I'm very one. is

modernizing Robin got started. century from I Hood it trading bringing XXst So about the has the and been mean, stock into time really we

that working it we things is structured a on in made which the trading So use X such vibrant mobile. the commission around and to right we introduce were X of first stock hours. market seamless particularly large the East is now to archaic And U.S. the equities, model, Coast is that's fact

is think offering to accessible goal stock particularly We start modernize we want. . internationally. our So services investing that people to XX/X and trading, be as round-the-clock important deliver going our this whenever making is

So today, year, of can as half the is over people at trade of and this day. this for earlier Robinhoo

So starting a.m. hours, trading beta X:XX Eastern. which X a.m. testing at even a.m. p.m. We're to X longer X:XX include Eastern. now to

the it early by hours mornings. So X extending in

be to a able day. And hours once will customers that's for XX trade launched, so

you're is as as so possible. XX/X get progress. continuing to to And the goal see to trading us And soon make

of plenty happening exciting So work there.

Chris Koegel

Thanks, Vlad. Awesome.

Okay.

has plan Next negative back on bringing people there question, the cetera. the countering et you on Reddit, these out dunking do through podcasts, G. Robinhood fold? been opinions How asks, Marcus media docs, various the into and

Vladimir Tenev

Yes. that, for you Marcus. Thank

and We've decision many a it's regain of didn't some on it trust. And that so nearly made mildly. So to that very mean we if fans a of a January negative button at of to to away progress. take make point, put And buy years the we look really lot you're X ago. that through I rally hard to think sentiment back you too to stocks, had lot been seeing difficult earn goes around stock XXXX, the back, the work

a customers, starts for We've that a think we've the solid of And listening them. lot showing actually. and this a that reputable from and it to of service, platform measuring are been quality seen made the added chat, lot pick support, reliable improve we improve these with improving I phone XX/X that we've up see customer we up. measures when Net Score. live in service we time of the support particularly followed Promoter Every strides customer we offering, we and

So we a to lot progress. us. significant trust a advanced they service customers But rebuild made while build believe to and work is our and pay on takes we're as the we for term, for that and the of long say, focused to dividends particularly doing and make that better starting we're

build So I products, to in know we answer, sort media is follow going we do this that it's as thing, long recognition but media of Reddit case, like the the social and a to right and continue believe that. exceptional

Chris Koegel

about in of Vlad. more XXXX Robinhood the right. to One from you, and launch will you similar coins. wallets company, licensed from Robinhood keep about Sajan like set addition first who question safe asks, All P investors with of safety spoken new talk Thank phases a how Celsius? has always its being Can

Vladimir Tenev

to Sure, you. It's earnings call. see thank questions, good Sajan call earnings great you after and asking

to on-ramp decentralized So stepping to crypto, the cost be we've stated, as of the trusted and most safest, Robinhood back, goal lowest is the web.

platform. trust example talking about building selective that that on this is a the of the we very about. we I just We're great think the list were So coins

introduced to listing coins. Robinhood give about lending. regular best-in-class. the in with also the offering. custody the we beta is the coin not framework, sell in the We're contact with And rigorous We XX,XXX a custody crypto wallet also that option well. customers believe We customers. crypto as we're engaged And SEC which we have We just

a and moving we approach, see that that take and customers hope you'll we're So appreciate understand continue us deliberate to carefully.

help And But a money. to slower to means other sometimes, of extremely these than little we companies. again, lot customers protect crypto be their moving deliberate want a and that bit and

Chris Koegel

Okay.

Let's do question. last one

see years? Kala asks, where So in do Robinhood you X

Vladimir Tenev

great is Yes. This question. a

that to only open people Robinhood the and mission, finance available lives previously And tools our exceptional means access to over to to is were all. their back democratize control coming of mission that for ordinary really is giving financial products to So building what us wealthy. that the give

And years, Robinhood wallet. we'd do? thing so look be out entire if to to to would you what like entire our like customers' Robinhood first serve we The X portfolios is -- and

and paycheck into So your to in use we'd find saving. to your spending like all using Robinhood for it Robinhood of for you value and deposit direct you for

Of course, right all also and retirement of investing the now, offer that passive. we long-term but

Robinhood user you So value we all to highest your manage want for of to and money. be tool best experience the

default Robinhood we thing want is your to account. for second financial The the be choice first

I So that focused just to because that's entails our be the of with want customers. for think We company being generation grow don't always being customers on next millennial-focused recipe the a and eventually irrelevant.

customers also out their the think our account, to also, spend offerings a of global top our not just used the So first company. about but mind every of. place then they deposit they every their to be the first to opening and generation, we account continue first and as adapt be have going And we're to paycheck investing

part that a broader big ton and And that, to a fairly winter. We've actually even and past look lots making year we the it benefit excited of low-cost, from of serve to to a we And invest there. continue investments entire is crypto been despite We've the in being want So world crypto the we're offer Robinhood and around think to of the market. got can't a is financial served system. world here. at simple services affordable if functional you well easy-to-use people extremely much U.S. it, and

big those serving customers opportunity, big there's our a just not of overseas. is big but we So think a part mission a

be to to going expand there's and So in done crypto invest to international of as and well. a lot work innovate

Chris Koegel

All right.

from engagement think Thank thoughtful everyone, that's And now good open for say. for questions. to from time for customers. the today's it's We I our the up appreciate you, and all shareholders questions. questions line your analyst

Okay. to open ask Kelly line. up now the I'll please

Operator

[Operator Instructions].

comes KBCM. or Josh from Beck from KMCM question -- first Our

Josh Beck

expense the the really question. I I of able kind into of we're hit ahead obviously, Thank EBITDA to dig target strides Obviously, of to you've side schedule. you real made that wanted for guess the equation. and just

into of forward as guidance, how the look we expecting baseline about QX should As we just think we next not but really of year, move qualitatively, forward? kind

Jason Warnick

Yes. Thanks, Josh.

So take I'll it's one. that Jason.

remarks the in guidance $XXX compensation So range our provided excluding take we share-based we'll to that to in of million. $XXX QX, million my OpEx,

busy leaner I XXXX. started cost you I'd that it we should that tell our think, don't base our have investments what to like But do we're and of to than where year. much with And structure. mindset. prudent for going a at in scrappy here. we scrappy position more qualitatively, We're we'll you yet. Paul, terms we We for make the next grow manage we're but lean carefully planning are a expect of guidance and that think it's is We'll think from how we as we growth, cost doing continue

Josh Beck

that Very million product the a encouraging, money And the believe, customers earlier card a helpful. I ceiling How do or question. out since to then I see pace that gate. of could where about the you've But QX. the a Certainly, were product a already in updates encouraging X.X Okay. for of go? follow-up, that if little adoption. know cash bit you survey just don't launch work for maybe think Obviously, of the done and it's

could how curious on forward? that Just progress moving

Vladimir Tenev

I'll that one. Yes. take

broadly customers' mentioned needs we're excited earlier, I as about more investing. serving really than So our

be to evolve see account. cash opportunity So people's card the primary spending actually we the to

And at and easier, a to take to and going We and we're new direct cash adoption that deposit strategy started starting excited process And of the we legacy the that know also over things point is XXXX. earning like move auto our million over. those customers I our card X-day among customers about And of the be paycheck. think on product we for it's that starting their good team management, time. see very direct paycheck have to portion pay invest This So paychecks. institution make base. to we'd to good customers a is choice to customer feel building your the early to will we've have significant someone's really ability exposure the right to point, customers about but like the for cash X existing to our where is ahead us. this deposit

the you're like you to of cash see think I part. what out going So

Operator

comes next the JMP Devin from Securities. Ryan line Our question from of

Devin Ryan

see again sheet. nice on question, So balance to building first the cash

then just that I in think us I may hard with much mentioned getting on the opportunities some the further I given to be be scale that profitability? capabilities? market you're seen you've number where I are an Jason, of add reset a get harsh just done love customers companies the M&A work interest know the away we've whether expenses. on remind And all on today, emerging? thinking valuations, about deals new how priorities, of from update to know just M&A or pretty adjacent

Jason Warnick

Vlad if we'll start, anything Sure. I'll and to has see add.

strong our balance love we So billion sheet in $X cash. position,

but number then the types democratizing It's offers in of so I a I think just than trading growth, there's at of we the we're could that vision might offerings think extend just looking whether and customers licenses look but M&A also much being our focused M&A. are of in technology, through companies or at that products to a it's that of a kind with finance not simply through of investments through rounding for good variety be product at, really transactions. acquisitions we broad ways that more portfolio also of out that new Robinhood all organically, to position

our that we're we there, the solid diligent paying So in We're going close be way to out the are opportunities but that we've really deploy capital. got a team. attention to

Vladimir Tenev

to Yes. very environment in I position. sort of that our more fraction there high-quality good positive companies really year. were they very We've think And we're of continuing I at and in out more has been patience feel as opportunities of, about see I prices this really of patient. a would some that been this say, just we earlier are sort cases, trading -- what

Devin Ryan

Yes.

Okay. Great.

about momentum bit Just interest rate like and add another product-centric, a little of that to enhancements there. of kind of you the good some a the higher quick value hear to offering. here, but tangible about The some to talked the gold you offering seems can follow-up

And maybe that from the is seeing gold bigger the you're cash existing areas picture there? then that the that, gold, that just other some of coming value you opportunities what is growth new value? into guess, the that seeing seeing customer customers driving could I around is add? So Or where actually enhance are you're

Jason Warnick

sure. first take part, the I'll for Yes,

upgrades really So from is gold. nice a largely we're the accounts. sweep to majority seeing uptick in deposits with in rest the gold the deposits finding coming And we're new from that

overall customers. assets our some It's and buying with for to this our offsets So even into strong increasing with . balance of net really the that's market encouraging interest-earning see by exciting us.

but gold can of I'll weigh terms glad In in. you enhancements, comment,

that. experiencing. was going saw to lot join our by proposition. gold to gold increased a opportunities best even had to and we product of we value gold. add I there's the at balance that look to financial with years, of invest to appealing. think growth We Essentially, like for areas priorities gold number find super at we've stepping the lot opportunity it and products other that we're as deal Cash make to the ago there's customers be was or Card that our of for frankly, a couple members high really services. the And you crypto business, here. whether dealt we'd We're other other offer to to. a ways a take higher, gold in last the we sweep I to think that changing encouraged rate X%. of over time And the the interest couple we're back, business across features today We added of to But us a years have of that

Vladimir Tenev

we active is enter that intended mind see get uninvested products. to and data interest would and do active advanced as Yes. trading us with first of really suite the aren't product deal people like that teams add The in sort keep props primarily gold more gold cash Level to asking a what financial useful margin I in into We're best continue is that market make into and as can of And foray started our X making data. our deposits customers out to kind value diversify the other so product value the on investors. well what customers competitive the you only for thing higher as And I product think services. as instant

process And our so roll gold is kind more products. new of planning becoming bit a as these out we of little

better like usage I they more of or think all-you-can-eat and simplicity Robinhood of model lots kind transition even where an customers more how product. we of their opportunities get can get an their into use see of deal from

Operator

Our next of question Repetto comes Sandler. line Piper from from Richard the

Richard Repetto

for significantly So it's think, mainly $XXX my but XX% you question lowered at look -- I outperformed XQ, comp your I in by, guess, stock-based Jason, is I you in by almost on the the by if you target comp. -- guess midpoint million. stock-based of

So in the reversal guess? strategy was culture to I'm of there in drove just than stock-based and have XQ, stock-based What trying up been expected? been regards understand performance, -- Or any change the or there but to this in going I bit sort little bigger has do you change has comp? whole comp any a

Jason Warnick

Yes.

share-based I there's few a go compensation. things think into that

effect I that last that granted last quarter been the compensation that awards was about from to comments just of granted awards is have made of historically significantly of are half that were money. out founders quarter share-based the our pre-IPO First the

hiring. we've just awards has share-based can to mentioned you're up awards Those very you and as but are be X-year your historically, new lower When workforce. impact, given an workforce expensive that You ramping historically of also reduction employees. -- the that when rate

And And offsetting has that of say would we so a kind in then look that. given stock down I what's happened the way positive slowing effect. market, also that had

continue talent. we top We also our look to retain make sure to that

which necessary net And it's of QX. reversals were the awards part up going back in year, why helps of a the net the in additional bridge on so basis, here

Richard Repetto

Got to sort guess then, Revenue of let's level of tie shouldn't a here. it. And trading that too Vlad, at is lot looks or That's very assume change things a just level like much. I helpful. trough I'm trying a together

done. got coming brought more You get you so up, revenue NII come you expenses your

forward? your Do back to do bit this? cash And Now positive of with to I quarter investment with going expenses? going you sort the do And EBITDA target build targets your early, new the you mode you You you passed is a strong point Or EBITDA. grow the what's EBITDA? the adjusted Or breakeven -- -- adjusted question a but what's get are viewing guess more into the cash? try forward? how is, adjusted

Vladimir Tenev

one, Jason can Rich, this can needed. Yes, I take add color maybe if some and

Jason Warnick

to said lean now. we're as XXXX we earlier right going question, think mindset going that Yes, grow to like sounds to and position We're I drive OpEx from that being growth. I here. a planning. mean investments like Josh's But we're deliberate to good. doesn't our we have middle scrappy make Rich, not of and our in investments thoughtful now drive of And to the

bring to guidance experience down not next for position talk in to we've a costs So about I'm not fun a kind it's done. But year. of expense just way the the that

very that here. But there's from we're We'll be the lot go going of deliberate forward. going increase a of we forward, in as mindful we way so be appropriate us. to And investments make to ahead costs opportunity

Vladimir Tenev

while progress taking And we a to well say do a is to we're the environment And bit year back cost get looser. the policy lot that aim where at good our times adjusted business accelerate can advantage of in think just strike And would the know of the we that I set when momentum. pulling demonstrate I tough we of companies we actually the balance of proud little can there. beginning to times. our positive And be then the to to in economic place do of EBITDA when and goal structure a we and that are also Yes. that sustainable economic kind other we wanted was own quite monetary a

to rolled seen, We've products product So this kind of dramatically. improve we've continued out offering as new year. you've the

we're we're happy value to going customer continue the drive about and so And and balance shareholder in and invest growth to revenues the to future.

Operator

the Chubak Wolfe from comes line of Steven Research. question next from Our

Steven Chubak

upside from mouthful, feedback to a to from suggest was to to shined unpacking bear revenue rates alone. little a be going others that but this really up This some hoping less quarter. assets to just of tough XX% the guidance assets going me. with some it's than only not with offering, more recognizing of unpack recognizing far. in do the are through I It have the going So, you NII is I'm on time XQ based I earlier spend earning higher guidance a reconcile, the funds in to just really the component comments small of makes thus offered have Fed And NII Jason, that want bps just any bit just to And average that beta even hikes that competitive the be per transpired proportion, higher actually your sweep have the XQ, north attached. pieces, XXX is trending up earning sort still, deposit of your you're

just component just those to feels trying $XX sequential reconcile increase, which So light? pieces all with the million quite

Jason Warnick

to roughly a I $X down $XX can below is of $XX start you billion. tell there margin what that come book, interest Yes, I appreciate Included bit in we've question. our that with earning billion the seen assets. and And is you billion, in October

the that think this factoring about we're quarter. rest of so variability of guidance for in as the And we

securities Additionally, has in soft. pretty October, been lending

quarter will assets, portion so rates the enjoy intend about some being of play to in pass gold as increase, back then, a sweep interest-earning of on large with the product. And Fed how course, rate there pretty as of while we the we're mentioned, to our out. increased as cautious well we rest customers think And we'll the you value also

and kind of million are we those parts, moving $XX the incremental. think So

and all, First assets growing it's well. earning growing are overall as interest that that pleased really of net we're

Steven Chubak

my just piece. on sec the And great. follow-up lending That's for

what light uptick nice a of actually on very really in what tech from others. environment. based in You especially a revenues, was seen we've challenging saw lending

hoping sizing base? client lending some provide your paid deepen I confidence sec Now that around penetration the to program, on you could quarters we're with was you're future of ability how a existing update about few that sort opportunity thinking your into revenue fully

Jason Warnick

Yes.

launching -- XX% had years. And the in continue we lending, margin several already for from that around paid product. generating offering. fully which has after revenue that's this $X fully just we're of So of We sec really about that QX months of from revenue lending. handful be securities the optimistic a at securities to We're been million of paid

lending early. very there is out lot market that of it's be securities It a time. still and it's we optimism evolving. But difficult a revenue this could a of our have over So portion meaningful

Operator

next Michael Stanley. comes question from Our Cyprys Morgan from

Michael Cyprys

Just a quarter, XX%. question on margin in the adjusted EBITDA the

Is here. for how profile about right think margin what the going Robinhood low-teens is from about And curious this you do you profile Just forward that margin longer how sustainable? term? think

Jason Warnick

Yes. It's Jason. I'll take that one.

the wouldn't you and Looking mix the see see over have But for depending in we why in for kind we'll drive margins on structural line term, attractive period future new build products new vary think costs, to the at pretty manage industry. don't I products. the long any we and our reason long we'll going with that with of And what affects shareholders. out as margins roll business. our term, that are will It's over others how we the of

Michael Cyprys

there? approach how you evolving? thinking quantify and Maybe it's And your you costs, -- your bit then can little question, how been a a help about acquisition allocating has customer you about can talk budget can costing as you're follow-up how much been

Jason Warnick

Yes.

So we're our in spending marketing increasing in QX.

we found in marketing. growth. spend we it sense high to in focused and that's have and in been quarter interest returns, also customers of that economic investing, really You tax it periods in But investing in interest of right paid kind referrals the majority tried area for paid television and to ads to like that advertising. that. an on to our mouth. might more relative started we we in for that last driven Historically, that come make to us lean that some attractive of signal really and in What have has of digital of really found And ads through lower we with doing recently begin and vast word seen we're lean us have haven't to periods pays now

doing if watch and And so seen you carefully. there, really on advertising. it, advertisements, cautious But really we've check our haven't something out some near to term, we're what the going it's we're in them. And brand-building is focusing that like been we

Operator

line from Siegenthaler next of Our from comes the Craig of question America. Bank

Craig Siegenthaler

the is digital on My launch. first wallet Web X X

it, as the plus. larger to Sorry think XX,XXX it but Is X I are X you waitlist if initial million? the you I than characterized And to going more up wait significantly open million missed when list? also, than the on

Vladimir Tenev

number actually is public. think I the

to robinhoodX.com, real-time get to go you if be the should able figure. wait list So you

the We We're they're mentioned, customers. more us we're feedback we've that the So rolling some can We're rolled yes, be And out to experience coming closely. to no they feedback to other things. and and on really, out user interface getting it I as like in fees. from like watching really tell going XX,XXX. the the useful They feedback good the multi-chain really and gas giving months.

wanted to faster really is So we're we really, early but to that it's good not sure when to, year. to we happen in a generally hurry. We next that expect roll could make it product it out want available. if the we improves, And

Craig Siegenthaler

you both a my on for terms in another wallet. this capabilities your then to potential NFTs differentiator offer? I'm what to offering see crypto NFT going as follow-up, big And X and the curious just do NFTs as for be viewing digital connecting marketplaces? you're of And

Vladimir Tenev

very our crypto that of to the from NFTs We able view at some in enthusiasts wallet. be have want hearing their to been least they

in a NFTs is app guidance. bit little with I think Apple recent complicated the trading

But an to that. custody highly ability we're the for that them. it's eye and add people to we'll So view keeping I likely think on NFTs

Operator

question And Budish. our final comes of line from Benjamin the

Benjamin Budish

ask guys maybe giving of OpEx But a take about the you of terms I required little talk next I wanted internationally? aren't digital on wallet. product another to kind you the for bit know can of that year. to any in kind forward guidance investment follow-up

Vladimir Tenev

very on the mean, it. Wallet working the lean is, we've Robinhood team thing about I great Yes. got a

of you product. Of it's infrastructure course, there's a and the essentially compliance but requisite kind software need,

UX the experience very is means the straightforward kind and that it nature really so of And And of default. tokens. of of being and of value swapping by great prop noncustodial blockchain-based targeted it's towards simple international kind and the gasless and

the And so built from straightforward. think we've kind of native I more much which with beginning, makes being the international it it idea of

Benjamin Budish

topic. on And the maybe up just of same follow Great. I'll kind

to launching internationally. to -- a that a options build-out? there of Do of or translate regulations directly? AML KYC going with for In a of comply investment separate think lot what terms do trading the you will else of lot and like? terms applicable Or you Is and is trading that and a be in compliance eventually or there's is sort stock infrastructure to anything have that

Vladimir Tenev

Yes.

we're of and because -- I certainly, unlikely crypto all first the to to custodial brokerage, simple solution think will different. get in value outset. it's little in not the the kind wallet the focused brokerage, brokerage more creating But available internationally that we're But that every from on out at likely make bit and a be very so from staff Robinhood for a we'll we'll noncustodial first. and there's of custody to the it's and some others U.S. least jurisdictions, going crypto rolling able be be features jurisdiction, and

Jason Warnick

we've want Before we by sweep call, end the just our made gold the decision saying to X.XX%. that take finish I rate interest to to

So we tremendous and absolutely to for deliver excited that's customers, to just them. think we're that

Vladimir Tenev

Yes.

this in environment. rate to beat. That's hard that's a value I a great think

Operator

for remarks. Perfect. it to I back Vlad questions. thank like I now to would closing you, your like to Well, everyone, turn for would

Vladimir Tenev

Well, thank for everyone, you, joining.

a to on team getting to appreciated for questions. quarter There's of EBITDA strong we've to the always, the As a schedule, a work. deliver ahead we're all. profitability Congrats again back adjusted to and for more do quarter finance democratizing lot delivering and

you. thank So

Operator

does all today's conclude you for our program. participating conference. Thank in This

may the now call. from You disconnect

Robinhood Markets (HOOD) 3 Nov 222022 Q3 Earnings call transcript