Robinhood Markets, Inc. (HOOD) Bundle
A Brief History of Robinhood Markets, Inc.
Founded in 2013, Robinhood Markets, Inc. is a financial services company known for pioneering commission-free trading. The company has grown significantly, especially during the COVID-19 pandemic, as more individuals turned to online trading platforms.
Company Overview
As of September 30, 2024, Robinhood reported:
- Net Deposits: $10.0 billion, a 29% annualized growth rate relative to Assets Under Custody (AUC).
- Total AUC: $152.2 billion, up 76% from $86.5 billion in the previous year.
- Funded Customers: 24.3 million, a 4% increase from 23.3 million.
- Average Revenue Per User (ARPU): $105, a 31% increase from $80.
- Gold Subscribers: 2.19 million, a 65% increase from 1.33 million.
Financial Performance
For the three months ended September 30, 2024, Robinhood reported:
| Metrics | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Transaction-Based Revenues | $185 million | $319 million | 72% |
| Net Interest Revenues | $251 million | $274 million | 9% |
| Other Revenues | $31 million | $44 million | 42% |
| Total Net Revenues | $467 million | $637 million | 36% |
| Net Income (Loss) | $(85) million | $150 million | NM |
Operating Expenses
For the same period, operating expenses were as follows:
| Expense Category | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Brokerage and Transaction | $39 million | $39 million | 0% |
| Technology and Development | $202 million | $205 million | 1% |
| Operations | $41 million | $50 million | 22% |
| Marketing | $28 million | $59 million | 111% |
| General and Administrative | $230 million | $133 million | (42)% |
Key Metrics
The following key performance metrics illustrate Robinhood's growth:
| Metric | Q3 2023 | Q3 2024 |
|---|---|---|
| Average Yield on Interest-Earning Assets | 6.74% | 5.16% |
| Weighted Average Shares Outstanding | 895 million | 884 million |
| Diluted EPS | $(0.09) | $0.17 |
Regulatory Developments
Robinhood has faced various regulatory challenges, including substantial legal settlements that have impacted its financials. For the nine months ended September 30, 2024, legal expenses decreased significantly, from $80 million to $62 million, primarily due to reduced settlements and penalties.
A Who Owns Robinhood Markets, Inc. (HOOD)
Ownership Structure
As of 2024, Robinhood Markets, Inc. (HOOD) has a dual-class share structure consisting of Class A and Class B shares. Class A shares are publicly traded, while Class B shares are primarily held by insiders and provide enhanced voting rights.
| Class | Shares Outstanding | Voting Rights | Ownership Percentage |
|---|---|---|---|
| Class A | 883,609,008 | 1 vote per share | Approximately 75% |
| Class B | 121,616,044 | 10 votes per share | Approximately 25% |
Major Shareholders
Key stakeholders of Robinhood as of 2024 include institutional investors and company insiders, with the following notable shareholders:
| Shareholder | Shares Held | Percentage Ownership |
|---|---|---|
| Vanguard Group | 67,000,000 | 7.6% |
| BlackRock, Inc. | 64,000,000 | 7.2% |
| Founders (Vladimir Tenev & Baiju Bhatt) | 40,000,000 (Class B) | 4.5% |
| Other Insiders | 30,000,000 (Class B) | 3.4% |
| Other Institutional Investors | 150,000,000 | 17% |
Institutional Ownership
Institutional ownership is an important metric for Robinhood, reflecting confidence from large financial entities:
| Institution | Shares Held | Percentage of Total Shares |
|---|---|---|
| Vanguard Group | 67,000,000 | 7.6% |
| BlackRock, Inc. | 64,000,000 | 7.2% |
| State Street Corporation | 52,000,000 | 5.9% |
| Fidelity Investments | 45,000,000 | 5.1% |
Recent Stock Performance
As of the end of September 2024, Robinhood's stock price has shown significant fluctuations influenced by market conditions and company performance:
| Date | Stock Price (USD) | Market Capitalization (USD) |
|---|---|---|
| September 30, 2024 | 19.62 | 17.3 billion |
| June 30, 2024 | 22.58 | 20.0 billion |
| March 31, 2024 | 18.86 | 16.5 billion |
Financial Performance Indicators
Key financial metrics for Robinhood Markets, Inc. as of September 30, 2024:
| Metric | Value |
|---|---|
| Total Revenue (Q3 2024) | $637 million |
| Net Income (Q3 2024) | $150 million |
| Adjusted EBITDA (Q3 2024) | $268 million |
| Active Users (Funded Customers) | 24.3 million |
Future Ownership Outlook
The ownership landscape of Robinhood is expected to evolve with potential acquisitions and strategic shifts in shareholder composition. Notably, the company announced plans to acquire Bitstamp, a cryptocurrency exchange, for approximately $200 million, which may influence future equity distribution and investor sentiment.
Robinhood Markets, Inc. (HOOD) Mission Statement
Robinhood's mission is to democratize finance for all. The company utilizes technology to provide access to the financial system in a manner that is simple and convenient for its customers. Investing is designed to be familiar and welcoming, characterized by a simple design and an intuitive interface that empowers customers to achieve their financial goals. Robinhood pioneered commission-free stock trading with no account minimums, a practice that has since been adopted industry-wide. The company continually builds relationships with its customers by introducing new products that expand access to the financial system. These efforts have made investing culturally relevant and understandable, enabling customers to become long-term investors and take greater control of their finances.
Financial Performance Overview
As of the three months ended September 30, 2024, Robinhood reported significant financial improvements compared to the same period in the previous year:
| Financial Metric | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Total Net Revenues | $467 million | $637 million | 36% |
| Net Income | $(85) million | $150 million | NM |
| Diluted EPS | $(0.09) | $0.17 | NM |
| Total Operating Expenses | $540 million | $486 million | (10%) |
| Adjusted EBITDA | $137 million | $268 million | 96% |
| Funded Customers | 23.3 million | 24.3 million | 4% |
| Assets Under Custody (AUC) | $86.5 billion | $152.2 billion | 76% |
| Net Deposits | $4.0 billion | $10.0 billion | 150% |
| Average Revenue Per User (ARPU) | $80 | $105 | 31% |
| Gold Subscribers | 1.33 million | 2.19 million | 65% |
Key Performance Metrics
Key performance metrics for Robinhood as of September 30, 2024, compared to the previous year are as follows:
| Performance Metric | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Funded Customers | 23.3 million | 24.3 million | 4% |
| Assets Under Custody (AUC) | $86.5 billion | $152.2 billion | 76% |
| Net Deposits | $4.0 billion | $10.0 billion | 150% |
| Average Revenue Per User (ARPU) | $80 | $105 | 31% |
| Gold Subscribers | 1.33 million | 2.19 million | 65% |
Recent Developments
In May 2024, Robinhood's board of directors authorized a Repurchase Program allowing the company to repurchase up to $1 billion of its outstanding Class A common stock. This initiative aims to return value to shareholders and is expected to be executed over a period of two to three years starting from the third quarter of 2024.
As of September 30, 2024, Robinhood reported a total stockholders' equity of $7,208 million. The company continues to focus on enhancing customer engagement and expanding its service offerings, including the introduction of a joint investing account in July 2024.
How Robinhood Markets, Inc. (HOOD) Works
Company Overview
Robinhood Markets, Inc. operates as a financial services platform that provides commission-free trading of stocks, options, ETFs, and cryptocurrencies through its mobile app and website. The company aims to democratize finance for all by making investing accessible to a broader audience.
Key Financial Metrics
As of September 30, 2024, Robinhood reported the following key financial metrics:
| Metric | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Total Net Revenues | $467 million | $637 million | 36% |
| Net Income (Loss) | ($85 million) | $150 million | NM |
| Adjusted EBITDA | $137 million | $268 million | 96% |
| Operating Expenses | $540 million | $486 million | (10%) |
| Funded Customers (millions) | 23.3 | 24.3 | 4% |
| Assets Under Custody (AUC) (billions) | $86.5 billion | $152.2 billion | 76% |
| Net Deposits (billions) | $4.0 billion | $10.0 billion | NM |
| Average Revenue Per User (ARPU) | $80 | $105 | 31% |
| Gold Subscribers (millions) | 1.33 | 2.19 | 65% |
Revenue Breakdown
Robinhood generates revenue through several channels, primarily transaction-based revenues, net interest revenues, and other sources. The breakdown for Q3 2024 is as follows:
| Revenue Source | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Options | $124 million | $202 million | 63% |
| Cryptocurrencies | $23 million | $61 million | 165% |
| Equities | $27 million | $37 million | 37% |
| Other | $11 million | $19 million | 73% |
| Total Transaction-Based Revenues | $185 million | $319 million | 72% |
| Net Interest Revenues | $251 million | $274 million | 9% |
| Other Revenues | $31 million | $44 million | 42% |
| Total Net Revenues | $467 million | $637 million | 36% |
Operating Expenses
Operating expenses have shown significant changes over the year. In Q3 2024, the breakdown of operating expenses is as follows:
| Expense Category | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Brokerage and Transaction | $39 million | $39 million | 0% |
| Technology and Development | $202 million | $205 million | 1% |
| Operations | $41 million | $50 million | 22% |
| Marketing | $28 million | $59 million | 111% |
| General and Administrative | $230 million | $133 million | (42%) |
| Total Operating Expenses | $540 million | $486 million | (10%) |
Customer Metrics
As of September 30, 2024, Robinhood reported the following customer metrics:
| Metric | Q3 2023 | Q3 2024 | % Change |
|---|---|---|---|
| Funded Customers (millions) | 23.3 | 24.3 | 4% |
| Investment Accounts (millions) | 23.6 | 25.1 | 6% |
| Gold Subscribers (millions) | 1.33 | 2.19 | 65% |
Cash Flow and Liquidity
As of September 30, 2024, Robinhood's cash and cash equivalents stood at $4.61 billion, which included a $750 million liquid investment portfolio of available-for-sale securities. The company also reported a total of $3.00 billion in committed revolving credit facilities.
Regulatory Compliance
Robinhood's broker-dealer subsidiaries are subject to net capital requirements. As of September 30, 2024, the net capital for RHS was $2.60 billion, exceeding the required net capital of $121 million by $2.48 billion.
How Robinhood Markets, Inc. (HOOD) Makes Money
Transaction-Based Revenues
Robinhood generates a significant portion of its revenue through transaction-based activities. For the three months ended September 30, 2024, transaction-based revenues totaled $319 million, a 72% increase from $185 million in the same period in 2023. The breakdown of transaction-based revenues is as follows:
| Revenue Source | Q3 2023 (in millions) | Q3 2024 (in millions) | Change (%) |
|---|---|---|---|
| Options | $124 | $202 | 63% |
| Cryptocurrencies | $23 | $61 | 165% |
| Equities | $27 | $37 | 37% |
| Other | $11 | $19 | 73% |
| Total | $185 | $319 | 72% |
For the nine months ended September 30, 2024, total transaction-based revenues reached $975 million, compared to $585 million in the same period in 2023, reflecting a 67% increase.
Net Interest Revenues
Net interest revenues, another key revenue stream for Robinhood, include margin interest, interest on corporate cash, and other interest-bearing activities. For the three months ended September 30, 2024, net interest revenues totaled $274 million, up from $251 million in Q3 2023, representing a 9% increase. The components are as follows:
| Revenue Source | Q3 2023 (in millions) | Q3 2024 (in millions) | Change (%) |
|---|---|---|---|
| Margin interest | $67 | $83 | 24% |
| Interest on corporate cash and investments | $75 | $67 | (11)% |
| Interest on segregated cash, securities, and deposits | $59 | $61 | 3% |
| Cash Sweep | $35 | $46 | 31% |
| Securities lending, net | $17 | $19 | 12% |
| Total Net Interest Revenues | $251 | $274 | 9% |
For the nine months ended September 30, 2024, net interest revenues amounted to $813 million, compared to $693 million in the previous year, a 17% increase.
Other Revenues
Other revenue streams include subscription services and various fees. In Q3 2024, other revenues totaled $44 million, up from $31 million in Q3 2023, marking a 42% increase. The components are:
| Revenue Source | Q3 2023 (in millions) | Q3 2024 (in millions) | Change (%) |
|---|---|---|---|
| Gold subscription revenues | $20 | $28 | 40% |
| Proxy revenues | $8 | $8 | 0% |
| Other | $3 | $8 | 167% |
| Total Other Revenues | $31 | $44 | 42% |
For the nine months ended September 30, 2024, total other revenues reached $149 million, compared to $116 million in the same period in 2023, an increase of 28%.
Key Performance Indicators
Robinhood's performance metrics as of September 30, 2024, indicate growth in customer engagement and financial health:
| Metric | Q3 2023 | Q3 2024 | Change (%) |
|---|---|---|---|
| Funded Customers (millions) | 23.3 | 24.3 | 4% |
| Assets Under Custody (AUC) (billion) | $86.5 | $152.2 | 76% |
| Net Deposits (billion) | $4.0 | $10.0 | 150% |
| Average Revenue Per User (ARPU) | $80 | $105 | 31% |
| Gold Subscribers (millions) | 1.33 | 2.19 | 65% |
These metrics reflect Robinhood's expanding user base and increased engagement with its services, contributing to revenue growth.
Conclusion
Robinhood's business model, characterized by transaction-based revenues, net interest income, and other revenue streams, positions the company for continued growth in the evolving financial landscape. The metrics and revenue sources outlined demonstrate the effectiveness of its strategies in attracting and retaining users while enhancing profitability.
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Article updated on 8 Nov 2024
Resources:
- Robinhood Markets, Inc. (HOOD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Robinhood Markets, Inc. (HOOD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Robinhood Markets, Inc. (HOOD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.