April 28, 2022. MENLO PARK, Calif.
Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today announced financial results for the first quarter, which ended March 31, 2022.
Total net revenues decreased 43% to $299 million, compared with $522 million in the first quarter of 2021.
Transaction-based revenues decreased 48% to $218 million, compared with $420 million in the first quarter of 2021.
Options decreased 36% to $127 million, compared with $198 million in the first quarter of 2021.
Cryptocurrencies decreased 39% to $54 million, compared to $88 million in the first quarter of 2021.
Equities decreased 73% to $36 million, compared with $133 million in the first quarter of 2021.
Net loss was $392 million, or $0.45 per diluted share, compared with net loss of $1.4 billion, or $6.26 per diluted share in the first quarter of 2021.
Share-based compensation expense totaled $220 million for the first quarter of 2022, compared with $9 million for the first quarter of 2021. Share-based compensation for the first quarter of 2021 related entirely to stock options; no expense relating to restricted stock units was recognized because our initial public offering had not yet occurred.
Net loss for the first quarter of 2021 also included total expense of $1.5 billion associated with the change in fair value of convertible notes and warrants issued in February 2021.
Adjusted EBITDA (non-GAAP) was negative $143 million, compared with positive $115 million in the first quarter of 2021.
Net Cumulative Funded Accounts increased 27% to 22.8 million as of March 31, 2022, compared with 18.0 million as of March 31, 2021 as we added 7.1 million new funded accounts primarily driven by large customer interest in cryptocurrencies during the second quarter of 2021, and 0.7 million resurrected accounts, partially offset by 3.0 million churned accounts. On a sequential basis, Net Cumulative Funded Accounts increased slightly compared with 22.7 million as of December 31, 2021. Churn continues to improve and as a percentage of Net Cumulative Funded Accounts has reached one of the lowest quarterly rates we have seen in years.
Monthly Active Users (MAU) decreased 10% to 15.9 million for March 2022, compared with 17.7 million for March 2021 during which we experienced high trading volumes and account sign-ups as well as high market volatility, particularly in certain sectors. On a sequential basis, MAU decreased 8% compared with 17.3 million for December 2021. The sequential decline was primarily attributable to users with lower balances, who are engaging less in the current market environment.
Assets Under Custody (AUC) increased 15% to $93.1 billion as of March 31, 2022, compared with $80.9 billion as of March 31, 2021, as result of the growth in our user base. On a sequential basis, AUC decreased 5% compared with $98.0 billion as of December 31, 2021, primarily due to decreasing asset values in this market environment, partially offset by an increase in net deposits of 30%.
Average Revenues Per User (ARPU) decreased 62% to $53, compared with $137 in the first quarter of 2021. On a sequential basis, ARPU decreased 18% compared with $64 in the fourth quarter of 2021. The decreases were primarily related to lower transaction-based revenue driven by the current market environment, which had a negative impact on the number of traders and notional trading volumes in all asset classes.
Cash and cash equiva lents at March 31, 2022 totaled $6.2 billion, compared with $6.3 billion at March 31, 2021.
“We're seeing our customers affected by the macroeconomic environment, which is reflected in our results this quarter.” Jason Warnick
"We're seeing our customers affected by the macroeconomic environment, which is reflected in our results this quarter," said Jason Warnick, Chief Financial Officer of Robinhood Markets. "At the same time, we've also made progress on our long-term plans and continue to pursue them aggressively."
"This quarter saw our product development engine gain velocity with the rollout of some of our most requested features and capabilities,” said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. “With the introduction of the Robinhood Cash Card, the release of crypto wallets to all customers, the addition of new coins to our platform, and our agreement to acquire Ziglu Limited, we’ve made huge strides against our roadmap. Looking ahead, we have a suite of new products and services slated for release that we believe will excite and delight our customers.”
Robinhood delivers major product developments
In March, Robinhood introduced the Robinhood Cash Card - one of the few debit cards to offer rewards similar to what customers have come to expect from a credit card. With the Robinhood Cash Card, customers can round up their spending and receive weekly bonuses for them to invest in stock and crypto. For customers who direct-deposit their paychecks, they can access their money two days early and automatically set aside a portion of their paycheck to invest. Over time, additional features and capabilities will be added to the Cash Card - like Instant Savings, which will give customers discounts on items like gas and groceries.
Robinhood also extended trading hours in March, with trading now available from 7 a.m. to 8 p.m. eastern time. This is the first step toward offering 24/7 trading and was one of the top-requested features of Robinhood advanced users.
Just this week, Robinhood began rolling out Stock Lending, its fully-paid securities lending product, to a small set of customers. Through Stock Lending, customers have the opportunity to earn extra income on the stocks they already own, empowering them to put their investments to work for them and adding a new source of passive income to their portfolios.
Robinhood makes significant strides in its crypto business
At the beginning of April, Robinhood rolled out crypto wallets to the approximately two million customers on its waitlist and just this week completed the full roll-out to all customers.
In addition, Robinhood recently added four new coins: Compound, Polygon, Solana, and Shiba Inu. New coins are one of the most frequently requested products from Robinhood customers and the company expects to add additional coins over time.
Crypto customers will also benefit from Robinhood’s planned integration with the Lightning Network, which will power near-instantaneous Bitcoin transfers globally, with transaction fees of less than a penny. Eventually, this technology, once fully integrated, is expected to help accelerate Robinhood’s ability to serve Bitcoin remittances on a global scale - at virtually no cost - and will be important for international expansion.
Robinhood is on track with its 2022 roadmap
Last quarter, Robinhood announced an ambitious plan for 2022 focused on long-term investing, spending and savings, helping customers move money faster, and opening up its crypto platform to customers internationally.
This month, Robinhood signed an agreement to acquire Ziglu Limited ("Ziglu"), a UK-based electronic money institution and crypto-asset firm, subject to regulatory approvals and other customary closing conditions. Ziglu's impressive team of deeply experienced financial services and crypto experts will help Robinhood accelerate its global expansion efforts and break down barriers for customers across the UK and Europe.
Tax-advantaged retirement accounts remain on track, with the goal of providing early access to an initial set of customers later this year.
Webcast and Conference Call Information
Robinhood will host a conference call to discuss its results at 2 p.m. PT / 5 p.m. ET today, April 28, 2022. The live webcast of Robinhood's earnings conference call can be accessed at investors.robinhood.com, along with the earnings press release and accompanying slide presentation.
Following the call, a replay and transcript will also be available at the same website.
Monthly Metrics Reports and Financial Outlook
Robinhood is going to start reporting certain limited purpose statistical and operational results on a monthly basis. The first report will cover the month of March 2022 (and each of the preceding 12 calendar months) and will be available on the afternoon of April 28, 2022. The report regarding April 2022 will be available in mid-May 2022. These monthly metrics reports ("Reports") will generally be presented without commentary and should be read together with our most recent quarterly and annual results and other filings with the U.S. Securities and Exchange Commission ("SEC"). Reports will be available for download from the “Overview” tab of our Investor Relations website. We expect that Reports regarding each of the first two months of each fiscal quarter will be available around the middle of the following month. We expect that the Report regarding the third month of each fiscal quarter will be available shortly after our quarterly earnings are announced regarding that completed quarter. Anyone who would like to receive an automatic email alert whenever a new Report is available may sign up on the "Resources" tab of our Investor Relations website. With this change, we no longer intend to provide revenue guidance.
Previously we shared that, for fiscal year 2022, we expected total operating expenses, excluding share-based compensation, to increase 15%–20% year-over-year and share-based compensation to decline 35%–40% year-over-year. As a result of our cost reduction initiatives (the “Cost Reduction Initiatives”), which include the reduction in force of approximately 9% of our full-time headcount announced on April 26, 2022 and a reduction to headcount targets for the year, we now expect total operating expenses, excluding share-based compensation, for full year 2022 to increase by approximately 2%–5% year-over-year and share-based compensation to decline by approximately 42%–47% year-over-year, in each case before giving effect to the restructuring impacts described below.
Additionally, we anticipate recording a restructuring benefit of approximately $7–$19 million in the second quarter of 2022, composed of $17–$23 million of cash restructuring and related charges, offset by $30–$36 million from reversals of previously recognized share-based compensation.
Actual results might differ materially from our outlook due to several factors, including the rate of growth in net new funded accounts which affects several costs including variable marketing costs, the degree to which we are successful in preventing fraud, our ability to manage web-hosting expenses efficiently, and our ability to achieve productivity improvements in customer service, among other factors.
Robinhood Markets is on a mission to democratize finance for all. With Robinhood, people can invest with no account minimums through Robinhood Financial, LLC, buy and sell crypto through Robinhood Crypto, LLC, spend, save, and earn rewards through Robinhood Money, LLC, and learn about investing through easy-to-understand educational content.
Robinhood intends to use the "Overview" tab of its Investor Relations website and its blog, Under the Hood, as means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (Reg. FD).
The Overview page can be accessed at investors.robinhood.com/overview and Under the Hood can be accessed at blog.robinhood.com and investors should routinely monitor those web pages, in addition to Robinhood’s press releases, SEC filings, and public conference calls and webcasts, as information posted on them could be deemed to be material information.
"Robinhood" and the Robinhood feather logo are registered trademarks of Robinhood Markets, Inc. All other names are trademarks and/or registered trademarks of their respective owners.
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