Robinhood(US:HOOD)2025-07-30 21:38PART I - FINANCIAL INFORMATION Item 1. Unaudited Financial Statements Robinhood's unaudited condensed consolidated financial statements for Q2 2025, covering balance sheets, operations, cash flows, and notes Condensed Consolidated Balance Sheets Total assets increased to $35.3 billion and liabilities to $27.3 billion by June 30, 2025, with stable stockholders' equity Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $35,324 | $26,187 | | Cash and cash equivalents | $4,162 | $4,332 | | Receivables from users, net | $9,685 | $8,239 | | Securities borrowed | $6,159 | $3,236 | | Goodwill | $383 | $179 | | Total Liabilities | $27,252 | $18,215 | | Payables to users | $10,511 | $7,448 | | Securities loaned | $12,640 | $7,463 | | Total Stockholders' Equity | $8,072 | $7,972 | Condensed Consolidated Statements of Operations Q2 2025 total net revenues rose 45% to $989 million, with net income up 105% to $386 million, driven by strong revenue growth Statement of Operations Summary (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $989 | $682 | +45% | $1,916 | $1,300 | +47% | | Transaction-based revenues | $539 | $327 | +65% | $1,122 | $656 | +71% | | Net interest revenues | $357 | $285 | +25% | $647 | $539 | +20% | | Total operating expenses | $550 | $493 | +12% | $1,107 | $953 | +16% | | Net income | $386 | $188 | +105% | $722 | $345 | +109% | | Diluted EPS | $0.42 | $0.21 | +100% | $0.79 | $0.38 | +108% | Condensed Consolidated Statements of Cash Flows Net cash from operations significantly improved to $4.15 billion in H1 2025, with investing providing $841 million and financing using $703 million Six Months Ended June 30, Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $4,151 | $(569) | | Net cash provided by (used in) investing activities | $841 | $(59) | | Net cash used in financing activities | $(703) | $(72) | - Key financing activities in H1 2025 included $446 million used for the repurchase of Class A common stock and $372 million for taxes paid on net share settlement of equity awards24 - Key investing activities in H1 2025 included $1.19 billion in cash acquired from business acquisitions, offset by $399 million in consideration paid for those acquisitions and $1.53 billion for purchases of credit card receivables24 Notes to Unaudited Condensed Consolidated Financial Statements Detailed notes explain accounting policies, business combinations, revenue sources, credit losses, financing, and legal contingencies Note 3 - Business Combinations Robinhood completed acquisitions of TradePMR for $175 million and Bitstamp for $224 million, with WonderFi acquisition pending - On February 26, 2025, the company acquired TradePMR for approximately $175 million in cash, adding $112 million in goodwill454648 - On June 2, 2025, the company acquired Bitstamp for approximately $224 million in cash to accelerate global expansion, adding $91 million in goodwill5253 - On May 12, 2025, Robinhood entered an agreement to acquire WonderFi for a total equity value of approximately $180 million, with the deal expected to close in H2 202557 Note 5 - Revenues Q2 2025 total net revenues were $989 million, primarily from transaction-based ($539 million) and net interest ($357 million) revenues Disaggregation of Revenues - Three Months Ended June 30 (in millions) | Revenue Source | 2025 | 2024 | | :--- | :--- | :--- | | Transaction-based revenues | $539 | $327 | | Options | $265 | $182 | | Cryptocurrencies | $160 | $81 | | Equities | $66 | $40 | | Net interest revenues | $357 | $285 | | Margin interest | $114 | $73 | | Other revenues | $93 | $70 | | Robinhood Gold subscription | $44 | $26 | | Total net revenues | $989 | $682 | - Citadel Securities, LLC was a significant source of transaction-based revenue, accounting for 13% of total revenues in Q2 2025 and 12% in Q2 202438 Note 11 - Common Stock and Stockholders' Equity The company repurchased 10 million shares for $446 million under its $1.5 billion program, with $426 million in unrecognized share-based compensation - The board authorized a share repurchase program of up to $1.5 billion. For the six months ended June 30, 2025, the company repurchased 10 million shares for $446 million110 - As of June 30, 2025, there was $426 million of unrecognized share-based compensation expense expected to be recognized over a weighted-average period of 1.21 years119 - As of June 30, 2025, outstanding warrants could be exercised to purchase 10.79 million shares of Class A common stock at a strike price of $26.60109 Note 14 - Commitments & Contingencies Accrued legal contingencies decreased to $45 million by June 30, 2025, with settlements in Best Execution and FINRA matters, and ongoing litigation - Accrued loss contingencies decreased to $45 million as of June 30, 2025, from $128 million as of December 31, 2024122 - In June 2025, Robinhood agreed to a settlement in principle in the Best Execution and PFOF civil litigation128 - On March 6, 2025, the company resolved multiple FINRA investigations by paying a $26 million penalty and approximately $3.76 million in restitution131 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 financial performance, highlighting significant revenue and net income growth, strong customer metrics, and liquidity Q2 2025 vs Q2 2024 Performance Highlights | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total net revenues | $989 million | $682 million | +45% | | Net income | $386 million | $188 million | +105% | | Adjusted EBITDA (non-GAAP) | $549 million | $301 million | +82% | | Funded Customers | 26.5 million | 24.2 million | +10% | | Total Platform Assets | $278.6 billion | $139.7 billion | +99% | | ARPU | $151 | $113 | +34% | Revenues Broad-based revenue growth in Q2 2025, with transaction-based up 65%, net interest up 25%, and other revenues up 33% Transaction-Based Revenues - Q2 2025 vs Q2 2024 (in millions) | Category | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Options | $265 | $182 | +46% | | Cryptocurrencies | $160 | $81 | +98% | | Equities | $66 | $40 | +65% | | Total | $539 | $327 | +65% | - Net interest revenues increased by $72 million YoY in Q2 2025, driven by growth in interest-earning assets like margin loans and securities lending activities168 - Robinhood Gold subscription revenues grew 69% YoY to $44 million in Q2 2025, driven by a 76% increase in subscribers to 3.48 million171159 Operating Expenses Total operating expenses increased 12% to $550 million in Q2 2025, driven by higher marketing and brokerage costs Operating Expenses - Q2 2025 vs Q2 2024 (in millions) | Category | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Brokerage and transaction | $48 | $40 | +20% | | Technology and development | $214 | $209 | +2% | | Marketing | $99 | $64 | +55% | | General and administrative | $132 | $134 | -1% | | Provision for credit losses | $28 | $18 | +56% | | Total Operating Expenses | $550 | $493 | +12% | - Marketing costs increased by $35 million in Q2 2025 due to higher investments in digital and brand marketing to promote the brand and products177 - General and administrative costs decreased slightly, partly due to a $14 million reduction in legal expenses associated with historical matters179 Liquidity and Capital Resources Robinhood maintains strong liquidity with $4.16 billion in cash and $3.775 billion in credit facilities, exceeding regulatory capital requirements - As of June 30, 2025, the company had $4.16 billion in cash and cash equivalents and $134 million in held-to-maturity investments184 - The company's broker-dealer subsidiary, RHS, had net capital of $2.89 billion, which is $2.67 billion in excess of its required net capital of $215 million188 - Total material cash commitments for the remainder of 2025 are estimated at $495 million, primarily for purchase commitments and the Credit Card Funding Trust186 Item 3. Quantitative and Qualitative Disclosures About Market Risk Robinhood's market risk is primarily interest rate sensitivity, with a 100 bps rate increase potentially boosting annual net revenues by $247 million Annualized Impact of Hypothetical Interest Rate Change (in millions) | Basis Point Change | Impact on Net Revenues (June 30, 2025) | Impact on Net Revenues (June 30, 2024) | | :--- | :--- | :--- | | +150 bps | $370 | $234 | | +100 bps | $247 | $156 | | +50 bps | $123 | $78 | - The company manages credit risk on margin lending by requiring customers to maintain collateral and monitoring accounts for excessive concentration or large positions202 Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with Bitstamp integration ongoing and excluded from 2025 assessment - The CEO and CFO concluded that as of the end of the reporting period, the company's disclosure controls and procedures were effective204 - Following its acquisition on June 2, 2025, Bitstamp is being integrated. Management expects to exclude Bitstamp from its assessment of internal control over financial reporting for 2025206 PART II - OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 14 for details on ongoing legal and regulatory matters, including settlements and investigations - For information regarding legal proceedings, the report directs readers to Note 14 - Commitments & Contingencies in the financial statements208 Item 1A. Risk Factors Key risks include slower growth, expansion challenges, reliance on PFOF, interest rate sensitivity, regulatory scrutiny, and concentrated voting power - A large portion of revenue is transaction-based (PFOF), which is sensitive to trading volumes, regulatory changes, and relationships with liquidity providers222 - The business is subject to extensive and complex regulations. Failure to comply could result in substantial costs, penalties, and changes to business practices. The company has been and expects to continue to be subject to regulatory investigations and actions211273 - The legal status of any particular cryptocurrency as a 'security' in the U.S. is highly uncertain. An adverse determination for a supported coin could lead to regulatory penalties, customer lawsuits, and a requirement to cease trading that asset211375 - The multi-class stock structure concentrates over 50% of the voting power with the company's founders, limiting other stockholders' influence on corporate matters215467468 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued 2,049,711 unvested shares for TradePMR acquisition and repurchased 3 million shares for $124 million in Q2 2025 - On February 26, 2025, the company issued 2,049,711 unvested shares of Class A common stock as part of the TradePMR acquisition in a transaction exempt from registration478 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Value (approx.) | | :--- | :--- | :--- | :--- | | April 2025 | 2,471,752 | $36.60 | $90.5M | | May 2025 | 307,171 | $56.99 | $17.5M | | June 2025 | 222,832 | $74.81 | $16.7M | | Total | 3,001,755 | $41.52 | $124.7M | Item 5. Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the second quarter of 2025483