Robinhood(HOOD)2023-11-08 01:53Financial Data and Key Metrics Changes - Total net revenues for Q3 2023 were $467 million, representing a 29% increase year-over-year, but a 4% decrease from Q2 2023 [112] - Adjusted EBITDA was $137 million in Q3, with adjusted EBITDA margins of 29%, up 16 points from a year ago [12][20] - The company recorded a net loss of $85 million or $0.09 per share due to a $104 million regulatory accrual [44] Business Line Data and Key Metrics Changes - Robinhood Gold subscriptions grew to over 1.3 million, with an increase of 100,000 in Q3 alone, and Gold customers had average assets under custody up more than 60% year-over-year [17][19] - Transaction-based revenues in Q3 were $185 million, down 4% sequentially, primarily due to lower crypto volumes [112] - Securities lending enrolled nearly 400,000 customers in Q3, bringing the total to nearly 2 million customers with over $10 billion of balances [19] Market Data and Key Metrics Changes - The company serves over 23 million customers in the US, capturing nearly 10% of American adults [8] - Market share in equities and options has been increasing year-over-year and sequentially for the past three quarters [52] - Net deposits in Q3 were $4 billion, translating to an 18% annual growth rate, with assets under custody ending the quarter at $87 billion, up 34% from a year ago [119] Company Strategy and Development Direction - The company aims to deepen customer relationships, innovate for active traders, and explore new growth opportunities, including international expansion [18][127] - The launch of brokerage operations in the UK and crypto trading in the EU is expected to expand the addressable market significantly [144] - The company is focused on becoming the number one platform for active traders by systematically removing limitations and enhancing user experience [139] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro-environment, including high interest rates and geopolitical tensions, but remains optimistic about achieving record annual revenue in 2023 [2][16] - The company plans to continue investing for growth while maintaining a lean cost structure, with a focus on driving profitability over time [20][28] - Management expressed confidence in the long-term potential to innovate and grow market share despite current stock price challenges [120] Other Important Information - The company has a strong balance sheet with nearly $5.5 billion in cash and investments, providing flexibility in a challenging macro backdrop [22] - Share-based compensation was $83 million in Q3, down from 30% of revenue a year ago to 18% [46] - The company is preparing to launch a new credit card product, leveraging insights from the acquisition of X1 [17][132] Q&A Session Summary Question: What will it take to bring the stock price back to the IPO level? - Management indicated that focusing on business growth and profitability is key to improving stock price over the long term [3][120] Question: What will Robinhood do to grow market share and expand operations? - The strategy includes deepening customer relationships through Robinhood Gold and enhancing product offerings to increase customer retention and wallet share [27] Question: What can Robinhood do to become consistently profitable throughout each quarter? - Management emphasized the importance of investing for growth while keeping costs lean, aiming to grow revenues faster than operating expenses [54][28] Question: When will Robinhood come to Europe? - The company is set to launch brokerage operations in the UK and crypto trading in the EU in the coming weeks [29][144] Question: What is driving the increase in market share? - The increase is attributed to systematic improvements in product offerings and user experience, particularly for active traders [56][57]