Robinhood Markets Inc

Previous wording

Data as of and for the three months ended March 31, 2023 and 2024 has been derived from our unaudited condensed consolidated financial statements appearing at the beginning of this Quarterly Report. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period.

Current wording

Data as of and for the three and six months ended June 30, 2023 and 2024 has been derived from our unaudited condensed consolidated financial statements appearing at the beginning of this Quarterly Report. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period.

Previous wording

•Funded Customers: We define a Funded Customer as a unique person who has at least one account with a Robinhood entity and, within the past 45 calendar days (a) had an account balance that was greater than zero (excluding amounts that are deposited into a Funded Customer account by the Company with no action taken by the unique person) or (b) completed a transaction using any such account. We define an Investment Account as a funded individual brokerage account or a funded individual retirement account (“IRA”). As of March 31, 2024, a Funded Customer can have up to three Investment Accounts - individual brokerage account, traditional IRA, and Roth IRA.

Current wording

•Funded Customers: We define a Funded Customer as a unique person who has at least one account with a Robinhood entity and, within the past 45 calendar days (a) had an account balance that was greater than zero (excluding amounts that are deposited into a Funded Customer account by the Company with no action taken by the unique person) or (b) completed a transaction using any such account.

Previous wording

•Net Deposits: We define Net Deposits as all cash deposits and asset transfers from, as well as dividends and interest received by customers, net of reversals, customer cash withdrawals, margin interest, Gold subscription fees, and other assets transferred out of our platforms (assets transferred in or out include debit card transactions, Automated Customer Account Transfer Service transfers, and custodial crypto wallet transfers) for a stated period. Prior to January 2024, Net Deposits did not include inflows from dividends and interest or outflows from Robinhood Gold subscription fees and margin interest, although we have not restated amounts in prior periods as the impact to those figures was immaterial.

Current wording

•Net Deposits: We define Net Deposits as all cash deposits and asset transfers from customers, as well as dividends, interest, and cash and assets earned in connection with Company promotions (such as account transfer and retirement match incentives and free stock bonuses) received by customers, net of reversals, customer cash withdrawals, margin interest, Gold subscription fees, and other assets transferred out of our platforms (assets transferred in or out include debit card transactions, Automated Customer Account Transfer Service transfers, and custodial crypto wallet transfers) for a stated period. Prior to the second quarter of 2024, Net Deposits did not include inflows from cash and assets earned in connection with Company promotions and prior to January 2024, Net Deposits did not include inflows from dividends and interest or outflows from Robinhood Gold subscription fees and margin interest, although we have not restated amounts in prior periods as the impact to those figures was immaterial.

Previous wording

•our Adjusted EBITDA (non-GAAP) was$247 million compared to$115 million, an increase of 115%;

Current wording

•our Adjusted EBITDA (non-GAAP) increased 99% to $301 million compared to$151 million;

Previous wording

•we had 23.9 million Funded Customers compared to 23.1 million, an increase of 3%, and Investment Accounts increased by 1.1 million to 24.4 million;

Current wording

•Funded Customers increased 4% to 24.2 million compared to 23.2 million, and Investment Accounts increased by 1.4 million to 24.8 million;

Previous wording

•we had AUC of $129.6 billion compared to $78.4 billion, an increase of 65%, primarily driven by higher equity and cryptocurrency valuations and continued Net Deposits;

Current wording

•AUC increased 57% to $139.7 billion compared to $88.8 billion driven by continued Net Deposits and higher equity and cryptocurrency valuations;

Previous wording

•Net Deposits were $11.2 billion, an annualized growth rate of 44% relative to AUC at the end of the fourth quarter of 2023, compared to $4.4 billion, an annualized growth rate of 29% relative to AUC at the end of the fourth quarter of 2022. Over the past twelve months, Net Deposits were $23.9 billion, a growth rate of 30% relative to AUC at the end of the first quarter of 2023;

Current wording

•Net Deposits were $13.2 billion, an annualized growth rate of 41% relative to AUC at the end of the first quarter of 2024, compared to $4.1 billion, an annualized growth rate of 21% relative to AUC at the end of the first quarter of 2023. Over the past twelve months, Net Deposits were $33.0 billion, a growth rate of 37% relative to AUC at the end of the second quarter of 2023;

Previous wording

Comparison of the Three Months Ended March 31, 2023 and 2024

Current wording

Comparison of the Three and Six Months Ended June 30, 2023 and 2024

Previous wording

Cryptocurrencies revenues increased primarily driven by an 88% increase in the average Notional Trading Volume traded per trader and a 57% increase in the number of users placing cryptocurrency trades.

Current wording

Cryptocurrencies revenues increased as a result of an 81% and 85% increase in the average Notional Trading Volume traded per trader and a 22% and 35% increase in the number of users placing cryptocurrency trades. In addition, cryptocurrencies revenues benefited from a higher rebate rate from crypto market makers (an increase was effective in May 2024).

Previous wording

Options revenues increased primarily driven by a 26% increase in Options Contracts Traded and the number of users placing option trades also increased 13%. However, we experienced lower option rebate rates due to the mix of ticker symbols traded as different ticker symbols pay different rebate rates.

Current wording

Options revenues increased due to a 28% and 20% increase in the number of users placing option trades and a 38% and 32% increase in Options Contracts Traded. For the three months ended June 30, 2024, we also experienced higher option rebate rates due to the mix of ticker symbols traded as different ticker symbols pay different rebate rates. Options revenues was reduced by $8 million due to match incentives paid to our customers (Refer to Note 3 - Revenues to our unaudited condensed consolidated financial statements in this Quarterly Report for more information).

Previous wording

Equities revenues increased primarily driven by a 23% increase in the average Notional Trading Volume traded per trader and a 12% increase in the number of users placing equity trades.

Current wording

Equities revenues increased primarily driven by a 31% and 27% increase in the average Notional Trading Volume traded per trader and a 19% and 16% increase in the number of users placing equity trades. In addition, we experienced higher equity rebate rates due to increased spreads in securities pricing.

Previous wording

Net interest revenues increased by $46 million. The increase was driven by growth in interest-earning assets balances and the higher short-term interest rate environment due to the rise in the federal funds rate, which positively impacted the interest rate we receive on these assets.

Current wording

Net interest revenues increased by $51 million and $97 million for the three and six months ended June 30, 2024. These increases were driven by growth in most of our interest-earning assets balances and the higher short-term interest rate environment due to the rise in the federal funds rate, which positively impacted the interest rate we receive on these assets. These increases were offset by decreases in interest revenues earned from corporate cash and investments driven by lower cash and cash equivalents balances.

Previous wording

(1)Includes cash and cash equivalents, cash and securities segregated under federal and other regulations, deposits with clearing organizations, and investments.

Current wording

(1)Includes cash and cash equivalents, cash, cash equivalents, and securities segregated under federal and other regulations, deposits with clearing organizations, and investments.

Previous wording

(2)Credit card, net consists of i) an off-balance sheet amount representing customer principal amounts funded by Coastal Bank under the Program Agreement. Under the Program Agreement, Robinhood Credit collects interest from customers that carry a balance and pays interest on the amount funded by Coastal Bank, with the difference between those amounts resulting in net interest revenue; ii) an on-balance sheet amount representing purchased credit card receivables by Credit Funding Trust that is included in receivables from users, net on the unaudited condensed consolidated balance sheets. Under the Program Agreement, Robinhood Credit has the ability to purchase credit card receivables originated and held for a period by Coastal Bank. Robinhood Credit collects interest from purchased credit card receivables. As of March 31, 2024,$177 million was off-balance sheet and$20 million was on-balance sheet. Refer to Note 9 - Financing Activities and Off-Balance Sheet Risk to these unaudited condensed consolidated financial statements for more information.

Current wording

(2)Credit card, net consists of i) an off-balance sheet amount representing customer principal amounts funded by Coastal Bank under the Program Agreement. Under the Program Agreement, Robinhood Credit collects interest from customers that carry a balance and pays interest on the amount funded by Coastal Bank, with the difference between those amounts resulting in net interest revenue; ii) an on-balance sheet amount representing purchased credit card receivables by the Credit Funding Trust, on which we collect interest, that is included in receivables from users, net on the unaudited condensed consolidated balance sheets. As of June 30, 2024,$191 million was off-balance sheet and$21 million was on-balance sheet. Refer to Note 10 - Financing Activities and Off-Balance Sheet Risk to our unaudited condensed consolidated financial statements in this Quarterly Report for more information.

Previous wording

Other revenues increased $9 million primarily due to increased subscription revenues of $6 million due to an increase in Gold Subscribers.

Current wording

Other revenues increased $11 million and $20 million for the three and six months ended June 30, 2024 as a result of increased Gold subscription revenues of $8 million and $14 million due to an increase in Gold Subscribers.

Previous wording

Technology and development costs decreased $3 million primarily due to decreases in SBC of $10 million and employee compensation, benefits, and overhead of $5 million driven by reduced average headcount as part of our efforts to improve efficiency and operating costs. The decreases were offset by an increase in cloud infrastructure expenses of $11 million to meet increased capacity requirements for our platforms to support higher trading volumes.

Current wording

Technology and development costs increased by $2 million for the three months ended June 30, 2024 and decreased by $1 million for the six months ended June 30, 2024. The increases in cloud infrastructure expenses of $11 million and $22 million to meet increased capacity requirements for our platforms to support higher trading volumes were partially offset by decreases in employee compensation, benefits, and overhead of $9 million and $14 million and SBC of $4 million and $14 million, driven by reduced average headcount as part of our efforts to improve efficiency and operating costs.

Previous wording

Operations costs increased by $2 million primarily due to an increase of $6 million in provision for credit losses and fraud mainly driven by a $8 million provision for credit losses related to Robinhood Credit, partially offset by a $2 million decrease in expenses related to Fraudulent Deposit Transactions as we continued to strengthen our process to identify high risk users and prevent these transactions on our platforms. The increase was also partially offset by a $2 million decrease in employee compensation, benefits, and overhead driven by reduced average headcount as part of our efforts to improve efficiency.

Current wording

Operations costs increased by $10 million and $12 million for the three and six months ended June 30, 2024, primarily due to increases of $13 million and $19 million in provision for credit losses and fraud mainly driven by $14 million and $24 million of provision for credit losses related to Robinhood Credit, partially offset by $2 million and $4 million decreases in expenses related to Fraudulent Deposit Transactions as we continued to strengthen our process to identify high risk users and prevent these transactions on our platforms. These increases were also partially offset by decreases of $4 million and $6 million in employee compensation, benefits, and overhead driven by reduced average headcount as part of our efforts to improve efficiency.

Previous wording

Marketing costs increased by $41 million, primarily due to higher expenses in digital marketing of $21 million and brand marketing of $11 million, as we increased our investments in paid marketing channels to promote our brand, products, and services.

Current wording

Marketing costs increased by $39 million and$80 millionfor the three and six months ended June 30, 2024, primarily due to higher expenses in digital marketing of $25 million and $46 million and brand marketing of $5 millionand$16 million, as we increased our investments in paid marketing channels to promote our brand, products, and services.

Previous wording

General and administrative costs decreased by $529 million primarily due to the 2021 Founders Award Cancellation of $485 million which occurred during the prior year periodand a decrease in other SBC of $42 million attributed to stock awards becoming fully vested in prior periods.

Current wording

General and administrative costs decreased by $25 million and $554 millionfor the three and six months ended June 30, 2024, primarily due to decreases in other SBC of $21 million and $63 million attributed to stock awards becoming fully vested in prior periods. The decrease for the six months ended June 30, 2024, was also due tothe 2021 Founders Award Cancellation of $485 million which occurred during the first quarter in 2023 anda$10 million decrease in legal expenses associated with certain historical regulatory matters.

Previous wording

Provision for income taxes increased by $3 million primarily due to the growth of our business and the change in valuation allowance on our U.S. federal and state deferred tax assets offset by our current taxes payable.

Current wording

Provision for income taxes increased by $6 million and $9 million for the three months and six months ended June 30, 2024 primarily due to the growth of the business and the change in valuation allowance on our U.S. federal and state deferred tax assets offset by our current taxes payable.

Previous wording

As of March 31, 2024, our cash and cash equivalents were $4.72 billion, and our liquid investment portfolio included available-for-sale securities of $500 million classified as cash and cash equivalents. Held-to-maturity investments maturing within one year can also be a source of liquidity and were $495 million as of March 31, 2024. See Note 5 - Investments and Fair Value Measurement, to our unaudited condensed consolidated financial statements in this Quarterly Report for further information.

Current wording

As of June 30, 2024, our cash and cash equivalents were $4.52 billion, which included a $750 million liquid investment portfolio of available-for-sale securities. Held-to-maturity investments maturing within one year can also be a source of liquidity and were $503 million as of June 30, 2024. See Note 6 - Investments and Fair Value Measurement, to our unaudited condensed consolidated financial statements in this Quarterly Report for further information.

Previous wording

(1) Purchase commitments are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated. The primarily relate to commitments for cloud infrastructure and data services and business insurance.

Current wording

(1) Purchase commitments are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated. These primarily relate to commitments for cloud infrastructure and data services and business insurance.

Previous wording

Cash provided by operating activities decreased $1,451 million. While we had higher net income, this was partially offset by a decrease in non-cash add-backs driven by higher SBC expense in 2023 as a result of the 2021 Founders Award Cancellation. The decrease was further driven by changes in operating assets and liabilities that had a negative impact on our cash provided by operating activities. These changes primarily included an increase in securities segregated under federal and other regulations resulting from the purchase of U.S. Treasury securities of $692 million and an increase in receivables from users, net balances of $853 million driven by increased customer trading and activities and timing differences in settlements. For periods that end on a weekend or a bank holiday, our settlements receivable and customer payable balances typically will be higher than for periods ending on a weekday.

Current wording

Cash provided by operating activities decreased $1.77 billion. While we had higher net income, this was partially offset by a decrease in non-cash add-backs driven by higher SBC expense in 2023 as a result of the 2021 Founders Award Cancellation. The decrease was further driven by changes in operating assets and liabilities that had a negative impact on our cash provided by operating activities. These changes primarily included an increase in securities segregated under federal and other regulations resulting from the purchase of U.S. Treasury securities of $547 million and an increase in receivables from users, net balances of $1.43 billion driven by higher margin balance due to lower rates offered in May 2024.

Previous wording

Cash used in investing activities decreased $434 million compared to the prior period. The change was primarily driven by a decrease in cash used in investing activities of $316 million from fewer purchases of held-to-maturity investments and an increase of $152 million in cash provided by investing activities related to proceeds from maturities of held-to-maturity investments.

Current wording

Cash used in investing activities decreased $423 million compared to the prior period. The change was primarily driven by a decrease of $273 million from fewer purchases of held-to-maturity investments and an increase of $197 million related to proceeds from maturities of held-to-maturity investments.

Previous wording

Cash used in financing activities increased $19 million compared to the prior period primarily driven by an increase in taxes paid related to net share settlement of equity awards of $38 million partially offset by $17 million in borrowings under our Credit Card Funding Trust which were subsequently used to purchase receivables.

Current wording

Cash used in financing activities increased $68 million compared to the prior period primarily driven by an increase in taxes paid related to net share settlement of equity awards of $94 million partially offset by $17 million in borrowings under our Credit Card Funding Trust to purchase credit card receivables.

Previous wording

There have been no material changes to our critical accounting estimates during the three months ended March 31, 2024, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in our 2023 Form 10-K.

Current wording

There have been no material changes to our critical accounting estimates during the six months ended June 30, 2024, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in our 2023 Form 10-K.