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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

______________________

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-40691

______________________

Robinhood Markets, Inc.

(Exact name of registrant as specified in its charter)

______________________

Delaware46-4364776
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)

85 Willow Rd

Menlo Park, CA 94025

(Address of principal executive offices, including zip code)

(844) 428-5411

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock $0.0001 par value per shareHOODThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☒

As of October 24, 2024, the numbers of shares of the issuer’s Class A and Class B common stock outstanding were 763,562,814 and 120,412,875.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATIONPAGE
ITEM 1.Unaudited Financial Statements
Condensed Consolidated Balance Sheets5
Condensed Consolidated Statements of Operations6
Condensed Consolidated Statements of Comprehensive Income (Loss)7
Condensed Consolidated Statements of Cash Flows8
Condensed Consolidated Statements of Stockholders’ Equity9
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 - Description of Business and Summary of Significant Accounting Policies11
Note 2 - Recent Accounting Pronouncements13
Note 3 - Revenues14
Note 4 - Business Combinations and Asset Acquisitions15
Note 5 - Allowance for Credit Losses16
Note 6 - Investments and Fair Value Measurement17
Note 7 - Derivatives and Hedging Activities22
Note 8 - Income Taxes24
Note 9 - Securities Borrowing and Lending24
Note 10 - Financing Activities and Off-Balance Sheet Risk25
Note 11- Common Stock and Stockholders' Equity28
Note 12 - Net Income (Loss) per Share31
Note 13 - Leases32
Note 14 - Commitments & Contingencies32
ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations38
ITEM 3.Quantitative and Qualitative Disclosures About Market Risk54
ITEM 4.Controls and Procedures55
PART II - OTHER INFORMATION
ITEM 1.Legal Proceedings57
ITEM 1A.Risk Factors58
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds113
ITEM 3.Defaults Upon Senior Securities115
ITEM 4.Mine Safety Disclosures115
ITEM 5.Other Information115
ITEM 6.Exhibit Index116
Signatures117

CAUTIONARY NOTE REGARDING FORWARD‑LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) of Robinhood Markets, Inc. (together with its subsidiaries, “we”, “us”, “RHM”, “Robinhood”, or the “Company”) contains forward-looking statements (as such phrase is used in the federal securities laws), which involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “believe,” “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “estimate,” “predict,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. This Quarterly Report includes, among others, forward-looking statements regarding:

  • our expectations regarding legal and regulatory proceedings and investigations;

  • our intent to continue expanding our operations outside of the United States;

  • our expectations with respect to our pending acquisition of Bitstamp Ltd. (“Bitstamp”);

  • that if the improvements in our U.S. operating results continue, our belief that a reasonable probability exists that, within the next 24 months, sufficient positive evidence may become available to reach a conclusion that a significant portion of the U.S. valuation allowance would no longer be required;

  • the Repurchase Program (as defined below) and our current expectations with respect to timing; and

  • our belief that, based on our current level of operations, our primary sources of liquidity will be adequate to meet our current liquidity needs for the next 12 months.

Our forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other factors that may cause our actual future results, performance, or achievements to differ materially from any future results expressed or implied in this Quarterly Report. Reported results should not be considered an indication of future performance. Factors that contribute to the uncertain nature of our forward-looking statements include, among others:

  • our limited operating experience at our current scale;

  • the difficulty of managing our business effectively, including the size of our workforce, and the risk of declining or negative growth;

  • the fluctuations in our financial results and key metrics from quarter to quarter;

  • our reliance on transaction-based revenue, including payment for order flow (“PFOF”), and the implementation of new or proposed regulation or bans on PFOF and similar practices;

  • our exposure to fluctuations in interest rates and rapidly changing interest rate environments;

  • the difficulty of raising additional capital (to provide liquidity needs and support business growth and objectives) on reasonable terms, if at all;

  • the need to maintain capital levels required by regulators and self-regulatory organizations (“SROs”);

  • the risk that we might mishandle the cash, securities, and cryptocurrencies we hold on behalf of customers, and our exposure to liability for processing, operational, or technical errors in clearing functions;

  • the impact of negative publicity on our brand and reputation;

  • the risk that changes in business, economic, or political conditions that impact the global financial markets, or a systemic market event, might harm our business;

  • our dependence on key employees and a skilled workforce;

  • the difficulty of complying with an extensive, complex, and changing regulatory environment and the need to adjust our business model in response to new or modified laws and regulations;

  • the possibility of adverse developments in pending litigation and regulatory investigations;

  • the effects of competition;

  • our need to innovate and invest in new products, services, technologies and geographies in order to attract and retain customers and deepen their engagement with us in order to maintain growth;

  • our reliance on third parties to perform some key functions and the risk that processing, operational or technological failures could impair the availability or stability of our platforms;

  • the risk of cybersecurity incidents, theft, data breaches, and other online attacks;

  • the difficulty of processing customer data in compliance with privacy laws;

  • our need as a regulated financial services company to develop and maintain effective compliance and risk management infrastructures;

  • the risks associated with incorporating artificial intelligence (“AI”) technologies into some of our products and processes;

  • the volatility of cryptocurrency prices and trading volumes;

  • the risk that our platforms and services could be exploited to facilitate illegal payments; and

  • the risk that substantial future sales of Class A common stock in the public market, or the perception that they may occur, could cause the price of our stock to fall.

Because some of these risks and uncertainties cannot be predicted or quantified and some are beyond our control, you should not rely on our forward-looking statements as predictions of future events. More information about potential risks and uncertainties that could affect our business and financial results is included in the section of this Quarterly Report titled “Risk Factors” and our other filings with the U.S. Securities and Exchange Commission (“SEC”), all of which are available on the SEC’s web site at www.sec.gov. Moreover, we operate in a very competitive and rapidly changing environment; new risks and uncertainties may emerge from time to time and it is not possible for us to predict all risks nor identify all uncertainties. The events and circumstances reflected in our forward-looking statements might not be achieved and actual results could differ materially from those projected in the forward-looking statements. Except as otherwise noted, all forward-looking statements are made as of the date we file this Quarterly Report, and are based on information and estimates available to us at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by law, Robinhood assumes no obligation to update any of the statements in this Quarterly Report whether as a result of any new information, future events, changed circumstances, or otherwise. You should read this Quarterly Report with the

understanding that our actual future results, performance, events, and circumstances might be materially different from what we expect.

We use the “Overview” tab of our Investor Relations website (accessible at investors.robinhood.com/overview) and its Newsroom, (accessible at newsroom.aboutrobinhood.com), as means of disclosing information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (“Reg. FD”). Investors should routinely monitor those web pages, in addition to our press releases, SEC filings, and public conference calls and webcasts, as information posted on them could be deemed to be material information. The contents of our websites are not intended to be incorporated by reference into this Quarterly Report or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

ROBINHOOD MARKETS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,September 30,
(in millions, except share and per share data)20232024
Assets
Current assets:
Cash and cash equivalents$4,835$4,611
Cash and cash equivalents segregated under federal and other regulations4,4485,547
Receivables from brokers, dealers, and clearing organizations89139
Receivables from users, net3,4955,546
Securities borrowed1,6023,704
Deposits with clearing organizations338464
Asset related to user cryptocurrencies safeguarding obligation14,70819,456
User-held fractional shares1,5922,201
Held-to-maturity investments413527
Prepaid expenses6386
Deferred customer match incentives1173
Other current assets196251
Total current assets31,79042,605
Property, software, and equipment, net120133
Goodwill175179
Intangible assets, net4839
Non-current held-to-maturity investments73—
Non-current deferred customer match incentives19159
Other non-current assets, including non-current prepaid expenses of $4 as of December 31, 2023 and $22 as of September 30, 2024107130
Total assets$32,332$43,245
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses$384$443
Payables to users5,0976,264
Securities loaned3,5477,306
User cryptocurrencies safeguarding obligation14,70819,456
Fractional shares repurchase obligation1,5922,201
Other current liabilities217288
Total current liabilities25,54535,958
Other non-current liabilities9179
Total liabilities25,63636,037
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.0001 par value. 210,000,000 shares authorized, no shares issued and outstanding as of December 31, 2023 and September 30, 2024.——
Class A common stock, $0.0001 par value. 21,000,000,000 shares authorized, 745,401,862 shares issued and outstanding as of December 31, 2023; 21,000,000,000 shares authorized, 761,992,964 shares issued and outstanding as of September 30, 2024.——
Class B common stock, $0.0001 par value. 700,000,000 shares authorized, 126,760,802 shares issued and outstanding as of December 31, 2023; 700,000,000 shares authorized, 121,616,044 shares issued and outstanding as of September 30, 2024.——
Class C common stock, $0.0001 par value. 7,000,000,000 shares authorized, no shares issued and outstanding as of December 31, 2023 and September 30, 2024.——
Additional paid-in capital12,14512,158
Accumulated other comprehensive income (loss)(3)1
Accumulated deficit(5,446)(4,951)
Total stockholders’ equity6,6967,208
Total liabilities and stockholders’ equity$32,332$43,245

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ROBINHOOD MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except share and per share data)2023202420232024
Revenues:
Transaction-based revenues$185$319$585$975
Net interest revenues251274693813
Other revenues3144116149
Total net revenues4676371,3941,937
Operating expenses:
Brokerage and transaction3939114114
Technology and development202205608610
Operations4150119140
Marketing285979190
General and administrative2301331,036385
Total operating expenses5404861,9561,439
Other income (expense), net(2)2—8
Income (loss) before income taxes(75)153(562)506
Provision for income taxes103911
Net income (loss)$(85)$150$(571)$495
Net income (loss) attributable to common stockholders:
Basic$(85)$150$(571)$495
Diluted$(85)$150$(571)$495
Net income (loss) per share attributable to common stockholders:
Basic$(0.09)$0.17$(0.64)$0.56
Diluted$(0.09)$0.17$(0.64)$0.55
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic895,108,790884,108,545898,999,464880,182,573
Diluted895,108,790905,544,750898,999,464903,555,592

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ROBINHOOD MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Net income (loss)$(85)$150$(571)$495
Other comprehensive income (loss), net of tax:
Foreign currency translation—1—1
Net losses on hedging instruments:
Net loss on hedging instruments during the period(1)—(4)—
Reclassification adjustment for net gains included in net income———3
Net gain (loss) on hedging instruments(1)—(4)3
Total other comprehensive income (loss), net of tax(1)1(4)4
Total comprehensive income (loss)$(86)$151$(575)$499

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ROBINHOOD MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,
(in millions)20232024
Operating activities:
Net income (loss)$(571)$495
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization5455
Provision for credit losses2957
Share-based compensation790227
Other(27)—
Changes in operating assets and liabilities:
Receivables from brokers, dealers, and clearing organizations13(50)
Receivables from users, net(502)(1,971)
Securities borrowed(687)(2,102)
Deposits with clearing organizations(89)(126)
Current and non-current prepaid expenses26(41)
Current and non-current deferred customer match incentives(10)(202)
Other current and non-current assets10(11)
Accounts payable and accrued expenses14528
Payables to users(376)1,167
Securities loaned1,4113,759
Other current and non-current liabilities5(42)
Net cash provided by operating activities2211,243
Investing activities:
Purchases of property, software, and equipment(1)(9)
Capitalization of internally developed software(14)(26)
Purchases of held-to-maturity investments(651)(469)
Proceeds from maturities of held-to-maturity investments167439
Purchases of credit card receivables by Credit Card Funding Trust—(239)
Collections of purchased credit card receivables—130
Business acquisition, net of cash and cash equivalents acquired(90)(6)
Asset acquisition, net of cash acquired—(3)
Other101
Net cash used in investing activities(579)(182)
Financing activities:
Proceeds from issuance of common stock under the Employee Stock Purchase Plan910
Taxes paid related to net share settlement of equity awards(9)(155)
Payments of debt issuance costs(10)(14)
Draws on credit facilities2012
Repayments on credit facilities(20)(12)
Borrowings on Credit Card Funding Trust—95
Repayments on Credit Card Funding Trust—(1)
Change in principal collected from customers due to Coastal Bank(3)(15)
Repurchase of Class A common stock(608)(97)
Proceeds from exercise of stock options, net of repurchases210
Net cash used in financing activities(619)(167)
Effect of foreign exchange rate changes on cash and cash equivalents—1
Net increase (decrease) in cash, cash equivalents, segregated cash, and restricted cash(977)895
Cash, cash equivalents, segregated cash, and restricted cash, beginning of the period9,3579,346
Cash, cash equivalents, segregated cash, and restricted cash, end of the period$8,380$10,241
Reconciliation of cash, cash equivalents, segregated cash and restricted cash, end of the period:
Cash and cash equivalents, end of the period$4,889$4,611
Segregated cash and cash equivalents, end of the period3,4485,547
Restricted cash in other current assets, end of the period2667
Restricted cash in other non-current assets, end of the period1716
Cash, cash equivalents, segregated cash and restricted cash, end of the period$8,380$10,241
Supplemental disclosures:
Cash paid for interest$8$12
Cash paid for income taxes, net of refund received$9$14

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ROBINHOOD MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Common stockAdditional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
(in millions, except for number of shares)SharesAmount
Balance as of June 30, 2023909,694,702$—$12,581$(3)$(5,391)$7,187
Net loss————(85)(85)
Shares issued in connection with stock option exercises, net of repurchases328,963—————
Issuance of common stock upon settlement of restricted stock units, net of shares withheld7,808,470—(4)——(4)
Repurchase and retirement of Class A common stock(55,273,469)—(611)——(611)
Change in other comprehensive loss———(1)—(1)
Share-based compensation——88——88
Balance as of September 30, 2023862,558,666$—$12,054$(4)$(5,476)$6,574
Common stockAdditional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
(in millions, except for number of shares)SharesAmount
Balance as of June 30, 2024884,545,769$—$12,223$—$(5,101)$7,122
Net income————150150
Shares issued in connection with stock option exercises, net of repurchases412,471—2——2
Repurchase and retirement of Class A common stock(5,012,195)—(97)——(97)
Issuance of common stock upon settlement of restricted stock units, net of shares withheld3,662,963—(56)——(56)
Change in other comprehensive income———1—1
Share-based compensation——86——86
Balance as of September 30, 2024883,609,008$—$12,158$1$(4,951)$7,208

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ROBINHOOD MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Common stockAdditional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
(in millions, except for number of shares)SharesAmount
Balance as of December 31, 2022892,751,571$—$11,861$—$(4,905)$6,956
Net loss————(571)(571)
Shares issued in connection with stock option exercises, net of repurchases1,125,929—2——2
Issuance of common stock in connection with Employee Stock Purchase Plan1,225,069—9——9
Issuance of common stock upon settlement of restricted stock units, net of shares withheld22,729,566—(9)——(9)
Repurchase and retirement of Class A common stock(55,273,469)—(611)——(611)
Change in other comprehensive loss———(4)—(4)
Share-based compensation——802——802
Balance as of September 30, 2023862,558,666$—$12,054$(4)$(5,476)$6,574
Common stockAdditional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
(in millions, except for number of shares)SharesAmount
Balance as of December 31, 2023872,162,664$—$12,145$(3)$(5,446)$6,696
Net income————495495
Shares issued in connection with stock option exercises, net of repurchases2,237,944—10——10
Repurchase and retirement of Class A common stock(5,012,195)—(97)——(97)
Issuance of common stock in connection with Employee Stock Purchase Plan1,555,893—10——10
Issuance of common stock upon settlement of restricted stock units, net of shares withheld12,664,702—(155)——(155)
Change in other comprehensive income———4—4
Share-based compensation——245——245
Balance as of September 30, 2024883,609,008$—$12,158$1$(4,951)$7,208

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ROBINHOOD MARKETS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Robinhood was incorporated in the State of Delaware on November 22, 2013. Our most significant, wholly-owned subsidiaries are:

  • Robinhood Financial LLC (“RHF”), a registered introducing broker-dealer;

  • Robinhood Securities, LLC (“RHS”), a registered clearing broker-dealer;

  • Robinhood Crypto, LLC (“RHC”), which provides users the ability to buy, sell, and transfer cryptocurrencies and is responsible for the custody of user cryptocurrencies held by users on our RHC platform;

  • Robinhood Credit, Inc. (“Robinhood Credit”), which offers credit cards with certain rewards offerings; and

  • Robinhood Money, LLC, which offers a spending card and a spending account that help customers invest, save, and earn rewards.

Acting as the agent of the user, we facilitate the purchase and sale of options, cryptocurrencies, and equities through our platforms by routing transactions through market makers, who are responsible for trade execution. Upon execution of a trade, users are legally required to purchase options, cryptocurrencies, or equities for cash from the transaction counterparty or to sell options, cryptocurrencies, or equities for cash to the transaction counterparty, depending on the transaction. We facilitate and confirm trades only when there are binding, matched legal obligations from the user and the market maker on both sides of the trade. Our users have ownership of the securities they transact on our platforms, including those that collateralize margin loans, and, as a result, such securities are not presented on our unaudited condensed consolidated balance sheets, other than user-held fractional shares which are presented gross. Our users also have ownership of the cryptocurrencies they transact on our platforms (none of which are allowed to be purchased on margin and which do not serve as collateral for margin loans), however, following our adoption of SEC Staff Accounting Bulletin 121 (“SAB 121”), we recognize a liability to reflect our safeguarding obligation along with a corresponding asset on our balance sheet related to the cryptocurrencies we hold in custody for users.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC for interim financial reporting. The condensed consolidated financial statements are unaudited, and in management’s opinion, include all adjustments, including normal recurring adjustments and accruals necessary for a fair presentation of the results for the interim periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2024 or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).

There have been no material changes in our significant accounting policies as described in our audited consolidated financial statements included in our 2023 Form 10-K, other than as disclosed below. The unaudited condensed consolidated financial statements include the accounts of RHM and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation. The impact of these reclassifications is immaterial to the presentation of the unaudited condensed consolidated financial statements taken as a whole and had no impact on previously reported total assets, total liabilities and net income (loss).

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts in the unaudited condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience, and other assumptions we believe to be reasonable under the circumstances. Assumptions and estimates used in preparing our unaudited condensed consolidated financial statements include, but are not limited to, those related to revenue recognition, share-based compensation (“SBC”), the determination of allowances for credit losses, valuation of user cryptocurrencies safeguarding obligation and corresponding asset, investment valuation, capitalization of internally developed software, useful lives of property, software, and equipment, valuation and useful lives of intangible assets, incremental borrowing rate used to calculate operating lease right-of-use assets and related liabilities, impairment of long-lived assets, determination of hedge effectiveness, uncertain tax positions, income taxes, accrued and contingent liabilities. Actual results could differ from these estimates and could have a material adverse effect on our operating results.

Concentrations of Revenue and Credit Risk

Concentrations of Revenue

We derived transaction-based revenues from individual market makers in excess of 10% of total revenues, as follows:

Three Months Ended September 30,Nine Months Ended September 30,
2023202420232024
Market maker:
Citadel Securities, LLC11%14%12%13%
All others individually less than 10%26%36%28%37%
Total as percentage of total revenue:37%50%40%50%

Concentrations of Credit Risk

We are engaged in various trading and brokerage activities in which the counterparties primarily include broker-dealers, banks, and other financial institutions. In the event our counterparties do not fulfill their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. Default of a counterparty in equities and options trades, which are facilitated through clearinghouses, would generally be spread among the clearinghouse's members rather than falling entirely on us. It is our policy to review, as necessary, the credit standing of each counterparty.

Variable Interest Entities

We evaluate our ownership, contractual and other interests in entities to determine if we have a variable interest in an entity. These evaluations are complex, involve judgment, and the use of estimates and assumptions based on available historical and prospective information, among other factors. If we determine that an entity for which we hold a contractual or ownership interest in is a variable interest entity (“VIE”) and that we are the primary beneficiary, we consolidate such entity in the consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE;

and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. We continuously monitor if any changes in the interest or relationship with the entity may impact the determination of whether we are still the primary beneficiary and require us to revise our previous conclusion.

Asset Acquisitions

Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. We allocate the cost of the acquisition, including direct and incremental transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition.

NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

There were no new accounting pronouncements adopted during the nine months ended September 30, 2024 that materially impacted our unaudited condensed consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This amendment will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives, and transfers of financial assets. The amendments in this guidance will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. We are currently evaluating the impacts of the amendment on our consolidated financial statements.

In November 2023, the FASB issued Accounting Standards Update 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in guidance improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income taxes (Topic 740): Improvements to Income Taxes Disclosures.” This guidance requires annual disclosure of specific categories in the rate reconciliation and provides additional information for reconciling items that meet a quantitative threshold. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and related disclosures.

In March 2024, the SEC adopted final rules under SEC Release No. 34-99678 and No. 33-11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “Final Rules”), which requires registrants to provide certain climate-related information in their registration statements and annual reports. The Final Rules require, among other things, disclosure in the notes to the audited financial statements of the effects of severe weather events and other natural conditions, subject to certain thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates in certain circumstances. The disclosure requirements of the Final Rules will begin phasing in

for annual periods beginning in fiscal year 2025. In April 2024, the SEC stayed the effectiveness of the Final Rules. We are currently evaluating the impact of the Final Rules.

NOTE 3: REVENUES

Disaggregation of Revenues

The following table presents our revenues disaggregated by revenue source:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Transaction-based revenues:
Options$124$202$384$538
Cryptocurrencies236192268
Equities273779116
Other11193053
Total transaction-based revenues185319585975
Net interest revenues:
Margin interest6783177228
Interest on corporate cash and investments7567217203
Interest on segregated cash, securities, and deposits5961156187
Cash Sweep354686129
Securities lending, net17197068
Credit card, net44416
Interest expenses related to credit facilities(6)(6)(17)(18)
Total net interest revenues251274693813
Other revenues
Gold subscription revenues20285577
Proxy revenues885353
Other38819
Total other revenues$31$44$116$149
Total net revenues$467$637$1,394$1,937

Robinhood Match Incentives

We offer a match incentive on customers’ eligible contributions to their retirement accounts and, from time to time, an incentive on other transfers of assets to our platform. We also provide a match on eligible cash deposits made by Robinhood Gold users. The match on retirement contributions and asset transfers are paid upfront and are subject to forfeiture if the recipient does not hold the contributed funds or transferred assets in their account for a specified period of time. These incentives are deferred and recognized over the specified holding period as a reduction to revenue. Match on eligible cash deposits are paid out on a monthly basis ratably over the specified earning period. Future match payments are forfeited if deposits are not held on the platform over the specified earning period. These matches are

recognized as a reduction to revenue when earned. The matches are allocated to certain revenue categories on a proportional basis. For the three and nine months ended September 30, 2023 and 2024, no impairments were recognized.

Fully-Paid Securities Lending

For our fully-paid securities lending program under which we borrow fully-paid shares from participating users and lend them to third parties (“Fully-Paid Securities Lending”), we earn revenue for lending certain securities based on demand for those securities and portions of such revenues are paid to participating users, and those payments are recorded as interest expense. The following table presents interest revenue earned and interest expense paid from Fully-Paid Securities Lending:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Interest revenue$12$20$35$60
Interest expense(2)(3)(5)(9)
Fully-Paid Securities Lending, net$10$17$30$51

Contract Balances

Contract receivables are recognized when we have an unconditional right to invoice and receive payment under a contract and are derecognized when cash is received. Transaction-based revenue receivables due from market makers are reported in receivables from brokers, dealers, and clearing organizations while other revenue receivables related to proxy revenues due from issuers are reported in other current assets on the unaudited condensed consolidated balance sheets.

Contract liabilities, which primarily consist of unearned subscription revenue, are recognized when users remit cash payments in advance of the time we satisfy our performance obligations and are recorded as other current liabilities on the unaudited condensed consolidated balance sheets.

The table below sets forth contract receivables and liabilities for the period indicated:

(in millions)Contract ReceivablesContract Liabilities
Beginning of the period, January 1, 2024$87$4
End of the period, September 30, 20241069
Changes during the period$19$5

The difference between the opening and ending balances of our contract receivables was primarily driven by higher transaction-based revenues due to increased trading volumes and timing differences between our performance and counterparties’ payments. We recognized all revenue from amounts included in the opening contract liabilities balance in the nine months ended September 30, 2024.

NOTE 4: BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

Pending Acquisition of Bitstamp

In June 2024, we entered into an agreement to acquire all outstanding equity of Bitstamp, a globally-scaled cryptocurrency exchange with retail and institutional customers. The aggregate consideration to be paid by us is expected to be approximately $200 million, subject to customary purchase price adjustments

set forth in the agreement and payable in cash. The acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to close in the first half of 2025.

Asset Acquisitions

On January 3, 2024, we acquired all outstanding stock of MNA Holdco LLC and its subsidiary Marex North America LLC (“MNA”) and licenses held by MNA for approximately $3 million (net of cash acquired in the amount of $125 million), which was determined to be an asset acquisition. The license acquired was recognized as an indefinite-lived intangible asset.

NOTE 5: ALLOWANCE FOR CREDIT LOSSES

Allowance for Credit Losses - Brokerage Related

Brokerage related allowance for credit losses primarily relate to unsecured balances of receivables from users due to Fraudulent Deposit Transactions, losses on margin lending, and reserves on proxy revenue receivables. Fraudulent Deposit Transactions occur when users initiate deposits into their accounts, make trades on our platforms using a short-term extension of credit from us, and then repatriate or reverse the deposits, resulting in a loss to us of the credited amount. The following table summarizes the brokerage related allowance for credit losses as a reduction of receivables from users, net on the unaudited condensed consolidated balance sheet:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Beginning balance$20$15$18$15
Provision for credit losses361816
Write-offs(7)(6)(20)(16)
Ending balance$16$15$16$15

Allowance for Credit Losses - Credit Card Related

We have two types of allowance for credit losses related to credit cards: i) an allowance related to off-balance sheet credit card receivables, shown as part of accounts payable and accrued expenses on the unaudited condensed consolidated balance sheet, and ii) an allowance related to purchased credit card receivables and interest receivable from customers, shown as a reduction of receivables from users, net on the unaudited condensed consolidated balance sheet. Credit card related allowance for credit losses represents management’s estimate of expected credit losses from credit exposure over the remaining expected life of credit card receivables. The credit card receivables allowance takes into account information from internal and external sources, including historical collection data, charge off trends by FICO cohort, and market data. We write-off balances when the balance becomes outstanding for over

180 days or when we otherwise deem the balance to be uncollectible. Write-offs for off-balance sheet credit card receivables are classified as credit loss payments to Coastal Bank.

The following table summarizes the allowance related to off-balance sheet credit card receivables:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Beginning balance$—$34$—$32
Opening balance from acquisition of Robinhood Credit16—16—
Provision for credit losses10111030
Credit loss payments to Coastal Bank(4)(8)(4)(26)
Recoveries—1—2
Ending balance$22$38$22$38

The following table summarizes the allowance related to purchased credit card receivables and interest receivables from customers:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Beginning balance$—$3$—$1
Provision for credit losses16111
Write-offs—(1)—(4)
Ending balance$1$8$1$8

NOTE 6: INVESTMENTS AND FAIR VALUE MEASUREMENT

Investments

Available-for-sale

As of December 31, 2023 and September 30, 2024, we had $500 million and $750 million of available-for-sale time deposits classified as cash equivalents on the unaudited condensed consolidated balance sheets. These investments had a maturity of three months or less at the time of purchase, and an aggregate market value equal to amortized cost. Refer to Fair Value of Financial Instruments below for further details.

Held-to-maturity

The following tables summarize our held-to-maturity investments:

December 31, 2023
(in millions)Amortized CostAllowance for Credit LossesUnrealized GainsUnrealized LossesFair Value
Debt securities:
Corporate debt securities$205$—$—$(1)$204
U.S. Treasury securities202———202
U.S. government agency securities42———42
Certificates of deposit34———34
Commercial paper3———3
Total held-to-maturity investments$486$—$—$(1)$485
September 30, 2024
(in millions)Amortized CostAllowance for Credit LossesUnrealized GainsUnrealized LossesFair Value
Debt securities:
U.S. Treasury securities$426$—$1$(1)$426
Corporate debt securities91———91
U.S. government agency securities10———10
Total held-to-maturity investments$527$—$1$(1)$527

There were no sales of held-to-maturity investments during the three and nine months ended September 30, 2024.

The table below presents the amortized cost and fair value of held-to-maturity investments by contractual maturity; the maximum maturity is two years:

December 31, 2023
(in millions)Within 1 Year1 to 2 YearsTotal
Amortized cost
Debt securities:
Corporate debt securities$153$52$205
U.S. Treasury securities18418202
U.S. government agency securities39342
Certificates of deposit34—34
Commercial paper3—3
Total held-to-maturity investments$413$73$486
Fair value
Debt securities:
Corporate debt securities$152$52$204
U.S. Treasury securities18418202
U.S. government agency securities39342
Certificates of deposit34—34
Commercial paper3—3
Total held-to-maturity investments$412$73$485
September 30, 2024
(in millions)Within 1 Year1 to 2 YearsTotal
Amortized cost
Debt securities:
U.S. Treasury securities$426$—$426
Corporate debt securities91—91
U.S. government agency securities10—10
Total held-to-maturity investments$527$—$527
Fair value
Debt securities:
U.S. Treasury securities$426$—$426
Corporate debt securities91—91
U.S. government agency securities10—10
Total held-to-maturity investments$527$—$527

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis were presented on our unaudited condensed consolidated balance sheets as follows:

December 31, 2023
(in millions)Level 1Level 2Level 3Total
Assets
Cash equivalents:
Time deposits$—$500$—$500
Money market funds146——146
Deposits with clearing organizations:
U.S. Treasury securities(1)50——50
Other current assets:
Stablecoin20——20
Equity securities - securities owned10——10
Other non-current assets:
Money market funds - escrow account2——2
Asset related to user cryptocurrencies safeguarding obligation—14,708—14,708
User-held fractional shares1,592——1,592
Total financial assets$1,820$15,208$—$17,028
Liabilities
User cryptocurrencies safeguarding obligation$—$14,708$—$14,708
Fractional shares repurchase obligations1,592——1,592
Total financial liabilities$1,592$14,708$—$16,300
September 30, 2024
(in millions)Level 1Level 2Level 3Total
Assets
Cash equivalents:
Time deposits$—$750$—$750
Money market funds60——60
U.S. Treasury securities8——8
Other current assets:
Stablecoin21——21
Equity securities - securities owned14——14
Other non-current assets:
Money market funds - escrow account2——2
Asset related to user cryptocurrencies safeguarding obligation—19,456—19,456
User-held fractional shares2,201——2,201
Total financial assets$2,306$20,206$—$22,512
Liabilities
User cryptocurrencies safeguarding obligation$—$19,456$—$19,456
Fractional shares repurchase obligations2,201——2,201
Total financial liabilities$2,201$19,456$—$21,657

(1) During the year ended December 31. 2023, U.S. Treasury securities were pledged to a clearing organization to meet margin requirements for our security lending program.

The fair value for certain financial instruments that are not required to be measured or reported at fair value was presented on our unaudited condensed consolidated balance sheets as follows:

December 31, 2023
(in millions)Level 1Level 2Level 3Total
Assets
Held-to-maturity investments:
Corporate debt securities$—$204$—$204
U.S. Treasury securities202——202
U.S. government agency securities—42—42
Certificates of deposit—34—34
Commercial paper—3—3
Total held-to-maturity investments$202$283$—$485
September 30, 2024
(in millions)Level 1Level 2Level 3Total
Assets
Held-to-maturity investments:
U.S. Treasury securities$426$—$—$426
Corporate debt securities—91—91
U.S. government agency securities—10—10
Total held-to-maturity investments$426$101$—$527

The fair values used for held-to-maturity investments are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, relevant yield curves, credit spreads and prices from market makers and live trading systems. Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment of the reasonableness of the fair values provided.

During the nine months ended September 30, 2024, we did not have any transfers in or out of Level 3 assets or liabilities.

Safeguarded user cryptocurrencies

Safeguarded user cryptocurrencies were as follows:

December 31,September 30,
(in millions)20232024
Bitcoin (BTC)$6,149$9,416
Ethereum (ETH)3,7614,014
Dogecoin (DOGE)3,3194,001
Other1,4792,025
Total user cryptocurrencies safeguarding obligation and corresponding asset$14,708$19,456

The fair value of the user cryptocurrencies safeguarding obligation and the corresponding asset were determined based on observed market pricing representing the last price executed for trades of each cryptocurrency as of December 31, 2023 and September 30, 2024.

NOTE 7: DERIVATIVES AND HEDGING ACTIVITIES

In 2023, we entered into two interest rate floors that were designated as cash flow hedges of interest rate risk associated with our margin receivables. One interest rate floor with a notional amount of $2 billion was effective as of June 30, 2023. Another with a notional amount of $1 billion was effective as of January 1, 2024. Both interest rate floors had a maturity of six months. As of September 30, 2024, the Company had no derivatives and hedging activities.

Amounts reported in accumulated other comprehensive income (loss) (“AOCI”) related to interest rate floors were reclassified to net interest revenues as interest payments were received or paid on the hedged items during the nine months ended September 30, 2024.

The following table summarizes the amount of gain or loss recognized in AOCI on our unaudited condensed consolidated financial statements:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Derivatives designated as hedging instruments:
Loss on derivatives included in effectiveness assessment$(1)$—$(4)$—
Loss reclassified from AOCI into net interest revenues included in effectiveness assessment———3
Total$(1)$—$(4)$3

The following table summarizes the components of AOCI including hedging activities on our unaudited condensed consolidated financial statements:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Beginning balance$(3)$—$—$(3)
Foreign currency translation:
Other comprehensive income before reclassifications—1—1
Other comprehensive income after reclassification, net of tax—1—1
Hedging instruments:
Other comprehensive loss before reclassifications(1)—(4)—
Reclassification adjustment for net gains included in net interest revenues, net of tax———3
Other comprehensive income (loss) after reclassification, net of tax(1)—(4)3
Ending balance$(4)$1$(4)$1

NOTE 8: INCOME TAXES

Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except percentages)2023202420232024
Income (loss) before income taxes$(75)$153$(562)$506
Provision for income taxes103911
Effective tax rate(12.7)%1.9%(1.5)%2.2%

Our tax provision for interim periods is determined using an estimated annual effective tax rate (“ETR”), adjusted for discrete items arising in the period. In each quarter, we update our estimated annual ETR and make a year-to-date calculation of the provision.

For the three and nine months ended September 30, 2023 and 2024, the ETR was lower than the U.S. federal statutory rate primarily due to the full valuation allowance on our U.S. federal and state deferred tax assets offset by current taxes payable.

The realization of tax benefits of net deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence during the nine months ended September 30, 2024, we believe it is more likely than not that the tax benefits of the remaining U.S. federal, state, and certain foreign net deferred tax assets may not be realized until sufficient positive evidence exists to support reversal of the valuation allowance.

Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and tax credits before utilization.

In June 2024, California's Governor signed Senate Bill 167 (“SB 167”), which temporarily suspends the use of California net operating losses and imposes a cap on business incentive tax credits that we can utilize against our income taxes, and Senate Bill 175 (“SB 175”), allows for the recovery of suspended credits. We believe the recent tax legislation changes provided under SB 167 and SB 175 do not materially impact our income tax provision and do not change our evaluation of the valuation allowance against deferred tax assets in California as of September 30, 2024.

NOTE 9: SECURITIES BORROWING AND LENDING

Our securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities borrowing and lending transactions. Therefore, activity related to securities borrowing and lending activities are presented gross on our unaudited condensed consolidated balance sheets.

When we borrow fully-paid securities from users and third parties, we provide cash collateral to our users and third parties, which represents our rights to the collateral provided to our users and third parties and is recorded as “securities borrowed”, an asset, on our unaudited condensed consolidated balance sheets. When we lend securities to third parties, we receive cash as collateral, which represents our obligation to return the collateral and is recorded as “securities loaned”, a liability, on our unaudited condensed consolidated balance sheets.

The following tables set forth certain balances related to our securities borrowing and lending activities as of December 31, 2023 and September 30, 2024:

December 31,September 30,
(in millions)20232024
AssetsSecurities borrowed
Gross amount of cash collateral provided to users for securities borrowing transactions$1,602$3,704
Gross amount offset on the consolidated balance sheets——
Amounts of assets presented on the consolidated balance sheets1,6023,704
Gross amount not offset on the consolidated balance sheets:
Cash collateral provided to users and third parties for securities borrowing transactions1,6023,704
Fair value of securities borrowed from users and third parties(1,536)(3,614)
Net amount$66$90
LiabilitiesSecurities loaned
Gross amount of cash collateral received from counterparties for securities lending transactions$3,547$7,306
Gross amount offset on the consolidated balance sheets——
Amounts of liabilities presented on the consolidated balance sheets3,5477,306
Gross amount not offset on the consolidated balance sheets:
Cash collateral received from counterparties for securities lending transactions3,5477,306
Fair value of securities pledged to counterparties(3,188)(6,842)
Net amount$359$464

We obtain securities on terms that permit us to pledge and/or transfer securities to others. As of December 31, 2023 and September 30, 2024, we were permitted to re-pledge securities with a fair value of $4.78 billion and $7.48 billion under margin account agreements with users. As of December 31, 2023, we were permitted to re-pledge securities with a fair value of an immaterial balance that we borrowed under the master securities loan agreements (“MSLAs”) with third parties. As of September 30, 2024, there were no securities re-pledged from borrowing under MSLAs with third parties. Under the Fully-Paid Securities Lending program, as of December 31, 2023 and September 30, 2024, we were permitted to borrow securities with a fair value of $14.03 billion and $29.43 billion including securities with a fair value of $1.54 billion and $3.61 billion that we had borrowed from users.

As of December 31, 2023 and September 30, 2024, we had re-pledged securities with a fair value of $3.19 billion and $6.84 billion, in each case under MSLAs and fixed-term securities lending agreements with third parties. In addition, as of December 31, 2023 and September 30, 2024, we had re-pledged $676 million and $1.22 billion of the permitted amounts under the margin account agreements with clearing organizations to meet deposit requirements.

NOTE 10: FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK

Revolving Credit Facilities

RHM March 2024 Credit Agreement

On March 22, 2024, RHM entered into a second amended and restated credit agreement with a syndicate of banks (the “RHM March 2024 Credit Agreement”) amending and restating the unsecured revolving line of credit entered into in October 2019 and as thereafter amended (refer to Note 13 - Financing Activities and Off-Balance Sheet Risk, of the 2023 Form 10-K for more information). The RHM March 2024 Credit Agreement has an initial commitment of $750 million with a maturity date of March 22,

  1. Under circumstances described in the RHM March 2024 Credit Agreement, the aggregate commitments may be increased by up to $187.5 million, for a total commitment of up to $937.5 million. Borrowings under the RHM March 2024 Credit Agreement will bear interest at a rate per annum equal to the Alternate Base Rate or Adjusted Term SOFR (“Secured Overnight Financing Rate”) plus an applicable margin rate of 1.50%. For purposes of the RHM Credit Agreement, the Alternate Base Rate is the greatest of (i) the prime rate then in effect, (ii) the Federal Reserve Bank of New York rate then in effect plus 0.5% and (iii) the Adjusted Term SOFR for a one month interest period plus 1.0%. The Adjusted Term SOFR Rate is equal to the Term SOFR, published by the Term SOFR Administrator, plus the Term SOFR Adjustment. The Term SOFR Adjustment is 0.10%. If the Adjusted Term SOFR Rate is less than the floor of 0%, such rate shall be deemed to be equal to the floor. RHM is obligated to pay a commitment fee calculated at a per annum rate equal to 0.25% on any unused amount of the RHM March 2024 Credit Agreement.

RHS March 2024 Credit Agreement

On March 22, 2024, RHS, our wholly-owned subsidiary, entered into the Third Amended and Restated Credit Agreement (the “RHS March 2024 Credit Agreement”) among RHS, as borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, amending and restating the $2.175 billion 364-day senior secured revolving credit facility entered into in March 2023 (refer to Note 13 - Financing Activities and Off-Balance Sheet Risk, of the 2023 Form 10-K for more information).

The RHS March 2024 Credit Agreement provides for a 364-day senior secured revolving credit facility with a total commitment of $2.25 billion. Under circumstances described in the RHS March 2024 Credit Agreement, the aggregate commitments may be increased by up to $1.125 billion, for a total commitment of $3.375 billion. Borrowings under the credit facility must be specified to be Tranche A, Tranche B, Tranche C or a combination thereof. Tranche A loans are secured by users’ securities purchased on margin and are used primarily to finance margin loans. Tranche B loans are secured by the right to the return from National Securities Clearing Corporation (“NSCC”) of NSCC margin deposits and cash and property in a designated collateral account and used for the purpose of satisfying NSCC deposit requirements. Tranche C loans are secured by the right to the return of eligible funds from any reserve account of the borrower and cash and property in a designated collateral account and used for the purpose of satisfying reserve requirements under Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Borrowings under the RHS March 2024 Credit Agreement will bear interest at a rate per annum equal to the greatest of (i) Daily Simple SOFR plus 0.10% (as defined in the RHS March 2024 Credit Agreement), (ii) the Federal Funds Effective Rate (as defined in the RHS March 2024 Credit Agreement) and (iii) the Overnight Bank Funding Rate (as defined in the RHS March 2024 Credit Agreement), in each case, as of the day the loan is initiated, plus an applicable margin rate. The applicable margin rate is 1.25% for Tranche A loans and 2.50% for Tranche B and Tranche C loans. Undrawn commitments will accrue commitment fees at a rate per annum equal to 0.50%.

The RHS March 2024 Credit Agreement requires RHS to maintain a minimum consolidated tangible net worth and a minimum excess net capital, and subjects RHS to a specified limit on minimum net capital to aggregate debit items. In addition, the RHS March 2024 Credit Agreement contains certain customary affirmative and negative covenants, including limitations with respect to debt, liens, fundamental changes, asset sales, restricted payments, investments and transactions with affiliates, subject to certain exceptions. Amounts due under the RHS March 2024 Credit Agreement may be accelerated upon an “event of default,” as defined in the RHS March 2024 Credit Agreement, such as failure to pay amounts owed thereunder when due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject in some cases to cure periods.

As of December 31, 2023 and September 30, 2024, there were no borrowings outstanding and we were in compliance with all covenants, as applicable, under our revolving credit facilities.

Credit Card Funding Trust

Under terms of the Coastal Community Bank (“Coastal Bank”) Program Agreement (discussed below), Robinhood Credit has the ability to purchase credit card receivables originated and held for a period of time by Coastal Bank. Robinhood Credit continues to earn interest from customers and uses these purchased credit card receivables as collateral under a trust structure to access debt financing in the ordinary course of business. To help facilitate these transactions, we created a VIE known as the Credit Card Funding Trust (the “Trust”).

We are the primary beneficiary of the Trust as, through our role as the servicer and administrator, we have the power to direct the activities that most significantly affect the Trust's economic performance and, due to owning all the equity interest in the Trust, have the right to receive benefits or the obligation to absorb losses. As such, we consolidate the Trust in the condensed consolidated financial statements. Substantially all of the Trust’s assets and liabilities are the purchased credit card receivables, included in receivables from users, net, and the outstanding borrowing, included in other current liabilities, on the unaudited condensed consolidated balance sheets.

Our exposure to losses in the Trust is limited to the carrying value of net assets held by the Trust, including expected credit losses related to the purchased credit card receivables (Refer to Note 5 - Allowance for Credit Losses). For the Trust, the creditors have no recourse to our general credit and the liabilities of the Trust can only be settled by the Trust’s assets. Additionally, the assets of the Trust can only be used to settle obligations of the Trust.

The credit card receivables of the Trust have risks and characteristics similar to other off-balance sheet credit card receivables owned by Coastal Bank and were underwritten to the same standard. Accordingly, the performance of these assets is expected to be similar to other comparable credit card receivables.

As of September 30, 2024, the Trust had one arrangement in place to borrow up to $100 million which will mature in April 2025. Borrowings under this arrangement bear interest at an annual rate of SOFR plus 2.75% for outstanding borrowings less than $50 million, and SOFR plus 2.50% for outstanding borrowings greater than $50 million. During the nine months ended September 30, 2024, we purchased $239 million of credit card receivables. As of September 30, 2024, the carrying value of purchased credit card receivables that had not been collected, net of provision for credit losses, was $99 million, and the outstanding balance of borrowing principal and interest was $94 million. There were no purchases of credit card receivables or borrowings under this arrangement for the year ended December 31, 2023. For the three and nine months ended September 30, 2024, the related interest revenue and expense of the Trust were immaterial.

Off-Balance Sheet Risk

Coastal Bank Program Agreement

Under a program agreement between us and Coastal Bank (the “Program Agreement”) most recently amended in November 2023, Coastal Bank may fund up to $300 million of credit card receivables. Robinhood Credit pays Coastal Bank interest based on the average balance of advances during the month at the federal funds rate plus a margin of 3.75% on the first $150 million and 3.00% on such amounts in excess of $150 million.

The credit card receivables and the funding from Coastal Bank are off-balance sheet, considering Coastal Bank is the legal lender and originator, the party to which the customer has a creditor-borrower relationship, and the legal owner of the receivables. As of September 30, 2024, the off-balance sheet credit card receivables funded under the Program Agreement was $202 million.

Transaction Settlement

In the normal course of business, we engage in activities involving settlement and financing of securities transactions. User securities transactions are recorded on a settlement date basis. Effective May 2024, settlement date for equities has been shortened from two business days after the trade date to one business day after the trade date, while the settlement date for options remains unchanged at one business day after the trade date. These activities may expose us to off-balance sheet risk in the event that the other party to the transaction is unable to fulfill its contractual obligations. In such events, we may be required to purchase financial instruments at prevailing market prices in order to fulfill our obligations.

NOTE 11: COMMON STOCK AND STOCKHOLDERS' EQUITY

Preferred Stock

As of September 30, 2024, no terms of the preferred stock were designated and no shares of preferred stock were outstanding.

Common Stock

We have three authorized classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock are entitled to one vote per share on all matters to be voted upon by our stockholders, holders of our Class B common stock are entitled to 10 votes per share on all matters to be voted upon by our stockholders and, except as otherwise required by applicable law, holders of our Class C common stock are not entitled to vote on any matter to be voted upon by our stockholders. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by our Amended and Restated Certificate of Incorporation (our “Charter”) or applicable law.

Warrants

As of September 30, 2024, warrants outstanding consisted of warrants to purchase 14.3 million shares of Class A common stock with a strike price of $26.60 per share. The warrants expire on February 12, 2031 and can be exercised with cash or net shares settled at the holder’s option. In aggregate, the maximum purchase amount of all warrants is $380 million. As of September 30, 2024, the warrants had not been exercised.

Share Repurchase Program

On May 28, 2024, we announced that our board of directors approved a share repurchase program (the “Repurchase Program”) authorizing the Company to repurchase up to $1 billion of its outstanding Class A common stock. While the Repurchase Program does not have an expiration date, we continue to expect to complete over a period of two to three years. During the three months ended September 30, 2024, the Company repurchased 5 million shares of our Class A common stock for $97 million.

The timing and amount of repurchase transactions will be determined by us from time to time at our discretion based on our evaluation of market conditions, share price, and other factors. Repurchase transactions may be made using a variety of methods, such as open market share repurchases, including the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, or other financial arrangements or transactions. The Repurchase Program does not obligate us to acquire any particular

amount of Class A common stock and the Repurchase Program may be suspended or discontinued at any time at our discretion. All shares repurchased will be subsequently retired.

Equity Incentive Plans

2021 Omnibus Incentive Plan

Our 2021 Omnibus Incentive Plan (the “2021 Plan”) became effective on July 27, 2021, and provides for the grant of share-based awards (such as options, including incentive stock options, non statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance units, and other equity-based awards) and cash-based awards.

As of September 30, 2024, an aggregate of 448 million shares had been authorized for issuance under our Amended and Restated 2013 Stock Plan, as amended, 2020 Equity Incentive Plan, as amended, and 2021 Plan, of which 146 million shares had been issued under the plans, 45 million shares were reserved for issuance upon the exercise or settlement of outstanding equity awards under the plans, and 257 million shares remained available for new grants under the 2021 Plan.

Time-Based RSUs

We grant RSUs that vest upon the satisfaction of a time-based service condition (“Time-Based RSUs”). The following table summarizes the activity related to our Time-Based RSUs for the nine months ended September 30, 2024, which is the period we grant our company-wide annual refresh grants:

Number of RSUsWeighted- average grant date fair value
Unvested at December 31, 202334,551,998$14.99
Granted16,910,35517.56
Vested(20,646,236)16.43
Forfeited(6,203,621)15.33
Unvested at September 30, 202424,612,496$15.46

Market-Based RSUs

In 2019 and 2021, we granted to our founders RSUs under which vesting is conditioned upon both the achievement of share price targets and the continued employment by each recipient over defined service periods (“Market-Based RSUs”).

In February 2023, we cancelled the 2021 Market-Based RSUs of 35.5 million unvested shares (the “2021 Founders Award Cancellation”). We recognized $485 million SBC expense related to the cancellation during the nine months ended September 30, 2023, which was included in the general and administrative expense on our unaudited condensed statement of operations. No further expense

associated with these awards was recognized after the cancellation. No other payments, replacement equity awards or benefits were granted in connection with the cancellation.

The following table summarizes the activity related to our Market-Based RSUs for the nine months ended September 30, 2024:

Eligible to Vest**(1)**Not Eligible to Vest**(2)**Total Number of RSUsWeighted- average grant date fair value
Unvested at December 31, 2023345,79622,130,92622,476,722$25.67
Granted———
Vested(230,532)—(230,532)2.34
Forfeited(3)(115,264)(11,065,463)(11,180,727)25.79
Unvested at September 30, 2024—11,065,46311,065,463$26.04

(1)Represents RSUs that became eligible to vest upon achievement of share price targets and vest upon satisfaction of time-based service requirements.

(2)Represents RSUs that have not yet become eligible to vest because share price targets have not yet been achieved.

(3)The 11 million forfeited shares reflects the impact of the resignation of our co-founder and former Chief Creative Officer during the first quarter of 2024.

Share-Based Compensation

The following table presents SBC on our unaudited condensed consolidated statements of operations for the periods indicated:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202420232024
Brokerage and transaction$2$2$6$7
Technology and development5148161144
Operations3165
Marketing1336
General and administrative262561465
Total(1)$83$79$790$227

(1)For the three and nine months ended September 30, 2023, SBC expense primarily consisted of $70 million and $218 million related to Time-Based RSUs and $10 million and $563 million related to Market-Based RSUs. For the three and nine months ended September 30, 2024, SBC expense primarily consisted of $76 million and $225 million related to Time-Based RSUs and an immaterial amount and negative $8 million related to Market-Based RSUs, as a portion of the Market-Based RSUs became fully vested in prior periods and was net of an $11 million reversal of previously recognized expense related to unvested awards that were forfeited upon the resignation of our co-founder and former Chief Creative Officer during the first quarter of 2024.

We capitalized SBC expense related to internally developed software of $7 million and $18 million during the three and nine months ended September 30, 2024 compared to $5 million and $12 million for the same periods in the prior year.

As of September 30, 2024, there was $310 million of unrecognized SBC expense that is expected to be recognized over a weighted-average period of 0.89 years

.

NOTE 12: NET INCOME (LOSS) PER SHARE

The following table presents the calculation of basic and diluted income (loss) per share:

(in millions, except share and per share data)Three Months Ended September 30,Nine months ended September 30,
2023202420232024
Class AClass BClass AClass BClass AClass BClass AClass B
Basic earnings per share (“EPS”):
Numerator
Net income (loss)$(73)$(12)$129$21$(490)$(81)$425$70
Net income (loss) attributable to common stockholders$(73)$(12)$129$21$(490)$(81)$425$70
Denominator
Weighted-average common shares outstanding - basic767,981,843127,126,947761,931,947122,176,598771,585,189127,414,275756,319,103123,863,470
Basic EPS$(0.09)$(0.09)$0.17$0.17$(0.64)$(0.64)$0.56$0.56
Diluted EPS:
Numerator
Net income (loss)$(73)$(12)$129$21$(490)$(81)$425$70
Reallocation of net income as a result of conversion of Class B to Class A common stock——21———70—
Reallocation of net income to Class B common stock—————$——(1)
Net income (loss) for diluted EPS$(73)$(12)$150$21$(490)$(81)$495$69
Denominator
Weighted-average common shares outstanding - basic767,981,843127,126,947761,931,947122,176,598771,585,189127,414,275756,319,103123,863,470
Dilutive effect of stock options and unvested shares——21,436,205———23,373,019—
Conversion of Class B to Class A common stock——122,176,598———123,863,470—
Weighted-average common shares outstanding - diluted767,981,843127,126,947905,544,750122,176,598771,585,189127,414,275903,555,592123,863,470
Diluted EPS$(0.09)$(0.09)$0.17$0.17$(0.64)$(0.64)$0.55$0.55

The following potential common shares were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions that were not satisfied by the end of the period:

Three Months Ended September 30,Nine Months Ended September 30,
2023202420232024
Time-Based RSUs45,066,880746,08345,066,880774,579
Market-Based RSUs22,591,98811,065,46322,591,98811,065,463
Stock options13,668,390—13,668,390—
Warrants14,278,03414,278,03414,278,03414,278,034
Employee Stock Purchase Plan ("ESPP")838,958—838,958—
Total anti-dilutive securities96,444,25026,089,58096,444,25026,118,076

NOTE 13: LEASES

Our operating leases are comprised of office facilities, and we do not have any finance leases. Lease assets and liabilities recognized on our unaudited condensed consolidated balance sheets were as follows:

December 31,September 30,
(in millions)Classification20232024
Lease right-of-use assets:
Operating lease assetsOther non-current assets$68$63
Lease liabilities:
Current operating lease liabilitiesOther current liabilities2022
Non-current operating lease liabilitiesOther non-current liabilities8978
Total lease liabilities$109$100

Cash flows related to leases were as follows:

Nine Months Ended September 30,
(in millions)20232024
Operating cash flows:
Payments for operating lease liabilities$32$20
Supplemental cash flow data:
Lease liabilities arising from obtaining right-of-use assets$—$5

NOTE 14: COMMITMENTS & CONTINGENCIES

We are subject to contingencies arising in the ordinary course of our business, including contingencies related to legal, regulatory, non-income tax and other matters. We record an accrual for loss contingencies at management’s best estimate when we determine that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If the reasonable estimate is a range and no amount within that range is considered a better estimate than any other amount, an accrual is recorded based on the bottom amount of the range. If a loss is not probable, or a probable loss cannot be reasonably estimated, no accrual is recorded. Amounts accrued for contingencies in the aggregate were $190 million as of December 31, 2023 and $175 million as of September 30, 2024. In our opinion, an adequate accrual had been made as of each such date to provide for the probable losses of which we are aware and for which we can reasonably estimate an amount.

Legal and Regulatory Matters

The securities industry, and many other industries in which we operate, are highly regulated and many aspects of our business involve substantial risk of liability. In past years, there has been an increase in litigation and regulatory investigations involving the brokerage, cryptocurrency, and credit card industries. Litigation has included and may in the future include class action suits that generally seek substantial and, in some cases, punitive damages. Federal and state regulators, exchanges, other SROs, or international regulators investigate issues related to regulatory compliance that may result in

enforcement action. We are also subject to periodic regulatory audits and inspections that have in the past and could in the future lead to enforcement investigations or actions.

We have been named as a defendant in lawsuits and from time to time we have been threatened with, or named as a defendant in arbitrations and administrative proceedings. The outcomes of these matters are inherently uncertain and some may result in adverse judgments or awards, including penalties, injunctions, or other relief, and we may also determine to settle a matter because of the uncertainty and risks of litigation.

With respect to matters discussed below, we believe, based on current knowledge, that any losses (in excess of amounts accrued, if applicable) as of September 30, 2024 that are reasonably possible and can be reasonably estimated will not, in the aggregate, have a material adverse effect on our business, financial position, operating results, or cash flows. However, for many of the matters disclosed below, particularly those in early stages, we cannot reasonably estimate the reasonably possible loss (or range of loss), if any. In addition, the ultimate outcome of legal proceedings involves judgments and inherent uncertainties and cannot be predicted with certainty. Any judgment entered against us, or any adverse settlement, could materially and adversely impact our business, financial condition, operating results, and cash flows. We might also incur substantial legal fees, which are expensed as incurred, in defending against legal and regulatory claims.

Described below are certain pending matters in which there is at least a reasonable possibility that a material loss could be incurred. We intend to continue to defend these matters vigorously.

Best Execution, Payment for Order Flow, and Sources of Revenue Civil Litigation

Beginning in December 2020, multiple putative securities fraud class action lawsuits were filed against RHM, RHF, and RHS. Five cases were consolidated in the United States District Court for the Northern District of California. An amended consolidated complaint was filed in May 2021, alleging violations of Section 10(b) of the Exchange Act and various state law causes of action based on claims that we violated the duty of best execution and misled putative class members by publishing misleading statements and omissions in customer communications relating to the execution of trades and revenue sources (including PFOF). Plaintiffs seek unspecified monetary damages, restitution, disgorgement, and other relief. In February 2022, the court granted Robinhood’s motion to dismiss the amended consolidated complaint without prejudice. In March 2022, plaintiffs filed a second consolidated amended complaint, alleging only violations of Section 10(b) of the Exchange Act, which Robinhood moved to dismiss. In October 2022, the court granted Robinhood’s motion in part and denied it in part. In November 2022, Robinhood filed a motion for judgment on the pleadings, which the court denied in January 2023. In March 2024, Plaintiffs filed a motion for class certification, which Robinhood is opposing.

State Regulatory Matters

Certain state regulatory authorities have conducted investigations regarding RHF’s options trading and related customer communications and displays, options and margin trading approval process, the service outages on our U.S. stock trading platform on March 2-3, 2020 and March 9, 2020 (the “March 2020 Outages”), and customer support prior to June 2020. RHF has reached and paid settlements with 46 states for an aggregate of $9.2 million and may reach settlements with the remaining states as part of a multi-state settlement related to these issues for approximately $1 million. The Financial Industry Regulatory Authority (“FINRA”) previously conducted an investigation and reached a settlement with RHF regarding many of these issues.

The New York Attorney General is conducting an investigation into brokerage execution quality, and the Massachusetts Securities Division (“MSD”) is examining RHF’s customer complaint supervision. We are cooperating with these investigations.

Brokerage Enforcement Matters

FINRA Enforcement staff are conducting investigations related to, among other things, RHS’s reporting of fractional share trades, as applicable, to a Trade Reporting Facility, the Over-the-Counter Reporting Facility, the Order Audit Trail System, and the Consolidated Audit Trail; RHS’s reporting of accounts holding significant options positions to the Large Option Position Report system; processing of certain requests for transfers of assets from Robinhood through the Automated Customer Account Transfer System (“ACATS”); responses to Electronic Blue Sheets requests from FINRA; the delays in notification from third parties and process failures within our brokerage systems and operations in connection with the handling of a 1-for-25 reverse stock split transaction of Cosmo Health, Inc, in December 2022 (the “Q4 2022 Processing Error”); RHF’s and RHS’s compliance with FINRA registration requirements for member personnel; marketing involving social media influencers and affiliates; collaring the prices of certain trade orders; RHS’s and RHF’s compliance with best execution obligations; RHS’s compliance with FINRA Rules 6190, 5260, and 6121; RHS’s and RHF’s compliance with regulations governing the delivery of required documents; matters related to RHS’s and RHF’s supervision of technology; origin code reporting; customer complaint supervision and restriction issues; and compliance with FINRA Rule 3210. We are cooperating with these investigations.

RHS has received requests from the SEC Division of Enforcement regarding its compliance with Regulation SHO’s trade reporting and other requirements in connection with securities lending, fractional share trading, the Q4 2022 Processing Error, and responses to Electronic Blue Sheets requests, and previously received similar requests from FINRA examinations staff including with respect to short interest reporting. RHS and RHF have also received requests from the SEC Division of Enforcement and FINRA Enforcement staff related to RHS’s and RHF’s compliance with recordkeeping requirements, including requests regarding off-channel communications. We are cooperating with these investigations.

Robinhood Crypto Matters

RHC received subpoenas from the California Attorney General’s Office (the “CAGO”) seeking information about, among other things, RHC’s trading platform, business and operations, custody of customer assets, customer disclosures, and coin listings. On August 31, 2024, RHC reached a settlement with the CAGO to resolve this matter for which we paid $3.9 million. The settlement related to certain disclosures by RHC and delivery of customers’ cryptocurrency assets under California Corporations Code Sections 29520 and 29505 during the period January 2018 through April 2022.

RHC also has received investigative subpoenas from the SEC regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations. RHC is cooperating with this investigation. On May 4, 2024, RHC received a “Wells Notice” (the “May 2024 Wells Notice”) from the Staff of the SEC (the “SEC Staff”) stating that the SEC Staff has advised RHC that it made a “preliminary determination” to recommend that the SEC file an enforcement action against RHC alleging violations of Sections 15(a) and 17A of the Exchange Act. The potential action may involve a civil injunctive action, public administrative proceeding, and/or a cease-and-desist proceeding and may seek remedies that include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest, civil money penalties, and censure, revocation, and limitations on activities.

Account Takeovers, Anti-Money Laundering, and Cybersecurity Matters

FINRA Enforcement and the SEC Division of Enforcement are investigating account takeovers (i.e., circumstances under which an unauthorized actor successfully logs into a customer account), as well as anti-money laundering compliance and cybersecurity issues. The SEC Division of Enforcement is also investigating the data security incident we experienced in November 2021 when an unauthorized third-party socially engineered a customer support employee by phone and obtained access to certain customer support systems (the “November 2021 Data Security Incident”). In March 2024, FINRA closed its investigation of the November 2021 Data Security Incident. The SEC’s Division of Enforcement and the U.S. Federal Deposit Insurance Corporation (“FDIC”) are also investigating issues related to compliance with the Electronic Funds Transfer Act. We are cooperating with these investigations.

Text Message Litigation

In August 2021, Cooper Moore filed a putative class action against RHF alleging that RHF initiated or assisted in the transmission of commercial electronic text messages to Washington State residents without their consent in violation of Washington state law. The complaint seeks unspecified total statutory and treble monetary damages, injunctive relief, and attorneys’ fees and costs. The case is currently pending in the U.S. District Court for the Western District of Washington. RHF filed a motion to dismiss the complaint. In February 2022, Moore and Andrew Gillette filed an amended complaint, which RHF again moved to dismiss. In August 2022, the court denied RHF’s motion to dismiss. The parties reached a settlement in principle to resolve this matter and in July 2024, the court granted final approval of the $9 million settlement.

Massachusetts Securities Division Matter

In December 2020, the MSD filed an administrative complaint against RHF, which stems from an investigation initiated by the MSD in July 2020. The complaint alleged three counts of Massachusetts securities law violations regarding alleged unethical and dishonest conduct or practices, failure to supervise, and failure to act in accordance with the Massachusetts fiduciary duty standard, which became effective on March 6, 2020 and had an effective enforcement date beginning September 1, 2020. Among other things, the MSD alleged that our product features and marketing strategies, outages, and options trading approval process constitute violations of Massachusetts securities laws. MSD subsequently filed an amended complaint that seeks, among other things, injunctive relief (a permanent cease and desist order), censure, restitution, disgorgement, appointment of an independent consultant, an administrative fine, and revocation of RHF’s license to operate in Massachusetts. If RHF were to lose its license to operate in Massachusetts, we would not be able to acquire any new customers in Massachusetts, and we expect that our current customers in Massachusetts would be unable to continue utilizing any of the services or products offered on our platform (other than closing their positions) and that we may be forced to transfer such customers’ accounts to other broker-dealers. Additionally, revocation of RHF’s Massachusetts license could trigger similar disqualification or proceedings to restrict or condition RHF’s registration by other state regulators. A revocation of RHF’s license to operate in Massachusetts would result in RHF and RHS being subject to statutory disqualification by FINRA and the SEC, which would then result in RHF needing to obtain relief from FINRA subject to SEC review in order to remain a FINRA member and RHS possibly needing relief from FINRA or other SROs.

In April 2021, RHF filed a complaint and motion for preliminary injunction and declaratory relief in Massachusetts state court seeking to enjoin the MSD administrative proceeding and challenging the legality of the Massachusetts fiduciary duty standard. In September 2021, the parties filed cross-motions for partial judgment on the pleadings. In March 2022, the court ruled in favor of RHF, declaring that the Massachusetts fiduciary duty regulation was unlawful. In August 2023, the Massachusetts Supreme Judicial Court reversed the decision of the Massachusetts Superior Court. In January 2024, we settled this matter with the MSD related to supervision of certain product features and marketing strategies, the March 2020 Outages, and our options trading approval process, as well as the November 2021 Data Security Incident, under which we paid a $7.5 million fine and engaged an independent consultant to review, among other things, implementation of the FINRA independent’s recommendations, policies and procedures regarding certain application features, and cybersecurity measures. The independent consultant’s review is complete and RHF has implemented all of its recommendations. RHF has dismissed its state court action.

Early 2021 Trading Restrictions Matters

Beginning on January 28, 2021, due to increased deposit requirements imposed on RHS by the NSCC in response to unprecedented market volatility, particularly in certain securities, RHS temporarily restricted or limited its customers’ purchase of certain securities, including GameStop Corp. and AMC Entertainment Holdings, Inc., on our U.S. trading platform (the “Early 2021 Trading Restrictions”).

A number of individual and putative class actions related to the Early 2021 Trading Restrictions were filed against RHM, RHF, and RHS, among others, in various federal and state courts. In April 2021, the Judicial Panel on Multidistrict Litigation entered an order centralizing the federal cases identified in a motion to transfer and coordinate or consolidate the actions filed in connection with the Early 2021 Trading Restrictions in the United States District Court for the Southern District of Florida. The court subsequently divided plaintiffs’ claims against Robinhood into three tranches: federal antitrust claims, federal securities law claims, and state law claims. In July 2021, plaintiffs filed consolidated complaints seeking unspecified monetary damages in connection with the federal antitrust and state law tranches. The federal antitrust complaint asserted one violation of Section 1 of the Sherman Act; the state law complaint asserted negligence and breach of fiduciary duty claims. In August 2021, we moved to dismiss both of these complaints.

In September 2021, plaintiffs filed an amended complaint asserting state law claims of negligence, breach of fiduciary duty, tortious interference with contract and business relationship, civil conspiracy, and breaches of the covenant of good faith and fair dealing and implied duty of care. In January 2022, the court dismissed the state law complaint with prejudice. In August 2023, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s order.

In November 2021, the court dismissed the federal antitrust complaint without prejudice. In January 2022, plaintiffs filed an amended complaint in connection with the federal antitrust tranche and Robinhood moved to dismiss the amended complaint. In May 2022, the court dismissed the federal antitrust complaint with prejudice. In June 2024, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s order.

In November 2021, plaintiffs for the federal securities tranche filed a complaint alleging violations of Sections 9(a) and 10(b) of the Exchange Act. The complaint seeks unspecified monetary damages, costs and expenses, and other relief. In January 2022, we moved to dismiss the federal securities law complaint. In August 2022, the court granted in part and denied in part Robinhood’s motion to dismiss. In November 2023, the court denied Plaintiffs’ motion for class certification without prejudice. In April 2024, the court denied Plaintiffs’ motion for leave to file a renewed motion for class certification. On May 28, 2024, Robinhood notified the court that it had reached a settlement in principle with the Plaintiffs in their individual capacities. Robinhood subsequently notified the court that one of these Plaintiffs was unwilling to sign the settlement agreement and requested additional time to negotiate with that individual. On August 14, 2024, the court dismissed the lead and named Plaintiffs’ claims. In October 2024, Robinhood notified the court that it was conferring with counsel for the remaining individual securities actions in connection with moving to compel arbitration for the majority of the remaining securities claims and ongoing substantive settlement negotiations.

RHM, RHF, RHS, and our Co-Founder and Chief Executive Officer (“CEO”), Vladimir Tenev, among others, have received requests for information, and in some cases, subpoenas and requests for testimony, related to investigations and examinations of the Early 2021 Trading Restrictions from the United States Attorney’s Office for the Northern District of California (“USAO”), the U.S. Department of Justice ("DOJ”), Antitrust Division, the SEC’s Division of Enforcement, FINRA, the New York Attorney General’s Office, other state attorneys general offices, and a number of state securities regulators. Also, a related search warrant was executed by the USAO to obtain Mr. Tenev's cell phone. There have been several inquiries based on specific customer complaints. We have also received requests from the SEC Division of Enforcement and FINRA related to employee trading in certain securities that were subject to the Early 2021 Trading Restrictions, including GameStop Corp. and AMC Entertainment Holdings, Inc., during the week of January 25, 2021. These matters include requests related to whether any employee trading in these securities may have occurred after the decision to impose the Early 2021 Trading Restrictions and before the public announcement of the Early 2021 Trading Restrictions on January 28, 2021. We are cooperating with these investigations. FINRA Enforcement has also requested information about policies, procedures, and supervision related to employee trading generally.

IPO Litigation

In December 2021, Philip Golubowski filed a putative class action in the U.S. District Court for the Northern District of California against RHM, the officers and directors who signed Robinhood’s initial public offering (“IPO”) offering documents, and Robinhood’s IPO underwriters. Plaintiff’s claims are based on alleged false or misleading statements in Robinhood’s IPO offering documents allegedly in violation of Sections 11 and 12(a) of the Securities Act of 1933, as amended (the “Securities Act”). Plaintiff seeks unspecified compensatory damages, rescission of shareholders’ share purchases, and an award for attorneys’ fees and costs. In February 2022, certain alleged Robinhood stockholders submitted applications seeking appointment by the court to be the lead plaintiff to represent the putative class in this matter, and in March 2022, the court appointed lead plaintiffs. In June 2022, plaintiffs filed an amended complaint. In August 2022, Robinhood filed a motion to dismiss the complaint. In February 2023, the court granted Robinhood’s motion without prejudice. In March 2023, plaintiffs filed a second amended complaint. In January 2024, the court granted Robinhood’s motion to dismiss the second amended complaint without leave to amend. In February 2024, plaintiffs filed a notice of appeal to the 9th Circuit and the appeal is currently pending.

In January 2022, Robert Zito filed a complaint derivatively on behalf of Robinhood against Robinhood’s directors at the time of its IPO in the U.S. District Court for the District of Delaware. Plaintiff alleges breach of fiduciary duties, waste of corporate assets, unjust enrichment, and violations of Section 10(b) of the Exchange Act. Plaintiff’s claims are based on allegations of false or misleading statements in Robinhood’s IPO offering documents, and plaintiff seeks an award of unspecified damages and restitution to the Company, injunctive relief, and an award for attorney’s fees and costs. In March 2022, the district court entered a stay of this litigation pending resolution of Robinhood’s motion to dismiss in the Golubowski securities action discussed above.

In August 2022, a shareholder sent a letter to the RHM board of directors demanding, among other things, that the board of directors pursue causes of action on behalf of the Company related to allegations of misconduct in connection with the Early 2021 Trading Restrictions, Robinhood’s IPO offering documents, and the November 2021 Data Security Incident. The board of directors has formed a Demand Review Committee that is reviewing the demand.

Pay transparency litigation

In July 2024, RHM, RHY, and RHC were sued in a putative class action captioned John Milito v. Robinhood Markets, Inc. et. al., alleging that Robinhood violated Washington’s Equal Pay and Opportunity Act, because some of the Company’s job postings allegedly failed to include a wage scale or salary range. The complaint seeks unspecified total statutory damages, attorneys’ fees and costs, injunctive relief, and declaratory relief. The case is currently stayed in the Superior Court in King County in Washington pending a certified question to the Washington Supreme Court.

Cash sweep litigation

In October 2024, RHM, RHF, and RHS were sued in a putative class action captioned Dey v. Robinhood Markets, Inc. et. al., in the U.S. District Court for the Northern District of California. Plaintiff asserts breach of fiduciary duty, gross negligence, negligent misrepresentation and omissions, breach of implied covenant of good faith and dealing, and violation of California’s unfair competition law based on allegations that defendants failed to pay a reasonable rate of interest to non-Robinhood Gold brokerage account holders on cash balances swept to program bank deposit programs. The complaint seeks, among other things, certification of the class, unspecified monetary, punitive, treble, and statutory damages, restitution, disgorgement, attorneys’ fees and costs, injunctive relief, and declaratory relief.

Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS