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

61K characters. Original on sec.gov · Markdown

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

This section presents management’s perspective on our financial condition and results of operations, including performance metrics that management uses to assess company performance. The following discussion and analysis is intended to highlight and supplement data and information presented elsewhere in this Quarterly Report, and should be read in conjunction with our interim unaudited condensed consolidated financial statements and notes elsewhere in this Quarterly Report and our audited consolidated financial statements and the related notes and the discussion under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Form 10-K. It is also intended to provide you with information that will assist you in understanding our consolidated financial statements, the changes in key items in those consolidated financial statements from year to year, and the primary factors that accounted for those changes. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which might not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”

Data as of and for the three months ended March 31, 2024 and 2025 has been derived from our unaudited condensed consolidated financial statements appearing at the beginning of this Quarterly Report. Results for any interim period should not be construed as an inference of what our results would be for any full fiscal year or future period.

We refer to our “users” and our “customers” interchangeably throughout this Quarterly Report to refer to individuals who hold accounts on our platforms.

Key Performance Metrics

In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following key performance metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

Our acquisition of TradePMR closed in February 2025. As a result, we are now reporting Total Platform Assets which includes our previously reported Assets Under Custody key performance metric. Total Platform Assets is our previously reported Assets Under Custody metric plus assets managed by RIAs using TradePMR’s platform that are not custodied by us (and therefore would not have been included in the previously reported Assets Under Custody metric). Additionally, we have included total RIA customers in our Funded Customers key performance metric, their accounts in the definition of Investment Accounts, and the appropriate RIA customer balances in our Cash Sweep and Margin Book additional operating metrics. Due to data limitations, we have not included RIA client figures in our Net Deposits key performance metric.

Funded Customers:** We define a Funded Customer as a unique person who has at least one account with a Robinhood entity and, within the past 45 calendar days (a) had an account balance that was greater than zero (excluding amounts that are deposited into a Funded Customer account by the Company with no action taken by the unique person) or (b) completed a transaction using any such account. Individuals who share a funded joint investing account (which launched in July 2024) are each considered to be a Funded Customer. Individuals who are

T able of Contents

customers of RIAs that use the TradePMR platform are also considered Funded Customers as of the end of the period.

Total Platform Assets**: We define Total Platform Assets as the sum of the fair value of all equities, options, cryptocurrency, futures (including options on futures, swaps, and event contracts), cash held by users in their accounts, net of receivables from users (previously reported as Assets Under Custody), and any such assets managed by RIAs using TradePMR’s platform that are not custodied by Robinhood, as of a stated date or period end on a trade date basis. Net Deposits and net market gains (losses) drive the change in Total Platform Assets in any given period.
Net Deposits:** We define Net Deposits as all cash deposits and asset transfers from customers, as well as dividends, interest, and cash or assets earned in connection with Company promotions (such as account transfer and retirement match incentives and free stock bonuses) received by customers, net of reversals, customer cash withdrawals, margin interest, Robinhood Gold subscription fees, and assets transferred off of our platforms for a stated period. Prior to the second quarter of 2024, Net Deposits did not include inflows from cash or assets earned in connection with Company promotions, although we have not restated amounts in prior periods as the impact to those figures was immaterial.
Average Revenue Per User (“ARPU”)**: We define ARPU as total revenue for a given period divided by the average number of Funded Customers on the last day of that period and the last day of the immediately preceding period. Figures in this Quarterly Report represent ARPU annualized for each three-month period presented.
Robinhood Gold Subscribers: We define a Robinhood Gold Subscriber as a unique person who has at least one account with a Robinhood entity and who, as of the end of the relevant period (a) is subscribed to Robinhood Gold and (b) has made at least one Robinhood Gold subscription fee payment.

Glossary Terms

Automated Customer Account Transfer Service (“ACATS”)**: A system that automates and standardizes procedures for the transfer of assets in a customer account from one brokerage firm and/or bank to another.
Cash Sweep: We define Cash Sweep as the period-end total amount of participating users’ uninvested brokerage cash that has been automatically “swept” or moved from their brokerage accounts into deposits for their benefit at a network of program banks. This is an off-balance-sheet amount. Robinhood earns a net interest spread on Cash Sweep balances based on the interest rate offered by the banks less the interest rate given to users as stated in our program terms. This includes balances from customers of RIAs using TradePMR's platform.
Churned Customers: A Funded Customer is considered “Churned” if it was ever a New Funded Customer whose account balance (measured as the fair value of assets in the account less any amount due from the user and excluding amounts that are deposited into a Funded Customer account by the Company with no action taken by the unique person) drops to or below zero and has not completed a transaction using any account with a Robinhood entity for at least 45 consecutive calendar days. Negative balances typically result from Fraudulent Deposit Transactions (which 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) and unauthorized debit card use, and less often, from margin loans.

T able of Contents

*•*Growth Rate and Annualized Growth Rate with respect to Net Deposits: Growth rate is calculated as aggregate Net Deposits over a specified 12 month period, divided by Total Platform Assets for the fiscal quarter that immediately precedes such 12 month period. Annualized growth rate is calculated as Net Deposits for a specified quarter multiplied by 4 and divided by Total Platform Assets for the immediately preceding quarter.

Investment Accounts: We define an Investment Account as a funded individual brokerage account, a funded joint investing account, a funded individual retirement account (“IRA”), or an account with an RIA using TradePMR’s platform. As of March 31, 2025, a Funded Customer can have up to five Investment Accounts - individual brokerage account, joint investing account (which launched in July 2024), traditional IRA, Roth IRA, and RIA custody account using TradePMR's platform.
Margin Book: We define Margin Book as our period-end aggregate outstanding margin loan balances receivable (i.e., the period-end total amount we are owed by customers on loans made for the purchase of securities, supported by a pledge of assets in their margin-enabled brokerage accounts). This includes margin loan balances from customers of RIAs using TradePMR's platform.
New Funded Customers: We define a New Funded Customer as a unique person who became a Funded Customer for the first time during the relevant period.
Notional Trading Volume: We define Notional Trading Volume for any specified asset class as the aggregate dollar value (purchase price or sale price as applicable) of trades executed in that asset class over a specified period of time.
Options Contracts Traded:** We define Options Contracts Traded as the total number of options contracts bought or sold over a specified period of time. Each contract generally entitles the holder to trade 100 shares of the underlying stock.
Resurrected Customers: A Funded Customer is considered “Resurrected” in a stated period if it was a Churned Customer as of the end of the immediately preceding period and its balance (excluding amounts that are deposited into a Funded Customer account by the Company with no action taken by the unique person) rises above zero or it completes a transaction using its account.

Overview

Robinhood was founded on the belief that everyone should be welcome to participate in our financial system. We are creating modern financial services platforms for everyone, regardless of their wealth, income, or background.

Our mission is to democratize finance for all. We use technology to provide access to the financial system in a way that is simple and convenient for our customers. We believe investing should be familiar and welcoming, with a simple design and an intuitive interface, so that customers are empowered to achieve their goals. We started with a revolutionary, bold brand and design in the Robinhood app which makes investing approachable for millions. Over the last decade, we have disrupted and changed the industry, becoming the first U.S. retail broker to offer commission-free stock trading with no account minimums, which was subsequently adopted by the rest of the industry. In recent years, we have continued to build relationships with our customers by introducing new products and diversifying our services that further expand access to the financial system, including focusing on products and tools for more seasoned investors. Through these efforts, we believe we have made investing culturally relevant and understandable, and that our platforms are enabling our customers to become long-term investors and take greater control of their finances.

T able of Contents

Financial Results and Performance

With respect to the three months ended March 31, 2025, as compared to the three months ended March 31, 2024:

total net revenues increased 50% to $927 million compared to $618 million;
net income increased 114% to $336 million, compared to $157 million;
diluted EPS increased 106% to $0.37 compared to $0.18;
total operating expenses increased 21% to $557 million compared to $460 million;

◦SBC expense increased 18% to $73 million compared to $62 million;

*•*Adjusted EBITDA (non-GAAP) increased 90% to $470 million compared to $247 million;

Funded Customers increased by 1.9 million, or 8%, to 25.8 million compared to 23.9 million, and Investment Accounts increased by 2.6 million, or 11%, to 27.0 million compared to 24.4 million;
Total Platform Assets increased 70% to $220.6 billion compared to $129.6 billion, primarily driven by continued Net Deposits and the acquisition of TradePMR.
Net Deposits were $18.0 billion, which translates to an annualized growth rate of 37% relative to Total Platform Assets at the end of the fourth quarter of 2024, compared to $11.2 billion, which translates to an annualized growth rate of 44% relative to Total Platform Assets at the end of the fourth quarter of 2023. Over the past twelve months, Net Deposits were $57.3 billion, a growth rate of 44% relative to Total Platform Assets at the end of the first quarter of 2024.
ARPU increased 39% to $145 compared to $104; and
Robinhood Gold Subscribers increased 1.51 million, or 90%, to 3.19 million compared to 1.68 million.

Adjusted EBITDA is a non-GAAP financial measure. For more information about Adjusted EBITDA, including the definition and limitations of such measure, and a reconciliation of net income to Adjusted EBITDA, please see “—Non-GAAP Financial Measures” below.

Key Performance Metrics

Key performance metrics for the relevant periods were as follows:


	Three Months Ended March 31,
	2024		2025		% Change
Funded Customers(1) (in millions)	23.9		25.8		8	%
Total Platform Assets (2) (in billions)	$	129.6	$	220.6	70	%
Net Deposits (in billions)	$	11.2	$	18.0	NM
Growth Rate with respect to Net Deposits	44%		37%		NM
ARPU (in dollars)	$	104	$	145	39	%
Robinhood Gold Subscribers (in millions)	1.68		3.19		90	%

T able of Contents

(1)The following table describes the annual changes within Funded Customers:


	Three Months Ended March 31,
(in millions)	2024	2025	% Change
Beginning Funded Customers	23.4	25.2	8	%
New Funded Customers	0.5	0.7	40	%
Resurrected Customers	0.2	0.2	—	%
Acquired customers(i)	—	0.1	NM
Churned Customers	(0.2)	(0.4)	100	%
Ending Funded Customers	23.9	25.8	8	%

(2)The following table sets out the components of Total Platform Assets by type of asset:


	Three Months Ended March 31,
(in billions)	2024		2025		% Change
Equities	$	81.5	$	125.5	54	%
Cryptocurrencies	26.2		27.5		5	%
Options and futures	1.2		1.1		(8)	%
RIA assets(ii)	—		41.3		NM
Cash held by Customers	24.8		34.0		37	%
Receivables from Customers (primarily margin balances)	(4.1)		(8.8)		115	%
Total Platform Assets	$	129.6	$	220.6	70	%

The following table describes the changes within Total Platform Assets:


	Three Months Ended March 31,
(in billions)	2024		2025		% Change
Beginning Total Platform Assets	$	102.6	$	192.9	88	%
Acquired assets(i)	—		42.9		NM
Net Deposits	11.2		18.0		NM
Net market gains (losses)	15.8		(33.2)		NM
Ending Total Platform Assets	$	129.6	$	220.6	70	%

(i) Acquired customers and acquired assets relate to those obtained from the acquisition of TradePMR in February 2025. (ii) RIA assets relates to the assets obtained from the acquisition of TradePMR in February 2025.

Non-GAAP Financial Measures

Adjusted EBITDA

We collect and analyze operating and financial data to evaluate the health of our business, allocate our resources and assess our performance. In addition to total net revenues, net income, and other results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”). Adjusted EBITDA is defined as net income, excluding (i) interest expenses related to credit facilities, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) SBC, (v) significant legal and tax settlements and reserves, and (vi) other significant gains, losses, and expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that we believe are not indicative of our ongoing results. This non-GAAP financial information is presented for supplemental informational purposes only, should not be considered in isolation or as a substitute for, or superior to, financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.

T able of Contents

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items are unpredictable, are not driven by core results of operations, and render comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.

The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income:


	Three Months Ended March 31,
(in millions)	2024		2025
Net income	$	157	$	336
Add:
Interest expenses related to credit facilities	6		6
Provision for income taxes	5		35
Depreciation and amortization	17		20
EBITDA (non-GAAP)	185		397
Add:
SBC	62		73
Adjusted EBITDA (non-GAAP)	$	247	$	470

T able of Contents

Results of Operations

The following table summarizes our unaudited condensed consolidated statements of operations data:


(in millions)	Three Months Ended March 31,
2024			2025
Revenues:
Transaction-based revenues	$	329		$	583
Net interest revenues	254			290
Other revenues	35			54
Total net revenues	618			927

Operating expenses(1):
Brokerage and transaction	35			50
Technology and development	196			214
Operations	28			31
Provision for credit losses	16			24
Marketing	67			105
General and administrative	118			133
Total operating expenses	460			557

Other income, net	4			1
Income before income taxes	162			371
Provision for income taxes	5			35
Net income	$	157		$	336

(1)Includes SBC expense as follows:


	Three Months Ended March 31,
(in millions)	2024		2025
Brokerage and transaction	$	2	$	2
Technology and development	44		44
Operations	2		1
Marketing	2		2
General and administrative	12		24
Total SBC expense	$	62	$	73

T able of Contents

Comparison of the Three Months Ended March 31, 2024 and 2025

Revenues

Transaction-Based Revenues


	Three Months Ended March 31,
(in millions, except for percentages)	2024		2025		% Change
Transaction-based revenues:
Cryptocurrencies	$	126	$	252	100	%
Options	154		240		56	%
Equities	39		56		44	%
Other	10		35		250	%
Total transaction-based revenues	$	329	$	583	77	%
Transaction-based revenues as a % of total net revenues:
Cryptocurrencies	20%		27%
Options	25%		26%
Equities	6%		6%
Other	2%		4%
Total transaction-based revenues	53%		63%

Transaction-based revenues increased by $254 million primarily driven by increases of $126 million in cryptocurrencies, $86 million in options, and $17 million in equities.

Cryptocurrencies revenues increased as a result of a higher rebate rate from crypto market makers (a rebate increase was effective in May 2024). Additionally, cryptocurrencies revenue increased as a result of a 45% increase in the number of users placing cryptocurrency trades, partially offset by a 14% decrease in the average Notional Trading Volume traded per trader and $21 million of incentives paid to our customers.

Options revenues increased due to a 46% increase in Options Contracts Traded and a 25% increase in the number of users placing option trades. In addition, we experienced higher option rebate rates due to the mix of ticker symbols traded as different ticker symbols pay different rebate rates. The increase was partially offset by $26 million of incentives paid to our customers.

Equities revenues increased primarily driven by a 56% increase in the average Notional Trading Volume traded per trader and a 17% increase in the number of users placing equity trades. The increase was partially offset by lower equity rebate rates due to the mix of ticker symbols traded as different ticker symbols pay different rebate rates.

T able of Contents

Net Interest Revenues


	Three Months Ended March 31,
(in millions, except for percentages)	2024			2025			% Change
Net interest revenues:
Margin interest	$	72		$	110		53	%
Interest on segregated cash, cash equivalents, securities, and deposits	58			56			(3)	%
Interest on corporate cash and investments	70			49			(30)	%
Cash Sweep	39			48			23	%
Securities lending, net	15			23			53	%
Credit card, net	6			10			67	%
Interest expenses related to credit facilities	(6)			(6)			—	%
Total net interest revenues	$	254		$	290		14	%
Net interest revenues as a % of total net revenues:
Margin interest	12		%	12		%
Interest on segregated cash, cash equivalents, securities, and deposits	9		%	7		%
Interest on corporate cash and investments	12		%	5		%
Cash Sweep	6		%	5		%
Securities lending, net	2		%	2		%
Credit card, net	1		%	1		%
Interest expenses related to credit facilities	(1)		%	(1)		%
Total net interest revenues	41		%	31		%

Net interest revenues increased by $36 million, primarily driven by growth in most of our interest-earning asset balances and securities lending activities. The increase was partially offset by a decrease in interest on corporate cash and investments driven by lower cash and deposits balances and a lower short-term interest rate environment. We anticipate any potential future rate cuts by the Federal Reserve will negatively impact our net interest revenues and adversely affect our customers’ returns on cash deposits.

T able of Contents

The following table summarizes interest-earning assets, the revenue generated by these assets, and their respective annualized yields:


(in millions, except for annualized yield)	Margin Book		Cash and deposits(1)		Cash Sweep (off-balance sheet)		Credit card, net (2)		Total interest-earning assets		Securities lending, net		Interest expenses related to credit facilities (5)		Total net interest revenues
Three Months Ended March 31, 2025
March 31, 2025	$	8,802	$	9,763	$	28,187	$	429	$	47,181
December 31, 2024	7,909		9,943		26,064		391		44,307
Average(3)	8,449		10,070		26,717		402		45,638
Revenue (expense)	$	110	$	105	$	48	$	10	$	273	$	23	$	(6)	$	290
Annualized yield(4)	5.21%		4.17%		0.72%		9.95%		2.39%						2.54%

Three Months Ended December 31, 2024
December 31, 2024	$	7,909	$	9,943	$	26,064	$	391	$	44,307
September 30, 2024	5,499		11,149		24,485		309		41,442
Average(3)	6,614		10,920		25,621		356		43,511
Revenue (expense)	$	91	$	127	$	50	$	8	$	276	$	26	$	(6)	$	296
Annualized yield(4)	5.50%		4.65%		0.78%		8.99%		2.54%						2.72%

Three Months Ended March 31, 2024
March 31, 2024	$	4,115	$	10,328	$	19,049	$	197	$	33,689
December 31, 2023	3,458		10,107		16,352		205		30,122
Average(3)	3,763		10,007		17,576		201		31,547
Revenue (expense)	$	72	$	128	$	39	$	6	$	245	$	15	$	(6)	$	254
Annualized yield(4)	7.65%		5.12%		0.89%		11.94%		3.11%						3.22%

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

(2) Credit card, net consists of i) an off-balance sheet amount representing customer principal amounts funded by Coastal Bank under the Program Agreement. Under the Program Agreement, Robinhood Credit collects interest from customers that carry a balance and pays interest on the amount funded by Coastal Bank, with the difference between those amounts resulting in net interest revenue and ii) an on-balance sheet amount representing purchased credit card receivables by the Credit Card Funding Trust. Robinhood Credit collects interest from customers that carry balances and pays interest on the amount funded through the Credit Card Funding Trust, with the difference in those amounts resulting in net interest revenues. As of March 31, 2025, the off-balance sheet amount funded under the Program agreement was $206 million and the on-balance sheet amount was $223 million. Refer to Note 10 - Financing Activities and Off-Balance Sheet Risk to our unaudited condensed consolidated financial statements in this Quarterly Report for more information.

(3) Average balance rows represent the simple average of month-end balances in a given period.

(4) Annualized yield is calculated by annualizing revenue for the given period and dividing by the applicable average asset balance.

(5) Includes interest expenses related to our revolving credit facilities; interest expense related to the Credit Card Funding Trust is included in the credit card, net interest yield calculation. Refer to Note 10 - Financing Activities and Off-Balance Sheet Risk to our unaudited condensed consolidated financial statements in this Quarterly Report for more information.

T able of Contents

Other Revenues


	Three Months Ended March 31,
(in millions, except for percentages)	2024			2025			% Change
Other revenues:
Robinhood Gold subscription revenues	$	23		$	38		65	%
Proxy revenues	7			9			29	%
Other	5			7			40	%
Total other revenues	$	35		$	54		54	%
Other revenues as a % of total net revenues:
Robinhood Gold subscription revenues	4		%	4		%
Proxy revenues	1		%	1		%
Other	1		%	1		%
Other revenues as a % of total net revenues	6		%	6		%

Other revenues increased $19 million primarily driven by an increase in Robinhood Gold subscription revenues of $15 million due to an increase in Robinhood Gold Subscribers.

Operating Expenses


	Three Months Ended March 31,
(in millions, except for percentages)		2024			2025			% Change
Operating expenses:
Brokerage and transaction		$	35		$	50		43	%
Technology and development		196			214			9	%
Operations		28			31			11	%
Provision for credit losses		16			24			50	%
Marketing		67			105			57	%
General and administrative		118			133			13	%
Total operating expenses		$	460		$	557		21	%
Percent of total net revenues:
Brokerage and transaction		5		%	6		%
Technology and development		32		%	23		%
Operations		5		%	3		%
Provisions for credit losses		2		%	3		%
Marketing		11		%	11		%
General and administrative		19		%	14		%
Total operating expenses		74		%	60		%

T able of Contents

Brokerage and Transaction


	Three Months Ended March 31,
(in millions)		2024		2025		% Change
Instant withdrawals		$	3	$	9	200%
Employee compensation, benefits, and overhead, excluding SBC		9		9		—%
Market data expenses		6		8		33%
Customer statements		4		4		—%
SBC		2		2		—%
Other		11		18		64%
Total		$	35	$	50	43%

Brokerage and transaction costs increased by $15 million primarily driven by a $7 million increase in other brokerage and transactions costs related to credit card network fees and a $6 million increase in instant withdrawals expense as a result of higher customer activities.

Technology and Development


	Three Months Ended March 31,
(in millions)		2024		2025		% Change
Employee compensation, benefits, and overhead, excluding SBC		$	74	$	77	4	%
Cloud infrastructure services		43		50		16	%
SBC		44		44		—	%
Software and tools		28		35		25	%
Other		7		8		14	%
Total		$	196	$	214	9	%

Technology and development costs increased by $18 million primarily due to a $7 million increase in cloud infrastructure services to meet higher capacity requirements for our platforms to support increased trading volumes and a $7 million increase in software and tools utilized in delivering our products and improving internal operations.

Operations


	Three Months Ended March 31,
(in millions)		2024		2025		% Change
Employee compensation, benefits, and overhead, excluding SBC		$	19	$	19	—%
Customer experience		4		6		50%
SBC		2		1		(50)%
Other		3		5		67%
Total		$	28	$	31	11%

Operations costs increased by $3 million with no material changes to note.

T able of Contents

Provision for credit losses


	Three Months Ended March 31,
(in millions)		2024		2025		% Change
Provision for credit losses - credit card related		$	10	$	13	30%
Provision for credit losses - brokerage related		6		11		83%
Total		$	16	$	24	50%

Provision for credit losses costs increased by $8 million primarily due to a $5 million increase in brokerage related expenses primarily as a result of fraudulent activities. Credit card related provision for credit losses increased $3 million primarily due to higher balances in purchased credit card receivables.

Marketing


	Three Months Ended March 31,
(in millions)		2024		2025		% Change
Digital marketing		$	28	$	53	89	%
Brand marketing		17		22		29	%
Employee compensation, benefits, and overhead, excluding SBC		7		9		29	%
Marketing incentives		4		5		25	%
Creative services		2		4		100	%
SBC		2		2		—	%
Other		7		10		43	%
Total		$	67	$	105	57	%

Marketing costs increased by $38 million primarily due to higher expenses in digital marketing of $25 million and brand marketing of $5 million, as we increased our investments in paid marketing channels and other marketing initiatives to promote our brand, products, and services.

General and Administrative


	Three Months Ended March 31,
(in millions)		2024		2025		% Change
Employee compensation, benefits, and overhead, excluding SBC		$	57	$	58	2	%
SBC		12		24		100	%
Other professional fees		12		17		42	%
Legal expenses		21		14		(33)	%
Settlements and penalties		2		2		—	%
Other		14		18		29	%
Total		$	118	$	133	13	%

General and administrative costs increased $15 million primarily due to an increase of $12 million in SBC expenses due to a reversal of $11 million of previously recognized expenses in the prior year as a result of the resignation of our co-founder and former Chief Creative Officer. Additionally, other professional fees increased by $5 million primarily due to costs incurred in connection with the TradePMR acquisition. These increases were partially offset by a decrease of $7 million in legal expenses associated with certain historical regulatory matters.

T able of Contents

Provision for Income Taxes


	Three Months Ended March 31,
(in millions)		2024		2025		% Change
Provision for income taxes		$	5	$	35	600	%

Provision for income taxes increased by $30 million for the three months ended March 31, 2025 primarily due to the valuation allowance release on the U.S. federal and certain state deferred tax assets in the fourth quarter of 2024 and the growth of the business.

Liquidity and Capital Resources

Sources and Uses of Funds

Our principal sources of liquidity are cash flows generated from operations and our cash, cash equivalents, and investments. Other sources of future funds may include potential borrowing under our revolving lines of credit and potential issuance of new debt or equity. Our liquidity needs are primarily to support and invest in our core business, including investing in new ways to serve our customers, potentially seeking strategic acquisitions to leverage existing capabilities and further build our business, and for general capital needs (including capital requirements imposed by regulators and SROs and cash deposit and collateral requirements under the rules of the Depository Trust Company (“DTC”), the NSCC, the Options Clearing Corporation (“OCC”), and the Commodity Futures Trading Commission (“CFTC”)). Based on our current level of operations, we believe our primary sources of liquidity will be adequate to meet our current liquidity needs for the next 12 months.

Liquid Assets

As of March 31, 2025, we had cash and cash equivalents of $4.42 billion and held-to-maturity investments of $192 million. Refer to Note 7 - Investments and Fair Value Measurement, to our unaudited condensed consolidated financial statements in this Quarterly Report for further information.

Revolving Credit Facilities and Credit Card Funding Trust

As of March 31, 2025, we had committed revolving credit facilities with a total borrowing capacity of up to $3.65 billion and a borrowing capacity for our Credit Card Funding Trust of up to $400 million. Refer to Note 10 - Financing Activities and Off-Balance Sheet Risk to our unaudited condensed consolidated financial statements in this Quarterly Report for further information.

T able of Contents

Commitments

The following table summarizes our short- and long-term material cash requirements for contractual obligations as of March 31, 2025:


	Payments Due by Period
(in millions)	Total		Remainder of 2025		2026-2027		2028-2029		Thereafter
Operating lease commitments	$	172	$	9	$	54	$	49	$	60
Purchase commitments(1)	647		279		365		2		1
Robinhood match incentives commitments(2)	107		56		51		—		—
Credit Card Funding Trust borrowing principal and interest	156		156		—		—		—
Total	$	1,082	$	500	$	470	$	51	$	61

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

(2) Robinhood match incentives commitments represent non-cancelable future match payments on eligible cash deposits made by Robinhood Gold Subscribers. The future match payments are forfeited if deposits are not held on the platform during the specific earning period.

In addition to lease and purchase commitments, we have two committed financing agreements: one with a contractual term of 30 days and a daily minimum commitment of $25 million and another with a contractual term of 21 days with a daily minimum commitment of $35 million.

Regulatory Capital Requirements

Our broker-dealer subsidiaries (RHS, RHF, and TradePMR) are subject to Rule 15c3-1 (the "SEC Uniform Net Capital Rule") under the Exchange Act, administered by the SEC and FINRA, which requires the maintenance of minimum net capital, as defined. Net capital and the related net capital requirements may fluctuate on a daily basis. RHS and RHF compute net capital under the alternative method as permitted by the SEC Uniform Net Capital Rule.

Our FCM subsidiary, Robinhood Derivatives, LLC (“RHD”), is subject to CFTC Regulation 1.17, administered by the CFTC and the NFA, which requires the maintenance of minimum net capital, as defined by CFTC Regulation 1.17. Net capital and the related net capital requirements may fluctuate on a daily basis.

The table below summarizes the net capital, capital requirements, and excess net capital of RHS, RHF, TradePMR, and RHD as of periods presented:


	March 31, 2025
(in millions)	Net Capital		Required Net Capital		Net Capital in Excess of Required Net Capital
RHS	$	2,697	$	191	$	2,506
RHF	407		0.25		407
RHD	38		2		36
TradePMR	5		2		3

As of March 31, 2025, these subsidiaries were in compliance with their respective regulatory capital requirements.

T able of Contents

Cash Flows

The following table summarizes our cash flow activities:


	Three Months Ended March 31,
(in millions)	2024		2025
Cash provided by (used in):
Operating activities	$	(623)	$	642
Investing activities	(47)		9
Financing activities	(30)		(417)

Operating activities

Net cash provided by operating activities increased $1.27 billion compared to the prior period primarily due to:

an increase of $179 million in net income;
an increase of $397 million due to maturities of U.S. treasury securities segregated under federal and other regulations compared to a decrease of $692 million in the prior year due to cash used to purchase U.S. treasury securities segregated under federal and other regulations;
an increase of $967 million in securities loaned due to continuous growth of our securities lending program; and
a decrease of $1.31 billion in payables to users due to increased customer activities.

Investing activities

Net cash provided by investing activities increased $56 million compared to the prior period primarily due to:

an increase of $500 million of cash provided by collections of purchased credit card receivables;
an increase of $171 million driven by no purchases of held-to-maturity investments during the period;
an increase of $54 million of cash provided by the maturities of held-to-maturity investments; and
a decrease of $520 million due to cash used for purchases of credit card receivables; and
a decrease of $150 million due to cash used for the acquisition of TradePMR, net of cash and cash equivalents acquired.

Financing activities

Net cash used in financing activities increased $387 million compared to the prior period primarily due to:

an increase of $322 million of cash used for share repurchases; and
an increase of $80 million of cash used for taxes related to net share settlement of equity awards.

T able of Contents

Critical Accounting Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities on our unaudited condensed consolidated financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results might differ significantly from these estimates under different assumptions, judgments, or conditions.

There have been no material changes to our critical accounting estimates during the three months ended March 31, 2025, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in our 2024 Form 10-K.

Recent Accounting Pronouncements

See Item 1 of Part I, “Unaudited Financial Statements — Note 2 - Recent Accounting Pronouncements.”

Previous: Cover and table of contents · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK