10-QPeriod: Q1 FY2023

Robinhood Markets, Inc. Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 10, 2023For Securities:HOOD

Summary

Robinhood Markets, Inc. reported a net loss of $511 million for the first quarter of 2023, an increase from the $392 million net loss in the same period of 2022. This wider loss was significantly impacted by a $485 million share-based compensation expense related to the cancellation of founder stock awards. Despite the increased net loss, total net revenues rose to $441 million from $299 million year-over-year, primarily driven by a substantial increase in net interest revenues due to higher interest rates. Operating expenses increased by 38% year-over-year, largely due to the aforementioned share-based compensation, though other operating expenses such as technology and development, and operations, decreased as the company focused on efficiency. The company's key performance metrics showed mixed results. While Net Cumulative Funded Accounts (NCFA) saw a slight increase to 23.1 million, Monthly Active Users (MAU) declined by 26% to 11.8 million, and Assets Under Custody (AUC) decreased by 16% to $78.4 billion, largely due to decreasing asset values. However, Average Revenue Per User (ARPU) saw a significant increase of 45% to $77. Robinhood ended the quarter with a strong liquidity position, reporting $5.46 billion in cash and cash equivalents.

Financial Highlights

38 data points
Beta

Revenue

$441.00M

Net Income

-$511.00M

-115.9% Net Margin

EPS (Diluted)

$-0.57

Total Assets

$27.79B

Cash & Equivalents

$5.46B

Free Cash Flow

$828.00M

Financial Statements
Beta
Revenue$441.00M
Operating Expenses$950.00M
Net Income-$511.00M
EPS (Basic)$-0.57
EPS (Diluted)$-0.57
Shares Outstanding (Basic)896.92M
Shares Outstanding (Diluted)896.92M

Key Highlights

  • 1Net loss widened to $511 million in Q1 2023 from $392 million in Q1 2022, heavily influenced by a $485 million share-based compensation charge from founder award cancellation.
  • 2Total net revenues increased by 47% year-over-year to $441 million, primarily driven by a significant surge in net interest revenues (up 278%) due to higher interest rates.
  • 3Monthly Active Users (MAU) decreased by 26% year-over-year to 11.8 million, indicating a decline in user engagement during the period.
  • 4Assets Under Custody (AUC) fell by 16% year-over-year to $78.4 billion, attributed to decreasing asset values in the market.
  • 5Average Revenue Per User (ARPU) significantly increased by 45% year-over-year to $77, suggesting improved monetization of the active user base.
  • 6The company ended the quarter with $5.46 billion in cash and cash equivalents, demonstrating a robust liquidity position.
  • 7Operating expenses rose by 38% to $950 million, mainly due to the $485 million share-based compensation expense, though other operating costs were reduced through efficiency measures.

Frequently Asked Questions

Robinhood reported a net loss of $511 million on total net revenues of $441 million for the first quarter of 2023. This represents a wider net loss compared to the prior year's $392 million loss, but a significant increase in revenue from $299 million in Q1 2022. The widened loss was largely due to a substantial share-based compensation expense related to founder awards.

Monthly Active Users (MAU) declined by 26% year-over-year to 11.8 million, indicating lower user engagement. Assets Under Custody (AUC) also decreased by 16% to $78.4 billion, primarily due to market-wide decreases in asset values. However, the company saw an increase in Net Cumulative Funded Accounts (NCFA).

Net interest revenues surged by 278% year-over-year to $208 million. This significant growth was primarily driven by the higher interest rate environment, which increased earnings on corporate cash, segregated cash, deposits with clearing organizations, and margin loans.

The cancellation of 2021 Market-Based RSUs granted to founders resulted in a significant share-based compensation expense of $485 million in the first quarter of 2023. Robinhood anticipates this cancellation will lower operating expenses by up to $50 million per quarter starting in the second quarter of 2023.