Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Robinhood Markets Inc (HOOD, Financial) achieved a record $682 million in revenue for Q2 2024, representing a 40% year-over-year growth.
- Net deposits reached a new high of $13 billion, translating to a 41% annualized growth rate.
- Gold subscribers increased to 2 million, marking over 60% year-over-year growth.
- Adjusted EBITDA roughly doubled to $301 million, with margins expanding by 13 points to 44%.
- Assets under custody finished Q2 at a record $140 billion, up 57% year over year.
Negative Points
- Crypto revenues declined due to lower industry volumes, despite increases in equities and options.
- The company faced a significant outage in its 24-hour market due to third-party technology issues.
- Monthly active users showed volatility, largely driven by fluctuations in the crypto market.
- The company is still a distant fifth in market share for margin trading, despite recent improvements.
- Expenses related to employee bonuses and recent acquisitions increased, impacting overall costs.
Q & A Highlights
Q: When are you rolling out the credit cards?
A: We started rolling out the credit card a few months ago and recently announced that we've crossed 50,000 cardholders. The demand is high, and the feedback has been very positive. We're on track with the rollout, similar to other successful card programs in their first year.
Q: Can we get more information on the AI company that you just acquired?
A: We acquired Pluto, an AI-powered investment research platform. The team is excellent, and we believe they can help us accelerate our work in AI and advisory.
Q: Do you ever plan on releasing a desktop version of Robinhood with more in-depth chart analysis capabilities?
A: Yes, we are focused on this and have been working on making the platform very good. The demos look great, and we believe customers will love it.
Q: Can you give me some color on the outage from earlier this week?
A: The outage was due to technology issues with our third-party ATS, Blue Ocean. They couldn't handle the extreme demand, but we are working with them to scale their infrastructure. Despite this, 24-hour market trading has been incredibly successful, nearing $30 billion in volumes since launch.
Q: Can you speak to the incremental revenue opportunity or how the strategy might evolve expanding your crypto offering?
A: Improved regulatory clarity would allow us to innovate more rapidly, offering more coins and services like lending and staking. The revenue opportunity could be meaningful, and we are working with regulators to gain that clarity.
Q: What drove the higher crypto take rate in 2Q?
A: The crypto take rate was 38 bps, up 3 bps quarter over quarter, due to pricing experiments. In July, the take rates were in the low $0.40 range.
Q: Can you provide an update on the potential organic growth rate in the second half?
A: We have a long track record of 20%-plus organic growth rate. The first half of the year was strong, and this momentum is continuing into Q3. We are well-positioned to continue driving outsized organic growth.
Q: Can you provide us an update on some of the near-term product gaps that you can fill?
A: We are focused on adding more capabilities for active traders, such as futures and a desktop interface. We are also improving the process of moving assets into Robinhood and systematically reducing reasons for withdrawals.
Q: How are you thinking about the incremental margin potential from here over the intermediate term?
A: We view the 50% EBITDA margin as a way station on our path to longer-term margins. We are driving up revenue and managing costs closely, and we see continuing leverage in our existing business.
Q: What are your thoughts on pricing for the Gold offering?
A: Our focus is on increasing the adoption rate of Gold. We love the economics and are not feeling pressured to raise the price in the short term, but we will continue to look at it.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
