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What changed in Robinhood Markets, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Robinhood Markets, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+672 added−611 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-27)

Top changes in Robinhood Markets, Inc.'s 2024 10-K

672 paragraphs added · 611 removed · 476 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

98 edited+63 added−33 removed87 unchanged
Biggest changeRHEC is supervised by the Lithuanian Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania. RHEC is also registered under the applicable Polish law as a virtual assets service provider (“VASP”) in the Register of Virtual Currency Activities maintained by the Director of the Tax Administration Chamber in Poland.
Biggest changeRHEU is also registered under the applicable Polish, Italian, and Spanish laws as a virtual assets service provider in the Register of Virtual Currency Activities maintained by the Director of the Tax Administration Chamber in Poland, the Register of Bureaux de Change maintained by the Organismo Agenti e Mediatori in Italy, and the Registry of Providers of Virtual Currency Exchange Services for Fiat Currency and Custody of Electronic Wallets maintained by the Bank of Spain.
Our self-clearing platform, order routing system, data platform, and other back-end infrastructure deliver the capabilities that allow our customers to focus on investing, saving and spending, while also enabling us to rapidly develop products that our customers love to use. Some of our most critical technologies include: • Core Infrastructure and Data Platform.
Our self-clearing system, order routing system, data platform, and other back-end infrastructure deliver the capabilities that allow our customers to focus on investing, saving and spending, while also enabling us to rapidly develop products that our customers love to use. Some of our most critical technologies include: • Core Infrastructure and Data Platform.
Federal, state and SROs, including the SEC and Financial Industry Regulatory Authority (“FINRA”), can, and in some cases have in the past, among other things, investigate, censure or fine us, issue cease-and-desist orders or otherwise restrict our operations, require changes to our business practices, products or services, limit our acquisition activities or suspend or expel a broker-dealer or any of its officers or employees.
Federal, state and SROs, including the SEC and Financial Industry Regulatory Authority (“FINRA”), can, and in some cases have in the past, among other things, investigate, censure or fine us, issue cease-and-desist orders or otherwise restrict our operations, require changes to our business practices, products or services, limit our marketing or acquisition activities or suspend or expel a broker-dealer or any of its officers or employees.
Companies and individuals that have committed violations of the FCPA may have to disgorge their ill-gotten gains plus pay prejudgment interest and substantial civil penalties. Companies may also be subject to oversight by an independent consultant. In the U.K., the Serious Fraud Office (“SFO”) has also published various policies and internal guidance documents for investigators and prosecutors considering bribery offenses.
Companies and individuals that have committed violations of the FCPA may have to disgorge their ill-gotten gains plus pay prejudgment interest and substantial civil penalties. Companies may also be subject to oversight by an independent consultant. In the U.K., the Serious Fraud Office has also published various policies and internal guidance documents for investigators and prosecutors considering bribery offenses.
Robinhood is a safety first company. Period. We create with care, make changes thoughtfully, and we obsess over details. We don’t compromise regulatory requirements to move fast, and when we see something amiss, we move quickly to correct it. We take risks responsibly with safety as the foundation of innovation. • Radical Customer Focus .
Robinhood is a safety first company. We create with care, make changes thoughtfully, and obsess over details. We don’t compromise regulatory requirements to move fast, and when we see something amiss, we move quickly to correct it. We take risks responsibly with safety as the foundation of innovation. • Radical Customer Focus .
We are also subject to regulation by the Consumer Financial Protection Bureau (the “CFPB”). We have obtained or are in the process of obtaining licenses to operate as a money transmitter (or as another type of regulated financial services institution, as applicable) in the United States and in the states where this is required.
We are also subject to regulation by the Consumer Financial Protection Bureau (the “CFPB”). We have obtained or are in the process of obtaining licenses to operate as a money transmitter (or as another type of regulated financial services institution, as applicable) in the United States and in the states and territories where this is required.
We conduct regular reviews of our customers’ eligibility and take action to revoke access to trading options as appropriate, to ensure our customers are accessing the level of options strategies that are appropriate for them based on information such as their trading experience, investment objectives and financial situation. • Fractional Trading .
We conduct regular reviews of our customers’ eligibility and take action to revoke access to trading options as appropriate, to ensure our customers are accessing the level of options strategies that are appropriate for them based on information such as their trading experience, investment objectives and financial situation.
Failure to comply with these requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our ability to continue to operate.
Failure to comply with these requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our growth or ability to continue to operate.
Failure to comply with these requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our ability to continue to operate.
Failure to comply with these requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our ability to grow or to continue to operate.
We offer a variety of ways for our customers to grow their financial knowledge: • Robinhood Learn . Robinhood Learn is an online collection of beginners’ guides, feature tutorials, and an extensive financial dictionary available to anyone.
We offer a variety of ways for our customers to grow their financial knowledge: • Robinhood Learn . Robinhood Learn is an online collection of guides, feature tutorials, and an extensive financial dictionary available to anyone.
If one of our regulated entities fails to maintain its required net capital, it may be subject to suspension or revocation of its registration by regulatory authorities and suspension or expulsion by these regulators could lead to the entity’s liquidation. 17 Table of Contents Money-Transmitter Regulation As money transmitters, our subsidiaries RHC and Robinhood Money, LLC (“RHY”) are subject to regulation, primarily at the state level.
If one of our regulated entities fails to maintain its required net capital, it may be subject to suspension or revocation of its registration by regulatory authorities and suspension or expulsion by these regulators could lead to the entity’s liquidation. 19 Table of Contents Money-Transmitter Regulation As money transmitters, our subsidiaries RHC and Robinhood Money, LLC (“RHY”) are subject to regulation, primarily at the state level.
Some notable benefits that our employees value include lifetime fertility benefits, a flexible lifestyle wallet that can be used for wellness, education or any number of other benefits, generous paid family leave, retirement savings with employer match, and employer-paid health benefits. Intellectual Property Our success and ability to compete are significantly dependent on our core technology and intellectual property.
Some notable benefits that our employees value include fertility benefits, a flexible lifestyle wallet that can be used for wellness, education or a number of other benefits, generous paid family leave, retirement savings with employer match, and employer-paid health benefits. Intellectual Property Our success and ability to compete are significantly dependent on our core technology and intellectual property.
Our newsfeeds give customers access to free, premium news from sites such as Barron’s , Reuters and Dow Jones . • Robinhood Snacks . Robinhood Snacks is an accessible digest of business news stories written for a new generation of investors. Its bite-sized news stories bring new investors the latest market-moving news without all of the complicated financial jargon.
Our newsfeeds give customers access to free, premium news from sites such as Barron’s, Reuters and Dow Jones. • Sherwood Snacks . Sherwood Snacks is an accessible digest of business news stories written for a new generation of investors. Its bite-sized news stories bring new investors the latest market-moving news without all of the complicated financial jargon.
This competition-based system creates an incentive for market makers to provide better prices for our customers, in order to receive more orders in the future. We are committed to seeking a quality execution on every order, and our routing protocols are designed with this in mind. • Machine Learning Platform.
This competition-based system creates an incentive for market makers to provide better prices for our customers, in order to receive more orders in the future. We are committed to seeking a quality execution on every order, and our routing protocols are designed with this in mind. • Machine Learning Platform and Artificial Intelligence.
Similarly, state attorneys general and other state regulators, including state securities and financial services regulators, can bring and have in the past brought legal actions on behalf of the citizens of their states to assure compliance with state laws. In addition, criminal authorities such as state attorneys general or the U.S.
Similarly, state attorneys general and other state regulators, including state securities and financial services regulators, can bring and have in the past brought legal actions on behalf of the residents of their states to assure compliance with state laws. In addition, criminal authorities such as state attorneys general or the U.S.
We plan to create an ecosystem of financial products and services that will enable people across the world to become investors. We believe the products on our roadmap will go a long way toward making that a reality. We believe our products can transform the relationship people have with the financial system.
We continue to create an ecosystem of financial products and services that will enable people across the world to become investors. We believe our products can transform the relationship people have with the financial system and that the products on our roadmap will go a long way toward making that a reality.
RHEC is in the process of obtaining necessary authorizations and licenses to operate in other countries in the EU. RHEC also intends to expand its offerings. Failure to comply with applicable Lithuanian rules and regulations, and similar laws, rules and regulations in other EU countries could result in fines or other legal consequences for RHEC.
RHEU is in the process of obtaining necessary authorizations and licenses to operate in other countries in the EU. RHEU also intends to expand its offerings. Failure to comply with applicable Lithuanian rules and regulations, and similar laws, rules and regulations in other EU countries could result in fines or other legal consequences for RHEU.
As required by the USA Patriot Act and other rules, we have established comprehensive AML, customer identification and transaction surveillance of customers designed to prevent our financial services from being used to facilitate money laundering, terrorist financing, and other illicit activity.
As required by the USA Patriot Act and other rules, we have established comprehensive AML, customer identification and transaction surveillance designed to prevent our financial services from being used to facilitate money laundering, terrorist financing, and other illicit activity.
As a vendor to Coastal Bank, Robinhood Credit is also subject to examination by federal banking 19 Table of Contents regulators, such as the Federal Reserve Board, with respect to the marketing, customer screening and servicing activities undertaken by Robinhood Credit on Coastal Bank’s behalf.
As a vendor to Coastal Bank, Robinhood Credit is also subject to examination by federal banking regulators, such as the Federal Reserve Board, with respect to the marketing, customer screening and 21 Table of Contents servicing activities undertaken by Robinhood Credit on Coastal Bank’s behalf.
A single asterisk indicates a cryptocurrency is not currently available for trading in New York. A double asterisk indicates a cryptocurrency is not currently available for trading in New York or Texas. We also offer crypto recurring investments, allowing customers to automatically buy crypto, commission-free, on a schedule of their choice.
An asterisk indicates a cryptocurrency is not currently available for trading in New York; a double asterisk indicates a cryptocurrency is not currently available for trading in New York or Texas. We also offer commission-free crypto recurring investments, allowing customers to automatically buy crypto on a schedule of their choice.
Cryptocurrency Regulation in the European Union RHEC offers cryptocurrency services to eligible customers in select jurisdictions in the EU and is registered according to the regulatory requirements of the Republic of Lithuania as a virtual currency exchange and virtual currency depository wallet operator.
Cryptocurrency Regulation in the European Union RHEU offers cryptocurrency services to eligible customers in select jurisdictions in the EU and is registered according to the regulatory requirements of the Republic of Lithuania as a virtual currency exchange and virtual currency depository wallet operator.
We are the authorized user of a variety of social media handles, pages, and profiles that reflect our primary brand. In addition, we have a suite of defensively registered domain names. We 16 Table of Contents believe that the protection of our trademark rights is an important factor in product recognition, protecting our brand, combating fraud, and maintaining goodwill.
We are the authorized user of a variety of social media handles, pages, and profiles that reflect our primary brand. In addition, we have a suite of defensively registered domain names. We believe that the protection of our trademark rights is an important factor in product recognition, protecting our brand, combating fraud, and maintaining goodwill.
We also offer cryptocurrency transfers (“Crypto Transfers”), allowing customers to transfer cryptocurrency into and out of their RHC accounts without commission, where eligible. Additionally, we provide real-time market data for certain cryptocurrencies, including those that are not supported on RHC’s platforms, for informational purposes only.
We offer cryptocurrency transfers (“Crypto Transfers”), allowing customers to transfer cryptocurrency into and out of their RHC accounts without commission, where eligible. Additionally, we provide real-time market data for certain cryptocurrencies, including those that are not supported on RHC’s platform, for informational purposes only.
Communications Regulation We send texts, emails, and other communications in a variety of contexts, such as when providing digital receipts and marketing. Communications laws and regulations, including those promulgated by the Federal Communications Commission, apply to certain aspects of this activity in the United States and elsewhere.
Communications Regulation We send texts, emails, and other communications in a variety of contexts, such as when providing digital transaction confirmations and marketing. Communications laws and regulations, including those promulgated by the Federal Communications Commission, apply to certain aspects of this activity in the United States and elsewhere.
This feature allows customers to build positions in their favorite cryptocurrencies over time. As an agent, we route all cryptocurrency transactions initiated by customers to third-party market makers. We never act as a counterparty to our users’ buy or sell transactions.
This feature allows customers to build positions in their favorite cryptocurrencies over time. As an agent, we route all cryptocurrency transactions initiated by customers to third-party market makers or exchange liquidity providers . We never act as a counterparty to our users’ buy or sell transactions.
To help foster our high performance culture, all employees are eligible for variable incentive pay (bonus and/or equity) and all of our compensation programs are directly linked to individual and company performance. Our comprehensive benefits are designed to attract the best talent and to ensure Robinhood employees are supported.
To help foster our high performance culture, all employees are eligible for variable incentive pay 17 Table of Contents (bonus and/or equity) and all of our compensation programs are directly linked to individual and/or company performance. Our comprehensive benefits are designed to attract the best talent and to ensure Robinhood employees are supported.
Robinhood Wallet Separately from RHC and RHEC, Robinhood offers a self-custody, web3 wallet (the “Robinhood Wallet”) in over 150 countries through our Cayman Islands subsidiary, Robinhood Non-Custodial Ltd. (“RHNC”), that allows customers to deposit and withdraw cryptocurrencies to and from their wallets. Customers can store and manage cryptocurrencies on the Ethereum, Bitcoin, Dogecoin, Polygon, Arbitrum, Optimism and Base networks.
Robinhood Wallet Separately from RHC and RHEU, Robinhood offers a self-custody, web3 wallet (the “Robinhood Wallet”) in over 150 countries through our Cayman Islands subsidiary, Robinhood Non-Custodial Ltd., that allows customers to deposit and withdraw cryptocurrencies to and from their wallets. Customers can store and manage cryptocurrencies on the Ethereum, Bitcoin, Solana, Dogecoin, Arbitrum, Polygon, Optimism and Base networks.
As such, we regularly communicate with our customers—not just to provide support, but also to learn more about their experiences and insights, and to respond to their feedback about our products. This keeps us connected with customers and enables us to understand their expectations and the problems and opportunities they face financially.
We regularly communicate with our customers—not just to provide support, but also to learn more about their experiences and insights, and to respond to their feedback about our products. This keeps us connected with customers and enables us to understand their expectations, problems and opportunities they face financially.
This service enables customers to build a diversified portfolio regardless of their budget and removes a barrier to investing in higher-priced stocks, thereby providing access to a much greater selection of equities with as little as $1. 6 Table of Contents • Recurring Investments.
This service enables customers to build a diversified portfolio regardless of their budget and removes a barrier to investing in higher-priced stocks, thereby providing access to a much greater selection of equities with as little as $1. • Recurring Investments.
Among other provisions, MiCA introduces 20 Table of Contents a comprehensive authorization and compliance regime for crypto asset service providers and a disclosure regime for the issuers of certain crypto assets, which is expected to impact our operations in the EU.
Among other provisions, MiCA introduces a comprehensive authorization and compliance regime for crypto asset service providers and a disclosure regime for the issuers of certain crypto assets, which is expected to impact our operations in the EU.
Subject to approval from Robinhood, customers can access basic options strategies (Level 2), which permits buying calls and puts and selling covered calls and puts, or more advanced options strategies (Level 3), which permits fixed-risk spreads (such as credit spreads and iron condors) and other advanced trading strategies, depending on their individually disclosed preparedness.
Subject to approval from Robinhood, customers can access basic options strategies (Level 2), which permits buying calls and puts and selling covered calls and puts, or more advanced options strategies (Level 3), which permits fixed-risk spreads (such as credit spreads 6 Table of Contents and iron condors) and other advanced trading strategies, depending on their individually disclosed preparedness.
We are making Robinhood a place people want to be by investing in our employees, leveraging diverse perspectives, and rewarding top performance. 5 Table of Contents • First-Principles Thinking . We are inventors, dreamers, and problem solvers. We question assumptions and seek creative solutions rather than just following the crowd.
We are making Robinhood a place people want to be by investing in our employees, leveraging diverse perspectives, and rewarding top performance. • First-Principles Thinking . We are inventors, dreamers, and problem solvers. We question assumptions and seek creative solutions rather than just following the crowd.
Patent and Trademark Office or other governmental authorities and administrative bodies in the United States and abroad may be necessary in the future to enforce our trademark rights and to determine the validity and scope of the trademark rights of others.
Patent and Trademark Office or other governmental authorities and 18 Table of Contents administrative bodies in the United States and abroad may be necessary in the future to enforce our trademark rights and to determine the validity and scope of the trademark rights of others.
Our self-clearing services allow us to clear and settle trades across stocks, ETFs, and options without relying on a third-party clearing firm, an approach that provides increased internal visibility over clearing and settlement. • Order Routing System.
Our self-clearing services allow us to clear and settle trades across stocks, ETFs, and options without relying on a third-party clearing firm, an approach that provides increased internal visibility and stronger oversight and control over clearing and settlement functions. • Order Routing System.
Neither RHC nor RHEC custody any Robinhood Wallet assets. Robinhood Gold Our subscription service grants subscribers access to a number of premium features. After an initial 30-day free trial, subscribers pay a flat recurring rate. Our premium features offered to Gold subscribers include: • Higher Interest on Cash Sweep.
Neither RHC nor RHEU custody any Robinhood Wallet assets. 10 Table of Contents Robinhood Gold Our subscription service grants subscribers access to a number of premium features. After an initial 30-day free trial, subscribers pay a flat recurring rate. Our premium features offered to Gold subscribers include: • Higher Interest on Cash Sweep.
Robinhood decides whether to extend margin to each customer who applies for access based on information regarding customer activity, portfolio equity or net worth criteria, investment objectives, and investing experience reported by the customer. • Fully-Paid Securities Lending.
Robinhood decides whether to extend margin to each customer who applies for access based on information regarding customer activity, portfolio equity or net worth criteria, investment objectives, and investing experience reported by the customer.
Its role includes securing an appropriate degree of protection for consumers, protecting and enhancing the integrity of the UK financial system, and promoting effective competition in the interest of consumers.
Its role includes securing an appropriate degree of protection for consumers, protecting and enhancing the integrity of the U.K. financial system, and promoting effective competition in the interest of consumers.
Subject to approval upon meeting eligibility criteria set by Robinhood, customers can invest on margin. This allows eligible customers to borrow a limited amount of funds from Robinhood at a floating interest rate to use as additional investing capital.
Subject to approval upon meeting eligibility criteria set by Robinhood, customers can invest on margin. This allows eligible customers to borrow a limited amount of funds from Robinhood to use as additional investing capital.
The laws and regulations applicable to cryptocurrency are evolving and subject to interpretation and change. Therefore, our current and future cryptocurrency services may be or become subject to additional licensing and regulatory requirements by other state and federal authorities.
The laws and regulations applicable to 20 Table of Contents cryptocurrency are evolving and subject to interpretation and change. Therefore, our current and future cryptocurrency services may be or become subject to additional licensing and regulatory requirements by other state and federal authorities.
Investors should 21 Table of Contents 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.
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.
Our first instinct is to take action. We strive for improvement and push for progress; and when something is broken, we fix it. We are driven by impact and constantly go after big opportunities.
Our first instinct is to take action. We strive for improvement and push for progress; and when something is broken, we fix it. We are driven by impact and constantly go 5 Table of Contents after big opportunities.
Anti-Money Laundering and Counter-Terrorist Financing We are subject to anti-money laundering (“AML”) laws and counter-terrorist financing laws and regulations in the United States, the United Kingdom and the EU.
Anti-Money Laundering and Counter-Terrorist Financing We are subject to anti-money laundering (“AML”) laws and counter-terrorist financing laws and regulations in the United States, the U.K. and the EU.
Data Privacy and Security We are also subject to laws and regulations regarding data privacy and security; in the U.S., federal law, such as the Gramm-Leach-Bliley Act of 1999 and its implementing regulations, restricts certain collection, processing, storage, use and disclosure of personal data, requires notice to individuals of privacy practices and provides individuals with some rights to prevent the use and disclosure of nonpublic or otherwise legally protected information.
In the U.S., federal law, such as the Gramm-Leach-Bliley Act of 1999 and its implementing regulations, restricts certain collection, processing, storage, use and disclosure of personal data, requires notice to individuals of privacy practices and provides individuals with some rights to prevent the use and disclosure of nonpublic or otherwise legally protected information.
In addition, EU-level legislation imposing additional regulatory requirements in relation to crypto-related activities is also expected to take effect in the near term, with the adoption of the Markets in Crypto-Assets Regulation (“MiCA”).
In addition, EU-level legislation imposing additional regulatory requirements in relation to crypto-related activities is 22 Table of Contents also expected to take effect in the near term, due to the adoption of the Markets in Crypto-Assets Regulation (“MiCA”).
Vertically Integrated Platform We design our own products and services and deliver them through a single, app-based platform supported by proprietary technology that has been cloud-based from the start. We are a licensed introducing broker-dealer, a licensed clearing broker-dealer, and a licensed money-transmitter.
Vertically Integrated Platform We design our own products and services and deliver them through app-based and desktop platforms supported by proprietary technology that has been cloud-based from the start. We are a licensed introducing broker-dealer, a licensed clearing broker-dealer, a licensed money-transmitter, and a registered futures commission merchant.
Our wallets store and transfer all the settled digital assets listed above using either private keys through hardware security modules or an architecture combining multi-party computation and hardware security to eliminate a single point of failure.
Our wallets store and transfer all the settled digital assets listed above using an architecture combining multi-party computation and hardware security to eliminate a single point of failure.
For example, we use machine learning as part of our fraud detection systems and customer support workflows, and even to improve the customer experience in our newsfeed by expanding the number of sources we can pull from, parsing and categorizing these articles, and delivering highly relevant and varied news to our customers for companies, stocks, or cryptocurrencies. • Experiments Infrastructure.
For example, we use machine learning and AI to increase the efficiency of our in-app chat support, customer support workflows, fraud detection systems, and even to improve the customer experience in our newsfeed by expanding the number of sources we can pull from, parsing and categorizing these articles, and 12 Table of Contents delivering highly relevant and varied news to our customers for companies, stocks, or cryptocurrencies. • Experiments Infrastructure.
We continuously monitor our compliance with AML rules and regulations and industry standards and implement policies, procedures and internal controls in light of current legal requirements. 18 Table of Contents Cryptocurrency Regulation As noted above, in the U.S., states primarily regulate RHC as a money transmitter. RHC also is registered with the Financial Crimes Enforcement Network.
Anti-money laundering regulations are constantly evolving, thus we actively monitor our compliance with AML rules and regulations and industry standards, and continuously implement policies, procedures, and internal controls in light of current legal requirements. Cryptocurrency Regulation As noted above, in the U.S., states primarily regulate RHC as a money transmitter. RHC also is registered with the Financial Crimes Enforcement Network.
To enable our rapid product development cycle, we’ve built a proprietary experiments infrastructure that enables us to test product changes through the build process and validate research hypotheses. The iterative, customer-centric product development approach that is so core to our success is enabled by this robust internal technology. Our Customers We are empowering a new generation of financial consumers.
To enable our rapid product development cycle, we’ve built a proprietary experiments infrastructure that enables us to test product changes through the build process and validate research hypotheses. The iterative, customer-centric product development approach that is so core to our success is enabled by this robust internal technology.
In the United Kingdom, the Financial Services and Markets Act 2000 is the primary regulation for all financial services in the United Kingdom. This law enacts the Financial Conduct Authority as the main AML regulator and provides guidelines for its duties.
In the U.K., the Financial Services and Markets Act 2000 is the primary regulation for all financial services in the U.K. This law designates the Financial Conduct Authority as the main AML regulator and provides guidelines for its duties.
Authorized Activities in the U.K. Robinhood U.K., Ltd. (“RHUK”) is authorized and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom to carry on certain regulated activities related to the provision of investment services. The FCA regulates the financial services industry in the UK.
Authorized Activities in the U.K. RHUK is authorized and regulated by the Financial Conduct Authority (“FCA”) in the U.K. to carry on certain regulated activities related to the provision of investment services. The FCA regulates the financial services industry in the U.K.
We currently support trading in the following cryptocurrencies, where available (1) : Aave (AAVE) Avalanche (AVAX)* Bitcoin (BTC) Bitcoin Cash (BCH) Chainlink (LINK) Compound (COMP)* Dogecoin (DOGE) Ethereum (ETH) Ethereum Classic (ETC) Litecoin (LTC) Shiba Inu (SHIB)* Stellar Lumens (XLM)* Tezos (XTZ)* Uniswap (UNI)* USD Stablecoin (USDC)** _______________ (1) Not all cryptocurrencies are available in every state.
We currently support trading in the following 22 cryptocurrencies, where available (1) : Aave (AAVE) Avalanche (AVAX) Bitcoin (BTC) Bitcoin Cash (BCH) BONK (BONK) Cardano (ADA) Chainlink (LINK) Compound (COMP) Dogecoin (DOGE) Dogwifhat (WIF) Ethereum (ETH) Ethereum Classic (ETC) Litecoin (LTC) Pepecoin (PEPE) OFFICIAL TRUMP (TRUMP)* Shiba Inu (SHIB) Solana (SOL) Stellar Lumens (XLM) Tezos (XTZ) Uniswap (UNI) USD Stablecoin (USDC)** XRP (XRP) _______________ (1) Not all cryptocurrencies are available in every state.
Our AML compliance program includes policies, procedures, reporting protocols, and internal controls, including the designation of AML compliance officers, and is designed to address these legal and regulatory requirements and to assist in managing risk associated with money laundering and terrorist financing. Anti-money laundering regulations are constantly evolving.
Our AML compliance program includes policies, procedures, reporting protocols, and internal controls, including the designation of AML compliance officers. This program is designed to address these legal and regulatory requirements, while managing risk associated with money laundering and terrorist financing.
If RHUK and/or its personnel fail to meet FCA standards, the FCA has a range of enforcement powers that it can use, including among other things, withdrawing a firm’s authorization, prohibiting and suspending firms and individuals from undertaking regulated activities, issuing fines, and bringing criminal prosecutions.
If RHUK and/or its personnel fail to meet FCA standards, including, but not limited to, RHUK’s compliance with its obligations under Consumer Duty rules and guidelines, the FCA has a range of enforcement powers that it can use, including among other things, withdrawing a firm’s authorization, prohibiting and suspending firms and individuals from undertaking regulated activities, issuing fines, and bringing criminal prosecutions.
With the exception of small amounts of cryptocurrency we purchase to support our business operations, we do not hold cryptocurrency for our own account and, therefore, do not commingle cryptocurrencies with those of our users. We do not engage in lending transactions with cryptocurrencies held on behalf of customers.
We currently do not hold significant amounts of cryptocurrency for our own account. The small amounts of cryptocurrency assets we currently hold are purchased to solely support our business operations, and we do not commingle cryptocurrencies with those of our users. We do not engage in lending transactions with cryptocurrencies held on behalf of customers.
European Union As of December 2023, we also offer commission-free cryptocurrency trading in select jurisdictions within the European Union (the “EU”) through Robinhood Europe, UAB (“RHEC”) using a separate mobile application that is only available to eligible users in the EU. Eligible users in select jurisdictions in the EU can currently buy, sell, and hold select cryptocurrencies through RHEC.
European Union We offer cryptocurrency trading in select jurisdictions within the European Union (the “EU”) through Robinhood Europe, UAB (“RHEU”) using a separate mobile application that is only available to eligible users in the EU. Eligible users in select jurisdictions in the EU can currently buy, sell, and hold select cryptocurrencies through RHEU.
We are committed to deepening strong relationships with our customers and we are focused on increasing Robinhood Gold Memberships and Net Deposits (as defined in Part II, Item 7 of this Annual Report, “Key Performance Metrics”).
We are committed to deepening strong relationships with our customers and we track our progress here by Robinhood Gold Subscribers and Net Deposits (each as defined in Part II, Item 7 of this Annual Report, “Key Performance Metrics”).
The credit card program is funded under a program agreement (“Program Agreement”) between Robinhood Credit, Inc. (“Robinhood Credit”) (formerly X1 Inc.) and Coastal Community Bank (“Coastal Bank”), a member of the FDIC. There are no annual fees, no late fees, and no foreign transaction fees. The credit card offers rewards on each purchase.
Robinhood Gold Card Robinhood Gold Card is offered under a program agreement (“Program Agreement”) between Robinhood Credit, Inc. (“Robinhood Credit”) and Coastal Community Bank (“Coastal Bank”), a member of the FDIC. There are no annual fees, and no foreign transaction fees.
We began by offering our customers the ability to buy and sell equities on a mobile-first platform and have since continued to expand our offerings to add products and features for our customers.
We began by offering our customers the ability to buy and sell equities on a mobile-first platform and have since continued to expand our offerings to add new asset classes, products and features, while also growing internationally to better serve our customers.
In general, the overwhelming majority of cryptocurrency coins on our platform are held in cold storage, in facilities located in the United States with physical security systems that we believe are state-of-the-art, though some coins are held in hot wallets to support day-to-day operations. 8 Table of Contents We maintain custody of our customers’ cryptocurrencies in omnibus wallets on behalf and for the benefit of our customers.
In general, the overwhelming majority of cryptocurrency coins on our platforms are held in cold storage, in facilities located in the United States and in the EU with physical security systems that we believe are state-of-the-art, though some coins are held in hot wallets to support day-to-day operations.
Our plans to pursue international expansion are dependent on a variety of external factors, including, among other things, our obtaining required regulatory approvals, authorizations, licenses and consents, our obtaining and protecting intellectual property rights abroad, and the identification of and successful entry into new business partnerships with third-party service providers that would be necessary to provide our products and services in the relevant local market. 12 Table of Contents Competition We believe that we are changing the consumption patterns for financial products and services and growing the market, but will continue to face competition from other firms including large legacy financial institutions, large technology companies, and smaller, new financial technology entrants.
Our plans to pursue international expansion are dependent on a variety of external factors, including, among other things, our obtaining required regulatory approvals, authorizations, licenses and consents, our obtaining and protecting intellectual property rights abroad, and the identification of, and successful entry into new business partnerships with third-party service providers that would be necessary to provide our products and services in the relevant local market.
Our instant withdrawals feature enables eligible customers to withdraw money from their Robinhood accounts and instantly deposit it to their bank accounts or debit cards with a fee. Instant withdrawals are also available to customers of the Robinhood Cash Card and Spending Account (each described below). • Robinhood Retirement.
Our instant withdrawals feature enables eligible customers to withdraw money from their Robinhood accounts and instantly deposit it to their bank accounts or debit cards with a fee. • Robinhood Retirement.
We prioritize hiring great leaders with deep functional expertise, we set high standards for performance and we commit to their professional and technical development so we can grow together as we transform the future of finance. We continue to invest in recruiting and fostering diverse talent and supporting all of our employees.
We prioritize hiring great leaders and industry talent with deep functional expertise, we set high standards for performance and we are committed to our employees’ professional and technical development so we can grow together as we transform the future of finance.
Following the purchase of cryptocurrencies from liquidity providers, cryptocurrencies are delivered to the secure omnibus wallet, or in the case of a net sell, cryptocurrencies are moved from such wallet to the liquidity provider’s account.
We maintain custody of our customers’ cryptocurrencies in omnibus wallets on behalf and for the benefit of our customers. Following the purchase of cryptocurrencies from liquidity providers, cryptocurrencies are delivered to the secure omnibus wallet, or in the case of a net sell, cryptocurrencies are moved from such wallet to the liquidity provider’s account.
We also plan to continue to innovate for our active traders to drive an even better experience. Increasing Wallet Share Many of our customers are just beginning their financial journeys. As our customers grow their wealth, we believe they will continue to expand their relationship with our platform, providing an increased opportunity to meet their growing financial needs.
Becoming the Number One in Wallet Share for the Next Generation Many of our customers are just beginning their financial journeys. As our next generation customers grow their wealth, we believe they will continue to expand their relationship with our platform, providing an increased opportunity to meet their growing financial needs.
Customers’ eligible contributions to their retirement account can earn a percentage match by Robinhood (“Robinhood Retirement Match”), subject to a five-year holding period. We offer customer IRA instant deposits up to $1,000, which allows customers to immediately start investing. Customers can also get a custom recommended portfolio, build their own, or do both, all commission-free. • 24 Hour Market .
Customers’ eligible contributions to their retirement account can earn a percentage match by Robinhood, subject to a five-year holding period. We offer customer IRA instant deposits up to $1,000, which allows customers to immediately start investing.
We take pride in the fact that we are expanding the market by welcoming new investors into the financial system and helping the next generation of investors build sound long-term investing, saving, and spending habits. 11 Table of Contents Customer feedback is at the heart of product development at Robinhood.
We take pride in the fact that we are expanding the market by welcoming new investors into the financial system and helping the next generation of investors build sound long-term investing, saving, and spending habits in their prime wealth building years.
In 2023, we launched Robinhood Connect, a new avenue that allows customers to fund Web3 wallets without the need to leave decentralized applications, or dApps. This avenue also benefits developers by being able to quickly embed the feature directly into their dApps, allowing their customers to use Robinhood Crypto to buy and transfer crypto, and fund their self-custody wallets.
This avenue also benefits developers by being able to quickly embed the feature directly into their dApps, allowing their customers to use Robinhood Crypto to buy and transfer crypto, and fund their self-custody wallets.
Subscribers have the ability to see greater depth of orders for any given stock or option. The ability to see multiple buy and sell requests helps subscribers understand the availability or desire for a stock at a certain price. Robinhood Credit Card Our Robinhood Credit Card allows us to provide our customers access to credit.
Subscribers have the ability to see greater depth of orders for any given stock or option with Level II Market Data from Nasdaq. The ability to see multiple buy and sell requests helps subscribers understand the availability or desire for a stock at a certain price.
Organizations are liable for an unlimited fine; removal of tainted proceeds; debarment from public sector contracts/tenders, as well as the disruption and cost of a law enforcement investigation; and directors may be disqualified from acting as a director for up to fifteen years.
Organizations are liable for an unlimited fine; removal of tainted proceeds; debarment from public sector contracts/tenders, as well as the disruption and cost of a law enforcement investigation; and directors may be disqualified from acting as a director for up to fifteen years. 23 Table of Contents Environmental Regulation We are subject to applicable federal, state, local and foreign laws and regulations relating to climate risk and environmental impact, including those required by the U.S.
We seek to differentiate ourselves from competitors primarily through our vertically integrated, mobile-first platform and focus on accessibility, customer experience, and trust. We believe that our ability to innovate quickly further differentiates our platform from our competition. We believe we compete favorably across all key competitive factors and that we have developed a business model that is difficult to replicate.
We seek to differentiate ourselves from competitors primarily through our vertically integrated mobile and desktop platforms, and focus on accessibility, customer experience, and trust. We believe that our ability to innovate quickly further differentiates our platforms from our competition.
This allows customers to understand the basics of investing before their first trade. We plan to continue to release additional Learn modules to provide customers access to information that can help build financial confidence. • Newsfeeds .
Our in-app education resources cover investing fundamentals including why people invest, a stock market overview, and tips on how to define investing goals. This allows customers to understand the basics of investing before their first trade. We plan to continue to release additional Learn modules to provide customers access to information that can help build financial confidence. • Newsfeeds .
Robinhood was built to make the financial system more friendly, approachable, and understandable to newcomers and experts alike. We have reached customers across the United States from a wide variety of social and economic backgrounds and many of our customers funding accounts on our platform told us that Robinhood was their first brokerage account.
Our Customers We are empowering a new generation of financial consumers. Robinhood was built to make the financial system more accessible and transparent for everyone. We have reached customers from a wide variety of social and economic backgrounds and many of our customers have told us that Robinhood was their first brokerage account.
Over time, we intend to pursue a disciplined approach to international expansion and we will consider factors such as population size and demographics, legal and regulatory environments, and general investing attitudes and the competitive landscape in potential new markets prior to pursuing such expansion.
We consider factors such as population size and demographics, legal and regulatory environments, general investing attitudes and the competitive landscape in potential new markets prior to pursuing such expansion. This drove our decision to open an office in Singapore as our APAC headquarters.
It is designed to provide people with a breadth of financial education and is regularly updated to ensure we provide timely and relevant information for anyone to learn and grow. • In-App Education . Our first in-app education resources cover investing fundamentals including why people invest, a stock market overview, and tips on how to define investing goals.
It is designed to provide people with a breadth of financial education and is regularly updated to ensure we provide timely and relevant information for anyone to learn and grow. 11 Table of Contents • In-App Education .
By taking a fresh, people-centric approach and creating a delightful, engaging customer experience, we believe we have built a trusted, category-defining brand that has made investing socially relevant for the next generation. 13 Table of Contents The relationship we have built with our customers has led many to want to talk about Robinhood and share their experience with their friends and family.
Category-Defining Brand We believe Robinhood today is a symbol of retail investing and finance in America, and we are committed to expanding our reach globally. By taking a fresh, people-centric approach and creating a delightful, engaging customer experience, we believe we have built a trusted, category-defining brand that has made investing socially relevant for the next generation.
A large charge or operating loss against our net capital could adversely impact our ability to maintain or expand current business, which could have a material adverse impact on our business and financial condition.
See “—Risks Related to Our Brokerage Products and Services— Our exposure to credit risk with customers, market makers, and other counterparties could result in losses.” A large charge or operating loss against RHD’s net capital could adversely impact its ability to maintain or expand current business, which could have a material adverse impact on its business and financial condition.
Our exclusive in-app educational module available to all RHC and eligible RHEC customers via Robinhood Learn that educates customers on the basics about cryptocurrency. Customers who complete these courses will be eligible to receive rewards, which will be paid out in cryptocurrency. Our Technology The Robinhood mobile app is the core front-end pathway through which our customers engage with us.
Customers who complete these courses will be eligible to receive rewards, which will be paid out in cryptocurrency. Our Technology The Robinhood apps and Robinhood Legend are the core front-end pathways through which our customers engage with us.
If the Net Capital Rule is changed or expanded, or if there is an unusually large charge against our broker-dealer’s net capital, our operations could be limited.
Changes to or expansion of the Net Capital Rule, or an unusually large charge against our broker-dealer’s net capital, could limit our operations.
Building on the success of Robinhood Snacks, we formed Sherwood Media, LLC, a subsidiary that is the home for news and information about the markets, economics, business, technology, and the culture of money. 10 Table of Contents Throughout 2023, we offered a suite of new editorial offerings, complementing Robinhood Snacks with more always-on news updates and analysis, original reporting and new newsletter offerings. • Crypto Learn and Earn .
Building on the success of Robinhood Snacks, we formed Sherwood Media, LLC (“Sherwood Media”), a subsidiary that is the home for news and information about the markets, economics, business, technology, and the culture of money.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDamage to our brand and reputation could also be caused by: • cybersecurity attacks, privacy or data security breaches, or other security incidents, payment disruptions or other incidents that impact the reliability of our platform; • actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors, our customers or third-party service providers or partners as well as complaints or negative publicity about such individuals or companies; • future restructurings or any similar such reductions or activities in the future; • any repeat imposition of temporary trading restrictions (similar to our Early 2021 Trading Restrictions as defined below), or any outright failure to meet our deposit requirements; • litigation involving, or regulatory actions or investigations into, our platform or our business; • any failures to comply with legal, tax and regulatory requirements; • any perceived or actual weakness in our financial strength or liquidity; • any regulatory action that results in changes to, or prohibits us from offering, certain features, products or services; • any new policies, features, products, or services, or changes to our policies, features, products, or services, that customers or others perceive as overly restrictive, unclear, inconsistent with our values or mission, or not clearly articulated; • a failure to operate our business in a way that is consistent with our values and mission; • inadequate or unsatisfactory customer support experiences; • negative responses by customers or regulators to our business model or to particular features, products or services; • a failure to adapt to new or changing customer preferences; • a prolonged weakness in popular equities or cryptocurrencies specifically or in U.S. equity and cryptocurrency markets generally, or a sustained downturn in the U.S. economy; and • any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole. 31 Table of Contents These and other events could negatively impact the willingness of our existing customers, and potential new customers, to do business with us, which could adversely affect our trading volumes and number of Funded Customers (previously Net Cumulative Funded Accounts, see Part II, Item 7 of this Annual Report, “Key Performance Metrics”), as well as our ability to recruit and retain personnel, any of which could have an adverse effect on our business, financial condition, and results of operations, as well as the trading price of our Class A common stock.
Biggest changeDamage to our brand and reputation could also be caused by: • cybersecurity attacks, privacy or data security breaches, or other security incidents, payment disruptions or other incidents that impact the reliability of our platforms; • actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors, our customers or third-party service providers or partners as well as complaints or negative publicity about such individuals or companies; • future restructurings or any similar such reductions or activities in the future; • any repeat imposition of temporary trading restrictions (similar to our Early 2021 Trading Restrictions), or any outright failure to meet our deposit requirements; • litigation, regulatory actions, settlements, or investigations involving our platforms or our business; • regulators requesting or requiring us to cease offering specific products or services; • any failures to comply with legal, tax and regulatory requirements; • any perceived or actual weakness in our financial strength or liquidity; • any regulatory action or settlement that results in changes to, or prohibits us from offering, certain features, products or services; • any new policies, features, products, or services, or changes to our policies, features, products, or services, that customers or others perceive as overly restrictive, unclear, inconsistent with our values or mission, or not clearly articulated; • a failure to operate our business in a way that is consistent with our values and mission; • inadequate or unsatisfactory customer support experiences; • negative responses by customers or regulators to our business model or to particular features, products or services; 35 Table of Contents • a failure to adapt to new or changing customer preferences; • our decision to offer products viewed by some as controversial; • our inability to successfully expand into new markets or make successful acquisitions of, or investments in, other companies, products or technologies; • a prolonged weakness in popular equities or cryptocurrencies specifically or in U.S. or international equity and cryptocurrency markets generally, or a sustained downturn in the U.S. or international economies; • negative claims or publicity involving our culture or businesses, regardless of whether such claims are accurate; and • any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.
The substantial costs and uncertainties related to complying with these regulations continue to increase, and our introduction of new products or services, expansion of our business into new jurisdictions or subindustries, acquisitions of other businesses that operate in similar regulated spaces, or other actions that we may take might subject us to additional laws, regulations, or other government or regulatory scrutiny.
The substantial costs and uncertainties related to complying with these laws and regulations continue to increase, and our introduction of new products or services, expansion of our business into new jurisdictions or subindustries, acquisitions of other businesses that operate in similar regulated spaces, or other actions that we may take might subject us to additional laws, regulations, or other government or regulatory scrutiny.
In the United States, we allow customers to deposit and withdraw cryptocurrencies to and from our platform through our Crypto Transfers feature in the states in which RHC operates (other than New York, where our regulatory application is still pending).
In the United States, we allow customers to deposit and withdraw cryptocurrencies to and from our RHC platform through our Crypto Transfers feature in the states in which RHC operates (other than New York, where our regulatory application is still pending).
There are significant risks and costs inherent in establishing and doing business in international markets, including: • difficulty establishing and managing international entities, offices, and/or operations and the increased operations, travel, infrastructure, and legal and compliance costs associated with operations, entities, and/or people in different countries or regions; • the need to understand, interpret and comply with local laws, regulations and customs in multiple jurisdictions, including laws and regulations governing cryptocurrency-related, broker-dealer, money transmitter, or regulated entity practices, some of which might require permissions, registrations, authorizations, licenses or consents, or might be different from, or conflict with, those of other jurisdictions or foreign cybersecurity, data privacy or labor and employment laws; • the additional complexities of any merger or acquisition activity internationally, which would be new for us and could subject us to additional regulatory scrutiny or approvals; • the need to adapt, localize, and position our products for specific countries (also known as “product-market fit”); • increased exposure to foreign fraud vectors; • increased competition from local providers of similar products and services; • challenges of obtaining, maintaining, protecting, defending and enforcing intellectual property rights abroad, including the challenge of extending or obtaining third-party intellectual property rights to use various technologies in new countries; • the need to offer customer support and other aspects of our offering (including websites, articles, blog posts, and customer support documentation) in various languages or locations; 35 Table of Contents • compliance with anti-bribery and anti-corruption laws, such as the FCPA and equivalent anti-money laundering and sanctions rules and requirements in local markets, by us, our employees, and our business partners; • the need to recruit and manage staff in new countries and regions to support international operations, and comply with employment law, tax, payroll, and benefits requirements in multiple countries; • the need to enter into new business partnerships with third-party service providers in order to provide products and services in the local market, or to meet regulatory obligations; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs and differences in technology service delivery in different countries; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; • double taxation of our international earnings and potentially adverse tax consequences due to requirements of or changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • political or social change or unrest or economic instability in a specific country or region in which we operate.
There are significant risks and costs inherent in establishing and doing business in international markets, including: • difficulty establishing and managing international entities, offices, and/or operations and the increased operations, travel, infrastructure, and legal and compliance costs associated with operations, entities, and/or people in different countries or regions; • the need to understand, interpret and comply with local laws, regulations and customs in multiple jurisdictions, including laws and regulations governing cryptocurrency-related, broker-dealer, money transmitter, or regulated entity practices, some of which might require permissions, registrations, authorizations, licenses or consents, or might be different from, or conflict with, those of other jurisdictions or foreign cybersecurity, data privacy or labor and employment laws; • the additional complexities of any merger or acquisition activity internationally, which would be new for us and could subject us to additional regulatory scrutiny or approvals; • the need to adapt, localize, and position our products for specific countries (also known as “product-market fit”); • increased exposure to foreign fraud vectors; • increased competition from local providers of similar products and services; • challenges of obtaining, maintaining, protecting, defending and enforcing intellectual property rights abroad, including the challenge of extending or obtaining third-party intellectual property rights to use various technologies in new countries; • the need to offer customer support and other aspects of our offering (including websites, articles, blog posts, and customer support documentation) in various languages or locations; • compliance with anti-bribery and anti-corruption laws, such as the FCPA and equivalent anti-money laundering and sanctions rules and requirements in local markets, by us, our employees, and our business partners; 39 Table of Contents • the need to recruit and manage staff in new countries and regions to support international operations, and comply with employment law, tax, payroll, and benefits requirements in multiple countries; • the need to enter into new business partnerships with third-party service providers in order to provide products and services in the local market, or to meet regulatory obligations; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs and differences in technology service delivery in different countries; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; • double taxation of our international earnings and potentially adverse tax consequences due to requirements of or changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • political or social change or unrest or economic instability in a specific country or region in which we operate.
We are subject to a variety of federal, state, local, and non-U.S. laws, directives, rules, policies, industry standards and regulations, as well as contractual obligations, relating to privacy and the collection, protection, use, retention, security, disclosure, transfer and other processing of personal data and other data, including the Gramm-Leach-Bliley Act of 1999, Section 5(c) of the Federal Trade Commission Act and state laws such as the California Consumer Privacy Act, which provides consumers with the right to know what personal data is being collected, know whether their personal data is sold or disclosed and to whom and opt out of the sale of their personal data, among other rights.
We are subject to a variety of federal, state, local, and non-U.S. laws, directives, rules, policies, industry standards and regulations, as well as contractual obligations, relating to privacy and the collection, protection, use, retention, security, disclosure, transfer and other processing of personal data and other data, including the Gramm-Leach-Bliley Act of 1999, Section 5 of the Federal Trade Commission Act and state laws such as the California Consumer Privacy Act, which provides consumers with the right to know what personal data is being collected, know whether their personal data is sold or disclosed and to whom and opt out of the sale of their personal data, among other rights.
If we or our market makers cannot maintain sufficient relationships with the banks that provide these services, if banking regulators restrict or prohibit banking of cryptocurrency businesses, if these banks impose significant operational restrictions, or if these banks were to fail or be taken over by the FDIC, such as occurred in the 2023 Banking Events, it could be difficult for us to find alternative business partners for our cryptocurrency offerings, which would disrupt our business and could cause cryptocurrency trading volumes and transaction-based revenues to decline significantly.
If we, our exchanges or our market makers cannot maintain sufficient relationships with the banks that provide these services, if banking regulators restrict or prohibit banking of cryptocurrency businesses, if these banks impose significant operational restrictions, or if these banks were to fail or be taken over by the FDIC, such as occurred in the 2023 Banking Events, it could be difficult for us to find alternative business partners for our cryptocurrency offerings, which would disrupt our business and could cause cryptocurrency trading volumes and transaction-based revenues to decline significantly.
And in December 2022, shortly after FTX filed for bankruptcy on November 11, 2022, and following the bankruptcies of several other major cryptocurrency trading venues and lending platforms earlier in 2022, including Three Arrows Capital, Ltd., Voyager Digital Holdings, Inc., and Celsius Network LLC (“Celsius”) (collectively, the “2022 Crypto Bankruptcies”), we received an investigative subpoena from the SEC regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations.
Additionally, in December 2022, shortly after FTX filed for bankruptcy on November 11, 2022, and following the bankruptcies of several other major cryptocurrency trading venues and lending platforms earlier in 2022, including Three Arrows Capital, Ltd., Voyager Digital Holdings, Inc., and Celsius Network LLC (“Celsius”) (collectively, the “2022 Crypto Bankruptcies”), we received an investigative subpoena from the SEC regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations.
Any loss of private keys relating to, or hack or other compromise of, the hot wallets or cold wallets we use to store our customers’ cryptocurrencies could result in total loss of customers’ cryptocurrencies (because customers’ cryptocurrency balances and cryptocurrency investments are not protected by the Securities Investor Protection Corporation (the “SIPC”)) or adversely affect our customers’ ability to sell their assets, and could result in our being required to reimburse customers for some or all of their losses, subjecting us to significant financial losses.
Any loss of private keys relating to, or hack or other compromise of, the hot wallets or cold wallets we use to store our customers’ cryptocurrencies could result in total loss of customers’ cryptocurrencies (because customers’ cryptocurrency balances are not protected by the Securities Investor Protection Corporation (the “SIPC”)) or adversely affect our customers’ ability to sell their assets, and could result in our being required to reimburse customers for some or all of their losses, subjecting us to significant financial losses.
If any of these market makers were unwilling to continue to receive orders from us or to pay us for those orders (including, for example, as a result of unusually high volatility), we might have little to no recourse and, if there are no other market makers that are willing to receive such orders from us or to pay us for such orders, or if we are unable to find replacement market makers in a timely manner, our transaction-based revenue would be negatively impacted.
If any market makers were unwilling to continue to receive orders from us or to pay us for those orders (including, for example, as a result of unusually high volatility), we might have little to no recourse and, if there are no other market makers that are willing to receive such orders from us or to pay us for such orders, or if we are unable to find replacement market makers in a timely manner, our transaction-based revenue would be negatively impacted.
We have also received inquiries from the SEC’s Division of Examinations and Division of Enforcement and FINRA related to employee trading during the week of January 25, 2021 in some of the securities that were subject to the Early 2021 Trading Restrictions, including GameStop Corp. and AMC Entertainment Holdings, Inc., and specifically as to whether any employee trading in these securities 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 have also received inquiries from the SEC’s Division of Examinations and Division of Enforcement and FINRA related to employee trading during the week of January 25, 2021 in some of the securities that were subject to the Early 2021 Trading Restrictions, including GameStop Corp. and AMC Entertainment Holdings, Inc., and specifically as 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.
The introduction of AI technologies, particularly generative AI, into new or existing offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.
The introduction and use of AI technologies, particularly generative AI, into new or existing offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.
Despite these resources, increases in the number of customers, and fluctuations in customer cash or deposit balances, as well as market conditions or changes in regulatory treatment of customer deposits, could affect our ability to meet our liquidity needs. We might be adversely affected in the future by regulatory changes related to our obligations with regard to capital maintenance requirements.
Despite these resources, increases in the number of customers, and fluctuations in customer cash or deposit balances, as well as market conditions or changes in regulatory treatment of customer deposits, could affect our ability to meet our liquidity needs. We might be adversely affected by regulatory changes related to our obligations with regard to capital maintenance requirements.
For instance, in December 2022, the SEC proposed four separate equity market structure rules (the “December 2022 Rule Proposals”) related to (i) best execution; (ii) order competition, including requiring certain retail equity orders to be exposed in auctions before being internalized; (iii) order execution disclosure; and (iv) order tick size and fee caps.
For instance, in December 2022, the SEC proposed four separate equity market structure rules (the “December 2022 Rule Proposals”) related to (i) best execution; (ii) order competition, including requiring certain retail equity orders to be exposed in auctions before being internalized; (iii) order execution disclosure; and (iv) order tick size and access fee caps.
If adopted as proposed, the proposals may require us to modify, limit or discontinue our use of certain technologies and product features—and would introduce new regulatory considerations or requirements that would apply to our communications and interactions with existing and prospective customers, including to the extent we provide investment advice or recommendations to them.
If adopted as originally proposed, the proposals may require us to modify, limit or discontinue our use of certain technologies and product features—and would introduce new regulatory considerations or requirements that would apply to our communications and interactions with existing and prospective customers, including to the extent we provide investment advice or recommendations to them.
Morgan Chase Bank, N.A.), and we have also partnered, on a non-exclusive basis, with Sutton, an Ohio-chartered bank, pursuant to a license from Mastercard International Incorporated, to offer the Robinhood Cash Card. Under the terms of our program agreement with Sutton, Robinhood Cash Card accounts for our users are opened and maintained by Sutton.
Morgan Chase Bank, N.A.), and we have also partnered, on a non-exclusive basis, with Sutton Bank (“Sutton”), an Ohio-chartered bank, pursuant to a license from Mastercard International Incorporated, to offer the Robinhood Cash Card. Under the terms of our program agreement with Sutton, Robinhood Cash Card accounts for our users are opened and maintained by Sutton.
Although our application includes features designed to block access to our services from sanctioned countries, if our services are accessed from a sanctioned country in violation of trade and economic sanctions, we could be subject to enforcement actions. We are subject to the FCPA, U.S. domestic bribery laws, and other U.S. and foreign anti-corruption laws.
Although our application includes features designed to block access to our services from sanctioned countries, if our services are accessed from a sanctioned country in violation of trade and economic sanctions, we could be subject to enforcement actions. We are subject to the FCPA, U.S. and foreign bribery laws, and other U.S. and foreign anti-corruption laws.
A large portion of our revenue comes from interest income earned from our corporate cash and investment portfolio, our securities lending activities, cash sweep, and from interest-rate sensitive assets, including receivables from users’ margin-borrowing and other assets underlying the customer balances we hold on our balance sheets as customer accounts.
A portion of our revenue comes from interest income earned from our corporate cash and investment portfolio, our securities lending activities, cash sweep, and from interest-rate sensitive assets, including receivables from users’ margin-borrowing and other assets underlying the customer balances we hold on our balance sheets as customer accounts.
For instance, one of the December 2022 Rule Proposals relates to best execution and proposes to enhance the existing regulatory framework concerning the duty of best execution by, among other things, requiring additional policies and procedures for broker-dealers engaging in certain conflicted transactions with retail customers.
For instance, one of the remaining December 2022 Rule Proposals relates to best execution and proposes to enhance the existing regulatory framework concerning the duty of best execution by, among other things, requiring additional policies and procedures for broker-dealers engaging in certain conflicted transactions with retail customers.
From time to time, we also have received, and might in the future receive SEC inquiries regarding specific cryptocurrencies supported on our platform and added features and since December 2022, following the 2022 Crypto Bankruptcies, we have received investigative subpoenas from the SEC regarding, among other topics, RHC’s supported cryptocurrencies, custody of cryptocurrencies, and platform operations.
From time to time, we also have received, and might in the future receive SEC inquiries regarding specific cryptocurrencies supported on our RHC platform and added features and since December 2022, following the 2022 Crypto Bankruptcies, we have received investigative subpoenas from the SEC regarding, among other topics, RHC’s supported cryptocurrencies, custody of cryptocurrencies, and platform operations.
Customers that traded such supported cryptocurrency through our platform and suffered trading losses might also seek to rescind transactions that we facilitated on the basis that they were conducted in violation of applicable law, which could subject us to significant liability and losses.
Customers that traded such supported cryptocurrency through our RHC platform and suffered trading losses might also seek to rescind transactions that we facilitated on the basis that they were conducted in violation of applicable law, which could subject us to significant liability and losses.
However, an assertion or determination by the SEC or a court that a cryptocurrency supported by our platform constitutes a security could also result in our determination that it is advisable to remove that and other cryptocurrencies from our platform that have similar characteristics to the cryptocurrency that was asserted or determined to be a security.
However, an assertion or determination by the SEC or a court that a cryptocurrency supported by our RHC platform constitutes a security could also result in our determination that it is advisable to remove that and other cryptocurrencies from our RHC platform that have similar characteristics to the cryptocurrency that was asserted or determined to be a security.
In April 2023, the SEC also reopened the comment period and provided supplemental information on proposed amendments to the definition of “exchange” under Exchange Act Rule 3b-16, including reiterating the applicability of existing rules to platforms that trade crypto asset securities.
In April 2023, the SEC reopened the comment period and provided supplemental information on proposed amendments to the definition of “exchange” under Exchange Act Rule 3b-16, including reiterating the applicability of existing rules to platforms that trade crypto asset securities.
Our ability to compete successfully in the financial services and cryptocurrency markets depends on a number of factors, including, among other things: • maintaining competitive pricing; • providing easy-to-use, innovative, and attractive products and services that are adopted by customers; • retaining customers (such as by providing effective customer support and avoiding outages, security breaches, and trading restrictions); • recruiting and retaining highly skilled personnel and senior management; 42 Table of Contents • maintaining and improving our reputation and the market perception of our brand and overall value; • maintaining our relationships with our counterparties; and • adjusting to a dynamic regulatory environment.
Our ability to compete successfully in the financial services and cryptocurrency markets depends on a number of factors, including, among other things: • maintaining competitive pricing; • providing easy-to-use, innovative, and attractive products and services that are adopted by customers; • retaining customers (such as by providing effective customer support and avoiding outages, security breaches, and trading restrictions); 47 Table of Contents • recruiting and retaining highly skilled personnel and senior management; • maintaining and improving our reputation and the market perception of our brand and overall value; • maintaining our relationships with our counterparties; and • adjusting to a dynamic regulatory environment.
The SEC’s July 2023 Rule Proposals, if adopted as proposed, would impose new requirements with respect to our use of a wide range of covered technologies when we are engaging or communicating with existing and prospective customers.
The SEC’s July 2023 Rule Proposals, if adopted as originally proposed, would impose new requirements with respect to our use of a wide range of covered technologies when we are engaging or communicating with existing and prospective customers.
To the extent that the SEC or a court asserts or determines that any cryptocurrencies supported by our platform are securities, that assertion or determination could prevent us from continuing to facilitate trading of those cryptocurrencies (including ceasing support for such cryptocurrencies on our platform).
To the extent that the SEC or a court asserts or determines that any cryptocurrencies supported by our RHC platform are securities, that assertion or determination could prevent us from continuing to facilitate trading of those cryptocurrencies (including ceasing support for such cryptocurrencies on our RHC platform).
Any inability to maintain adequate relationships with third-party banks, market makers, and liquidity providers with respect to, and any inability to settle customer trades related to, our cryptocurrency offerings would disrupt our ability to offer cryptocurrency trading to customers. We rely on third-party banks, market makers, and liquidity providers to provide cryptocurrency products and services to our customers.
Any inability to maintain adequate relationships with third-party banks, market makers, exchanges, and liquidity providers with respect to, and any inability to settle customer trades related to, our cryptocurrency offerings would disrupt our ability to offer cryptocurrency trading to customers. We rely on third-party banks, market makers, exchanges and liquidity providers to provide cryptocurrency products and services to our customers.
Accordingly, regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC or a court were to assert or determine that a cryptocurrency supported by our platform is a “security” under U.S. law.
Accordingly, regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC or a court were to assert or determine that a cryptocurrency supported by our RHC platform is a “security” under U.S. law.
Additional factors that could have a significant effect on the trading price of our Class A common stock include: • publication of research reports about us, our competitors, or our industry, or changes in, or failure to meet, estimates made by securities analysts or ratings agencies of our financial and operating performance, or lack of research reports by industry analysts or ceasing of analyst coverage; • announcements by us or our competitors of new offerings or platform features; • the public’s perception of the quality and accuracy of our key metrics on our customer base and engagement; • the public’s reaction to our media statements, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • the extent to which retail and other individual investors (as distinguished from institutional investors), including our customers, invest in our Class A common stock, which might result in increased volatility; and • media coverage related to certain individuals and entities identified as having owned our stock, and any speculation related to plans to dispose of their holdings.
Additional factors that could have a significant effect on the trading price of our Class A common stock include: • publication of research reports about us, our competitors, or our industry, or changes in, or failure to meet, estimates made by securities analysts or ratings agencies of our financial and operating performance, or lack of research reports by industry analysts or ceasing of analyst coverage; • announcements by us or our competitors of new offerings or platform features; • the public’s perception of the quality and accuracy of our key metrics on our customer base and engagement; • the public’s reaction to our media statements, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; 78 Table of Contents • the extent to which retail and other individual investors (as distinguished from institutional investors), including our customers, invest in our Class A common stock, which might result in increased volatility; and • media coverage related to certain individuals and entities identified as having owned our stock, and any speculation related to plans to dispose of their holdings.
Additionally, if our customers or potential customers believe that they might get better execution quality (including better price improvement) directly from stock exchanges or from our competitors that have different execution arrangements, or if our customers perceive our PFOF practices to create a conflict of interest between us and them, or if they begin to disfavor the specific market markers with which we do business due to any negative media attention, they might come to have an adverse view of our business model and might decide to limit or cease the use of our platform.
Additionally, if our customers or potential customers believe that they might get better execution quality (including better price improvement) directly from stock exchanges or from our competitors that have different execution arrangements, or if our customers perceive our PFOF practices to create a conflict of interest between us and them, or if they begin to disfavor the specific market markers with which we do business due to any negative media attention, they might come to have an adverse view of our business model and might decide to limit or cease the use of our platforms.
For example, in connection with the 2022 Crypto Bankruptcies, the prices of coins such as Bitcoin, Ethereum, and Solana significantly decreased. • Regulatory measures, if any, that affect the use and value of cryptocurrencies or regulatory or judicial assertions or determinations that certain cryptocurrencies are securities. • Competition for and among various cryptocurrencies that exist and market preferences and expectations with respect to adoption of individual currencies. • Actual or perceived manipulation of the markets for cryptocurrencies. 55 Table of Contents • Actual or perceived connections between cryptocurrencies (and related activities such as mining) and adverse environmental effects or illegal activities. • Social media posts and other public communications by high-profile individuals relating to specific cryptocurrencies, or listing or other business decisions by cryptocurrency companies relating to specific cryptocurrencies. • Expectations with respect to the rate of inflation in the economy, monetary policies of governments, trade restrictions, and currency devaluations and revaluations.
For example, in connection with the 2022 Crypto Bankruptcies, the prices of coins such as Bitcoin, Ethereum, and Solana significantly decreased. • Regulatory measures, if any, that affect the use and value of cryptocurrencies or regulatory or judicial assertions or determinations that certain cryptocurrencies are securities. • Competition for and among various cryptocurrencies that exist and market preferences and expectations with respect to adoption of individual currencies. • Actual or perceived manipulation of the markets for cryptocurrencies. • Actual or perceived connections between cryptocurrencies (and related activities such as mining) and adverse environmental effects or illegal activities. • Social media posts and other public communications by high-profile individuals relating to specific cryptocurrencies, or listing or other business decisions by cryptocurrency companies relating to specific cryptocurrencies. • Expectations with respect to the rate of inflation in the economy, monetary policies of governments, trade restrictions, and currency devaluations and revaluations.
We might experience declines in the growth of our business (or negative growth) as a result of a number of factors, including slowing demand for our platform, insufficient growth in the number of customers that utilize our platform, declines in the level of usage of our platform by existing customers, macroeconomic factors, increasing competition, a decrease in the growth of our overall market, or our failure to continue to capitalize on growth opportunities, including as a result of our inability to scale to meet such growth and economic conditions that have, in some instances, and could continue to reduce financial activity and the maturation of our business, among others.
We might experience declines in the growth of our business (or negative growth) as a result of a number of factors, including slowing demand for our platforms, insufficient growth in the number of customers that utilize our platforms, declines in the level of usage of our platforms by existing customers, macroeconomic factors, increasing competition, a decrease in the growth of our overall market, or our failure to continue to capitalize on growth opportunities, including as a result of our inability to scale to meet such growth and economic conditions that have, in some instances, and could continue to reduce financial activity and the maturation of our business, among others.
Broker-Dealer Regulation As broker-dealers, our subsidiaries RHF and RHS are subject to extensive regulation by federal and state regulators and SROs, and are subject to laws and regulations covering all aspects of the securities industry.
Broker-Dealer and FCM Regulations As broker-dealers, our subsidiaries RHF and RHS are subject to extensive regulation by federal and state regulators and SROs, and are subject to laws and regulations covering all aspects of the securities industry.
Additionally, while we now offer select services and products in certain countries outside the United States, we are not currently licensed, authorized, or registered in any every jurisdiction (and in some cases are not licensed in every state).
Additionally, while we now offer select services and products in certain countries outside the United States, we are not currently licensed, authorized, or registered in every jurisdiction (and in some cases are not licensed in every state).
In addition, our growth might be adversely affected if we are not able to expand our platform to include additional cryptocurrencies that the SEC has determined to be securities or that we believe are likely to be determined to be securities.
In addition, our growth might be adversely affected if we are not able to expand our RHC platform to include additional cryptocurrencies that the SEC has determined to be securities or that we believe are likely to be determined to be securities.
Disruptions to, destruction of, improper access to, breach of, instability of, or failure to effectively maintain our information technology systems (including our data processing systems, self-clearing platform, and order routing system) that allow our customers to use our products and services, and any associated degradations or interruptions of service could result in damage to our reputation, loss of customers, loss of revenue, regulatory or governmental investigations, civil litigation, 45 Table of Contents and liability for damages.
Disruptions to, destruction of, improper access to, breach of, instability of, or failure to effectively maintain our information technology systems (including our data processing systems, self-clearing platform, and order routing system) that allow our customers to use our products and services, and any associated degradations or 50 Table of Contents interruptions of service could result in damage to our reputation, loss of customers, loss of revenue, regulatory or governmental investigations, civil litigation, and liability for damages.
If we are unable to identify, troubleshoot and resolve any such issues successfully, we might no longer be able to support such cryptocurrency, our customers’ assets might be frozen or lost, the security of our hot or cold wallets might be compromised and our platform and technical infrastructure might be affected, all of which could cause trading volumes and transaction-based revenue to decline and expose us to potential liability for customer losses.
If we are unable to identify, troubleshoot and resolve any such issues successfully, we might no longer be able to support such cryptocurrency, our customers’ assets might be frozen or lost, the security of our hot or cold wallets might be compromised and our platforms and technical infrastructure might be affected, all of which could cause trading volumes and transaction-based revenue to decline and expose us to potential liability for customer losses.
In addition, surges in trading volume on our platform have in the past and might in the future cause our systems to operate at diminished speed or even fail, temporarily or for a more prolonged period of time, which would affect our ability to process transactions and potentially result in some customers’ orders being executed at prices they did not anticipate, executed incorrectly, or not executed at all.
In addition, surges in trading volume on our platforms have in the past and might in the future cause our systems to operate at diminished speed or even fail, temporarily or for a more prolonged period of time, which would affect our ability to process transactions and potentially result in some customers’ orders being executed at prices they did not anticipate, executed incorrectly, or not executed at all.
A substantial judgment, settlement, fine, penalty, or injunctive relief could be material to our results of operations or cash flows for a particular period, or could cause us significant reputational harm. For more information about the legal proceedings in which we are currently involved, see Note 17 - Commitments & Contingencies, to our consolidated financial statements in this Annual Report.
A substantial judgment, settlement, fine, penalty, or injunctive relief could be material to our results of operations or cash flows for a particular period, or could cause us significant reputational harm. For more information about the legal proceedings in which we are currently involved, see Note 16 - Commitments & Contingencies to our consolidated financial statements in this Annual Report.
While we have made, and continue to make, significant investments designed to correct software errors and design defects and to enhance the reliability and scalability of our platform and operations, the risk of software and system failures and design defects is always present, we do not have fully redundant systems, and we might fail to maintain, expand, and upgrade our systems and infrastructure to meet future requirements and mitigate future risks on a timely basis.
While we have made, and continue to make, significant investments designed to correct software errors and design defects and to enhance the reliability and scalability of our platforms and operations, the risk of software and system failures and design defects is always present, we do not have fully redundant systems, and we might fail to maintain, expand, and upgrade our systems and infrastructure to meet future requirements and mitigate future risks on a timely basis.
However, we might not be aware that our products or services are infringing, misappropriating or otherwise violating third-party intellectual property rights and such third parties might bring claims alleging such infringement, misappropriation or violation. As we face increasing competition and become increasingly high profile, the possibility of receiving a larger number of intellectual property claims against us grows.
However, we might not be aware that our products, services, or marketing materials are infringing, misappropriating or otherwise violating third-party intellectual property rights and such third parties might bring claims alleging such infringement, misappropriation or violation. As we face increasing competition and become increasingly high profile, the possibility of receiving a larger number of intellectual property claims against us grows.
In addition, if our customers use older versions of our app it may result in customer complaints and regulatory inquiries that could lead to arbitration claims or regulatory sanctions. 46 Table of Contents We rely on third parties to perform some key functions, and their failure to perform those functions could adversely affect our business, financial condition and results of operations.
In addition, if our customers use older versions of our app it may result in customer complaints and regulatory inquiries that could lead to arbitration claims or regulatory sanctions. 51 Table of Contents We rely on third parties to perform some key functions, and their failure to perform those functions could adversely affect our business, financial condition and results of operations.
Similarly, if we fail to maintain cash assets in our bank accounts sufficient to meet the working capital needs of our business and necessary to complete routine cash settlements related to customer trading activity, such failure could impair our ability to support normal trading operations on our cryptocurrency platform, which could cause cryptocurrency trading volumes and transaction-based revenues to decline significantly.
Similarly, if we fail to maintain cash assets in our bank accounts sufficient to meet the working capital needs of our business and necessary to complete routine cash settlements related to customer trading activity, such failure could impair our ability to support normal trading operations on our cryptocurrency platforms, which could cause cryptocurrency trading volumes and transaction-based revenues to decline significantly.
There are several considerations that we consider as part of our Crypto Listing Framework (including security or infrastructure concerns that might arise with the integration of any new cryptocurrency into the technical infrastructure that allows us to secure customer cryptocurrencies and to transact securely in corresponding blockchains), which might operate to limit our ability to support forks.
There are several considerations that we consider as part of our Crypto Listing Frameworks (including security or infrastructure concerns that might arise with the integration of any new cryptocurrency into the technical infrastructure that allows us to secure customer cryptocurrencies and to transact securely in corresponding blockchains), which might operate to limit our ability to support forks.
The user agreement each customer enters into in order to trade cryptocurrencies on our platform clearly indicates that we have the sole discretion to determine whether we will support a forked network and the approach to such forked cryptocurrencies and that we may temporarily suspend trading for a cryptocurrency whose network is undergoing a fork without advanced notice to the customer.
The user agreement each customer enters into in order to trade cryptocurrencies on our platforms clearly indicates that we have the sole discretion to determine whether we will support a forked network and the approach to such forked cryptocurrencies and that we may temporarily suspend trading for a cryptocurrency whose network is undergoing a fork without advanced notice to the customer.
Furthermore, the term of our current insurance policy expires in the third quarter of 2024, with our option to renew annually or for the carrier to terminate coverage with advance written notice. Any loss of our insurance coverage would impede our ability to mitigate any losses our customers might suffer if we are unable to access private keys.
Furthermore, the term of our current insurance policy expires in the third quarter of 2025, with our option to renew annually or for the carrier to terminate coverage with advance written notice. Any loss of our insurance coverage would impede our ability to mitigate any losses our customers might suffer if we are unable to access private keys.
While we have observed a positive trend in the total market capitalization of cryptocurrency assets over the long term, driven by increased adoption of cryptocurrency trading by both retail and institutional investors as well as continued growth of various non-investing use cases, historical trends are not indicative of future adoption, and it is possible that the rate of adoption of cryptocurrencies might slow or decline, which would negatively impact our business, financial condition, and results of operations.
While we have observed a positive trend in the total market capitalization of cryptocurrency assets over the long term, driven by increased adoption of cryptocurrency trading by both retail and institutional 61 Table of Contents investors as well as continued growth of various non-investing use cases, historical trends are not indicative of future adoption, and it is possible that the rate of adoption of cryptocurrencies might slow or decline, which would negatively impact our business, financial condition, and results of operations.
For instance, a user might include typos when entering our custodial wallet’s public key or the desired recipient’s public key when depositing to and withdrawing from our platform, respectively. Alternatively, a user could mistakenly transfer cryptocurrencies to a wallet address that he or she does not own or control, or for which the user has lost the private key.
For instance, a user might include typos when entering our custodial wallet’s public key or the desired recipient’s public key when depositing to and withdrawing from our platforms, respectively. Alternatively, a user could mistakenly transfer cryptocurrencies to a wallet address that he or she does not own or control, or for which the user has lost the private key.
The use of our platform for illegal or improper purposes could subject us to claims, individual and class action lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that could result in significant liabilities and reputational harm for us and could cause cryptocurrency trading volumes and transaction-based revenues to decline.
The use of our platforms for illegal or improper purposes could subject us to claims, individual and class action lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that could result in significant liabilities and reputational harm for us and could cause cryptocurrency trading volumes and transaction-based revenues to decline.
Such issues are increasing in frequency and evolving in nature, including employee and contractor theft or misuse, denial-of-service attacks, and sophisticated nation-state and nation-state-supported actors engaging in attacks. The operation of our platform involves the use, collection, storage, sharing, disclosure, transfer, and other processing of customer information, including personal data.
Such issues are increasing in frequency and evolving in nature, including employee and contractor theft or misuse, denial-of-service attacks, and sophisticated nation-state and nation-state-supported actors engaging in attacks. The operation of our platforms involves the use, collection, storage, sharing, disclosure, transfer, and other processing of customer information, including personal data.
With respect to all other cryptocurrencies, there is currently no certainty under the applicable legal test that such assets are not securities, and regulators have expressed concerns about cryptocurrency platforms adding multiple new coins, some of which the regulators question might be unregistered securities.
With respect to all other cryptocurrencies, there is currently no certainty under the applicable legal test that such assets are not securities, and U.S. regulators have expressed concerns about cryptocurrency platforms adding multiple new coins, some of which the regulators question might be unregistered securities.
The implementation of these requirements, and any further legislative changes or related guidance from the Internal Revenue Service, might significantly impact our tax reporting and withholding processes and result in increased compliance costs. Failure to comply with these new information reporting and withholding requirements might subject us to significant tax liabilities and penalties.
The implementation of these requirements, and any further legislative changes or related guidance from the Internal Revenue Service and the Treasury Department, might significantly impact our tax reporting and withholding processes and result in increased compliance costs. Failure to comply with these new information reporting and withholding requirements might subject us to significant tax liabilities and penalties.
If enacted, such financial transaction taxes could increase the cost to customers of investing or trading on our platform and reduce or adversely affect U.S. market conditions and liquidity, general levels of interest in investing, and the volume of trades and other transactions from which we derive transaction-based revenues.
If enacted, such financial transaction taxes could increase the cost to customers of investing or trading on our platforms and reduce or adversely affect U.S. market conditions and liquidity, general levels of interest in investing, and the volume of trades and other transactions from which we derive transaction-based revenues.
Our Charter provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for a number of types of actions or proceedings shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have subject matter jurisdiction, another state court sitting in the State of Delaware) (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as 74 Table of Contents defendants.
Our Charter provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for a number of types of actions or proceedings shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have subject matter jurisdiction, another state court sitting in the State of Delaware) (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
Any of 40 Table of Contents these outcomes could have an adverse effect on our business, financial condition and results of operations. We are involved in numerous litigation matters that are expensive and time consuming, and, if resolved adversely, could expose us to significant liability and reputational harm.
Any of these outcomes could have an adverse effect on our business, financial condition and results of operations. 45 Table of Contents We are involved in numerous litigation matters that are expensive and time consuming, and, if resolved adversely, could expose us to significant liability and reputational harm.
Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict. Changes in these laws and regulations, or our failure to comply with them, could negatively impact cryptocurrency trading on our platform. Domestic and foreign regulators and governments are increasingly focused on the regulation of cryptocurrencies.
Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict. Changes in these laws and regulations, or our failure to comply with them, could negatively impact cryptocurrency trading on our platforms. Domestic and foreign regulators and governments are increasingly focused on the regulation of cryptocurrencies.
Some crypto networks might require additional information to be provided in connection with any transfer of cryptocurrency to or from our platform. A number of errors could occur in the process of depositing or withdrawing cryptocurrencies to or from our platform, such as typos, mistakes, or the failure to include information required by the blockchain network.
Some crypto networks might require additional information to be provided in connection with any transfer of cryptocurrency to or from our platforms. A number of errors could occur in the process of depositing or withdrawing cryptocurrencies to or from our platforms, such as typos, mistakes, or the failure to include information required by the blockchain network.
To the extent our investment education tools, news and information, or digital engagement practices are determined to constitute investment advice or recommendations and to the extent those recommendations fail to satisfy regulatory requirements, or we fail to know our customers, or improperly advise our customers, or if risks associated with advisory services otherwise materialize, we could be 53 Table of Contents found liable for losses suffered by such customers, or could be subject to regulatory fines, penalties, and other actions such as business limitations, any of which could harm our reputation and business.
To the extent our investment education tools, news and information, or digital engagement practices are determined to constitute investment advice or recommendations and to the extent those recommendations fail to satisfy regulatory requirements, or we fail to know our customers, or improperly advise our customers, or if risks associated with advisory services otherwise materialize, we could be found liable for losses suffered by such customers, or could be subject to regulatory fines, penalties, and other actions such as business limitations, any of which could harm our reputation and business.
Fluctuations in the price of various cryptocurrencies might cause uncertainty in the market and could negatively impact trading volumes of cryptocurrencies, and we may not effectively identify, prevent or mitigate cryptocurrency market risks, any of which would adversely affect the success of our business, financial condition and results of operations. 23 Table of Contents • Any particular cryptocurrency’s status as a “security” is subject to a high degree of uncertainty and if we have not properly characterized one or more cryptocurrencies, we might be subject to regulatory scrutiny, investigations, fines, and other penalties. • Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict.
Fluctuations in the price of various cryptocurrencies might cause uncertainty in the market and could negatively impact trading volumes of cryptocurrencies, and we may not effectively identify, prevent or mitigate cryptocurrency market risks, any of which would adversely affect the success of our business, financial condition and results of operations. • In the United States, any particular cryptocurrency’s status as a “security” is subject to a high degree of uncertainty and if we have not properly characterized one or more cryptocurrencies, we might be subject to regulatory scrutiny, investigations, fines, and other penalties. 26 Table of Contents • Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict.
For example, some of our competitors have quickly adopted, or are seeking to adopt, some of our key offerings and services, including commission-free trading, fractional share trading, no account minimums, and IRA match since their introduction on our platform in order to compete with us.
For example, some of our competitors have quickly adopted, or are seeking to adopt, some of our key offerings and services, including commission-free trading, fractional share trading, no account minimums, and IRA match since their introduction on our platforms in order to compete with us.
When a modification is introduced and a substantial majority of miners consent to the modification, the change is implemented and the Bitcoin, Ethereum or other blockchain protocol networks, as applicable, remain uninterrupted, although such modifications might cause certain cryptocurrencies to fail our Crypto Listing Framework.
When a modification is introduced and a substantial majority of miners consent to the modification, the change is implemented and the Bitcoin, Ethereum or other blockchain protocol networks, as applicable, remain uninterrupted, although such modifications might cause certain cryptocurrencies to fail our Crypto Listing Frameworks.
If we are unable to identify, troubleshoot, and resolve any such issues successfully, we might no longer be able to support such cryptocurrency, our customers’ assets might be frozen or lost, the security of our hot or cold wallets might be compromised, and our platform and technical infrastructure might be affected.
If we are unable to identify, troubleshoot, and resolve any such issues successfully, we might no longer be able to support such cryptocurrency, our customers’ assets might be frozen or lost, the security of our hot or cold wallets might be compromised, and our platforms and technical infrastructure might be affected.
In order for a customer to receive cryptocurrency on our platform, the customer will need to arrange for the owner of an external source wallet to “sign” a transaction with the private key of that external wallet, directing a transfer of the cryptocurrency to our receiving custodial wallet by inputting the public key (which we will provide to the customer) of our custodial wallet.
In order for a customer to receive cryptocurrency on our platforms, the customer will need to arrange for the owner of an external source wallet to “sign” a transaction with the private key of that external wallet, directing a transfer of the cryptocurrency to our receiving custodial wallet by inputting the public key (which we will provide to the customer) of our custodial wallet.
A substantial majority of our customers’ activity on our platform occurs on mobile devices. We are dependent on the interoperability of our app with popular mobile operating systems, networks, technologies, products, hardware, and standards that we do not control, such as the Android and iOS operating systems.
A substantial majority of our customers’ activity on our platforms occurs on mobile devices. We are dependent on the interoperability of our app with popular mobile operating systems, networks, technologies, products, hardware, and standards that we do not control, such as the Android and iOS operating systems.
Furthermore, as registered broker-dealers, market makers must comply with rules and regulations that are generally intended to prohibit them from taking advantage of information they obtain while executing orders (e.g., through the prohibition on “front running”). Market makers also have a duty 27 Table of Contents to seek “best execution” of customers’ equity and option orders we send to them.
Furthermore, as registered broker-dealers, market makers must comply with rules and regulations that are generally intended to prohibit them from taking advantage of information they obtain while executing orders (e.g., through the prohibition on “front running”). Market makers also have a duty to seek “best execution” of customers’ equity and option orders we send to them.
Attrition and workforce reorganizations and reductions have also and might continue to adversely affect our reputation among job seekers, demoralize our remaining employees, and result in a loss of institutional know-how, reduced productivity, slower customer service response, reduced effectiveness of internal compliance and risk-mitigation programs, and cancellations of or delays in completing new product developments and other strategic projects.
Attrition and workforce reorganizations and reductions have also and might continue to adversely 37 Table of Contents affect our reputation among job seekers, demoralize our remaining employees, and result in a loss of institutional know-how, reduced productivity, slower customer service response, reduced effectiveness of internal compliance and risk-mitigation programs, and cancellations of or delays in completing new product developments and other strategic projects.
Our business could be adversely affected, and growth in our net revenue earned from cryptocurrency transactions could slow or decline, if the markets for the cryptocurrencies we support deteriorate or if demand moves to other cryptocurrencies not supported by our platform.
Our business could be adversely affected, and growth in our net revenue earned from cryptocurrency transactions could slow or decline, if the markets for the cryptocurrencies we support deteriorate or if demand moves to other cryptocurrencies not supported by our platforms.
Factors contributing to quarterly fluctuations could include, among others: • our ability to retain and engage existing customers and attract new customers; • the timing and success of new product and service introductions by us or our competitors, or other changes in the competitive landscape of our market; • volatility in the market generally or the occurrence of so-called “meme” trading in equities, options, or cryptocurrencies, which can cause our trading volumes to fluctuate; • fluctuations in interest rates; • increases in marketing, sales, compensation (for example, due to increased hiring competition for highly skilled personnel), cloud infrastructure, and other operating expenses that we might incur to grow and expand our operations and to remain competitive; • the timing and amount of non-cash expenses, such as share-based compensation (“SBC”) and asset impairments; • the success of our expansion into new markets; 25 Table of Contents • trading volume and the prevailing trading prices for cryptocurrencies, which can be highly volatile; • ceasing support for certain cryptocurrencies on our platform that the SEC or a court has asserted or determined are securities or proactively removing certain cryptocurrencies because they share similarities with such cryptocurrencies; • changes in the public’s perception, adoption, and use of cryptocurrencies and other asset classes; • any inability of customers to place trades, due to system disruptions, outages, or trading restrictions; • any events that damage customer confidence in Robinhood, such as breaches of security or privacy; • the impacts of public health threats (including pandemics such as COVID-19), unemployment, and inflation; and • changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued, and might significantly affect the effective tax rate of that period.
Factors contributing to quarterly fluctuations could include, among others: • our ability to retain and engage existing customers and attract new customers; • the timing and success of new product and service introductions by us or our competitors, or other changes in the competitive landscape of our market; • volatility in the market generally or the occurrence of so-called “meme” trading in equities, options, cryptocurrencies, or futures (which includes options on futures, swaps, and event contracts (“Futures”)) which can cause our trading volumes to fluctuate; • fluctuations in interest rates; • increases in marketing, sales, compensation (for example, due to increased hiring competition for highly skilled personnel), cloud infrastructure, and other operating expenses that we might incur to grow and expand our operations and to remain competitive; 28 Table of Contents • the timing and amount of non-cash expenses, such as share-based compensation (“SBC”) and asset impairments; • the success of our expansion into new markets or acquisitions ; • trading volume and the prevailing trading prices for cryptocurrencies, which can be highly volatile; • ceasing support for certain cryptocurrencies on our RHC platform that the SEC or a court has asserted or determined are securities or proactively removing certain cryptocurrencies because they share similarities with such cryptocurrencies; • changes in the public’s perception, adoption, and use of cryptocurrencies and other asset classes; • any inability of customers to place trades, due to system disruptions, outages, or trading restrictions; • any events that damage customer confidence in Robinhood, such as breaches of security or privacy; • the impacts of public health threats (including pandemics such as COVID-19), unemployment, and inflation; and • changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued, and might significantly affect the effective tax rate of that period.
For example, during the first quarter of 2021 many customers became upset by our imposition of the Early 2021 Trading Restrictions (defined below) and we saw an increase in customers choosing to transfer their accounts to other broker-dealers.
For example, during the first quarter of 2021 many customers became upset by our imposition of the Early 2021 Trading Restrictions and we saw an increase in customers choosing to transfer their accounts to other broker-dealers.
Errors in performing clearing functions, including clerical and other errors related to the handling of funds and securities on behalf of customers, could lead to (i) civil penalties, as well as losses and liability as a result of related lawsuits brought by customers and others and any out-of-pocket costs associated with remediating customers for losses, and (ii) the risk of fines or other actions by regulators.
Errors in performing clearing functions, including clerical and other errors related to the handling of funds and securities on behalf of customers, (i) could lead to civil penalties, as well as losses and liability as a result of related lawsuits brought by customers and others and any out-of-pocket costs associated with remediating customers for losses, and (ii) have led to, and could in the future lead to the risk of, fines or other actions by regulators.
While these numbers are based on what we believe to be reasonable estimates of our metrics for the applicable period of measurement, there are inherent challenges in measuring how our platform is used across large populations globally. You should not place undue reliance on such operational metrics when evaluating an investment in our Class A common stock.
While these numbers are based on what we believe to be reasonable estimates of our metrics for the applicable period of measurement, there are inherent challenges in measuring how our platforms are used across large populations globally. You should not place undue reliance on such operational metrics when evaluating an investment in our Class A common stock.
Congress and state legislatures, as well as by foreign governments, to impose new taxes on a broad range of financial transactions, including transactions that occur on our platform, such as the buying and selling of stocks, derivative transactions, and cryptocurrencies.
Congress and state legislatures, as well as by foreign governments, to impose new taxes on a broad range of financial transactions, including transactions that occur on our platforms, such as the buying and selling of stocks, derivative transactions, and cryptocurrencies.
These and other provisions of our Charter, our Bylaws and the Delaware General Corporation Law could have the effect of delaying or deterring a change in control, which might limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock and might also affect the price that some investors are willing to pay for our Class A common stock.
These and other provisions of our Charter, our Bylaws and the Delaware General Corporation Law could have the effect of delaying or deterring a change in control, which might limit the opportunity for our stockholders to receive 81 Table of Contents a premium for their shares of our Class A common stock and might also affect the price that some investors are willing to pay for our Class A common stock.
You should carefully consider the risks and uncertainties described below, as well as the other information included in this Annual Report, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our business, financial condition, results of operations, and prospects could be materially and adversely affected by any of these risks or uncertainties.
You should carefully consider the risks and uncertainties described below, as well as the other information included in this Annual Report, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our business, 24 Table of Contents financial condition, results of operations, and prospects could be materially and adversely affected by any of these risks or uncertainties.
Higher interest rates also lead to higher payment obligations by our customers to us and to their creditors under mortgage, credit card, and other consumer and merchant loans, which might reduce our customers’ ability to satisfy their obligations to us, including failing to pay for securities purchased, meet minimum credit card payments, deliver securities sold, or meet margin calls, and therefore lead to increased delinquencies, charge-offs, and allowances for loan and interest receivables, which could have an adverse effect on our net income (loss).
Higher interest rates also lead to higher payment obligations by our customers to us and to their creditors under mortgage, credit card, and other consumer and merchant loans, which might reduce our customers’ ability to satisfy their obligations to us, including failing to pay for securities purchased, meet 32 Table of Contents minimum credit card payments, deliver securities sold, or meet margin calls, and therefore lead to increased delinquencies, charge-offs, and allowances for loan and interest receivables, which could have an adverse effect on our net income (loss).
Any number of technical changes, software upgrades, soft or hard forks, cybersecurity incidents, or other changes to the underlying blockchain networks might occur from time to time, causing incompatibility, technical issues, disruptions or security weaknesses to our platform.
Any number of technical changes, software upgrades, soft or hard forks, cybersecurity incidents or other changes to the underlying blockchain networks might occur from time to time, causing incompatibility, technical issues, disruptions or security weaknesses to our platforms.
Similarly, in order to withdraw cryptocurrency from our platform, the customer will need to provide us with the public key of the external wallet to which the cryptocurrency is to be transferred, and we will “sign” the transaction using the private key of our wallet.
Similarly, in order to withdraw cryptocurrency from our platforms, the customer will need to provide us with the public key of the external wallet to which the cryptocurrency is to be transferred, and we will “sign” the transaction using the private key of our wallet.
However, under Sections 382 and 383 of the United States Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (as defined by the Code) may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (as defined by the Code) may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income.
Any illegal or improper uses of our spending and payments services by our users might subject us to claims, individual and class action lawsuits, and government and regulatory requests, inquiries, or investigations that could result in liability, restrict our operations, require us to change our business 65 Table of Contents practices, harm our reputation, increase our costs, and negatively impact our business.
Any illegal or improper uses of our spending and payments services by our users might subject us to claims, individual and class action lawsuits, and government and regulatory requests, inquiries, or investigations that could result in liability, restrict our operations, require us to change our business practices, harm our reputation, increase our costs, and negatively impact our business.
Each provider of these operating systems and stores has broad discretion to change and interpret its terms of service and policies with respect to our platform and those changes might be unfavorable to us and our customers’ use of our platform.
Each provider of these operating systems and stores has broad discretion to change and interpret its terms of service and policies with respect to our platforms and those changes might be unfavorable to us and our customers’ use of our platforms.
If we, third-party banks, market makers, or liquidity providers have operational failures and cannot perform and facilitate our routine cash and cryptocurrency settlement transactions, we will be unable to support normal trading operations on our cryptocurrency trading platform and these disruptions could have an adverse impact on our business, financial condition and results of operations.
If we, third-party banks, market makers, exchanges or liquidity providers have operational failures and cannot perform and facilitate our routine cash and cryptocurrency settlement transactions, we will be unable to support normal trading operations on our cryptocurrency trading platforms and these disruptions could have an adverse impact on our business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese controls and processes include, among others: • maintaining a vulnerability management program that performs regular vulnerability scans and relies on our risk-based information security program to promote coverage of critical areas; • establishing an offensive security team that actively tests our security controls, imitating methods persons trying to achieve unauthorized access might use to identify any weaknesses; • our global privacy program supported by our privacy engineering and privacy legal teams and the Privacy Advisory Council, a cross functional team of senior leaders from legal, engineering, product, and compliance; • maintaining an incident response plan which includes required responses in the event of a cybersecurity incident; • conducting mandatory annual security and privacy training for all employees and contractors and, where appropriate, giving employees and contractors role-based training focused on content specific to their role at the Company; • undertaking an annual review of our consumer facing policies and statements related to cybersecurity; • requiring employees to treat customer information and data with care through policy, practice and contract (as applicable); 75 Table of Contents • leveraging the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework (“CSF”) incident handling framework to help us identify, protect, detect, respond, and recover when there is an actual or potential cybersecurity incident; and • carrying information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident.
Biggest changeThese controls and processes include, among others: 82 Table of Contents • maintaining a vulnerability management program that performs regular vulnerability scans and relies on our risk-based information security program to promote coverage of critical areas; • establishing an offensive security team that actively tests our security controls, imitating methods persons trying to achieve unauthorized access might use to identify any weaknesses; • our global privacy program supported by our privacy engineering and privacy legal teams; • maintaining an incident response plan which outlines the roles and responsibilities of key personnel in the event of a cybersecurity incident; • conducting mandatory annual security and privacy training for employees and contractors and, where appropriate, giving employees and contractors role-based training focused on content specific to their role at the Company; • undertaking an annual review of our consumer facing policies and statements related to cybersecurity; • requiring our employees to treat customer information and data with care through policy, practice and contract (as applicable); and • carrying cybersecurity insurance that provides some protection against potential losses arising from a cybersecurity incident.
The Security organization elevates risks to the ROCs where applicable. Our cybersecurity program is aligned with industry standards and best practices, such as the NIST CSF, and we engage third-party consultants annually to conduct a NIST CSF maturity assessment of our cybersecurity program.
The Security organization elevates risks to the relevant ROCs where applicable. Our cybersecurity program is aligned with industry standards and best practices, such as the NIST CSF, and we engage third-party consultants annually to conduct a NIST CSF maturity assessment of our cybersecurity program.
Services provided by third-party consultants include, but are not limited to: regular assessments to our cybersecurity program including cyber maturity assessments and penetration tests; risk scoring of our critical business partners and vendors; and participating in incident response processes. Management is responsible for day-to-day risk operations and management processes.
Services provided by third-party consultants include, but are not limited to: regular assessments of our cybersecurity program including cyber maturity assessments and penetration tests; risk scoring of our critical business partners and vendors; and participating in incident response processes. Our management is responsible for the Company’s day-to-day risk operations and management processes.
We maintain a Third Party Security and Privacy Policy and conduct security reviews of vendors, including for potential fourth-party risks, prior to and during their contracts with Robinhood and require all third-party service providers with access to personal, confidential or proprietary information to implement and maintain comprehensive cybersecurity practices consistent with applicable legal standards and industry best practices.
We maintain a Third Party Security and Privacy Standard and conduct security reviews of vendors, including for potential fourth-party risks, prior to and during their contracts with Robinhood and require all third-party service providers with access to personal, confidential or proprietary information to implement and maintain cybersecurity practices consistent with applicable legal standards and industry standards.
Additionally, several of Robinhood’s subsidiaries, including RHC, RHF, and RHS, have a Chief Information Security Officer, who reports to the CSO, and a Risk Operating Committee (“ROC”) that manages risks, including cybersecurity risks, specific to each entity. The Chief Information Security Officers have expertise in cybersecurity, industry and regulatory standards, risk management, and security operations.
Additionally, several of Robinhood’s subsidiaries, including RHC, RHF, and RHS, have a Chief Information Security Officer, who reports to the CSO, and a Risk Operating Committee (“ROC”) that manages risks, including cybersecurity risks, specific to each entity’s business. Each of our Chief Information Security Officers has expertise in cybersecurity, industry and regulatory standards, risk management, and security operations.
The principal role of our board of directors and the Safety Committee is one of oversight, recognizing that management is responsible for the design, implementation, and maintenance of an effective program for protecting against and mitigating data privacy and cybersecurity risks.
The principal role of our board of directors and the Safety Committee, a board-level committee composed solely of independent directors, is one of oversight, recognizing that management is responsible for the design, implementation, and maintenance of an effective program for protecting against and mitigating data privacy and cybersecurity risks.
We have a cybersecurity program that includes physical, technological, and administrative controls to detect, contain, respond to and remediate cybersecurity threats and incidents and defined processes to assess, identify and manage material risks from cybersecurity threats.
Although no organization can eliminate cybersecurity and information technology risk completely, we have a cybersecurity program that includes physical, technological, and administrative controls designed to detect, contain, respond to and remediate cybersecurity threats and incidents and defined processes to assess, identify and manage material risks from cybersecurity threats.
The board of directors and the Safety Committee also receive updates, including material legal and legislative developments, concerning data privacy and security, the rapidly evolving cybersecurity risk landscape, and the Safety Committee facilitates the board of directors’ oversight responsibilities.
Our board of directors and Safety Committee receive updates on relevant industry developments, threats, and material risks identified as needed each quarter, including material legal and legislative developments, concerning data privacy and security, the rapidly evolving cybersecurity risk landscape, and the Safety Committee facilitates the board of directors’ oversight responsibilities.
In making such determination, the MAC may consult with the CEO, other members of the Company’s management, and the Company’s outside professional advisors, in each case, as appropriate.
The MAC will then determine, without unreasonable delay, whether the incident is material to the Company. In making such determination, the MAC may consult with the CEO, other members of the Company’s management, and the Company’s outside professional advisors, in each case, as appropriate.
If a materiality assessment is required, the CSO will report such an incident to our Materiality Assessment Committee (“MAC”), which consists of the CFO, CLO, and CBO (in addition to the CSO). The MAC will then determine, without unreasonable delay, whether the incident is material to the 76 Table of Contents Company.
If a significant cybersecurity incident occurs, we will conduct an assessment to determine if it is material to us. If a materiality assessment is required, the CSO will report such an incident to our Materiality Assessment Committee (“MAC”), which consists of the CFO, CLO, and CBO (in addition to the CSO) and notify the CEO.
Our cybersecurity program is managed by the Company’s Security and Corporate Engineering organization, which is led by our CSO, who reports directly to the CEO. Currently, our CSO is Erika Dean. Ms. Dean, who joined the Company in 2021, has over twenty years of experience in the security industry.
Our cybersecurity program is managed by the Company’s Security and Corporate Engineering organization, which is led by our CSO, who reports directly to the CEO. Our CSO has over twenty years of experience in the security industry and has held a variety of leadership positions in cybersecurity at Capital One, including as Vice President, Divisional Chief Information Security Officer.
We have also implemented guidelines to outline communications responsibilities during incidents of all severity levels, including the escalation process for alerting senior management of high severity incidents. If a significant cybersecurity incident occurs, we will conduct an assessment to determine if it is material to us.
If a cybersecurity incident occurs, incident response procedures are in place to facilitate the appropriate reporting to the CSO, and business continuity plans are mobilized to minimize disruption to business operations. We have also implemented guidelines to outline communications responsibilities during incidents of all severity levels, including an escalation process for alerting senior management of high severity and material incidents.
ERM maintains a risk taxonomy and a scoring methodology design to ensure risks are elevated in a clear and transparent manner, and further escalates top risks to the Safety Committee, along with planned mitigants and monitoring procedures.
In particular, the ERM team provides 83 Table of Contents governance over risk management practices and reports on a quarterly basis on top risks to the Safety Committee, along with planned mitigants and monitoring procedures.
Removed
Prior to joining our Company, she held a variety of leadership positions in cybersecurity at Capital One, including as Vice President, Divisional Chief Information Security Officer.
Added
In addition to our Internal Audit and Compliance functions, the ERM team partners with various front-line risk teams and risk owners across Robinhood, to foster consistent risk management practices across Robinhood.
Removed
In addition to our Internal Audit and Compliance functions, the Company has a management ERC, which comprises senior leaders of the Company, including the CEO, CFO, CLO, CSO, Vice President of Risk and Audit, and CBO, among others, and reviews on at least a quarterly basis risks that are escalated by the Company’s ERM function, including cybersecurity risks.
Removed
If a cybersecurity incident occurs, incident response procedures are in place to ensure that the occurrence is appropriately reported to the CSO, and business continuity plans are mobilized to minimize disruption to business operations.
Removed
Our board of directors and Safety Committee receive updates on relevant industry developments, threats, and material risks identified as needed each quarter.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe our facilities are suitable for their present and intended purposes and are operating at a level consistent with the requirements of the industry in which we operate. We also believe that our leases are at competitive or market rates and do not anticipate any difficulty in leasing suitable additional space upon expiration of our current lease terms.
Biggest changeWe believe our facilities are suitable for their present and intended purposes and are operating at a level consistent with the requirements of the industry in which we operate.
ITEM 2. PROPERTIES Our corporate headquarters are located in Menlo Park, California, where we currently have lease commitments for multiple facilities with various expiration dates through 2026. We otherwise lease office facilities throughout the United States and other countries around the world for engineering, sales, marketing, and operations, as well as general and administrative purposes.
ITEM 2. PROPERTIES Our corporate headquarters are located in Menlo Park, California, where we currently have lease commitments for multiple facilities with various expiration dates through 2033. We otherwise lease office facilities throughout the United States and other countries around the world for engineering, sales, marketing, and operations, as well as general and administrative purposes.
Removed
ITEM 3. LEGAL PROCEEDINGS See Note 17 - Commitments & Contingencies, to our consolidated financial statements in this Annual Report. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 77 Table of Contents PART II
Added
We also believe that our leases are at competitive or market rates and do not anticipate any difficulty in leasing suitable additional space upon expiration of our current lease terms. 84 Table of Contents ITEM 3. LEGAL PROCEEDINGS Refer to Note 16 - Commitments & Contingencies to our consolidated financial statements in this Annual Report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSales of Unregistered Securities From January 1, 2023 through December 31, 2023 we did not sell any shares of Class A common stock (or other equity securities of Robinhood Markets, Inc.) that were not registered under the Securities Act. 78 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.
Biggest changeRefer to Note 13 - Common Stock and Stockholders' Equity to our consolidated financial statements in this Annual Report for more information about the Repurchase Program. 87 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.
The graph uses the closing market price on July 29, 2021 of $34.82 per share as the initial value of our Class A common stock. The stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance. ITEM 6. [REMOVED AND RESERVED] 79 Table of Contents
The graph uses the closing market price on July 29, 2021 of $34.82 per share as the initial value of our Class A common stock. The stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance.
As of February 22, 2024, there were eight stockholders of record of our Class B common stock and zero stockholders of record of our Class C common stock. Dividend Policy We have never declared or paid cash dividends on our capital stock.
As of February 12, 2025, there were nine stockholders of record of our Class B common stock and zero stockholders of record of our Class C common stock. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Our Class B and Class C common stock are not listed on any stock exchange nor traded on any public market. Holders of Record As of February 22, 2024, there were 82 stockholders of record of our Class A common stock.
Our Class B and Class C common stock are not listed on any stock exchange nor traded on any public market. Holders of Record As of February 12, 2025, there were 81 stockholders of record of our Class A common stock.
Added
Sales of Unregistered Securities From January 1, 2024 through December 31, 2024 we did not sell any shares of Class A common stock (or other equity securities of Robinhood Markets, Inc.) that were not registered under the Securities Act. 86 Table of Contents Issuer Purchases of Equity Securities The following table presents repurchases of shares of our Class A common stock during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) (in millions) October 1, 2024 - October 31, 2024 797,990 $ 25.23 797,990 $ 882 November 1, 2024 - November 30, 2024 2,787,976 $ 25.35 2,787,976 $ 812 December 1, 2024- December 31, 2024 1,757,949 $ 38.90 1,757,949 $ 743 Total 5,343,915 $ 29.79 5,343,915 $ 743 (1) The average cost per share excludes the 1% excise tax on net share repurchase and commissions.
Added
(2) On May 28, 2024, we announced that the Board of Directors approved the Repurchase Program authorizing the Company to repurchase up to $1 billion of its outstanding Class A common stock.
Added
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.
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOverview With respect to the year ended December 31, 2023, as compared to the year ended December 31, 2022: • we generated total net revenues of $1.87 billion compared to $1.36 billion, an increase of 37%; • we incurred a net loss of $0.54 billion, or -$0.61 per share, compared to net loss of $1.03 billion, or -$1.17 per share; • operating expenses were $2.40 billion compared to $2.37 billion, an increase of 1%; ◦ SBC expense totaled $871 million compared to $654 million, an increase of 33% . ◦ SBC expense for the year ended December 31, 2023 included a $485 million charge related to cancellation of the 2021 Market-Based RSUs (the “2021 Founders Award Cancellation”). ◦ SBC expense for the year ended December 31, 2022 included $77 million net reversals of previously recognized expense in connection with both the April 2022 Restructuring and August 2022 Restructuring; • our Adjusted EBITDA (non-GAAP) was positive $536 million compared to negative $94 million ; • we had 23.4 million Funded Customers compared to 23.0 million, an increase of 2% ; • we had AUC of $102.6 billion compared to $62.2 billion , an increase of 65%; • Net Deposits were $17.1 billion, which translates to a growth rate of 27% relative to AUC at the end of the fourth quarter of 2022, compared to $18.4 billion, which translates to a growth rate of 19% relative to AUC at the end of the fourth quarter of 2021; • we had ARPU of $80 compared to $60 , an increase of 33%; • we had MAU of 10.9 million in December 2023 compared to 11.4 million in December 2022, a decrease of 4% .
Biggest changeNet income included the impact of: ◦ a $369 million deferred tax benefit, primarily from the release of the Company's valuation allowance on most of its net deferred tax assets; ◦ a $55 million benefit due to a reversal of an accrual as part of a regulatory settlement. ◦ The year ended December 31, 2023 included an expense of $485 million from the 2021 Founders Award Cancellation (the “2021 Founders Award Cancellation”); • total operating expenses decreased 21% to $1.90 billion compared to $2.40 billion; ◦ SBC expense decreased 65% to $304 million compared to $871 million; • Adjusted EBITDA (non-GAAP) increased 167% to $1.43 billion compared to $0.54 billion ; • Funded Customers increased 8% to 25.2 million compared to 23.4 million and Investment Accounts increased by 10% to 26.2 million compared to 23.8 million; • AUC increased 88% to $192.9 billion compared to $102.6 billion, driven by continued Net Deposits and higher equity and cryptocurrency valuations; • Net Deposits were $50.5 billion, which translates to a growth rate of 49% relative to AUC at the end of the fourth quarter of 2023, compared to $17.1 billion, which translates to a growth rate of 27% relative to AUC at the end of the fourth quarter of 2022; • ARPU increased 53% to $122 compared to $80; and • Gold Subscribers increased 86% to 2.64 million compared to 1.42 million.
General and Administrative General and administrative costs primarily consist of cash compensation, SBC, and employee benefits as well as allocated overhead for certain executives and employees engaged in legal, finance, human resources, risk, and compliance.
General and Administrative General and administrative costs primarily consist of cash compensation and employee benefits, SBC, as well as allocated overhead for certain executives and employees engaged in legal, finance, human resources, risk, and compliance.
The excess of the fair value of purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
Each contract generally entitles the holder to trade 100 shares of the underlying stock. • Resurrected Customer: 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.
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.
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 DTC, NSCC, and OCC).
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 DTC, NSCC, OCC, and CFTC).
However, if the book value of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Income Tax We make significant judgments and estimates to determine any valuation allowance recorded against deferred tax assets.
However, if the book value of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Income Taxes We make significant judgments and estimates to determine any valuation allowance recorded against deferred tax assets.
For additional information, see Note 1 - Description of Business and Summary of Significant Accounting Policies, to our consolidated financial statements in this Annual Report. 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.
For additional information, refer to Note 1 - Description of Business and Summary of Significant Accounting Policies to our consolidated financial statements in this Annual Report. 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.
The allowance for credit losses provides for unsecured balances of receivables from users due to Fraudulent Deposit Transactions, losses on margin lending, and reserves on proxy revenue receivables. The allowance for credit losses takes into account relevant available information including the nature of the collateral, potential future changes in collateral values, and historical credit loss information.
The allowance for credit losses provides for unsecured balances of receivables from users due to Fraudulent Deposit Transactions, losses on margin lending, purchased credit card receivables, and reserves on proxy revenue receivables. The allowance for credit losses takes into account relevant available information including the nature of the collateral, potential future changes in collateral values, and historical credit loss information.
Factors that could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” We refer to our “users” and our “customers” interchangeably throughout this Annual Report to refer to individuals who hold accounts on our platform.
Factors that could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” We refer to our “users” and our “customers” interchangeably throughout this Annual Report to refer to individuals who hold accounts on our platforms.
This non-GAAP financial information is presented for supplemental informational purposes only, should not be considered 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.
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.
(2) Restructuring charges for the year ended December 31, 2022 related to both the April 2022 Restructuring and August 2022 Restructuring, consisting of $45 million of impairment and $9 million of accelerated depreciation, in each case relating to office closures, and $51 million of cash charges for employee-related wages, benefits and severance.
(3) Restructuring charges for the year ended December 31, 2022 related to both the April 2022 Restructuring and August 2022 Restructuring, consisting of $45 million of impairment and $9 million of accelerated depreciation, in each case relating to office closures, and $51 million of cash charges for employee-related wages, benefits and severance.
We route option and equity orders in priority to participating market makers that we believe are most likely to give our customers the best execution, based on historical performance (according to order price, trading symbol, availability of the market maker and, if statistically significant, order size), and, in the case of options, the likelihood of the order being filled is a factor as well.
We route 94 Table of Contents option and equity orders in priority to participating market makers that we believe are most likely to give our customers the best execution, based on historical performance (according to order price, trading symbol, availability of the market maker and, if statistically significant, order size), and, in the case of options, the likelihood of the order being filled is a factor as well.
We estimate the expected term based on various vesting scenarios, as these awards are not considered “plain vanilla.” We estimate the expected date of an IPO based on our expectation at the time of measurement of the award’s value.
We estimated the expected term based on various vesting scenarios, as these awards are not considered “plain vanilla.” We estimated the expected date of an IPO based on our expectation at the time of measurement of the award’s value.
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.
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 107 Table of Contents subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.
In testing for goodwill impairment, we first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
In testing for goodwill impairment, we first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not 108 Table of Contents that the fair value of a reporting unit is less than its carrying amount.
Regulatory Capital Requirements Our broker-dealer subsidiaries (RHF and RHS) are subject to the SEC Uniform Net Capital Rule, 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.
Regulatory Capital Requirements Our broker-dealer subsidiaries (RHF and RHS) are subject to the SEC Uniform Net Capital Rule, administered by the SEC and FINRA, which requires the maintenance of minimum net capital, as defined. 105 Table of Contents Net capital and the related net capital requirements may fluctuate on a daily basis.
When customers place orders for options, cryptocurrencies, or equities on our platform, we route these orders to market makers and we receive consideration from those market makers. With respect to options and equities trading, such fees are known as PFOF.
When customers place orders for options, cryptocurrencies, or equities on our platform, we route these orders to market makers and we receive consideration from those market makers. With respect to options and equities trading, such fees are known as PFOF. With respect to cryptocurrencies trading, we receive “Transaction Rebates” when routing to market makers.
For additional information, see Note 13 - Financing Activities and Off-Balance Sheet Risk, to our consolidated financial statements in this Annual Report. Business Combinations We allocate the fair value of purchase price to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.
For additional information, refer to Note 12 - Financing Activities and Off-Balance Sheet Risk to our consolidated financial statements in this Annual Report. Business Combinations We allocate the fair value of the purchase price to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.
Allowance for Credit Losses and Credit Card Expected Loss Liability The amount of the allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of our financial assets measured at amortized cost considering available information from internal and external sources.
Allowance for Credit Losses The amount of the allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of our financial assets measured at amortized cost considering available information from internal and external sources.
(4) Partially as a result of the termination of the stock purchase agreement, the advances made to Ziglu accounted for as non-marketable equity securities were impaired to a carrying value of zero. 84 Table of Contents Key Components of Our Results of Operations Revenues Transaction-Based Revenues Transaction-based revenues consist of amounts earned from routing customer orders for options, cryptocurrencies, and equities to market makers.
(5) Partially as a result of the termination of the stock purchase agreement, the advances made to Ziglu accounted for as non-marketable equity securities were impaired to a carrying value of zero. Key Components of Our Results of Operations Revenues Transaction-Based Revenues Transaction-based revenues consist of amounts earned from routing customer orders for options, cryptocurrencies, and equities to market makers.
A large portion of our brokerage and transaction costs are variable and tied to trading and transaction volumes on our platform.
A large portion of our brokerage and transaction costs are variable and tied to trading and transaction volumes on our platforms.
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.
Moreover, Adjusted EBITDA is a key measurement used by 93 Table of Contents our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.
We record SBC expense for market-based equity awards on an accelerated attribution method over the requisite service period, and only if performance-based conditions are considered probable to be satisfied.
We recorded SBC expense for market-based equity awards on an accelerated attribution method over the requisite service period, and only if performance-based conditions were considered probable to be satisfied.
We earn interest revenues on corporate cash and investments, margin loans to users, segregated cash and cash equivalents, deposits with clearing organizations, Cash Sweep, and carried customer credit card balances. We also earn and incur interest revenues and expenses on securities lending transactions. We incur interest expenses in connection with our revolving credit facilities.
We earn interest revenues on margin loans to users, segregated cash, cash equivalents, and securities, deposits with clearing organizations, corporate cash and investments, Cash Sweep, and carried customer credit card balances. We also earn and incur interest revenues and expenses on securities lending transactions.
See Note 13 - Financing Activities and Off-Balance Sheet Risk, to our consolidated financial statements in this Annual Report for further information.
Refer to Note 12 - Financing Activities and Off-Balance Sheet Risk to our consolidated financial statements in this Annual Report for further information.
Adjusted EBITDA is defined as net income (loss), excluding (i) interest expenses related to credit facilities, (ii) provision for (benefit from) income taxes, (iii) 83 Table of Contents depreciation and amortization, (iv) SBC, (v) change in fair value of convertible notes and warrant liability, (vi) significant legal and tax settlements and reserves, and (vii) 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.
Adjusted EBITDA is defined as net income (loss), 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.
For market-based awards, we determine the grant-date fair value utilizing a Monte Carlo valuation model, which incorporates various assumptions including expected stock price volatility, expected term, risk-free interest rates, expected date of an IPO, and expected capital raise percentage.
The market-based conditions are satisfied upon our achievement of specified share prices. For market-based awards, we determined the grant-date fair value utilizing a Monte Carlo valuation model, which incorporates various assumptions including expected stock price volatility, expected term, risk-free interest rates, expected date of an IPO, and expected capital raise percentage.
For the year ended December 31, 2023 the average balance for Credit card, net is calculated using the period from June 30, 2023 to December 31, 2023 based on Robinhood Credit’s acquisition date of July 3, 2023.
For the year ended December 31, 2023 the average balance for Credit card, net is calculated using the period from June 30, 2023 to December 31, 2023 based on Robinhood Credit’s acquisition date of July 3, 2023. (4) Annual yield is calculated by dividing revenue for the given period by the applicable average asset balance.
Marketing Marketing costs primarily consist of paid marketing channels such as digital marketing and brand marketing, as well as cash compensation, SBC, and employee benefits as well as allocated overhead for employees engaged in the marketing function. Marketing costs also include incentive expenses associated with the Robinhood Referral Program.
Marketing Marketing costs primarily consist of paid marketing channels such as digital marketing and brand marketing, as well as cash compensation, and employee benefits, SBC, and allocated overhead for employees engaged in the marketing function.
Refer to Note 3 - Business Combinations to our consolidated financial statements in this Annual Report for more information. (4) Average balance rows represent the simple average of month-end balances in a given period.
Refer to Note 12 - Financing Activities and Off-Balance Sheet Risk to our consolidated financial statements in this Annual Report for more information. (3) Average balance rows represent the simple average of month-end balances in a given period.
The following table presents a reconciliation of Adjusted EBITDA, to the most directly comparable GAAP measure, net loss: Year Ended December 31, (in millions) 2021 2022 2023 Net loss $ (3,687) $ (1,028) $ (541) Add: Interest expenses related to credit facilities 20 24 23 Provision for income taxes 2 1 8 Depreciation and amortization 26 61 71 EBITDA (non-GAAP) (3,639) (942) (439) 2021 Founders Award Cancellation — — 485 SBC excluding 2021 Founders Award Cancellation (1) 1,572 654 386 Significant legal and tax settlements and reserves 55 20 104 Restructuring charges (2) — 105 — Q4 2022 Processing Error (3) — 57 — Impairment of Ziglu equity securities (4) — 12 — Change in fair value of convertible notes and warrant liability 2,045 — — Adjusted EBITDA (non-GAAP) $ 33 $ (94) $ 536 _______________ (1) For the year ended December 31, 2022, SBC excluding 2021 Founders Award Cancellation benefited from restructuring-related net reversals of previously recognized expense of $77 million in connection with both the April 2022 Restructuring and August 2022 Restructuring (see Note 14 - Common Stock and Stockholders' (Deficit) Equity, to our consolidated financial statements in this Annual Report for further information).
The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income (loss): Year Ended December 31, (in millions) 2022 2023 2024 Net income (loss) $ (1,028) $ (541) $ 1,411 Add: Interest expenses related to credit facilities 24 23 24 Provision for (benefit from) income taxes 1 8 (347) Depreciation and amortization 61 71 77 EBITDA (non-GAAP) (942) (439) 1,165 Add: SBC 2021 Founders Award Cancellation — 485 — SBC Excluding 2021 Founders Award Cancellation (1) 654 386 304 Significant legal and tax settlements and reserves (2) 20 104 (40) Restructuring charges (3) 105 — — Q4 2022 Processing Error (4) 57 — — Impairment of Ziglu equity securities (5) 12 — — Adjusted EBITDA (non-GAAP) $ (94) $ 536 $ 1,429 _______________ (1) For the year ended December 31, 2022, SBC excluding 2021 Founders Award Cancellation benefited from restructuring-related net reversals of previously recognized expense of $77 million in connection with both the April 2022 Restructuring and August 2022 Restructuring.
Operating Expenses Brokerage and Transaction Brokerage and transaction costs primarily consist of broker-dealer transaction expenses (such as fees paid to centralized clearinghouses and regulatory fees), market data expenses, customer statements, cash compensation, SBC and employee benefits as well as allocated overhead for employees engaged in clearing and brokerage functions.
Operating Expenses Brokerage and Transaction Brokerage and transaction costs primarily consist of cash compensation and employee benefits, SBC, as well as allocated overhead for employees engaged in clearing and brokerage functions, market data expenses, expenses related to our instant withdrawals feature, fees paid to centralized clearinghouses and regulatory fees, customer statement-related costs, and other brokerage and transaction costs such as costs related to our Cash Sweep and securities lending programs.
(3) Credit card, net is an off-balance sheet amount, which represents 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 intere st revenue.
Under the Program Agreement, Robinhood Credit collects interest from customers that carry a balance and pays interest on the amount funded by Coastal Bank, with the difference between those amounts resulting in net interest revenue; ii) an on-balance sheet amount representing purchased credit card receivables by the Credit Card Funding Trust.
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. • Churned Customer: 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.
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. • 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.
The increase was primarily driven by growth in interest-earning assets balances and the higher short-term interest rate environment due to the rise in the federal funds rate, which positively impacted the interest rate we receive on these assets. 89 Table of Contents The following table summarizes interest-earning assets, the revenue generated by these assets, and their respective annual yields: (in millions, except for annual yield) Margin Book Cash and deposits (1) Cash Sweep (off-balance sheet) (2) Credit card, net (off-balance sheet) (3) Total interest-earning assets Securities lending, net Interest expenses related to credit facilities Total net interest revenues Year ended December 31, 2023 December 31, 2023 $ 3,458 $ 10,107 $ 16,352 $ 205 $ 30,122 December 31, 2022 3,089 9,530 5,837 N/A 18,456 Average (4) 3,302 9,979 11,348 197 24,826 Revenue (expense) 243 498 123 9 $ 873 $ 79 $ (23) $ 929 Annual yield (5) 7.36 % 4.99 % 1.08 % N/A 3.52 % 3.74 % Year ended December 31, 2022 December 31, 2022 $ 3,089 $ 9,530 $ 5,837 N/A $ 18,456 December 31, 2021 6,467 10,600 2,095 N/A 19,162 Average (4) 4,519 9,931 2,920 N/A 17,370 Revenue (expense) 177 160 22 N/A $ 359 $ 89 $ (24) $ 424 Annual yield (5) 3.92 % 1.61 % 0.75 % N/A 2.07 % 2.44 % Year ended December 31, 2021 December 31, 2021 $ 6,467 $ 10,600 $ 2,095 N/A $ 19,162 December 31, 2020 3,351 6,544 1,827 N/A 11,722 Average (4) 5,432 10,137 2,109 N/A 17,678 Revenue (expense) 132 5 3 N/A $ 140 $ 136 $ (20) $ 256 Annual yield (5) 2.43 % 0.05 % 0.14 % N/A 0.79 % 1.45 % _______________ (1) Includes cash and cash equivalents, cash segregated under federal and other regulations, deposits with clearing organizations, and investments.
We anticipate any potential future rate cuts by the Federal Reserve will have a similar impact. 99 Table of Contents The following table summarizes interest-earning assets, the revenue generated by these assets, and their respective annual yields: (in millions, except for annual 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 Year ended December 31, 2024 December 31, 2024 $ 7,909 $ 9,943 $ 26,064 $ 391 $ 44,307 December 31, 2023 3,458 10,107 16,352 205 30,122 Average (3) 5,082 10,252 21,352 261 36,947 Revenue (expense) 319 517 179 24 $ 1,039 $ 94 $ (24) $ 1,109 Annual yield (4) 6.28 % 5.04 % 0.84 % 9.20 % 2.81 % 3.00 % Year ended December 31, 2023 December 31, 2023 $ 3,458 $ 10,107 $ 16,352 205 $ 30,122 December 31, 2022 3,089 9,530 5,837 N/A 18,456 Average (3) 3,302 9,979 11,348 197 24,826 Revenue (expense) 243 498 123 9 $ 873 $ 79 $ (23) $ 929 Annual yield (4) 7.36 % 4.99 % 1.08 % N/A 3.52 % 3.74 % Year ended December 31, 2022 December 31, 2022 $ 3,089 $ 9,530 $ 5,837 N/A $ 18,456 December 31, 2021 6,467 10,600 2,095 N/A 19,162 Average (3) 4,519 9,931 2,920 N/A 17,370 Revenue (expense) 177 160 22 N/A $ 359 $ 89 $ (24) $ 424 Annual yield (4) 3.92 % 1.61 % 0.75 % N/A 2.07 % 2.44 % _______________ (1) Includes cash and cash equivalents, cash, cash equivalents, and securities segregated under federal and other regulations, deposits with clearing organizations, and investments.
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 Our cash and cash equivalents were $6.34 billion and $4.84 billion as of December 31, 2022 and 2023.
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. 104 Table of Contents Liquid Assets As of December 31, 2024, we had cash and cash equivalents of $4.33 billion, held-to-maturity investments of $398 million, and stablecoin of $361 million.
They primarily relate to commitments for cloud infrastructure service and business insurance. 95 Table of Contents In addition to lease and purchase commitments, we have a committed financing agreement 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.
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.
The number of users placing option trades also decreased 18%. 88 Table of Contents Net Interest Revenues Year Ended December 31, (in millions, except for percentages) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Net interest revenues: Interest on corporate cash and investments $ 1 $ 103 $ 288 NM 180 % Margin interest 132 177 243 34 % 37 % Interest on segregated cash and cash equivalents and deposits 4 57 210 NM 268 % Cash Sweep 3 22 123 633 % 459 % Securities lending, net 136 89 79 (35) % (11) % Credit card, net — — 9 NM NM Interest expenses related to credit facilities (20) (24) (23) 20 % (4) % Total net interest revenues $ 256 $ 424 $ 929 66 % 119 % Net interest revenues as a % of total net revenues: Interest on corporate cash and investments —% 7% 16% Margin interest 7% 13% 13% Interest on segregated cash and cash equivalents and deposits 1% 4% 11% Cash Sweep —% 2% 7% Securities lending, net 7% 7% 4% Credit card, net —% —% —% Interest expenses related to credit facilities (1)% (2)% (1)% Total net interest revenues 14% 31% 50% Net interest revenues increased by $505 million.
The increase was offset by $10 million of match incentives paid to our customers. 98 Table of Contents Net Interest Revenues Year Ended December 31, (in millions, except for percentages) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Net interest revenues: Margin interest $ 177 $ 243 $ 319 37 % 31 % Interest on segregated cash, cash equivalents, securities, and deposits 57 210 261 268 % 24 % Interest on corporate cash and investments 103 288 256 180 % (11) % Cash Sweep 22 123 179 459 % 46 % Securities lending, net 89 79 94 (11) % 19 % Credit card, net — 9 24 NM 167 % Interest expenses related to credit facilities (24) (23) (24) (4) % 4 % Total net interest revenues $ 424 $ 929 $ 1,109 119 % 19 % Net interest revenues as a % of total net revenues: Margin interest 13% 13% 11% Interest on corporate cash and investments 7% 16% 9% Interest on segregated cash, cash equivalents, securities, and deposits 4% 11% 9% Cash Sweep 2% 7% 6% Securities lending, net 7% 4% 3% Credit card, net —% —% 1% Interest expenses related to credit facilities (2)% (1)% (1)% Total net interest revenues 31% 50% 38% Net interest revenues increased by $180 million, driven by growth in most of our interest-earning asset balances except for corporate cash and investments.
With respect to cryptocurrencies trading, we receive “Transaction Rebates.” In the case of options, our fee is on a per contract basis based on the underlying security.
In the case of options, our fee is on a per contract basis based on the underlying security.
Other Revenues Other revenues primarily consist of Robinhood Gold subscription fees, proxy revenues, and ACATS fees charged to users for facilitating the transfer of part or all of assets in their accounts to another broker-dealer.
We incur interest expenses in connection with our revolving credit facilities and borrowings by the Credit Card Funding Trust. Other Revenues Other revenues primarily consists of Robinhood Gold subscription fees, proxy revenues, advertising revenues, and ACATS fees charged to users for facilitating the transfer of part or all of assets in their accounts to another broker-dealer.
Technology and Development Technology and development costs primarily consist of cash compensation, SBC and employee benefits as well as allocated overhead for engineering, data science, and design personnel who support and improve our platform and develop new products, costs for cloud infrastructure services, and costs associated with computer hardware and software, including amortization of internally developed software. 85 Table of Contents Operations Operations costs consist of customer service related expenses, including cash compensation, SBC and employee benefits as well as allocated overhead for employees engaged in customer support, and costs incurred to support and improve customer experience (such as third-party customer service vendors).
Technology and Development Technology and development costs primarily consist of costs incurred to support and improve our platforms and develop new products, costs associated with computer hardware and software, including amortization of internally developed software, and compensation and benefits, including SBC, for engineering, data science, and design personnel, as well as allocated overhead.
Negative balances typically result from Fraudulent Deposit Transactions (which occur when users initiate deposits into their accounts, make trades on our platform 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. • 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). • New Funded Customer: 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. 81 Table of Contents • Options Contracts Traded: We define Options Contracts Traded as the total number of options contracts bought or sold over a specified period of time.
As of December 31, 2024 , a Funded Customer can have up to four Investment Accounts - individual brokerage account, joint investing account (which launched in July 2024), traditional IRA, and Roth IRA. • 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). • 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. 90 Table of Contents • Options Contracts Traded: We define Options Contracts Traded as the total number of options contracts bought or sold over a specified period of time.
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 capacity under our revolving lines of credit and potential issuance of new debt or equity.
Other sources of future funds may include potential borrowing under our revolving lines of credit and potential issuance of new debt or equity.
Operating Expenses Year Ended December 31, (in millions, except for percentages) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Operating expenses: Brokerage and transaction $ 158 $ 179 $ 146 13 % (18) % Technology and development 1,234 878 805 (29) % (8) % Operations 368 285 159 (23) % (44) % Marketing 325 103 122 (68) % 18 % General and administrative 1,371 924 1,169 (33) % 27 % Total operating expenses $ 3,456 $ 2,369 $ 2,401 Percent of total net revenues: Brokerage and transaction 9 % 13 % 8 % Technology and development 68 % 65 % 43 % Operations 20 % 21 % 9 % Marketing 18 % 8 % 7 % General and administrative 76 % 68 % 63 % Total operating expenses 191 % 175 % 130 % 91 Table of Contents Brokerage and Transaction Year Ended December 31, (in millions) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Broker-dealer transaction expenses $ 48 $ 31 $ 32 (35)% 3 % Employee compensation, benefits, and overhead, excluding SBC 14 20 31 43% 55 % Market data expenses 33 26 23 (21)% (12) % Customer statements 11 8 15 (27)% 88 % SBC 7 5 7 (29)% 40 % Q4 2022 Processing Error — 57 — NM NM Other 45 32 38 (29)% 19 % Total $ 158 $ 179 $ 146 13% (18) % Brokerage and transaction costs decreased by $33 million as a result of the one time $57 million Q4 2022 Processing Error in the prior period.
Operating Expenses Year Ended December 31, (in millions, except for percentages) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Operating expenses: Brokerage and transaction $ 179 $ 146 $ 164 (18) % 12 % Technology and development 878 805 818 (8) % 2 % Operations 249 116 112 (53) % (3) % Provision for credit losses 36 43 76 19 % 77 % Marketing 103 122 272 18 % 123 % General and administrative 924 1,169 455 27 % (61) % Total operating expenses $ 2,369 $ 2,401 $ 1,897 Percent of total net revenues: Brokerage and transaction 13 % 8 % 5 % Technology and development 65 % 43 % 28 % Operations 18 % 6 % 4 % Provision for credit losses 3 % 3 % 3 % Marketing 8 % 7 % 9 % General and administrative 68 % 63 % 15 % Total operating expenses 175 % 130 % 64 % 101 Table of Contents Brokerage and Transaction Year Ended December 31, (in millions) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Employee compensation, benefits, and overhead, excluding SBC $ 20 $ 31 $ 36 55 % 16 % Market data expenses 26 23 26 (12) % 13 % Instant withdrawals 1 7 20 (12) % 186 % Broker-dealer transaction expenses 31 32 16 3 % (50) % Customer statements 8 15 15 88 % — % SBC 5 7 9 40 % 29 % Q4 2022 Processing Error 57 — — NM NM Other 31 31 42 — % 35 % Total $ 179 $ 146 $ 164 (18) % 12 % Brokerage and transaction costs increased by $18 million primarily driven by a $13 million increase in expenses related to our instant withdrawals feature due to higher customer activities.
The amount of the credit card expected loss liability represents management’s estimate of expected credit losses from off-balance sheet credit exposure over the remaining expected life of credit card receivables originated under an arrangement with Coastal Bank where Coastal Bank is the legal lender and originator, the party to which the customer has a credit-borrower relationship, and the legal owner of the credit card receivables.
The amount of the allowance for credit losses represents management’s estimate of expected credit losses from off-balance sheet credit exposure over the remaining expected life of credit card receivables originated under an arrangement with Coastal Bank.
Commitments The following table summarizes our short- and long-term material cash requirements for contractual obligations as of December 31, 2023: Payments Due by Period (in millions) Total 2024 2025-2026 2027-2028 Thereafter Operating lease commitments $ 145 $ 28 $ 46 $ 30 $ 41 Purchase commitments (1) 899 335 555 8 1 Total $ 1,044 $ 363 $ 601 $ 38 $ 42 _______________ (1) Purchase commitments are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated.
Commitments The following table summarizes our short- and long-term material cash requirements for contractual obligations as of December 31, 2024: Payments Due by Period (in millions) Total 2025-2026 2027-2028 2029 Thereafter Operating lease commitments $ 189 $ 56 $ 50 $ 23 $ 60 Purchase commitments (1) 637 601 35 1 — Robinhood match incentives commitments (2) 142 142 — — — Credit Card Funding Trust borrowing principal and interest 131 131 — — — Total $ 1,099 $ 930 $ 85 $ 24 $ 60 _______________ (1) Purchase commitments are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated.
The time-based service condition for these awards is generally satisfied over six years. The performance-based conditions were satisfied upon the occurrence of an IPO. The market-based conditions are satisfied upon our achievement of specified share prices.
Share-based Compensation Market-Based RSUs We have granted RSUs that vest upon the satisfaction of all the following conditions: time-based service conditions, performance-based conditions, and market-based conditions (“Market-Based RSUs”). The time-based service condition for these awards is generally satisfied over six years. The performance-based conditions were satisfied upon the occurrence of an IPO.
Revenues Transaction-Based Revenues Year Ended December 31, (in millions, except for percentages) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Transaction-based revenues Options $ 690 $ 488 $ 505 (29) % 3 % Cryptocurrencies 420 202 135 (52) % (33) % Equities 287 117 104 (59) % (11) % Other 5 7 41 40 % 486 % Total transaction-based revenues $ 1,402 $ 814 $ 785 (42) % (4) % Transaction-based revenues as a % of total net revenues: Options 38% 36% 27% Cryptocurrencies 23% 15% 7% Equities 16% 9% 6% Other —% —% 2% Total transaction-based revenues 77 % 60 % 42 % Transaction-based revenues decreased by $29 million primarily driven by a $67 million decrease in Crypto and a $13 million decrease in Equities, offset by a $17 million increase in Options.
Revenues Transaction-Based Revenues Year Ended December 31, (in millions, except for percentages) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Transaction-based revenues Options $ 488 $ 505 $ 760 3 % 50 % Cryptocurrencies 202 $ 135 626 (33) % 364 % Equities 117 $ 104 177 (11) % 70 % Other 7 $ 41 84 486 % 105 % Total transaction-based revenues $ 814 $ 785 $ 1,647 (4) % 110 % Transaction-based revenues as a % of total net revenues: Options 36% 27% 26% Cryptocurrencies 15% 7% 21% Equities 9% 6% 6% Other —% 2% 3% Total transaction-based revenues 60 % 42 % 56 % Transaction-based revenues increased by $862 million primarily driven by increases of $491 million in cryptocurrencies, $255 million in options, and $73 million in equities.
The tables below summarize the net capital, capital requirements and excess net capital of RHS and RHF as of periods presented: December 31, 2023 (in millions) Net Capital Required Net Capital Net Capital in Excess of Required Net Capital RHS $ 2,277 $ 75 $ 2,202 RHF 196 0.25 196 As of December 31, 2023, our broker-dealer subsidiaries were in compliance with their respective regulatory capital requirements.
The table below summarizes the net capital, capital requirements and excess net capital of RHS, RHF, and RHD as of periods presented: December 31, 2024 (in millions) Net Capital Required Net Capital Net Capital in Excess of Required Net Capital RHS $ 2,540 $ 178 $ 2,362 RHF 248 0.25 248 RHD 40 1 39 As of December 31, 2024, these subsidiaries were in compliance with their respective regulatory capital requirements.
(3) $57 million for the year ended December 31, 2022 due to delays in notification from third parties and process failures within Robinhood’s brokerage systems and operations in connection with the handling of a 1-for-25 reverse stock split transaction of Cosmos Health, Inc.
Refer to Note 6 - Restructuring Activities to our consolidated financial statements in this Annual Report for further information. (4) Q4 2022 Processing Error was due to delays in notification from third parties and process failures within Robinhood’s brokerage systems and operations in connection with the handling of a 1-for-25 reverse stock split transaction of Cosmos Health, Inc.
Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results might differ from estimates. 97 Table of Contents Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination and is allocated to reporting units expected to benefit from the business combination.
Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results might differ from estimates.
See Note 6 - Restructuring Activities, to our consolidated financial statements in this Annual Report for further information.
Refer to Note 8 - Investments and Fair Value Measurement to our consolidated financial statements in this Annual Report for further information.
For more information about Adjusted EBITDA, including the definition and limitations of such measure, and a reconciliation of net income (loss) to Adjusted EBITDA, please see “—Non-GAAP Financial Measures.” 82 Table of Contents Key Performance Metrics Key performance metrics for the relevant periods were as follows: Year Ended December 31, 2021 2022 2023 Funded Customers (1) (in millions) 22.7 23.0 23.4 AUC (2) (in billions) $ 98.0 $ 62.2 $ 102.6 Net Deposits (in billions) $ 27.1 $ 18.4 $ 17.1 Growth Rate with respect to Net Deposits 43 % 19 % 27 % ARPU (in dollars) $ 103 $ 60 $ 80 MAU (in millions) 17.3 11.4 10.9 _______________ (1) The following table describes the annual changes within Funded Customers: Year Ended December 31, (in millions) 2021 2022 2023 Beginning Funded Customers 12.5 22.7 23.0 New Funded Customers 12.2 1.3 1.1 Resurrected Customers 0.5 0.2 0.2 Churned Customers (2.5) (1.2) (0.9) Ending Funded Customers 22.7 23.0 23.4 (2) The following table sets out the components of AUC by type of asset: Year Ended December 31, (in billions) 2021 2022 2023 Equities $ 72.1 $ 45.8 $ 69.4 Cryptocurrencies 22.1 8.4 14.7 Options 1.5 0.3 0.6 Cash held by Customers 8.8 10.8 21.3 Receivables from Customers (6.5) (3.1) (3.4) AUC $ 98.0 $ 62.2 $ 102.6 The following table describes the changes within AUC: Year Ended December 31, (in billions) 2021 2022 2023 Beginning AUC $ 63.0 $ 98.0 $ 62.2 Net Deposits 27.1 18.4 17.1 Net market gains (losses) 7.9 (54.2) 23.3 Ending AUC $ 98.0 $ 62.2 $ 102.6 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.
Key Performance Metrics Key performance metrics for the relevant periods were as follows: Year Ended December 31, 2022 2023 2024 Funded Customers (1) (in millions) 23.0 23.4 25.2 AUC (2) (in billions) $ 62.2 $ 102.6 $ 192.9 Net Deposits (in billions) $ 18.4 $ 17.1 $ 50.5 Growth Rate with respect to Net Deposits 19% 27% 49% ARPU (in dollars) $ 60 $ 80 $ 122 Gold Subscribers (in millions) 1.14 1.42 2.64 _______________ (1) The following table describes the annual changes within Funded Customers: Year Ended December 31, (in millions) 2022 2023 2024 Beginning Funded Customers 22.7 23.0 23.4 New Funded Customers 1.3 1.1 2.2 Resurrected Customers 0.2 0.2 0.5 Churned Customers (1.2) (0.9) (0.9) Ending Funded Customers 23.0 23.4 25.2 92 Table of Contents (2) The following table sets out the components of AUC by type of asset: Year Ended December 31, (in billions) 2022 2023 2024 Equities $ 45.8 $ 69.4 $ 130.6 Cryptocurrencies 8.4 14.7 35.2 Options and futures (2) 0.3 0.6 1.8 Cash held by Customers 10.8 21.3 33.3 Receivables from Customers (primarily margin balances) (3.1) (3.4) (8.0) AUC $ 62.2 $ 102.6 $ 192.9 _______________ (2) Futures consists of futures, options on futures, and swaps, including event contracts, which we launched during the fourth quarter of 2024.
We determine the requisite service period by comparing the derived service period to achieve the market-based condition and the explicit time-based service period, using the longer of the two service periods as the requisite service period. Upon the occurrence of our IPO in 2021, we recorded a cumulative one-time SBC expense determined using the grant-date fair values.
We determined the requisite service period by comparing the derived service period to 109 Table of Contents achieve the market-based condition and the explicit time-based service period, using the longer of the two service periods as the requisite service period.
General and administrative costs also include settlements and penalties, legal expenses, other professional fees, and real estate charges including impairments on our operating leases or lease improvements and lease terminations. 86 Table of Contents Results of Operations The following table summarizes our consolidated statements of operations data: (in millions) Year Ended December 31, 2021 2022 2023 Revenues: Transaction-based revenues $ 1,402 $ 814 $ 785 Net interest revenues 256 424 929 Other revenues 157 120 151 Total net revenues 1,815 1,358 1,865 Operating expenses: (1) Brokerage and transaction 158 179 146 Technology and development 1,234 878 805 Operations 368 285 159 Marketing 325 103 122 General and administrative 1,371 924 1,169 Total operating expenses 3,456 2,369 2,401 Change in fair value of convertible notes and warrant liability 2,045 — — Other (income) expense, net (1) 16 (3) Loss before income taxes (3,685) (1,027) (533) Provision for income taxes 2 1 8 Net loss $ (3,687) $ (1,028) $ (541) ____________________ (1) Includes SBC expense as follows: Year Ended December 31, (in millions) 2021 2022 2023 Brokerage and transaction $ 7 $ 5 $ 7 Technology and development 610 212 211 Operations 20 8 8 Marketing 50 4 5 General and administrative 885 425 640 Total SBC expense $ 1,572 $ 654 $ 871 Upon our IPO in 2021, we recognized $1.01 billion of SBC expense.
General and administrative costs also include legal expenses, other professional fees, business insurance, and real estate charges including impairments on our operating leases and leasehold improvements, lease terminations, and settlements and penalties. 96 Table of Contents Results of Operations The following table summarizes our consolidated statements of operations data: (in millions) Year Ended December 31, 2022 2023 2024 Revenues: Transaction-based revenues $ 814 $ 785 $ 1,647 Net interest revenues 424 929 1,109 Other revenues 120 151 195 Total net revenues 1,358 1,865 2,951 Operating expenses: (1) Brokerage and transaction 179 146 164 Technology and development 878 805 818 Operations 249 116 112 Provision for credit losses 36 43 76 Marketing 103 122 272 General and administrative 924 1,169 455 Total operating expenses 2,369 2,401 1,897 Other income (expense), net (16) 3 10 Income (loss) before income taxes (1,027) (533) 1,064 Provision for (benefit from) income taxes 1 8 (347) Net income (loss) $ (1,028) $ (541) $ 1,411 ____________________ (1) Includes SBC expense as follows: Year Ended December 31, (in millions) 2022 2023 2024 Brokerage and transaction $ 5 $ 7 $ 9 Technology and development 212 211 192 Operations 8 8 7 Marketing 4 5 8 General and administrative 425 640 88 Total SBC expense $ 654 $ 871 $ 304 97 Table of Contents Comparison of the Years Ended December 31, 2024 and 2023 A discussion of our results for fiscal year 2023 compared to fiscal year 2022 can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations — Comparison of the Years Ended December 31, 2023 and 2022” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024.
Next year, we plan to increase our marketing investments in 2024 to promote our brand, products, and service. 93 Table of Contents General and Administrative Year Ended December 31, (in millions) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change SBC related to 2021 Founders Award Cancellation $ — $ — $ 485 NM NM Employee compensation, benefits, and overhead, excluding SBC 196 239 216 22% (10) % SBC excluding 2021 Founders Award Cancellation 885 425 155 (52)% (64) % Settlements and penalties 70 24 126 (66)% 425 % Legal expenses 101 76 96 (25)% 26 % Other professional fees 54 53 41 (2)% (23) % Real estate related charges — 45 5 NM (89) % Other 65 62 45 (5)% (27) % Total $ 1,371 $ 924 $ 1,169 (33)% 27 % General and administrative costs increased by $245 million primarily due to the SBC related to the 2021 Founders Award Cancellation of $485 million, a $102 million increase in settlements and penalties and a $20 million increase in legal expense related to certain historical regulatory matters (See Note 17 - Commitments & Contingencies t o our consolidated financial statements in this Annual Report for further information) .
Additionally, employee compensation, benefits, and overhead increased by $11 million due to increased average headcount to support increased marketing initiatives. 103 Table of Contents General and Administrative Year Ended December 31, (in millions) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Employee compensation, benefits, and overhead, excluding SBC $ 239 $ 216 $ 235 (10) % 9 % SBC excluding 2021 Founders Award Cancellation 425 155 88 (64) % (43) % Legal expenses 76 96 71 26 % (26) % Other professional fees 53 41 47 (23) % 15 % Real estate related charges 45 5 2 (89) % (60) % SBC related to 2021 Founders Award Cancellation — 485 — NM NM Settlements and penalties 24 126 (29) 425 % NM Other 62 45 41 (27) % (9) % Total $ 924 $ 1,169 $ 455 27 % (61) % General and administrative costs decreased by $714 million primarily due to a decrease of $485 million related to 2021 Founders Award Cancellation which occurred in 2023.
Net Deposits and net market gains (losses) drive the change in AUC in any given period. • Net Deposits: We define Net Deposits as all cash deposits and asset transfers received from customers, net of reversals, customer cash withdrawals, and other assets transferred out of our platform (assets transferred in or out include debit card transactions, ACATS transfers, and custodial crypto wallet transfers) for a stated period.
Net Deposits and net market gains (losses) drive the change in AUC 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, Gold subscription fees, and assets transferred off of our platforms for a stated period.
In addition, other revenue increased by $34 million primarily driven by increasing user activities in Instant Withdrawals. Crypto revenues decreased primarily driven by a 29% decrease of number of users placing cryptocurrency trades and a 15% decrease in the average Notional Trading Volume traded per trader. The decrease was partially offset by a higher rebate rate from crypto market makers.
Cryptocurrencies revenues increased as a result of a 77% increase in the average Notional Trading Volume traded per trader and a 72% increase in the number of users placing cryptocurrency trades. In addition, cryptocurrencies revenues benefited from a higher rebate rate from crypto market makers (a rebate increase was effective in May 2024).
However, we experienced lower option rebate rates due to reduced market volatility and the mix of ticker symbols traded as different ticker symbols pay different rebate rates.
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.
Marketing Year Ended December 31, (in millions) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Digital marketing $ 49 $ 21 $ 39 (57)% 86 % Employee compensation, benefits, and overhead, excluding SBC 37 26 22 (30)% (15) % Brand marketing 24 14 21 (42)% 50 % Marketing incentives 121 11 7 (91)% (36) % SBC 50 4 5 (92)% 25 % Other marketing 44 27 28 (39)% 4 % Total $ 325 $ 103 $ 122 (68)% 18 % Marketing costs increased by $19 million primarily due to higher expenses in digital marketing of $18 million and brand marketing of $7 million mainly due to increased advertising campaigns.
Marketing Year Ended December 31, (in millions) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Digital marketing $ 21 $ 39 $ 119 86 % 205 % Brand marketing 14 21 45 50 % 114 % Employee compensation, benefits, and overhead, excluding SBC 26 22 33 (15) % 50 % Marketing incentives 11 7 16 (36) % 129 % Creative services 14 10 12 (29) % 20 % SBC 4 5 8 25 % 60 % Other marketing 13 18 39 38 % 117 % Total $ 103 $ 122 $ 272 18 % 123 % Marketing costs increased by $150 million primarily due to higher expenses in digital marketing of $80 million, brand marketing of $24 million, and other marketing of $21 million, as we increased our investments in paid marketing channels and other marketing initiatives to promote our brand, products, and services.
Technology and Development Year Ended December 31, (in millions) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Employee compensation, benefits, and overhead, excluding SBC $ 284 $ 367 $ 308 29% (16) % SBC 610 212 211 (65)% — % Cloud infrastructure services 267 175 149 (34)% (15) % Software and tools 63 105 114 67% 9 % Other 10 19 23 90% 21 % Total $ 1,234 $ 878 $ 805 (29)% (8) % Technology and development costs decreased by $73 million primarily due to a decrease of $59 million in employee compensation, benefits, and overhead driven by reduced average headcount as part of our efforts to improve efficiency and operating costs.
Technology and Development Year Ended December 31, (in millions) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Employee compensation, benefits, and overhead, excluding SBC $ 367 $ 308 $ 287 (16) % (7) % SBC 212 211 192 — % (9) % Cloud infrastructure services 175 149 189 (15) % 27 % Software and tools 105 114 123 9 % 8 % Other 19 23 27 21 % 17 % Total $ 878 $ 805 $ 818 (8) % 2 % Technology and development costs increased by $13 million primarily due to increases of $40 million in cloud infrastructure expenses and $9 million in software and tools to meet increased capacity requirements for our platforms to support higher trading volumes.
We operate and report financial information in one operating segment. We test goodwill for impairment at least annually, in the fourth quarter, or whenever events or changes in circumstances indicate that goodwill might be impaired. We evaluate our reporting units when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach.
We evaluate our reporting units when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach.
RHS and RHF compute net capital under the alternative method as permitted by the SEC Uniform Net Capital Rule.
RHS and RHF compute net capital under the alternative method as permitted by the SEC Uniform Net Capital Rule. Our FCM subsidiary (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.
SBC expense remained flat primarily due to SBC expense in the period ended December 31, 2022 containing net reductions of $18 million related to both the April 2022 Restructuring and August 2022 Restructuring. 92 Table of Contents Operations Year Ended December 31, (in millions) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Employee compensation, benefits, and overhead, excluding SBC $ 125 $ 144 $ 75 15% (48) % Provision for credit losses and fraud 108 42 49 (61)% 17 % Customer experience 98 78 19 (20)% (76) % SBC 20 8 8 (60)% — % Other 17 13 8 (24)% (38) % Total $ 368 $ 285 $ 159 (23)% (44) % Operations costs decreased by $126 million primarily due to a decrease of $69 million in employee compensation, benefits, and overhead driven by reduced average headcount as part of our efforts to improve efficiency.
These increases were partially offset by decreases of $21 million in employee, compensation, benefits, and overhead, and of $19 million in SBC due to decreased average headcount as part of our efforts to improve efficiency and operating costs. 102 Table of Contents Operations Year Ended December 31, (in millions) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Employee compensation, benefits, and overhead, excluding SBC $ 144 $ 75 $ 72 (48) % (4) % Customer experience 78 19 18 (76) % (5) % SBC 8 8 7 — % (13) % Other 19 14 15 (26) % 7 % Total $ 249 $ 116 $ 112 (53) % (3) % Operations costs decreased by $4 million primarily due to a decrease of $3 million in employee compensation, benefits, and overhead due to decreased average headcount as part of our efforts to improve efficiency and operating costs.
We are responsible to pay Coastal Bank customer balances that are ultimately charged off or deemed uncollectible, generally when balances become outstanding for over 180 days. The credit card expected loss liability takes into account information from internal and external sources, including historical collection data, charge off trends by FICO cohort, and market data.
Coastal Bank is the legal lender and originator, the party to which the customer has a credit-borrower relationship, and the legal owner of the credit card receivables. We are responsible to pay Coastal Bank customer balances that are ultimately charged off or deemed uncollectible, generally when balances become outstanding for over 180 days.
The change was primarily driven by an increase in cash used in investing activities of $759 million from purchases of held-to-maturity investments and $93 million primarily related to the acquisition of Robinhood Credit, net of cash and cash equivalents acquired.
Investing activities Net cash used in investing activities decreased $434 million compared to the prior period primarily due to: • an increase of $556 million from collection of purchased credit card receivables; • an increase of $376 million from proceeds from maturities of held-to-maturity investments; • an increase of $203 million driven by fewer purchases of held-to-maturity investments; and • an increase of $748 million driven by purchases of credit card receivables by the Credit Card Funding trust.
Additionally, beginning in the fourth quarter of 2023, Robinhood Credit users are included in our calculation of MAU, although we are not restating amounts in prior periods as the impact to those figures was immaterial. • 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. • Assets Under Custody (“AUC”) : We define AUC as the sum of the fair value of all equities, options, cryptocurrency and cash held by users in their accounts, net of receivables from users, as of a stated date or period end on a trade date basis.
Key Performance Metrics In addition to the measures presented in our 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. • 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.
There will be no additional mark-to-market adjustments related to the convertible notes or warrant liability. 94 Table of Contents Provision for Income Taxes Year Ended December 31, (in millions) 2021 2022 2023 2021 to 2022 % Change 2022 to 2023 % Change Provision for income taxes $ 2 $ 1 $ 8 (50)% 700% Provision for income taxes increased by $7 million primarily due to the nondeductible 2021 Founders Award Cancellation, non-deductible regulatory matters and our current taxes payable offset by the change in valuation allowance on our remaining U.S. federal and state deferred tax assets.
Provision for (Benefit from) Income Taxes Year Ended December 31, (in millions) 2022 2023 2024 2022 to 2023 % Change 2023 to 2024 % Change Provision for (benefit from) income taxes $ 1 $ 8 $ (347) 700 % NM Benefit from income taxes increased by $355 million primarily due to a $369 million deferred tax benefit, primarily from the valuation allowance release on the U.S. federal and certain state deferred tax assets.
SBC related to remaining time-based service and market-based conditions to be met will be recorded over the remaining derived requisite service period.
Remaining SBC related to the Market-Based RSUs was fully recorded over the remaining derived requisite service period by December 31, 2024. Previously recognized SBC related to the Market-Based RSUs will not be reversed even if the specified share prices are not achieved.
Equities revenues decreased primarily driven by lower equity rebate rates due to reduced spreads in securities pricing. In addition, the number of users placing equity trades decreased 16% while the average Notional Trading Volume traded per trader increased 12% O ptions revenues increased primarily driven by a 26% increase in Option Contracts Traded .
The increase was offset by $43 million of match incentives paid to our customers . Equities revenues increased as a result of a 45% increase in the average Notional Trading Volume traded per trader and a 23% increase in the number of users placing equity trades.
In addition, employee compensation, benefits, and overhead also increased by $11 million due to increases in headcount which continue to support our business and new initiatives. Starting in the fourth quarter of 2023, we began to pass option trading fees onto users, which will reduce broker-dealer transaction expenses in future periods.
These increases were partially offset by a decrease of $16 million in broker-dealer transaction expenses mainly due to passing option trading fees onto users starting in the fourth quarter of 2023.
Removed
Key Performance Metrics In addition to the measures presented in our 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. Before the fourth quarter of 2023, we referred to Funded Customers as Net Cumulative Funded Accounts.
Added
Individuals who share a funded joint investing account (which launched in July 2024) are each considered to be a Funded Customer. • Assets Under Custody (“AUC”) : We define AUC as the sum of the fair value of all equities, options, cryptocurrency, futures (including options on futures, swaps, and event contracts), and cash held by users in their accounts, net of receivables from users, as of a stated date or period end on a trade date basis.
Removed
As our business has grown and we have added additional account types (such as retirement accounts), we have relabeled this metric (and made conforming changes throughout other definitions) to clarify that it measures unique individuals (rather than accounts), although the calculation remains the same and does not affect amounts reported in prior periods.
Added
Prior to the second quarter of 2024, Net Deposits did not include inflows from cash or assets earned in connection with Company promotions and prior to January 2024, Net Deposits did not include inflows from dividends and interest or outflows from Robinhood Gold subscription fees and margin interest, although we have not restated amounts in prior periods as the impact to those figures was immaterial. 89 Table of Contents • 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. • Gold Subscribers: We define a 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.
Removed
Starting in January 2024, Net Deposits include dividend and interest inflows and Robinhood Gold subscription fees and margin interest 80 Table of Contents outflows, although we will not restate amounts in prior periods as the impact to those figures was immaterial. • Growth Rate with respect to Net Deposits: When used with respect to Net Deposits, “growth rate” provides information about Net Deposits relative to total AUC.
Added
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.
Removed
“Growth rate” is calculated as aggregate Net Deposits over a specified 12 month period, divided by AUC for the fiscal quarter that immediately precedes such 12 month period. • 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. • Monthly Active Users (“MAU”) : We define MAUs as the number of unique persons who, using one or more accounts with a Robinhood entity, meet one of the following criteria at any point during a specified calendar month: a) executes a debit card or credit card transaction, b) transitions between two different screens on a mobile device while logged into their account or c) loads a page in a web browser while logged into their account.
Added
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. • Growth Rate with respect to Net Deposits: Growth rate is calculated as aggregate Net Deposits over a specified 12 month period, divided by AUC for the fiscal quarter that immediately precedes such 12 month period. • Investment Accounts: We define an Investment Account as a funded individual brokerage account, a funded joint investing account, or a funded individual retirement account (“IRA”).
Removed
A person need not satisfy these conditions on a recurring monthly basis or be a Funded Customer to be included in MAU. MAU figures in this Annual Report reflect MAU for the last month of the relevant period presented. We utilize MAU to measure how many customers interact with our products and services during a given month.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed13 unchanged
Biggest changeHowever, as there were no outstanding borrowings under our credit facilities as of December 31, 2023 and 2022, we had limited financial exposure associated with changes in interest rates as of such dates.
Biggest changeRefer to Note 12 - Financing Activities and Off-Balance Sheet Risk to our consolidated financial statements in this Annual Report for further information. However, as there were no outstanding borrowings under our uncommitted revolving credit facilities as of December 31, 2024 and 2023, we had limited financial exposure associated with changes in interest rates as of such dates.
We manage risks associated with our securities lending activities by requiring credit approvals for counterparties, by monitoring the market value of securities loaned and collateral values for securities borrowed on a daily basis, by requiring additional cash as collateral for securities loaned or return of collateral for securities borrowed when necessary, and by participating in a risk-sharing program offered through the OCC. 101 Table of Contents
We manage risks associated with our securities lending activities by requiring credit approvals for counterparties, by monitoring the market value of securities loaned and collateral values for securities borrowed on a daily basis, by requiring additional cash as collateral for securities loaned or return of collateral for securities borrowed when necessary, and by participating in a risk-sharing program offered through the OCC. 111 Table of Contents
The impact related to the change in interest rates is positively correlated, linear, and proportional. The change in the sensitivity analysis from prior year is in line with the change in interest-earning asset balances. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements.
The impact related to the change in interest rates is positively correlated, 110 Table of Contents linear, and proportional. The change in the sensitivity analysis from prior year is in line with the change in interest-earning asset balances. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements.
The impact to total net revenues, net income (loss), and cash flows, prior to any income tax effects, as a result of a hypothetical interest rate change at the end of each reporting period would be: December 31, (in millions) 2022 2023 50 basis point $ 68 $ 71 100 basis point 136 141 150 basis point 204 212 The change to total net revenues, net income (loss), and cash flows, prior to any income tax effects, would be the same as total net revenues includes net interest revenue, which captures both the impact of any incremental interest revenue and interest expense, and changes in interest rates do not have a direct impact on operating expenses.
The impact to total net revenues, net income (loss), and cash flows, prior to any income tax effects, as a result of a hypothetical interest rate change at the end of each reporting period would be: December 31, (in millions) 2023 2024 50 basis point $ 71 $ 94 100 basis point 141 188 150 basis point 212 282 The change to total net revenues, net income (loss), and cash flows, prior to any income tax effects, would be the same as total net revenues includes net interest revenue, which captures both the impact of any incremental interest revenue and interest expense, and changes in interest rates do not have a direct impact on operating expenses.
We use a net interest sensitivity analysis, which applies hypothetical 50, 100 or 150 basis point increases or decreases in interest rates to the period end balances of our interest-earning assets and liabilities, to evaluate the effect that changes in interest rates might have on total net revenues, net income (loss), and cash flows, prior to any income tax effects, over the next 12 months.
We use a net interest sensitivity analysis, which applies hypothetical 50, 100 or 150 basis point increases or decreases in interest rates to the period end balances of our interest-earning assets and liabilities, including interest rate sensitive off-balance sheet amounts related to our Coastal Bank Program Agreement, to evaluate the effect that changes in interest rates might have on total net revenues, net income (loss), and cash flows, prior to any income tax effects, over the next 12 months.
Based on investment positions as of December 31, 2023, a hypothetical 100 basis point increase in interest rates across all maturities would not be significant. Any losses would only be realized if we sold the investments prior to maturity.
Based on investment positions as of December 31, 2024, a hypothetical 100 basis point increase in interest rates across all maturities would not be significant. Any losses would only be realized if we sold the investments prior to maturity. We also have exposure to changes in interest rates related to our variable-rate credit facilities.
The sensitivity analysis assumes the asset and liability structure of the consolidated balance sheets would not change as a result of a simulated changes in interest rates.
The sensitivity analysis assumes the asset and liability structure of the consolidated balance sheets would not change as a result of simulated changes in interest rates. Additionally, the analysis does not factor in any assumptions on the effect simulated changes in interest rates would have on trading activities across our platforms.
Removed
We also have exposure to change in interest rates related to our variable-rate credit facilities, which are described in Note 13 - Financing Activities and Off-Balance Sheet Risk, to our consolidated financial 100 Table of Contents statements in this Annual Report.

Other HOOD 10-K year-over-year comparisons