Robinhood Posts Financial Results for Q4 and Full Year 2022

Robinhood Markets, Inc. ("Robinhood") announced financial results for the fourth quarter and full year of 2022, which ended December 31, 2022.

Fourth Quarter Results

• Total net revenues increased 5% sequentially to $380 million.

• Transaction-based revenues decreased 11% sequentially to $186 million.

• Options were unchanged at $124 million.

• Cryptocurrencies decreased 24% to $39 million.

• Equities decreased 32% to $21 million.

• Net interest revenue increased 30% sequentially to $167 million, driven by higher short-term interest rates and growth in interest earning assets.

• Net loss was $166 million, or earnings per share (EPS) of -$0.19, compared with net loss of $175 million, or EPS of -$0.20, in the third quarter of 2022, a sequential improvement of $9 million or $0.01 per share.

• This includes a -$0.08 EPS impact from the combination of a $57 million loss from the Q4 2022 Processing Error (as defined), as well as a $12 million Ziglu equity security impairment.

• Operating expenses decreased 0.2% sequentially to $534 million.

• Operating expenses prior to share-based compensation (SBC) decreased 12% sequentially to $374 million, which included a $57 million Q4 2022 Processing Error.

• Operating expenses prior to SBC, restructuring charges, and Q4 2022 Processing Error were $319 million, an improvement of $16 million from the third quarter.

• Share-based compensation expense increased 45% sequentially to $160 million, primarily due to a net reversal of $53 million related to the August 2022 Restructuring recorded in the third quarter that did not recur in the fourth quarter.

• Adjusted EBITDA (non-GAAP) was positive $82 million, a sequential improvement of 74%.

• Net Cumulative Funded Accounts increased by approximately 50 thousand sequentially to 23.0 million.

• Monthly Active Users (MAU) decreased 0.8 million sequentially to 11.4 million, as customers continued to navigate the volatile market environment.

• Assets Under Custody (AUC) decreased 4% sequentially to $62 billion, primarily driven by lower market valuations for growth stocks and crypto assets, partially offset by continued net deposits.

• Net Deposits were $4.8 billion, which translates to an annualized growth rate of 30% relative to AUC at the end of the third quarter. Over the past twelve months, Net Deposits were $18.4 billion, which translates to a growth rate of 19%.

• Average Revenues Per User (ARPU) increased to $66 from $63 in the third quarter.

• Cash and cash equivalents totaled $6.3 billion compared with $6.2 billion at the end of the third quarter.

Full Year Results

• Total net revenues were $1.36 billion.

• Net loss was $1.03 billion, or EPS -$1.17 per share.

• Operating expenses were $2.37 billion.

• Operating expenses prior to SBC were $1.72 billion.

• Operating expenses prior to SBC, restructuring charges, and Q4 2022 Processing Error were $1.55 billion.

• Share-based compensation expense was $654 million.

• Adjusted EBITDA (non-GAAP) was negative $94 million.

"Looking back over the past year, I'm incredibly proud of the tremendous execution of our team on our 2022 product roadmap. We're now starting to see meaningful traction on a number of the products we launched, which gives us confidence they can grow into significant business lines over time," said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. "Additionally, co-founder Baiju Bhatt and I announced today that we cancelled nearly $500 million of our share-based compensation to ensure the company has as many resources as possible to deliver value to customers and shareholders."

"We stayed focused in the fourth quarter on serving customers, growing our business, and driving long-term shareholder value," said Jason Warnick, Chief Financial Officer of Robinhood Markets. "We continued to deliver on our product roadmap and kept our costs lean. On the capital management front, our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022. The proposed share purchase underscores the confidence the Board of Directors and management team have in our business."