Robinhood Posts Fourth Quarter and Full Year 2021 Results

​Robinhood Markets, Inc. ("Robinhood") (NASDAQ: HOOD) has announced financial results for the fourth quarter and full year ended December 31, 2021.

Total net revenues for the quarter increased 14% to $363 million, compared with $318 million in the fourth quarter of 2020, and for the year increased 89% to $1.82 billion, compared with $959 million for the year ended December 31, 2020.

Transaction-based revenues for the quarter increased 12% to $264 million, compared with $235 million in the fourth quarter of 2020, and for the year increased 95% to $1.40 billion, compared with $720 million for the year ended December 31, 2020.

Options for the quarter increased 14% to $163 million, compared with $142 million in the fourth quarter of 2020, and for the year increased 57% to $689 million, compared with $440 million for the year ended December 31, 2020.

Cryptocurrencies for the quarter increased 304% to $48 million, compared to $12 million in the fourth quarter of 2020, and for the year increased to $419 million, compared with $27 million for the year ended December 31, 2020.

Equities for the quarter decreased 35% to $52 million, compared with $80 million in the fourth quarter of 2020, and for the year increased 15% to $288 million, compared with $251 million for the year ended December 31, 2020.

Loss before income tax for the quarter was $420 million, compared with income before income tax of $19 million in the fourth quarter of 2020, and for the year loss before income tax was $3.68 billion, compared with income before income tax of $14 million for the year ended December 31, 2020.

Share-based compensation expense totaled $318 million for the fourth quarter of 2021 and $1.57 billion for the year ended December 31, 2021. For the year ended December 31, 2020, share-based compensation expense totaled $24 million, all related to stock options (no expense relating to restricted stock units was recognized because our initial public offering ("IPO") had not yet occurred).

The loss before income tax for the year ended December 31, 2021 also included total expense of $2.05 billion associated with the change in fair value of convertible notes and warrant liability issued in February 2021.

Net loss for the quarter was $423 million, or $0.49 per diluted share, compared with net income of $13 million, or $0.02 per diluted share in the fourth quarter of 2020, and for the year net loss was $3.69 billion, or $7.49 per diluted share, compared with net income of $7 million, or $0.01 per diluted share, for the year ended December 31, 2020.

Adjusted EBITDA (non-GAAP) for the quarter was negative $87 million, compared with positive $79 million in the fourth quarter of 2020, and for the year was positive $34 million, compared with positive $155 million for the year ended December 31, 2020.

Net Cumulative Funded Accounts increased 81% to 22.7 million as of December 31, 2021, compared with 12.5 million as of December 31, 2020. On a sequential basis, Net Cumulative Funded Accounts increased 1% compared with 22.4 million as of September 30, 2021.

Monthly Active Users (MAU) increased 48% to 17.3 million for December 2021, compared with 11.7 million for December 2020. On a sequential basis, MAU decreased 8% compared with 18.9 million for September 2021.

Assets Under Custody (AUC) increased 56% to $98 billion as of December 31, 2021, compared with $63 billion as of December 31, 2020. On a sequential basis, AUC increased 3% compared with $95 billion as of September 30, 2021.

Average Revenues Per User (ARPU) for the quarter decreased 39% to $64 on an annualized basis, compared with $106 in the fourth quarter of 2020. The decrease was primarily related to lower trading volumes per user for options and equities and lower interest earnings per user from securities lending due to declines in market rates earned on loaned securities, partially offset by higher trading volumes per user for cryptocurrencies. ARPU for the year decreased 5% to $103, compared with $109 for the year ended December 31, 2020. On a sequential basis, ARPU remained consistent compared with the quarter ended September 30, 2021.

Cash and cash equivalents at December 31, 2021 totaled $6.3 billion, compared with $1.4 billion at December 31, 2020.

"We had a momentous year, nearly doubling the number of customers on the platform and making critical investments in our team and infrastructure to support growth," said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. "This year, we'll expand our ecosystem of products that make Robinhood the best place to start investing and build wealth for the long term."

Highlights

Robinhood's 2021 investments put the company on strong footing for 2022

In 2021 Robinhood added over 10 million net funded accounts, nearly doubling the customers on the platform. In the same time, the company has more than doubled its team, adding talent to important areas like engineering, product, customer service, and compliance.

Robinhood also made strong executive additions over the past year and is excited to have most recently welcomed Steve Quirk as Chief Brokerage Officer and a member of the senior leadership team.

The company has invested heavily in the service and reliability of its platform to meet the demands created by tremendous user growth and successfully added 24/7 live phone support for all logged-in users, giving customers the ability to get phone support at any time and on any topic.

Robinhood has continued to improve the product experience, adding contextual in-app education, rolling out Crypto Gifts and recurring investments, opening up access to IPOs, and giving customers a voice with the companies they invest in through the acquisition of Say Technologies and the integration of its Q&A platform into the Robinhood app.

Robinhood delivers on product development in Q4 2021

Robinhood introduced first trade recommendations to all new customers who have yet to place a trade, helping users get started with a diversified ETF portfolio based on their risk profile and investment objectives.

Robinhood launched Automated Customer Account Transfer Service ("ACATS") In a few weeks ago to a small set of customers and has been gradually expanding its availability, with early results looking promising. This feature allows customers to transfer assets from other brokerages into Robinhood and the company will continue to improve the experience and expand the availability to all customers in Q1 2022.

Robinhood continued to improve its options experience for customers, introducing Options Alerts, Options Watchlist and making it simpler to roll option contracts.

Robinhood made considerable progress on its fully-paid securities lending program, continues to discuss with its regulators, and believes it will be able to launch the program during the first half of the year.

Robinhood is close to delivering an even larger window of available trading hours and expects to roll this out later in Q1 2022. This will be one of several improvements the company plans to make to the trading experience this year.

Robinhood successfully completed alpha testing on Crypto Wallets and has launched a public beta, which will continue to provide valuable insights as the company prepares for a full launch of wallets in Q1 2022.

During the holiday season, Robinhood launched Crypto Gifts, which enables customers to send crypto to family and friends. The company will take learnings from this launch and look to apply them to transfer capabilities beyond crypto.

Robinhood charts ambitious plan for 2022

Robinhood's plan is focused on three core areas: being the best place to get started investing, helping first time investors grow into long-term investors, and continuing to serve advanced investors with the power and simplicity they need.

Robinhood will build products intended to help with long-term investing, aiming to make it easier for customers to build for their futures no matter where they are in their financial journeys. Teams are already hard at work developing tax-advantaged retirement accounts, which will begin rolling out to customers mid-year.

Robinhood will invest in spending and savings products and, in the coming months, will introduce a new experience for day-to-day spending to help customers build a portfolio as an outcome of spending.

Robinhood plans to offer customers ways to move their money faster, starting with introducing instant debit card deposits and withdrawals in the next few months.

Robinhood has set aggressive goals to start opening its crypto platform up to customers internationally in 2022. The company believes in the immense potential of the crypto economy and sees a big opportunity in serving customers across the globe.

Financial Outlook

For the first quarter of 2022, Robinhood anticipates that total net revenues will be less than $340 million, which assumes some incremental improvement in trading volumes versus what we have seen so far. At the top end, this implies a year-over-year revenue decline of 35% compared to the first quarter of 2021, during which we saw outsized revenue performance due to heightened trading activity, particularly relating to certain meme-stocks.

Actual results for total net revenues might differ materially from our outlook. Total net revenues are highly sensitive to the number and timing of new funded accounts, the number of trades made by our customers, the notional amount of trading volume per customer, and market environment or other exogenous events, all of which are affected by general market conditions, consumer sentiment, and other factors.

For fiscal year 2022, Robinhood expects total operating expenses, excluding share-based compensation, to increase 15-20% year-over-year. Additionally, we expect share-based compensation to decline 35-40% year-over-year.

Actual results for total operating expenses, excluding share-based compensation, might differ materially from our outlook due to several factors, including the rate of growth in net new funded accounts which affects several costs including variable marketing costs, the degree to which we are successful in preventing fraud, our ability to manage web-hosting expenses efficiently, and our ability to achieve productivity improvements in customer service, among other factors.