American broker Robinhood Markets, Inc. (NASDAQ:HOOD) saw its shares rise 7% in aftermarket trading on Wednesday after the company reported quite upbeat results for the first quarter of 2024.
Robinhood reported record quarterly revenue of $618 million in Q1 2024, up 40% year over year. The company also saw record GAAP Diluted EPS of $0.18 per share. The company’s first quarter results included record net deposits of $11.2 billion, including net positive transfers from every major incumbent brokerage. The company’s Gold Subscribers hit a new high of 1.7 million, up 42% year-over-year.
After posting just its second profitable quarter in the fourth quarter of 2023 with $30 million in net income, Robinhood’s first quarter of 2024 brought in $157 million in net income, also a record for the company.
However, the results follow news that Robinhood is facing some regulatory issues in its crypto business, with Robinhood Crypto LLC receiving a Wells notice earlier this week.
Vlad Tenev, CEO and Co-Founder of Robinhood said,
“We continued to aggressively execute on our product roadmap in Q1, driving all-time highs for Net Deposits and Gold Subscribers. Q2 is off to a strong start with April being the highest month of the year for Net Deposit and Gold Subscriber growth, and we’re excited to see strong interest from over 1 million customers in the Robinhood Gold Card.”
“We delivered significant revenue growth and margin expansion in Q1 as we remain focused on driving another year of profitable growth in 2024,” said Jason Warnick, Robinhood’s Chief Financial Officer. “In Q1, we set records for quarterly revenue, net income and EPS even as we increased our marketing and development investments.”
Robinhood Q1 2024 Results Summary
- Total net income increased 40% year-over-year to $618 million.
- Transaction-based revenue increased 59% year-over-year to $329 million, primarily due to $126 million in cryptocurrency revenue, up 232%options revenue of $154 million, up 16%, and equity revenue of $39 million, up 44%.
- Net interest income rose 22% year-over-year to $254 million, driven by an increase in interest-earning assets and higher short-term interest rates.
- Other revenue increased 35% year-over-year to $35 million, driven primarily by higher Gold subscription revenue.
- Net income increased year-over-year to $157 million, or diluted earnings per share (EPS) of $0.18, compared to a net loss of $511 million, or diluted EPS of -$0.57, in the first quarter of 2023.
- 1Q2023 Diluted EPS of -$0.57 included a -$0.54 impact from a one-time $485 million stock-based compensation expense (“SBC”) related to the cancellation of our co-founders’ restricted stock awards 2021 in February 2023 (the “2021 Founders Award Cancellation”).
- Total operating expenses decreased 52% year-over-year to $460 million, primarily due to the cancellation of the 2021 Founders Award in Q1 2023.
- Adjusted operating expenses (non-GAAP) increased 13% year-over-year to $398 million, primarily due to increased marketing and development investments.
- SBC was down 90% year-over-year to $62 million, primarily due to the cancellation of the 2021 Founders Award in Q1 2023.
- Adjusted EBITDA (non-GAAP) increased 115% year over year to $247 million.
- Financed Customers increased by 810 thousand year-over-year to 23.9 million.
- Investment Accounts increased by 1.1 million year-over-year to 24.4 million.
- Assets Under Custody (AUC) increased 65% year-over-year to $129.6 billion, driven primarily by higher equity and cryptocurrency valuations and continued Net Deposits.
- Net deposits were $11.2 billion, an annual growth rate of 44% over AUC at the end of Q4 2023. In the trailing twelve months, net deposits were $23.9 billion, an increase of 30% over the AUC at the end of Q1 2023.
- Average revenue per user (ARPU) increased 35% year over year to $104.
- Gold subscribers grew by 500k, or 42%, year over year to 1.7 million.
- Cash and cash equivalents totaled $4.7 billion compared to $5.5 billion at the end of Q1 2023.
Q1 Highlights
- Gold subscribers continue to accelerate – Gold subscribers grew to a record high of 1.7 million in Q1 2024, up 260k quarter-on-quarter, marking the fastest quarterly growth in three years.
- New 1% Unlimited Deposit Boost with Gold – Announced in March and coming soon, the deposit boost will provide even more value to customers with Robinhood Gold.
- Robinhood Announces New Gold Credit Card – Announced in March and exclusive to Robinhood Gold subscribers, the Gold Credit Card provides industry-leading benefits such as 3% cash back on all categories and no annual or foreign transaction fees. More than 1 million customers have joined the waiting list.
- 3% Retirement Transfer Race Adoption Guidelines – Customers transferred more than $4 billion in retirement assets from brokerage competitors during Robinhood’s 3% transfer promotion between January 2024 and April 2024, averaging over $90k per customer.
- Robinhood Retirement Increases More Than 4x Year To Date – In early May, Retirement AUC hit a new high of over $7 billion.
- Robinhood UK reaches full availability – Marking another step in its global expansion, Robinhood pulled all eligible customers from its waiting list in March.
- 24 Hour Market Sees Record Overnight Volume – With more than 900 stocks and ETFs available, the Robinhood 24 Hour Market hit new highs in overnight trading volumes. As of March, clients have traded over $10 billion in notional trading volume during the overnight session since launch.
Additional Operating Data 1st quarter 2024
- Pension AUC was $4.2 billion compared to $0.3 billion at the end of Q1 2023.
- Cash Sweep grew 113% year-over-year to $19.0 billion.
- Margin Book grew 32% year over year to $4.1 billion.
- Notional equity trading volumes increased 40% year-over-year to $225.0 billion.
- Options Contracts Traded rose 26% year-on-year to 343.6 million.
- Crypto Notional Trading Volumes increased 224% year-over-year to $36.0 billion.
- Monthly Active Users (MAU) grew 16% year over year to 13.7 million.
Robinhood Financial Outlook
Robinhood’s 2024 spending plan includes growth investments in new products, features and international expansion, while becoming more efficient in our existing businesses. Overall, it continues to expect both total GAAP operating expenses and combined adjusted non-GAAP operating expenses and SBC for the full year 2024 to range from $1.85 billion to $1.95 billion.