Robinhood Markets, Inc 10-Q for FY2021 Q3

Robinhood Markets, Inc. (HOOD)

10-Q 2021-10-29 For: 2021-09-30

Added on April 12, 2026

About this 10-Q

Robinhood Markets, Inc filed this 10-Q on October 29, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $364.92M; up 35.4% from $269.53M a year earlier
Net loss: $1.32B; compared with a net loss of $10.66M a year earlier
Diluted EPS: -$2.06; compared with -$0.05 a year earlier

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Delaware						46-4364776
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock - $0.0001 par value per share	HOOD	The Nasdaq Stock Market


PART I - FINANCIAL INFORMATION		PAGE
ITEM 1.	UNAUDITED FINANCIAL STATEMENTS
	CONDENSED CONSOLIDATED BALANCE SHEETS	4
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	5
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	6
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	7
	CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT	8
	NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	12
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	61
ITEM 4.	CONTROLS AND PROCEDURES	62
PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	64
ITEM 1A.	RISK FACTORS	65
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	141
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	143
ITEM 4.	MINE SAFETY DISCLOSURES	143
ITEM 5.	OTHER INFORMATION	144
ITEM 6.	EXHIBIT INDEX	145
	SIGNATURES	147


	December 31,		September 30,
(in thousands, except share and per share data)	2020		2021
Assets
Current assets:
Cash and cash equivalents	$	1,402,629	$	6,166,705
Cash and securities segregated under federal and other regulations	4,914,660		4,468,298
Receivables from brokers, dealers and clearing organizations	124,501		124,962
Receivables from users, net	3,354,142		6,099,497
Deposits with clearing organizations	225,514		316,221
Other current assets	851,138		1,674,013
Total current assets	10,872,584		18,849,696
Property, software and equipment, net	45,834		114,666
Goodwill	—		95,564
Intangible assets, net	185		35,227
Restricted cash	7,364		23,773
Other non-current assets	62,507		198,442
Total assets	$	10,988,474	$	19,317,368
Liabilities, mezzanine equity and stockholders’ (deficit) equity
Current liabilities:
Accounts payable and accrued expenses	$	104,649	$	237,147
Payables to users	5,897,242		6,811,169
Securities loaned	1,921,118		3,129,650
Other current liabilities	893,036		1,620,452
Total current liabilities	8,816,045		11,798,418
Other non-current liabilities	48,012		134,368
Total liabilities	8,864,057		11,932,786
Commitments and contingencies (Note 16)
Mezzanine equity
Redeemable convertible preferred stock, $0.0001 par value. 414,033,220 shares authorized, 412,742,897 shares issued and outstanding with a liquidation preference of $2,191,086 as of December 31, 2020. No shares authorized, issued, and outstanding as of September 30, 2021.	2,179,739		—
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value. No shares authorized, issued and outstanding as of December 31, 2020; 210,000,000 shares authorized and no shares issued and outstanding as of September 30, 2021.	—		—
Common stock, $0.0001 par value. 777,354,000 shares authorized, 229,031,546 shares issued and outstanding as of December 31, 2020; no shares authorized, issued, and outstanding as of September 30, 2021.	1		—
Class A common stock, $0.0001 par value. No shares authorized, issued and outstanding as of December 31, 2020; 21,000,000,000 shares authorized, 725,229,836 shares issued and outstanding as of September 30, 2021.	—		73
Class B common stock, par value $0.0001. No shares authorized, issued and outstanding as of December 31, 2020; 700,000,000 shares authorized, 130,155,246 shares issued and outstanding as of September 30, 2021.	—		13
Class C common stock, par value $0.0001. No shares authorized, issued and outstanding as of December 31, 2020; 7,000,000,000 shares authorized, no shares issued and outstanding as of September 30, 2021.	—		—
Additional paid-in capital	134,307		10,837,381
Accumulated other comprehensive income	473		383
Accumulated deficit	(190,103)		(3,453,268)
Total stockholders’ (deficit) equity	(55,322)		7,384,582
Total liabilities, mezzanine equity and stockholders’ (deficit) equity	$	10,988,474	$	19,317,368


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share and per share data)	2020		2021		2020		2021
Revenues:
Transaction-based revenues	$	201,807	$	266,797	$	484,851	$	1,138,403
Net interest revenues	50,406		63,405		114,420		193,611
Other revenues	17,317		34,721		42,020		120,416
Total net revenues	269,530		364,923		641,291		1,452,430

Operating expenses:
Brokerage and transaction	31,444		44,031		80,460		122,847
Technology and development	55,491		679,162		133,667		952,367
Operations	40,962		108,337		93,239		275,966
Marketing	39,088		86,893		152,520		283,300
General and administrative	113,494		790,060		186,781		1,038,520
Total operating expenses	280,479		1,708,483		646,667		2,673,000

Change in fair value of convertible notes and warrant liability	—		25,336		—		2,045,657
Other expense (income), net	45		(1,955)		88		(2,104)
Loss before income tax	(10,994)		(1,366,941)		(5,464)		(3,264,123)
Provision for (benefit from) income taxes	(333)		(50,244)		115		(958)
Net loss	$	(10,661)	$	(1,316,697)	$	(5,579)	$	(3,263,165)
Net loss attributable to common stockholders:
Basic	$	(10,661)	$	(1,316,697)	$	(5,579)	$	(3,263,165)
Diluted	$	(10,661)	$	(1,316,697)	$	(5,579)	$	(3,263,165)
Net loss per share attributable to common stockholders:
Basic	$	(0.05)	$	(2.06)	$	(0.02)	$	(8.85)
Diluted	$	(0.05)	$	(2.06)	$	(0.02)	$	(8.85)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic	225,997,444		638,168,188		225,299,165		368,518,894
Diluted	225,997,444		638,168,188		225,299,165		368,518,894



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2021		2020		2021
Net loss	$	(10,661)	$	(1,316,697)	$	(5,579)	$	(3,263,165)
Other comprehensive income (loss), net of tax:

Foreign currency translation	194		(142)		20		(90)
Total other comprehensive income (loss), net of tax	194		(142)		20		(90)
Total comprehensive loss	$	(10,467)	$	(1,316,839)	$	(5,559)	$	(3,263,255)


	Redeemable convertible preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit		Total stockholders’ (deficit) equity
(in thousands, except for number of shares)	Shares	Amount		Shares	Amount
Balance as of June 30, 2020	366,266,778	$	1,469,708	225,750,368	$	1	$	105,505	$	15	$	(192,470)	$	(86,949)
Net loss	—	—		—	—		—		—		(10,661)		(10,661)
Shares issued in connection with employee stock options	—	—		865,966	—		3,074		—		—		3,074
Issuance of Series F convertible preferred stock, net of issuance costs	3,360,000	41,987		—	—		—		—		—		—
Issuance of Series G convertible preferred stock, net of issuance costs	43,116,119	668,066		—	—		—		—		—		—
Vesting of early-exercised stock options	—	—		—	—		127		—		—		127
Repurchase of common stock	—	—		(11,196)	—		—		—		—		—
Change in other comprehensive income	—	—		—	—		—		194		—		194
Share-based compensation	—	—		—	—		1,600		—		—		1,600
Balance as of September 30, 2020	412,742,897	$	2,179,761	226,605,138	$	1	$	110,306	$	209	$	(203,131)	$	(92,615)


	Redeemable convertible preferred stock			Common stock(1)			Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit		Total stockholders’ (deficit) equity
(in thousands, except for number of shares)	Shares	Amount		Shares	Amount
Balance as of June 30, 2021	412,742,897	$	2,179,739	232,609,957	$	1	$	151,281	$	525	$	(2,136,571)	$	(1,984,764)
Net loss	—	—		—	—		—		—		(1,316,697)		(1,316,697)
Shares issued in connection with employee stock options	—	—		2,238,444	24		5,062		—		—		5,086
Issuance of common stock in connection with initial public offering, net of issuance costs	—	—		56,729,194	6		2,052,374		—		—		2,052,380
Issuance of common stock upon settlement of restricted stock units, net of shares withheld	—	—		13,759,434	—		(411,772)		—		—		(411,772)
Conversion of preferred stock to common stock	(412,742,897)	(2,179,739)		412,742,897	41		2,179,698		—		—		2,179,739
Conversion of convertible notes to common stock	—	—		137,305,156	14		5,217,583		—		—		5,217,597
Reclassification of warrant liability to stockholders' equity	—	—		—	—		380,036		—		—		380,036
Vesting of replacement awards issued in connection with acquisition	—	—		—	—		639		—		—		639
Vesting of early-exercised stock options	—	—		—	—		108		—		—		108

Change in other comprehensive income	—	—		—	—		—		(142)		—		(142)
Share-based compensation	—	—		—	—		1,262,372		—		—		1,262,372
Balance as of September 30, 2021	—	$	—	855,385,082	$	86	$	10,837,381	$	383	$	(3,453,268)	$	7,384,582


(in thousands)	Fair Value
Cash	$	132,168
Share-based compensation awards attributable to pre-combination services	639
Total consideration	$	132,807


(in thousands, except years)	Fair Value		Useful Life
Developed technology	$	22,000	3
Customer relationships	12,000		10
Trade names	600		3
Total	$	34,600


(in thousands)	Carrying Amount
As of December 31, 2020	$	—
Additions due to business combinations	95,564
As of September 30, 2021	$	95,564


(in thousands, except years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life - Years
Finite-lived intangible assets
Developed technology	$	22,000	$	(964)	$	21,036	3
Customer relationships	12,000		(158)		11,842		10
Trade names	600		(26)		574		3
Domain names	163		(40)		123		12
Indefinite-lived intangible assets	1,652		—		1,652		N/A
Total	$	36,415	$	(1,188)	$	35,227


(in thousands)	Intangible Assets
Remainder of 2021	$	2,210
2022	8,768
2023	8,768
2024	5,890
2025	1,199
Thereafter	6,740
Total	$	33,575


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2021		2020		2021
Market maker:
Citadel Securities, LLC	33	%	23	%	34	%	21	%
Tai Mo Shan Limited(1)	1	%	8	%	2	%	17	%
Entities affiliated with Susquehanna International Group, LLP(2)	18	%	13	%	20	%	11	%

Entities affiliated with Wolverine Holdings, L.P.(3)	10	%	13	%	10	%	10	%
All others individually less than 10%	13	%	16	%	9	%	19	%
Total as percentage of total revenue:	75	%	73	%	75	%	78	%


(in thousands)	Contract Receivables
Beginning of period, January 1, 2021	$	111,871
End of period, September 30, 2021	115,298
Increase in contract receivables during the period	$	3,427


(in thousands)	Contract Liabilities
Beginning of period, January 1, 2021	$	2,060
End of period, September 30, 2021	3,298
Increase in contract liabilities during the period	$	1,238


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2021		2020		2021
Beginning balance	$	41,055	$	35,253	$	17,122	$	34,092
Provision for credit losses	20,406		25,051		44,339		61,796
Write-offs	(552)		(22,552)		$	(552)	$	(58,136)
Ending balance	$	60,909	$	37,752	$	60,909	$	37,752


	December 31, 2020
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	1,026,034	$	—	$	—	$	1,026,034
Cash and securities segregated under federal and other regulations:
U.S. Treasury securities	134,994		—		—		134,994
Other current assets:
Equity securities - user-held fractional shares	802,483		—		—		802,483
Equity securities - securities owned	3,222		—		—		3,222
Total financial assets	$	1,966,733	$	—	$	—	$	1,966,733

Liabilities
Accounts payable and accrued expenses:
Equity securities - referral program liability	$	695	$	—	$	—	$	695
Other current liabilities:
Equity securities - repurchase obligations	802,483		—		—		802,483
Total financial liabilities	$	803,178	$	—	$	—	$	803,178


	September 30, 2021
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	4,006,138	$	—	$	—	$	4,006,138
Cash and securities segregated under federal and other regulations:
U.S. Treasury securities	50,000		—		—		50,000
Other current assets:
Equity securities - user-held fractional shares	1,530,971		—		—		1,530,971
Equity securities - securities owned	22,769		—		—		22,769
Total financial assets	$	5,609,878	$	—	$	—	$	5,609,878

Liabilities
Accounts payable and accrued expenses:
Equity securities - referral program liability	$	46	$	—	$	—	$	46
Other current liabilities:
Equity securities - repurchase obligations	1,530,971		—		—		1,530,971
Total financial liabilities	$	1,531,017	$	—	$	—	$	1,531,017


(in thousands)	Convertible notes		Warrant liability
Beginning of period, January 1, 2021	$	—	$	—
Issued during the period	3,299,031		252,944
Change in fair value	1,918,565		127,092
Reclassifications to equity	(5,217,596)		(380,036)
End of period, September 30, 2021	$	—	$	—


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except percentages)	2020			2021			2020			2021
Loss before income taxes	$	(10,994)		$	(1,366,941)		$	(5,464)		$	(3,264,123)
Provision (benefit from) for income taxes	(333)			(50,244)			115			(958)
Effective Tax Rate	3.0		%	3.7		%	(2.1)		%	—		%


(in thousands, except share data and per share amounts)
Series	Shares Authorized	Shares Issued and Outstanding	Per Share Liquidation Preference		Liquidation Amount		Per Share Initial Conversion Price		Carrying Value of Stock, Net of Issuance Costs
A	131,913,460	131,913,460	$	0.1954	$	25,777	$	0.1954	$	16,139
B	80,263,020	80,263,020	0.6354		50,999		0.6354		50,999
C	43,788,180	43,788,180	2.5121		110,000		2.5121		109,870
D	35,774,761	35,774,761	10.1450		362,935		10.1450		362,670
E	29,887,357	29,887,357	12.4827		373,075		12.4827		372,733
F	48,000,000	48,000,000	12.5000		600,000		12.5000		599,284
G	44,406,442	43,116,119	15.5000		668,300		15.5000		668,044
	414,033,220	412,742,897			$	2,191,086			$	2,179,739


	Number of Shares	Weighted-Average Exercise Price		Weighted- Average Remaining Life	Total Intrinsic Value (in thousands)
Balance at December 31, 2020	21,543,828	$	2.19	6.52	$	304,590
Granted during the period	—	—
Exercised during the period	(5,819,965)	2.02
Cancelled and forfeited during the period	(276,657)	4.51
Balance at September 30, 2021	15,447,206	$	2.21	5.66	$	615,827
Options vested and expected to vest at September 30, 2021	15,447,206	$	2.21	5.66	$	615,827
Options exercisable at September 30, 2021	14,040,377	$	1.79	5.49	$	565,754


	Number of RSUs	Weighted- average grant date fair value
Unvested at December 31, 2020	47,711,649	$	10.84
Granted	28,635,488	40.76
Vested	(23,261,472)	17.94
Forfeited	(2,442,812)	24.37
Unvested at September 30, 2021	50,642,853	$	32.20


(in thousands, except per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2021		2020		2021
Net loss	$	(10,661)	$	(1,316,697)	$	(5,579)	$	(3,263,165)
Less: allocation of earnings to participating securities	—		—		—		—
Net loss attributable to common stockholders	$	(10,661)	$	(1,316,697)	$	(5,579)	$	(3,263,165)

Weighted-average common stock outstanding - basic	225,997,444		638,168,188		225,299,165		368,518,894
Dilutive effect of stock options and unvested shares	—		—		—		—
Weighted-average common stock outstanding - diluted	225,997,444		638,168,188		225,299,165		368,518,894

Net loss per share attributable to common stockholders:
Basic	$	(0.05)	$	(2.06)	$	(0.02)	$	(8.85)
Diluted	$	(0.05)	$	(2.06)	$	(0.02)	$	(8.85)


(in thousands)
Remainder of 2021	$	5,807
2022	32,646
2023	34,821
2024	33,355
2025	32,436
Thereafter	125,724
Total undiscounted lease payments	264,789
Less: imputed interest	(44,385)
Less: lease incentives	(12,682)
Less: leases executed but not yet commenced	(53,185)
Total lease liabilities	$	154,537


	Three Months or Month Ended September 30,
(in millions except ARPU)	2020		2021
Net Cumulative Funded Accounts(1)	11.4		22.4
Monthly Active Users (MAU)(2)	10.7		18.9
Assets Under Custody (AUC)(3)	$	44,445.6	$	95,389.9
Average Revenues Per User (ARPU)(4)	$	101.9	$	65.0


	Three Months Ended September 30,
(in millions)	2020	2021
Beginning balance	9.8	22.5
New funded accounts	1.9	0.7
Resurrected accounts	0.1	0.1
Churned accounts	(0.4)	(0.9)
Ending balance	11.4	22.4


	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except for percentages)	2020			2021			% Change		2020		2021		% Change
Transaction-based revenues
Options	$	126,769		$	163,750		29	%	$	297,677	$	526,214	77	%
Cryptocurrencies	5,282			50,723			860	%	14,840		371,413		NM
Equities	68,818			50,459			(27)	%	171,013		235,772		38	%
Other	938			1,865			99	%	1,321		5,004		279	%
Total transaction-based revenues	$	201,807		$	266,797		32	%	$	484,851	$	1,138,403	135	%
Transaction-based revenues as a % of total net revenues:
Options	47%			45%					46%		36%
Cryptocurrencies	2%			14%					2%		26%
Equities	26%			13%					27%		16%
Other	—%			1%					—%		—%
Total transaction-based revenues	75		%	73		%			75%		78%


	Three months ended September 30,						Nine Months Ended September 30,
(in thousands)	2020		2021		$ Change		2020		2021		$ Change
Change in fair value of convertible notes and warrant liability	$	—	$	25,336	$	25,336	$	—	$	2,045,657	$	2,045,657


	September 30, 2021
(in thousands)	Net Capital		Required Net Capital		Net Capital in Excess of Required Net Capital
RHS	$	2,756,371	$	124,472	$	2,631,899
RHF	122,566		250		122,316


	Payments Due by Period
	Total		Remainder of 2021		2022-2023		2024-2025		Thereafter
As of September 30, 2021	(in thousands)
Operating lease commitments	$	264,789	$	5,807	$	67,467	$	65,791	$	125,724
Non-cancelable purchase commitments(1)	205,259		35,185		147,237		21,899		938
Total contractual obligations	$	470,048	$	40,992	$	214,704	$	87,690	$	126,662


		Incorporated by Reference
Exhibit Number	Description	Form*	Filing Date	Exhibit	Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of Robinhood Markets, Inc., dated August 2, 2021 (our “Charter”)	8-K	2021-08-02	3.1
3.2	Amended and Restated Bylaws of Robinhood Markets, Inc., dated August 2, 2021 (our “Bylaws”)	8-K	2021-08-02	3.2
4.1	Form of Class A Common Stock Certificate of Robinhood Markets, Inc.	S-1/A	2021-07-19	4.1
4.2	Form of ten-year Warrant to Purchase Stock of Robinhood Markets, Inc., issued to multiple investors on February 12, 2021.	S-1	2021-07-01	4.2
10.1	Form of Indemnification Agreement between Robinhood Markets, Inc. and, separately, each of its directors and executive officers (other than Jan Hammer and Scott Sandell)	S-1/A	2021-07-19	10.1
10.2	Form of Indemnification Agreement between Robinhood Markets, Inc. and, separately, each of Jan Hammer and Scott Sandell	S-1/A	2021-07-19	10.2
10.3†	Underwriting Agreement, dated July 28, 2021, between Robinhood Markets, Inc., as the issuer, and Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein	10-Q	2021-08-18	10.3
10.4	Exchange Agreement, dated July 26, 2021 between Robinhood Markets, Inc. Baiju Bhatt, Vladimir Tenev, and certain of his related entities	10-Q	2021-08-18	10.8
10.5	Form of Equity Exchange Right Agreement, entered into on July 26, 2021 between Robinhood Markets, Inc. and, separately, (a) Baiju Bhatt and (b) Vladimir Tenev	S-1/A	2021-07-19	10.13
10.6	Voting Agreement, dated July 26, 2021, among Robinhood Markets, Inc., Baiju Bhatt, Vladimir Tenev, and certain related entities	10-Q	2021-08-18	10.10
10.7+	2021 Omnibus Incentive Plan, effective July 27, 2021 (the “2021 Plan”)	S-8	2021-07-29	99.1
10.8+	Form of Restricted Stock Unit Agreement for Employees and Non-Employee Directors (including the Notices of Grant) under the 2021 Plan	10-Q	2021-08-18	10.16
10.9+	Form of Fully Vested Stock Award Agreement for Non-Employee Directors (including the Notice of Grant) under the 2021 Plan	10-Q	2021-08-18	10.17
10.10+	2021 Employee Share Purchase Plan, effective July 27, 2021 (the “ESPP”)	S-8	2021-07-29	99.2
10.11+	Forms of ESPP Subscription Agreement and Notice of Withdrawal	10-Q	2021-08-18	10.19
31.1	CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act				X
31.2	CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act				X


Robinhood Markets, Inc.

By:			/s/ Vladimir Tenev
Name:			Vladimir Tenev
Title:			Co-Founder, Chief Executive Officer and President

By:			/s/ Jason Warnick
Name:			Jason Warnick
Title:			Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)