Earnings Call Transcript - HOOD Q1 2025

Operator, Operator

Thank you to everyone for joining Robinhood's Q1 2025 Earnings Call. Joining today are Chair and CEO, Vlad Tenev; CFO, Jason Warnick; and VP of Corporate Finance and Investor Relations, Chris Koegel. Vlad and Jason will offer opening remarks and then open the call to Q&A. During the Q&A portion of the call, we will answer questions from institutional research analysts and will also answer questions from retail analysts who may hold an ownership position in Robinhood. As a reminder, today's call will contain forward-looking statements. Actual results could differ materially from our current expectations, and we may not provide updates unless legally required. Potential risk factors that could cause differences, including regulatory developments that we continue to monitor, are described in the press release we issued today, the earnings presentation, and our SEC filings, all of which can be found at investors.robinhood.com. Today's discussion will also include non-GAAP financial measures. Reconciliations to the GAAP measures we consider most directly comparable can be found in the earnings presentation. With that, please welcome Vlad and Jason.

Vlad Tenev, CEO

All right. Hey, everyone. Great to speak with you again today. Thank you for joining us. This is our second live video earnings call. I think the last one, hopefully, was informative and entertaining, so we're happy to be with you again. If I had to sum up the quarter, what I'm most excited about is the incredible product velocity. And it was across our three focus areas, which if you remember, are building the number one platform for active traders, being number one in wallet share for the next generation, and building the number one global financial ecosystem. So let's get into it in a little bit more detail. When I look at our active trader offering, it just keeps getting more disruptive. We launched futures and prediction markets in Q1, and futures are accelerating nicely. So about 4.5 million contracts traded in April alone, which is more than all of Q1. So Q1, which was a strong quarter, greatly was accelerated in April. And prediction markets have done over 1 billion contracts in the last six months. And we've recently started to increase the breadth of the contracts we offer. So we're still very much in the early stages there. On Robinhood Legend, which if you remember, we announced at Hood Summit late last year and launched fully a few months after that. We've been making a lot of improvements. We've upgraded speed. We've brought in new asset classes, like crypto and index options. We've added support for joint accounts, more indicators and charts, and really more features being shipped on a weekly basis. So the team has just been executing incredibly quickly on making Robinhood Legend the best platform for active traders. And all of that has been driving strong incremental volume on the Legend platform. There's actually a lot more to come. The team is already spending a lot of time preparing for the second annual active trader event, which will be held this fall. We're also working to serve far more of our customers' assets. So at our Lost City of Gold event, just this past March, we announced three new products: Robinhood Strategies, Robinhood Cortex, and of course, Robinhood Banking. Pretty awesome that Robinhood Strategies already has over 40,000 customers, and over $100 million in assets. So that's gone off to a very rapid start. Robinhood Gold, so when you look at the gold credit card, we doubled the Gold cardholders to 200,000 just in the past few weeks and we love what we're seeing. We know that there's a ton of excitement about getting the credit card from customers. We see it on social media and in the questions, and we're excited to accelerate the rollout from here. So already doubled and it's going to continue. Retirement assets, they're now up to $16 billion, which is up about 20% just from the start of the year. And we closed the acquisition of TradePMR, which was bringing over $40 billion of platform assets to Robinhood. So a lot of progress on wallet share. And on the global financial ecosystem, this is our 10 year arc. We continue to make the U.K. brokerage offering better and better, and we're working on launching in Asia, so excited about that. Bitstamp acquisition is still on track to close mid-year and we're heads down getting things ready for the crypto event, which will be in France in two months. So, we're very excited about that. There's going to be some new things unveiled. And wrapping it all up. As a result of the strong product velocity, we saw strong business results as well. Revenue is up 50% year-over-year. Trading volumes all up double-digits year-over-year, including a record quarter for options trading. Record net deposits as well, $18 billion of net deposits in the quarter. So I'm glad to see the strategy is working. Customers are not only trading more with us, but they're entrusting us with more of their assets. Gold subscribers nearly doubling year-over-year to $3.2 million as of the end of the quarter and actually now $3.3 million in April, and that's a 12% plus adoption rate overall. But if you look at new customers who joined Robinhood in Q1, about one in three became Gold subscribers relatively quickly. And we look on international, that's continuing to accelerate. We are now up to over 150,000 international customers, and that's just going to keep going and going. So we feel great about our product velocity and the business results that it's driving. I'll turn it over to you, Jason, to talk through financials, and then we'll go straight to Q&A.

Jason Warnick, CFO

Okay. Thanks, Vlad. Q1 was another quarter of profitable growth as revenues grew 50% year-over-year, and EPS more than doubled. Our focus on profitable growth drove 72% incremental margins as adjusted EBITDA margin expanded by 11 points from a year ago. And over the past 12 months, revenues reached $3.3 billion, and adjusted EBITDA was $1.7 billion, as we continue to grow and diversify our business. It's also great to see momentum continuing into the second quarter. April net deposits are around $6.5 billion. Equities trading is a four year high. Options are in the zone of an all-time high, and crypto trading is north of $8 billion. Also, margin balances are about $8.4 billion, which is up 2x from last year. I am pleased with our customers' continued engagement. It's driven by a greater share of active traders who tend to stay resilient through volatility, continued market share gains and diversification into newer areas like Robinhood Legend, advisory, futures and index options. Let's take a closer look at our Q1 financials compared to a year ago. Q1 revenues were $927 million, driven by strong growth across the board. Transaction volumes increased by double-digits across all categories, including up 84% year-over-year in equities, and we saw record options volume in the quarter. Interest-earning assets and securities lending activity continued to grow, more than offsetting short-term rates, and other revenues grew as Gold subscriptions reached new highs. We also stayed disciplined on expenses, leading to 51% adjusted EBITDA margins. In Q1, adjusted OpEx and SBC was $533 million, in the middle of our updated full year outlook range on a quarterly basis. As we previously announced, we anticipate approximately $85 million of costs from TradePMR in 2025. So we updated our full year outlook for adjusted OpEx and SBC to $2.085 billion to $2.185 billion. As a reminder, this outlook does not include costs from our anticipated acquisition of Bitstamp or provisions for credit losses. Let's talk for a moment about how we're diversifying our business. You've heard me say that we have nine businesses that each generate over $100 million in annualized revenues, nearly double the number we had just a couple of years ago. And I'm excited to say, we have many more that are quickly scaling. For example, we've recently launched three new products: Futures, index options and prediction markets, where the ARR for each of them individually is already around $20 million. And with the addition of TradePMR, we've added a business that has a $50 million run rate and a nice track record for growth. And there are several more businesses that we recently announced and expect to begin contributing later this year, including Robinhood Strategies, Robinhood Banking and our acquisition of Bitstamp in the middle of the year. So we're incredibly excited about all these new businesses, and I like our opportunity to build many of them into additional $100 million revenue businesses in the coming years. I also want to give an update on our share repurchase program. You'll recall we began executing on our $1 billion share repurchase plan in Q3 last year, with target completion over two to three years. Since then, we've moved faster and have deployed over $650 million at an average price of $33 per share. This includes over $300 million of buybacks in Q1, which more than offset share issuance for TradePMR. Given our strong performance and positive outlook, our board has increased the authorization by $500 million, taking the program up to a total of $1.5 billion. We expect to deploy the remaining $800 million plus over roughly the next two years, but we're keeping flexibility to accelerate if market conditions warrant. So we feel great about our business and financial results and remain focused on driving another year of profitable growth in 2025. We're continuing to work to maximize earnings per share and free cash flow per share over time. With that, Chris, let's move to Q&A.

Chris Koegel, VP of Corporate Finance and Investor Relations

All right. Thank you, Jason. For the Q&A session, we'll start by answering the top few questions from Say Technologies ranked by the number of votes. We passed over questions that we've already addressed on this call, or in prior quarters, and group together questions that share a common theme. After the Say questions, we'll turn to live questions from our analysts. So let's kick it off with our first question from Say. Patrick asks, what is Robinhood doing to accelerate credit cards and checking accounts to their gold members?

Jason Warnick, CFO

Thanks for the questions. I'll start with the Gold Card and maybe turn it over to Vlad for banking. As I've mentioned, it's really important for us to study customer behavior as we roll out the card. We've been doing that and have increased the number of cardholders from 100,000 to over 200,000 just in Q1. So far, what we're seeing in terms of customer behavior is in line with our expectations, so we feel good. And we plan to continue increasing the number of cardholders throughout the year. But along the way, we're going to continue to be measured in the near-term. Vlad?

Vlad Tenev, CEO

Thanks, Jason. Yeah. On the banking side, so we announced at The Lost City of Gold event back in March Robinhood Banking. And the philosophy behind this product is that we want to build a compelling banking experience for the top of market. So if you're someone who's a high net worth individual with more assets, we wanted to provide a digital banking experience where you would feel like you're not making compromises relative to your brick-and-mortar bank. And I don't think any digital bank has taken that approach. So we're extremely excited. We've been testing the product internally. It's looking really good. I think you're going to like it. And at the event, we announced rolling out to the public in Q3, and we feel good about that date. So stay tuned. The team has been working incredibly hard.

Chris Koegel, VP of Corporate Finance and Investor Relations

Awesome. All right. Thanks, Vlad. The next question is from Nico, who asks, when will users be able to invest in private companies such as SpaceX?

Vlad Tenev, CEO

This is one of our top policy priorities. We find it quite surprising that customers cannot invest in private companies, especially since these companies are remaining private for longer periods. The instances of major companies like Microsoft and Apple going public at lower market caps are becoming rare. Now we have companies such as OpenAI and SpaceX that are still private, with valuations in the hundreds of billions. Consequently, the financial benefits are accruing to an increasingly smaller group of insiders. We possess the technology to address this issue. I even wrote an op-ed for the Washington Post discussing how tokenizing private equities can significantly benefit both individuals and the companies involved, and how crypto technology can resolve many challenges in secondary market transactions. What is necessary now is comprehensive security legislation in the U.S., and a reevaluation of the accredited investor rules that currently exclude more than 80% of the public. We are making strides on both fronts, engaging in active discussions, and there is a clear willingness from the administration and lawmakers to tackle these issues. We anticipate making progress in this area.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. Thank you, Vlad. And then the last question is from Paul, who asks, when will Robinhood offer 401(k) plans to businesses?

Vlad Tenev, CEO

Yeah. Thanks, Paul. Our 10-year arc or long-term arc is to build the number one global financial ecosystem. And what that means is, expanding our business from retail only, which it pretty much is now to also serving businesses and institutions, and also expanding from primarily U.S. to being a full global platform, serving customers everywhere. Regardless of whether they're individual retail businesses or institutions. And so, when we look at that B2B opportunity, we think businesses and institutions have fundamentally similar needs in many ways to retail. The things that we're building, the innovations we're building for retail, things like 24 hour trading, rock bottom margin rates also appeal to institutions and businesses. And there are so many opportunities. 401(k) administration for businesses is one. You also look at things like employee stock plan administration for public companies. You look at institutional prime brokerage and of course, serving registered investment advisers, which we're now getting into through TradePMR. And we think that's an enormous opportunity to serve businesses. If we look at registered investment advisers, it's a business that has an additional layer of compounding. So not only are we taking advantage of the great wealth transfer, where young people are going to be making more and more money over time. We're getting more customers. But as we get more advisers that's a third layer of asset growth. So for the near term, we're working really hard to integrate the TradePMR team and technology, build a great experience, serving registered investment advisers. We want to make sure we stay super focused and we don't take on too much. So that's been our B2B focus for the near-term. But over the long-term, we do think 401(k) is a sizable opportunity that we'd be excited to tackle alongside all of the other things in our 10-year arc.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. Thank you, Vlad. That concludes our shareholder questions from Say Technologies. Now we will open the call to Q&A. The first question comes from Chris Allen at Citi. Chris?

Christopher Allen, Analyst

Yeah. Good afternoon, guys. Appreciate the question. The health of the retail customer is a big focus in the current environment. I was wondering if you could peel back or provide some additional color on April metrics you provided were very solid. Curious if margin balances kind of improved towards the back half of the month, whether you've seen net new account openings and the strong deposit numbers, are those coming from existing customers or new customers?

Jason Warnick, CFO

Hey, Chris. Thanks. It's Jason. I'll take it, and Vlad, feel free to add in. So we saw incredibly strong engagement across the board, not just in Q1, but it continued into April as we said. And it was throughout the month of April. So I wouldn't say, it was front loaded or back loaded. It was really a strong month in total. We're seeing strong additions, as Vlad alluded to, to Robinhood Gold and the strength in net deposits is pretty diverse. And what's different about us today than perhaps a few years ago is, there's just a lot more options for customers to place their assets. Whether it's the growth in retirement, the nascent growth in strategies, certainly brokerage, we're also seeing it go into crypto. So I'd say that there's a pretty broad-based strength of retail engagement that we're seeing and all signs are positive throughout the month of April.

Vlad Tenev, CEO

Yeah. The only thing I'd add to that is, unlike where the business was back in 2022, where we were predominantly focused on novice investors, the new focus on being the best platform for active traders, has made us more resilient in times like these because we used to just not have a lot of mechanisms for customers that were more sophisticated that wanted to trade sideways or declining markets. They just couldn't engage in that super easily on Robinhood. But just recently, we've launched futures. And as we shared, futures had a very, very significant growth in April with over 4.5 million contracts traded, outright contracts. We've rolled out an amazing experience for multi-leg options trading on mobile, the side-by-side chain, which will make it easier for advanced traders to engage in the multi-leg strategies. And Robinhood Legend continues to grow and get better. So now we have multiple mechanisms for these active traders to engage no matter what the market environment is in. So even though we're diversifying the business with nine business lines of over $100 million, and we're getting less reliant upon trading in the revenue mix, even within trading, it's becoming more resilient. So I think we're very excited about that, and there's still more to come.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. Thank you, Jason. Thank you, Vlad. The next question is from Dan Dolev from Mizuho.

Dan Dolev, Analyst

Hey, everyone. Great quarter as always, very impressive. It looks like Robinhood Gold is performing exceptionally well. I hope I didn't miss it being discussed already, but this seems to be growing much faster than we expected. What should we consider regarding the growth trajectory? I believe there was a $550,000 quarter-over-quarter increase this quarter. Could you provide some insight into how significant it could become and the impressive growth rate? Thank you.

Vlad Tenev, CEO

Yeah. Maybe I'll share some higher level thoughts, Jason, feel free to add in. Yeah. Our aspiration, I already think Robinhood Gold is the best deal in financial services. But I think the aspiration is to actually make it on par with the best membership loyalty programs out there. So we're not just looking at financial services as a benchmark. And in reality, these types of products are, until we came along, relatively unique in our industry. But we're looking at things like the Costco membership. Amazon Prime is an inspiration. And we're really sort of like students of this. And I think that the improvements that we've made in day one and Q1 attach rate, which have been tremendous are just the beginning. I think that when you keep hearing how crazy high of a value Gold is and why we don't raise the price, not just from analysts, but also customers, I think we feel very good we're on the right track in, credit card is continuing to roll out, that's in the relatively early stages. Banking, which is going to be a Gold only product, that's looking really, really good. So as far as we can see, the Gold roadmap is looking very solid.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. All right. The next question is from Devin Ryan at Citizens.

Devin Ryan, Analyst

Hey, Vlad. Hey, Jason. How are you?

Vlad Tenev, CEO

Hey, Devin.

Devin Ryan, Analyst

I want to ask a question on crypto specifically. You've seen a little bit of a pullback, a record fourth quarter, and we know that was kind of particularly elevated. But would love to just get a little bit of color from what you're seeing or hearing from customers there, because it's still very active. And I know you're going to have the update in June. So I don't want to completely front run it. But at the same time, I'm curious kind of the level of urgency to do more as this industry is getting unlocked. So we're hearing more about kind of a race on stable coins. And so, I'd just love to kind of get a sense of how hard you guys are pushing there? And then also just the engagement from customers just given that we're off the highs a little bit. Thanks.

Vlad Tenev, CEO

Yeah. So, I mean crypto had an awesome quarter. We had about $260 million in revenue for the quarter, which was the second highest quarter in recent years. Last quarter, obviously, was higher than that. But it's going to go up and down in terms of trading volumes. But what we like to look at is market share. And if industry volumes are going down, but market share is going up for Robinhood, and we're continuing to unlock and add more selection and add more products. We feel like we're doing very, very well. So the team has been cranking. There have been a slew of improvements both for traders and coming down the pike, but more selection, smart exchange routing, and the team has been executing a lot and there's so much to do. So we're excited for the June event. But I'd also tell you, we're diversifying the business outside of the crypto business, which will make us less reliant on crypto transaction volumes. But also within crypto, there's going to be diversification over time. So crypto itself will diversify and be less reliant on transaction volumes in the future.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. Thanks, Vlad. The next question is from Roy at Crossroads.

Vlad Tenev, CEO

Roy?

Unidentified Participant, Analyst

Hi, guys. Thanks for taking my question. I really enjoyed getting that early look at Robinhood Strategies and seeing what that platform is about and what you guys have been building. And I'm curious, if you could give us any early read on that product as far as how it's being approached by customers, how many are actually looking at that?

Vlad Tenev, CEO

Yeah, absolutely. So we shared earlier over 40,000 customers already, over $100 million in assets on Strategies. I'm sure you've seen some of the engagement on social customers sharing their portfolios and talking about how despite sort of like the volatility of the times we're in. Product's been holding up very, very well, so it's continuing to grow. We're adding more and more features based on demand, but early read has been tremendously positive from the customers that have it.

Chris Koegel, VP of Corporate Finance and Investor Relations

Thanks, Vlad. The next question is from Patrick Moly at Piper.

Patrick Moley, Analyst

Yeah. Good evening, and thanks for taking the question. So I wanted to touch on the futures offering again. You mentioned that you've seen 4.5 million contracts traded in April. So it sounds like that's picking up pretty nicely. So just curious where that borrowing is coming from? Is that existing customers? Are you finding that you're winning customers from other brokerage platforms there? And then any specific commentary that you can give on whether there are specific products or specific asset classes that you're finding your customers are migrating to? Thanks.

Vlad Tenev, CEO

Yeah. So I think it's a little bit early to give you sort of like the full read, but we're seeing good signs of these volumes being incremental, actually. And the reason we can tell is, we look at a lot of our futures traders. They also are trading equities and other assets. And you're actually seeing the power of having multiple assets in one platform shine through there. And really, the thing that futures allows customers to do is to take short positions easily, which we still don't have equity shorting. While that's coming, it's sort of an outlet for that type of advanced systematic trading. We have the ladder and we also have those markets trading around the clock. So it's really opening up new behaviors and new styles of trading for our active traders. So that's, I think, why it's seen such good adoption, plus the product experience that the futures team has built. They've done a really nice job, particularly on the mobile ladder. And there's more to do. Futures on Legend, for example, and making it available also to outside the U.S. as we continue to expand there.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. The next question is from Craig Siegenthaler at Bank of America.

Craig Siegenthaler, Analyst

Thanks. Good afternoon, everyone. My question is about Cortex. Will this product have a charge or will it be available for free to your Gold subscribers? Additionally, is the launch expected towards the end of the year, in the fourth quarter of 2025?

Vlad Tenev, CEO

For Cortex, we aim to release it sooner than anticipated. Our teams have been diligently working on it. The Cortex features, announced during the velocity of Gold events, are just the beginning. We are introducing Cortex for stock digest, which will assist customers in understanding stock performance, and a trade builder that will help execute options trading strategies based on specific stock insights. This will be available to Gold subscribers without any additional fees, as we want to enhance their experience with this technology. You'll see it integrated throughout the Robinhood platform. This is just the starting point, and we are already considering deeper integration for active traders across various platforms. Additionally, we are making strides in enhancing our operations and customer service with AI, which, while not always visible, provides significant benefits by resolving issues effectively for our customers.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. The next question is from James Yaro at Goldman Sachs.

James Yaro, Analyst

Good afternoon and thanks for taking my question. So Vlad, I want to ask a longer-term crypto one for you. We've now seen all three U.S. banking regulators shift their posture to allow them to participate in the crypto ecosystem. What role do you expect U.S. banks to play across both retail and wealth versus institutional crypto? And what does this mean for competition and pricing in the U.S. crypto markets?

Vlad Tenev, CEO

Yeah. I would just put out there. I like our positioning. It's always hard to speculate on what competitors may or may not do before they have products in market. And we're focused on driving innovation here. So obviously, we've done well on the trading side. We think crypto is interesting as a foundational technology that could actually improve a wide variety of financial services, not just spot crypto trading. So, we think we're just in the early innings of having this technology permeate the financial system. And we're excited to see what not just we bring to market, but what others can do partnering with us and just independently as well.

Jason Warnick, CFO

I think as more competitors enter the market, it makes crypto more mainstream, which makes the market bigger. And I think we've been demonstrating our ability to take market share. So I really like our competitive position.

Chris Koegel, VP of Corporate Finance and Investor Relations

Thank you. The next question is from Amit at Amit Is Investing.

Unidentified Participant, Analyst

Hey, Vlad. Hey, Jason. Congrats on a great quarter. My question here is on the promotion you guys ran for the 2% match in March. Jason, I know you said, you've loved the unit economics on these matches. Can you give us a little bit of insight on the types of customers you brought over in March? And if you think the 2% match is sustainable to continue bringing over more of the wealthier clients? Thanks, guys.

Jason Warnick, CFO

You bet. So first of all, incredible engagement by customers, record level of net deposits. The promotions were not the majority of that. In fact, they were, in Q1, less than 15%. Customers love it. We love it. And you're right, Amit. I love the economics of it. The payback periods are really attractive, consistently below across all of our promotions below the claw-back periods on that. In terms of the kinds of customers that we're getting, we're getting large customers. The average customer transfer per user was $90,000 overall. So we're getting large customers. And then, what's really interesting is for taxable accounts, because we had taxable and non-taxable promotions. For taxable accounts, it was double that. So over $180,000 average ACAT transfer in for the promotion. So we really love these promotions. We like the customers that we're getting, and they tend to have larger balances.

Chris Koegel, VP of Corporate Finance and Investor Relations

Thanks, Jason. The next question is from Matt O'Neil at FT Partners.

Matthew O'Neill, Analyst

Yeah. Thanks so much for taking my question. I joined a little bit late, so apologies if this has already been discussed. But just curious around crypto pricing. It seems like things are moving in the direction that they have been for a number of quarters now. Maybe you could just discuss kind of where that stands as far as the experimentation that continues, as well as I believe there's some further experimentation going on with volume-based pricing? Thanks.

Vlad Tenev, CEO

Yeah. Do you want to hit that, Jason?

Jason Warnick, CFO

Sure. I mean we're continuing to experiment. We've been seeing the take rates come up sequentially for several quarters now. What I'd say is that when we look at take rates for crypto for the month of April, it's in a similar zone to where we were at in Q1. I do think the big opportunity for us on experimenting is tiered pricing. While Robinhood has really attractive pricing on average, I think that there's a big opportunity for us for the highest volume traders of crypto to get a better price for Robinhood. And that's what we're really experimenting with. And we like what we're seeing so far, but we're still pretty early in those experiments.

Chris Koegel, VP of Corporate Finance and Investor Relations

All right. Thanks, Jason. The next question is from Brian Bedell at Deutsche Bank.

Brian Bedell, Analyst

Thanks. Good afternoon, guys. Maybe just going back to the net deposits in March and the continued traction in April on the actual active trader mix within those net deposits. So you talked about the 180,000 average balance on the taxable side. Either Jason or Vlad, can you talk about what you're seeing from active traders coming into the complex and the usage on Legend? I think the last time you quoted that it was about a $50 million run rate. I don't know if there's an update to that. And maybe just talk about the plans for Legend as we roll out through the year?

Jason Warnick, CFO

Maybe I'll start Vlad and then you can kind of fill in. So last quarter, we said $50 million ARR. We didn't update it this quarter. We'll just update that periodically. But I can tell you that we've seen strong growth sequentially in volumes through Legend as active traders continue to adopt and engage with the product and as we continue to Legend. One thing that's really nice is that when we look at incrementality, the vast majority of the volumes that are coming through Legend are incremental, so that's super encouraging.

Vlad Tenev, CEO

Yeah. And in terms of the roadmap for Legend throughout the year rounding out the feature set. So futures on Legend is off request. Customers want to see the ladder, which they love on mobile, on Legend as well, and then continuing to refine and improve the active trader experience and also the live streamer experience. So we've added a bunch of new widgets, snapshot to make live streaming on Legend better and better. So the velocity of this team continues to be really, really strong. And we've got more in store even prior to the active trader event in the latter half of the year.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. The next question is from Ben Budish at Barclays.

Ben Budish, Analyst

Hi, good evening, and thank you for taking my question. Jason, could you share more about what you’re observing on the credit side? I’m specifically interested in your expectations for credit loss provisioning for the year. I know it’s a challenging aspect to model and likely difficult to guide. In the last quarter, you mentioned it might be around the $20 million range, but it ended up being a bit higher, which probably reflects the changing macro environment. How should we approach that line? Additionally, can you provide insights into credit behavior? Are customers accruing balances on this card? Are they maximizing points? What kind of activity are you noticing? How do you manage credit risk in this environment? Thank you.

Jason Warnick, CFO

Yeah. Sure. So first of all, we really like what we're seeing from our customers. Delinquency rates, write-offs are all very, very low and in line with our expectations. And when we look at broader industry data, there's nothing that we're seeing that's particularly concerning. That said, we're continuing to have pretty tight underwriting standards so that we build a book of business that can be resilient regardless of the backdrop. In terms of the provision for credit losses this quarter, I'd actually point you to on the brokerage side, not on the credit card side. We had a step-up in some brokerage related losses, not related to margin book, but more kind of fraud related teams all over it, not something I'm worried about. But in terms of the Gold Card, we like what we're seeing in terms of the customer behavior. We are seeing a nice ramp in the revolve rates, which is in line with our expectations. And customers are engaging with the card in a variety of ways, using it for all types of purchases, and they're certainly enjoying the 3% rewards on the card. So, so far so good. We continue to hold the path. We added 100,000 cardholders in Q1 and we intend to continue to add cardholders throughout the year. In terms of the expectations for provision, I would expect it to just increase gradually through the year as we roll out more cards.

Vlad Tenev, CEO

Yeah. And product experience for the credit card app keeps getting better and better, and it's going to continue to improve, particularly when it becomes the banking app. So we're excited for that in the coming months.

Chris Koegel, VP of Corporate Finance and Investor Relations

Excellent. All right. The next question is from Alex Markgraff at KeyBanc.

Alex Markgraff, Analyst

Hey, Vlad. Hey, Jason. Thanks for taking my question. Jason, maybe one for you on just sort of taking all of these new products together and understanding that there might be some yield differential, if you will, or an advisory and things like that. Could you just sort of speak to contribution margin and how you manage that line as you launch and scale new products at different price points, different monetization levels?

Jason Warnick, CFO

Yeah, absolutely. Every business that we go into has different economic characteristics. Some might have lower return on assets, some might be more monetized just directly from trading activity. What I would tell you is that what we're trying to optimize for over time is just increasing earnings per share and free cash flow per share. And I think as a technology company, we're incredibly well positioned to serve a variety of different businesses with a variety of different economic characteristics at a really low incremental cost, and that's leading to pretty high incremental margins. You can see this kind of in our overall business, as we're growing revenue much, much faster than our bottom line costs. So, we're seeing really nice leverage and 100% increase year-over-year in earnings per share. So, we feel really good about just continuing to stay focused on the customer, our three priorities of number one in active traders, number one in wallet share for the next generation and number one in global financial ecosystem. And we think if we stay focused on the customer and keep our primary financial lens on growth of earnings per share, we're heading in the right direction.

Chris Koegel, VP of Corporate Finance and Investor Relations

Thanks, Jason. The next question is from John Todaro at Needham.

John Todaro, Analyst

Hey, guys. Thanks for taking my question. It's on prediction markets. So $1 billion traded over the last six months, does that basically leave us with $500 million or a $1 million or so that was outside the November election. And then any sense how much was kind of March Madness or sports-related versus other events?

Vlad Tenev, CEO

Yeah. That's right. I'll be happy to feel that one. So out of the $1 billion contracts traded, yeah, just less than half of that has been sports, and that's March Madness, but we also had the masters and now there's NHL and NBA contracts as well. So the plan is still continue making the product better. Now that we have so many contracts, discoverability and organizations, something that the team is looking at. And we think that this is an incredibly powerful nascent asset class, and you should see more and more contracts and a wide variety of contracts over time. So, we love what we're seeing and it's so early that the potential of this is vast.

Chris Koegel, VP of Corporate Finance and Investor Relations

All right. The next question is from Tanner at Future Investing.

Unidentified Participant, Analyst

Hey, guys. Great quarter. Can you hear me?

Vlad Tenev, CEO

Yeah. We can hear you. How are you doing?

Unidentified Participant, Analyst

Okay. Perfect. Doing great. Within the new verticals like you guys have with the end contracts and credit cards, are you guys attracting new users onto the platform without simply going to brokerage first? Any insights on that? And if they're upgrading to Gold or eventually cross-selling to other products would be great.

Vlad Tenev, CEO

It's a combination of factors. Typically, we start by testing among our existing users, especially the most active ones who are usually the first to adopt. We have a significant installed base of over 25 million funded accounts, which sets us apart from other companies launching similar products. We have various channels for customers to discover products, including different cross-selling services and marketing activities. Depending on the product, we may utilize one or several of these channels. The credit card product is somewhat unique since we are facing relatively low acquisition costs at the top of the funnel. Currently, there are about 3 million people on the waitlist, and we are rolling it out quickly. Our belief is that by providing an excellent product experience with strong economics, we can avoid the high customer acquisition costs that traditional companies have been accustomed to, and it seems to be proving true. We are excited about this development.

Jason Warnick, CFO

I would just add that Robinhood Gold does play a pretty important part in this. When you become a Robinhood Gold customer you bring in more balances, you deposit at a higher rate. And importantly, on the cross-sell point, you're much more likely to adopt more products. And so take retirement accounts as an example, like 4x more likely as a Gold customer versus an average customer, to have a retirement account. And so, I think they have 5x the assets. And so, being a Gold customer is kind of central to our strategy for cross-sell. And then as we continue to offer new and interesting products, our customers are discovering them at a faster rate.

Chris Koegel, VP of Corporate Finance and Investor Relations

Thanks, Jason. The next question is from Brett Knoblauch at Cantor.

Thomas Shinske, Analyst

Hi, Vlad and Jason. This is Thomas Shinske on for Brett Knoblauch. Thank you for taking my question and congrats on another great quarter.

Vlad Tenev, CEO

Thanks, Tom.

Jason Warnick, CFO

Thank you.

Thomas Shinske, Analyst

I just wanted to touch on the launch of the mark exchange routing. I know we've touched a little bit on crypto pricing here, but I just wanted to see how adoption has been amongst traders for the mark exchange routing? And how we should think about the impact on your blended crypto takeover over the next few quarters as adoption for this new product grows?

Vlad Tenev, CEO

It's still early in the rollout, and we're experimenting with it. So far, the results look promising, especially for active traders using the order book through tools like Legend or on mobile. They want to engage with the order book and see the pricing. This also allows us, as Jason mentioned earlier, to provide better pricing for customers who trade more. Our overall philosophy is that as you increase your activity on Robinhood, whether it's through crypto trading or managing assets, the experience should improve for you. That's the long-term goal. The more activity and assets you bring to Robinhood and the longer you stay with us, the better your experience will become. Unlike many financial services, which often become less favorable as your wealth grows, we’re focused on making the experience better. Stay tuned, as we aim to introduce more customization and pricing based on your activity and engagement with the Robinhood platform in the future.

Jason Warnick, CFO

I would add that tiered pricing doesn't necessarily lead to a lower blended rate. The significant opportunity lies in attracting trading volumes that are currently not directed to Robinhood. We'll have to see how this develops. As we noted, it's small at the moment, and April's take rates align with what we observed in Q1.

Chris Koegel, VP of Corporate Finance and Investor Relations

All right. The next question is from Edward Engel at Compass Point.

Edward Engel, Analyst

Hi. Thanks for taking my question. Most of my questions have been asked already, but I just wanted to touch on TradePMR. You talked about $85 million of incremental costs for this year. I guess as we kind of exit the year out of 2026, what does kind of that core run rate cost base looks like? Is there any opportunities for savings there?

Jason Warnick, CFO

Yeah. I would just say that in that $85 million is including deal-related costs. So, we have an opportunity to take that number down, particularly by next quarter even as we move forward.

Chris Koegel, VP of Corporate Finance and Investor Relations

Okay. The next question is from Kyle Voigt at KBW.

Kyle Voigt, Analyst

Hey, good evening. Maybe another question on crypto, but on the regulatory side. Last quarter, you noted that more regulatory clarity was needed to offer crypto staking. I just wanted to get an update on that. And really wondering whether you'd be satisfied with guidance from the SEC or do you need to see a more comprehensive crypto market infrastructure bill or regulatory framework path to get comfort there? And then, in terms of the comprehensive kind of crypto bill, was there anything proposed in the prior FIT21 digital asset bill that would cause or necessitate any material changes to your current operating model for crypto more broadly?

Vlad Tenev, CEO

Yeah. We don't see anything that's concerning with regards to the crypto operating model. But there are opportunities. I think the big opportunity is clarity on listing crypto asset securities and actually not just for brokers to be able to list these assets but also for issuers to issue these assets. I think that will unlock a ton of economic value for the crypto industry in the U.S. So that's been kind of our primary policy objective in Washington when it comes to crypto. I think it's been good in the sense like not having a regulation by enforcement posture has been a boon to the industry. But now we have an opportunity to go further and make this technology useful to everyday people and to institutions in a real big way. So that's kind of what we're working towards in Washington.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. The next question is from Evan at Stock Market News.

Unidentified Participant, Analyst

My question is a congratulations to the entire team on a fantastic quarter. I want to discuss the addition of new products, features, and business lines. I wanted to ask about the time spent on the app and user engagement metrics. Have you noticed any changes in this area, and is it something you are monitoring and optimizing?

Vlad Tenev, CEO

Yeah. Great question. We've traditionally done very, very well on those types of metrics. I mean, people find the Robinhood app very engaging, despite the fact that we don't spend a ton of time or efforts driving that. The efforts are all on making great products, making sure that customers retain really well and build a great product experience. And more recently, driving Gold subscription, the retention of Gold subscribers. So really, thus far, the focus has been on making it easy for customers to get in, making it easy for them to adopt the Gold subscription. And once they have Gold sort of like facilitating them seeing the value across all of the products that are on the platform. And then making sure we uphold the commitment to having a great product experience throughout the journey. Not to say that there aren't opportunities, and we're actually investing more in building out our related teams there on the growth in the marketing side. But yeah, thus far, it's been focused on making sure the products are really, really high quality and customers are experiencing tremendous value from using that, and Robinhood Gold in particular.

Jason Warnick, CFO

One of the things I'm excited about is the potential for Cortex to make the app even more engaging throughout the day. I'm looking forward to seeing the team execute on that.

Chris Koegel, VP of Corporate Finance and Investor Relations

Great. The next question is from Ken Worthington at JPMorgan.

Ken Worthington, Analyst

I would like to gain a deeper understanding of the event and prediction market business. Do the participants in this space resemble your equity option or crypto customers? What level of engagement do you anticipate from these customers in the prediction markets over time? Additionally, how does the activity level of prediction market customers compare to other segments of your business? Are they very active, or do they have a lower level of engagement? How do they align within the spectrum of your customer base?

Vlad Tenev, CEO

The great thing about the prediction markets business is that it appeals to a wide range of customers, and we observe very different behaviors even within prediction markets across various contracts. For instance, the group of customers engaging with the economic prediction markets is different from those participating in other areas. Many younger customers in our base are passionate about sports and follow news and current events, leading to a wide dispersion in engagement. Unlike other assets, where specific traders predominantly interact, our customers are involved in a broad spectrum of assets and exhibit diverse trading activities across our products.

Chris Koegel, VP of Corporate Finance and Investor Relations

Okay. Great. Thank you.

Vlad Tenev, CEO

Thanks, Ken.

Chris Koegel, VP of Corporate Finance and Investor Relations

All right. The next question is from Steven Chubak at Wolfe.

Steven Chubak, Analyst

Hi. Good afternoon, and thanks for squeezing me in here. Jason, you typically provide near-term guidance on NII. And I was hoping you could speak to where you expect NII to lend in 2Q based on spot or current balances? And with four cuts reflected in the forward curve, it might be helpful if you could provide an updated sensitivity to interest rate cuts.

Jason Warnick, CFO

Yeah. Thank you, Steven. So we didn't provide specific guidance for NII. What I'd tell you is that when we look at the effect, again, just isolating for a 25 basis point cut, the impact would be on a standalone basis, about $50 million as a headwind. Now when we look at over the last year, the rates have come down quite a bit, yet we have grown our interest earning assets at a pace that has outpaced the effect of dropping rates. And so, it's a little misleading to just hold everything constant and say $50 million. So, we're continuing to gather assets from customers, and we've seen a really nice growth in interest-earning assets. And then I know you've heard me say many times, we also believe that we've got a really nice natural hedge between interest rates and trading. So as rates come down, there's an expectation that we have that trading would go up and provide a nice offset to any impact there.

Chris Koegel, VP of Corporate Finance and Investor Relations

All right. The next question is from Mike Cypress at Morgan Stanley.

Mike Cyprys, Analyst

Hey, good afternoon. Thanks for squeezing me in here as well. Just a question on 24/5 markets. I was hoping you could talk about the traction that you're seeing from clients in your overnight sessions, how that's contributing today? And talk about some of the steps that you're taking to drive greater customer uptake of this? And if you look out three to five years, what does success look like here for your 24/5 markets? What portion of equities options line do you think this could represent for Robinhood?

Vlad Tenev, CEO

The 24-hour market continues to grow, with spikes in engagement during macro events after hours or on weekends. This trend highlights the significance of a 24-hour market, which I believe will become a standard in the coming years. In five years, discussing a 24-hour market will likely be irrelevant as it becomes essential for any platform catering to active traders. We can expect exchanges to follow suit, making it uncommon for any service not to provide 24-hour market access. This will be especially crucial as we expand internationally, particularly into Europe and Asia, where U.S. East Coast hours have less overlap. This will create a favorable environment for increased volumes and adoption. Overall, I see a long-term trend towards 24/7 trading for all tradable assets.

Chris Koegel, VP of Corporate Finance and Investor Relations

All right. And then the last question is a follow-up from James Yaro at Goldman Sachs.

James Yaro, Analyst

Thanks for the follow-up. I want to discuss Bitstamp. Once the deal is finalized, could you clarify what this acquisition might mean for how you manage your crypto orders, particularly regarding internalization and the crypto take rate? It's important to note that the deal included institutional volumes, which could affect the overall take rate if not specified separately. Could you also provide insight into how this will influence your retail crypto take rate?

Vlad Tenev, CEO

Yeah. We're very excited about Bitstamp. The oldest and longest running crypto exchange out there. So that makes Robinhood the oldest and longest continuously running crypto exchange, which is very exciting. Still middle of the year for close. I don't want to front-run any specific announcements on what we're going to do. But what I'll tell you is, institutional is a big opportunity for us. We're obviously not really in that space yet, but we see a lot of opportunity. And also international, Bitstamp has a global presence. Cryptos increasingly global. We're going to do more and more there. And in terms of customer execution quality, at the end of the day, the goal is to give customers choice and to provide a great execution experience, and Bitstamp certainly will play a role in that. We think it just gives us another lever to give our active traders more ways to execute their orders.

Chris Koegel, VP of Corporate Finance and Investor Relations

Okay. Well, that concludes the Q&A portion of our call. Before we end the call, Vlad, I'll turn it back to you for any closing comments.

Vlad Tenev, CEO

Yeah. I mean I just want to say thank you, guys, for joining us again. Second live video earnings call. I think we're going to continue to do it. I think they're going to get better and better. But really, we've got a lot of work to do. It's going to be a busy year. The roadmap is incredibly full. So thank you for being on this journey with us and for listening, and to the analysts and investors, retail and institutional who continue to engage with the company. So we're by no means slowing down. It's going to be a busy year for us, and looking forward to seeing many of you at the France crypto event.