Robinhood Markets (HOOD) posted its first-quarter results which revealed a gain in revenue, up 40% year-over-year, with revenue from crypto up 232%. Among the positive results showed thousands of customers sign up for Robinhood’s retirement account offering, potentially on the back of rising retirement concerns around Social Security insolvencies.
Yahoo Finance Executive Editor Brian Sozzi is joined by Robinhood CEO Vlad Tenev to discuss the trading platform’s successful quarter as well as the drivers for asset inflows, the boost from crypto engagement, and more.
“When we talk to customers, particularly for our retirement product, they love the user experience and the 3% match that is evergreen for contributions is just among the most compelling offers they’ve seen,” Tenev tells Yahoo Finance’s Market Domination. “A lot of them don’t have 401(k)s through employers. The ones that do sometimes don’t have employers that match, so having Robinhood provide that service in an individual self-directed retirement product is really compelling.”
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Nicholas Jacobino
Video Transcript
Big quarter out of Robin Hood, real record revenues, they were up 40% year over year crypto revenue up 232% lots going on at this company.Let’s welcome in Robin Hood, co founder and Ceo Vlad, 10 of Vlad.Always great to get some time with you.Hang with me here o on this one, I recently caught up uh Reddit’s co founder and Ceo uh Steve Hoffman and I asked him, it sounded like after his quarter, the platform looked and felt like it’s grown up.I’ll put the same question to you just given the gains and the numbers in this quarter is Robin Hood all grown up now and investors need to think about your company and your platform a lot differently.Well, thanks for having me, by the way, I think certainly the platforms become more diversified.Uh We’ve said for a long time that we don’t want to help our customers with their investing activities.We don’t want to just do that, but we can help in lots of ways, high yield savings, retirement, uh the new credit card offering.So you’re beginning to see uh the strategy evolving and over time you’ll continue to see more products from Robin Hood with, with the core essence of superior economics and superior user experience.I think the real highlight for me and we’ll dive into a lot of numbers that, but customers transferred 4 billion in retirement assets to Robin Hood and I know you give, uh, rewards or boosters to get some of those assets.That’s a very large number.Why do you think people outside of those incentives?Why do you think they’re moving the assets to Robin Hood?And, and what are you doing to, I guess, keep those, those numbers like that coming.Yeah, and, and one thing that we mentioned in earnings is it’s not just the aggregate level of asset inflows, but also the fact that for the second quarter in a row, we’re seeing net positive inflows from all of our major incumbent competitors.So across our incumbent competitors, people are moving more assets into Robinhood than moving out.And I think it’s, it’s a couple of things when we talk to customers, particularly for our retirement product, they love the user experience and the 3% match that is evergreen for contributions.Um is just among the most compelling offers.They’ve seen it.Uh a lot of them don’t have 401k through employers.The ones that do sometimes don’t have employers that match.So having Robin Hood provide that service in an individual self directed retirement product is, is really compelling.So it’s those two things I mentioned.Superior economic, superior user experience.Do you have an age group?The these folks moving retirement assets?Is it folks like me over the age of 40 that are, are making these move now or do you or do you have just retirees saying I, I don’t know what some of these other retirement platforms are doing but I, I like what Robin Hood is offering me.Yeah.Uh I think with this offer, it appeals both to first time investors millennials and, and Gen Z.And there’s a a long term trend of each successive generation being interested in retirement and starting to think about it at younger and younger ages.So for example, Gen Z, there was a recent survey that says they start thinking about it when they’re 19 years old and so it’s compelling as a first retirement product, but also with the matches.Um it’s also very compelling with someone that has a very large pre existing Ira account at another broker.And we’ve seen lots of customers who are maybe five years away from retirement age who uh the economics of the offer are irresistible to pass up and maybe they already use Robinhood and they like the user experience or the active trading products or the taxable account.And we’ve seen uh lots of transfers which mu with much larger account balances.And I think to us that shows that Robin Hood has evolved in feature set and capability far beyond where we started.And now it actually can serve customers who have more complex financial needs.And that was the goal from the very beginning.We wanted to start with something very simple and evolve the feature set and the capability to encompass customers that have varied and more complex needs.We’re starting to see that work and uh we’re gonna continue on that journey in the years ahead.No, it’s fascinating to see.And then also uh another good quarter in the, in the, just the bread and butter that stocks business for, for Robin Hood.Do you think there’s an economic read in there?And I, by that, I mean, Vlad people are trading more on the platform perhaps because they don’t, they’re not beating inflation, you know, they’re having trouble paying for their everyday needs.Do you think they’re now investing in stocks as a way to, to try to go out there and beat inflation?I think that typically what you see and we did actually see this when interest rates go up uh relative to uh relative to cash stocks become less attractive and you see flows uh on a macro level away from the equity markets and into uh bonds as well as high yield instruments like uh the Robin Hood goal product.Um but you have countervailing forces to that, you have what’s happening in the crypto markets.You have uh a tremendous amount of innovation uh concentrated in the US in Artificial Intelligence and uh younger customers who typically have a longer time horizon tend to be more optimistic about technology and they want to be early on to these trends.And so that’s balanced out some of the effects that we’d normally see in a higher interest rate environment on the trading front.Um Perhaps you could just detail a little more on this wells notice um that Robin Hood received uh o on the on the crypto front a any update there.And, and how do you plan to defend the company?Well, uh we shared some statements uh on that.I had uh a statement on X a couple of days ago.Um We have been trying to work with the uh sec in good faith to register a special purpose broker dealer to uh trade crypto assets.Uh Obviously, that process uh was not reciprocated.And that’s unfortunate.We do believe we have the most compliant and safest crypto platform out there for customers were as you probably know, extremely selective about the coins that we offer on the platform.They go through a rigorous vetting process.So it, it appears that uh the uh the sec is taking a hostile posture towards the crypto industry in general in the US.And I think with us, we’re eager to defend the company and the industry and our customers.And I do believe over the long run that crypto is going to be an important asset class for us, consumers, you’ve seen jurisdictions outside, you know, in the European Union, for example, taken um a much more proactive route where there is more and more regulatory clarity.So, uh yeah, we, we want to make sure America is not left behind here.We should be at the forefront of innovation across all new technologies and I think it’s incumbent on us to lead that and make sure that the conditions in, in the US remain favorable to technology and innovation.Do you ever think that regulators will, will warm up to crypto?I do think they will, I think you’re starting to see it.I mean, it’s, it’s been a little bit slower than we would like.But five years ago, Bitcoin was in a, in a uh uncertain environment.Now you’re seeing regulators moving past Bitcoin and starting to investigate other things and to try to understand them.I do believe over the long run the US will get there and it’s just about accelerating that, but the people want it.It’s an asset class that uh particularly in a high inflation environment is attractive.You’ve seen it being adopted and lots of practical use cases emerging.So I think crypto technology and the assets themselves are gonna continue to be an important part of the economy.Lastly that uh Vlad um Robinhood is sitting on a ton of cash $4.7 billion any thought of.Uh I guess a potential dividend are you gonna buy back stock with that?Well, uh in the past, we have bought back stock, we bought back uh about 7% of the outstanding in uh Q three of last year from emergent fidelity technologies.We’ve also uh enjoyed having the flexibility for opportunistic M and A and we’ve been uh very selective about uh the companies that we look at and we end up moving forward with.But um yeah, it’s, it’s, it’s a huge strength for the company to have a fortress balance sheet in uh in all environments.Uh Fascinating quarter from uh from you guys.We’ll leave it there.Robin Hood, co founder and Ceo of Vlad 10 of uh thanks for always making time for y’all.Finance.We appreciate it.It’s always a pleasure.Thank you, Brian.
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