Upgrade to SI Premium - Free Trial

Robinhood Reports Third Quarter 2022 Results

November 2, 2022 4:05 PM

MENLO PARK, Calif., Nov. 02, 2022 (GLOBE NEWSWIRE) -- Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) today announced financial results for the third quarter of 2022, which ended September 30, 2022.

"In the third quarter we achieved our goal of reaching adjusted EBITDA profitability, a quarter earlier than planned,” said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. "We delivered on top feature requests for customers including advanced charts, options in cash accounts, instant withdrawals and our self-custody, web3 wallet. In the next week, we are raising the yield on uninvested cash for Gold members - making it one of the best rates in the industry."

“We remained focused on serving our customers and driving long-term shareholder value in Q3,” said Jason Warnick, Chief Financial Officer of Robinhood Markets. “We drove positive Adjusted EBITDA by increasing revenues and reducing expenses. We also continued to deliver on our 2022 product roadmap, which helped maintain steady net funded accounts and drive strong net deposits.”

Highlights

Robinhood returns to adjusted EBITDA profitability in the third quarter

Robinhood delivers enhanced user experience

Robinhood enhances the Gold offering

Webcast and Conference Call Information

Robinhood will host a conference call to discuss its results at 2 p.m. PT / 5 p.m. ET today, November 2, 2022. The live webcast of Robinhood's earnings conference call can be accessed at investors.robinhood.com, along with the earnings press release and accompanying slide presentation.

Following the call, a replay and transcript will also be available at the same website.

Financial Outlook

As a result of the progress we have made on our cost reduction initiatives, including the reductions in force announced April 26, 2022 (the “April 2022 Restructuring”) and August 2, 2022 (the “August 2022 Restructuring”) we expect:

Actual results 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.

About Robinhood

Robinhood Markets is on a mission to democratize finance for all. With Robinhood, people can invest with no account minimums through Robinhood Financial LLC, buy and sell crypto through Robinhood Crypto, LLC, spend, save, and earn rewards through Robinhood Money, LLC, and learn about investing through easy-to-understand educational content.

Robinhood intends to use the "Overview" tab of its Investor Relations website and its blog, Under the Hood, as means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the Securities and Exchange Commission's ("SEC") Regulation Fair Disclosure (Reg. FD). The Overview page can be accessed at investors.robinhood.com/overview and Under the Hood can be accessed at blog.robinhood.com and investors should routinely monitor those web pages, in addition to Robinhood’s press releases, SEC filings, and public conference calls and webcasts, as information posted on them could be deemed to be material information.

"Robinhood" and the Robinhood feather logo are registered trademarks of Robinhood Markets, Inc. All other names are trademarks and/or registered trademarks of their respective owners.

Contacts

Investors:
[email protected]

Press:
[email protected]

December 31, September 30,
2021 2022
Assets
Current assets:
Cash and cash equivalents$6,253 $6,187
Cash and cash equivalents segregated under federal and other regulations 3,992 2,954
Receivables from brokers, dealers, and clearing organizations 88 75
Receivables from users, net 6,639 4,046
Securities borrowed 139
Deposits with clearing organizations 328 201
Asset related to user cryptocurrencies safeguarding obligation 9,361
User-held fractional shares 1,834 1,029
Investments 27 32
Prepaid expenses 92 80
Other current assets 30 41
Total current assets 19,283 24,145
Property, software, and equipment, net 146 151
Goodwill 101 100
Intangible assets, net 34 27
Restricted cash 24 22
Operating lease right-of-use-assets 129 100
Non-current prepaid expenses 44 27
Other non-current assets 8 29
Total assets$19,769 $24,601
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses$252 $203
Payables to users 6,476 5,396
Securities loaned 3,651 1,423
User cryptocurrencies safeguarding obligation 9,361
Fractional shares repurchase obligation 1,834 1,029
Operating lease liabilities 22 22
Other current liabilities 112 75
Total current liabilities 12,347 17,509
Operating lease liabilities, non-current 129 138
Total liabilities 12,476 17,647
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.0001 par value. 21,000,000,000 shares authorized, 735,957,367 shares issued and outstanding as of December 31, 2021; 21,000,000,000 shares authorized, 756,758,543 shares issued and outstanding as of September 30, 2022.
Class B common stock, par value $0.0001. 700,000,000 shares authorized, 127,955,246 shares issued and outstanding as of December 31, 2021; 700,000,000 shares authorized, 127,955,246 shares issued and outstanding as of September 30, 2022.
Class C common stock, par value $0.0001. 7,000,000,000 shares authorized, no shares issued and outstanding as of December 31, 2021; 7,000,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022.
Additional paid-in capital 11,169 11,694
Accumulated other comprehensive income (loss) 1 (1)
Accumulated deficit (3,877) (4,739)
Total stockholders’ equity 7,293 6,954
Total liabilities and stockholders’ equity$19,769 $24,601


Three Months Ended
September 30,
YOY% Change
Three Months Ended June 30, QOQ% Change
(in millions, except share, per share, and percentage data) 2021 2022 2022
Revenues:
Transaction-based revenues$267 $208 (22)% $202 3%
Net interest revenues 63 128 103% 74 73%
Other revenues 35 25 (29)% 42 (40)%
Total net revenues 365 361 (1)% 318 14%
Operating expenses(1)(2):
Brokerage and transaction 44 33 (25)% 30 10%
Technology and development 679 185 (73)% 244 (24)%
Operations 108 64 (41)% 86 (26)%
Marketing 87 19 (78)% 24 (21)%
General and administrative 790 234 (70)% 226 4%
Total operating expenses 1,708 535 (69)% 610 (12)%
Change in fair value of convertible notes and warrant liability 25 NM NM
Other (income) expense, net (1) NM 2 NM
Loss before income taxes (1,367) (174) (87)% (294) (41)%
Provision for (benefit from) income taxes (50) 1 (102)% 1 %
Net loss$(1,317) $(175) (87)% $(295) (41)%
Net loss attributable to common stockholders:
Basic$(1,317) $(175) $(392)
Diluted$(1,317) $(175) $(392)
Net loss per share attributable to common stockholders:
Basic$(2.06) $(0.20) $(0.34)
Diluted$(2.06) $(0.20) $(0.34)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic 638,168,188 882,356,575 874,873,301
Diluted 638,168,188 882,356,575 874,873,301


Nine Months Ended
September 30,
% Change
(in millions, except share, per share, and percentage data) 2021 2022
Revenues:
Transaction-based revenues $1,138 $628 (45)%
Net interest revenues 193 257 33%
Other revenues 121 93 (23)%
Total net revenues 1,452 978 (33)%
Operating expenses(1)(2):
Brokerage and transaction 123 94 (24)%
Technology and development 952 695 (27)%
Operations 276 241 (13)%
Marketing 283 77 (73)%
General and administrative 1,039 728 (30)%
Total operating expenses 2,673 1,835 (31)%
Change in fair value of convertible notes and warrant liability 2,045 NM
Other (income) expense, net (1) 2 NM
Loss before income taxes (3,265) (859) (74)%
Provision for (benefit from) income taxes (1) 3 NM
Net loss $(3,264) $(862) (74)%
Net loss attributable to common stockholders:
Basic $(3,264) $(862)
Diluted $(3,264) $(862)
Net loss per share attributable to common stockholders:
Basic $(8.85) $(0.99)
Diluted $(8.85) $(0.99)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic 368,518,894 875,055,571
Diluted 368,518,894 875,055,571

________________
(1) The following table presents operating expenses as a percent of total net revenues:

Three Months Ended
September 30,
Three Months Ended June 30, Nine Months Ended
September 30,
2021 2022 2022 2021 2022
Brokerage and transaction 12% 9% 9% 8% 10%
Technology and development 186% 51% 77% 66% 71%
Operations 30% 18% 27% 19% 25%
Marketing 24% 5% 8% 19% 8%
General and administrative 216% 65% 71% 72% 74%
Total operating expenses 468% 148% 192% 184% 188%

________________
(2) The following table presents the share-based compensation in our unaudited condensed consolidated statements of operations for the periods indicated:

Three Months Ended
September 30,
Three Months Ended June 30, Nine Months Ended
September 30,
(in millions) 2021 2022 2022 2021 2022
Brokerage and transaction $6 $2 $1 $6 $4
Technology and development 503 25 59 505 166
Operations 16 1 16 5
Marketing 41 (2) 41 3
General and administrative 678 83 105 686 316
Total share-based compensation expense $1,244 $110 $164 $1,254 $494


Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions) 2021 2022 2021 2022
Operating activities:
Net loss$(1,317) $(175) $(3,264) $(862)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 8 15 17 44
Impairment of long-lived assets 47 47
Provision for credit losses 25 9 62 28
Share-based compensation 1,243 110 1,253 494
Change in fair value of convertible notes and warrant liability 25 2,045
Other 8 8
Changes in operating assets and liabilities:
Segregated securities under federal and other regulations 300 20 85
Receivables from brokers, dealers, and clearing organizations 85 14 13
Receivables from users, net (701) 92 (2,805) 2,565
Securities borrowed (73) (139)
Deposits with clearing organizations (44) 88 (91) 127
Operating lease right-of-use assets (60) 7 (86) 8
Current and non-current prepaid expenses (77) 18 (112) 29
Other current and non-current assets 10 7 771 (3)
Accounts payable and accrued expenses (64) (38) 118 (45)
Payables to users (957) (400) 914 (1,080)
Securities loaned 487 56 1,209 (2,228)
Current and non-current operating lease liabilities 67 (5) 100 (2)
Other current and non-current liabilities (39) (7) (826) (37)
Net cash used in operating activities (1,009) (207) (610) (1,033)
Investing activities:
Purchase of property, software, and equipment (24) (6) (46) (25)
Capitalization of internally developed software (7) (8) (13) (22)
Acquisitions of a business, net of cash acquired (119) (119)
Purchase of investments (27)
Sales of investments 14 19
Other (2) (11) (2) (16)
Net cash used in investing activities (152) (11) (180) (71)
Financing activities:
Proceeds from issuance of common stock in connection with initial public offering, net of offering costs 2,058 2,058
Proceeds from issuance of common stock under the Employee Stock Purchase Plan 13
Taxes paid related to net share settlement of equity awards (412) (2) (412) (9)
Proceeds from issuance of convertible notes and warrants 3,552
Payments of debt issuance costs (10)
Draws on credit facilities 610 10 1,958 21
Repayments on credit facilities (610) (10) (1,958) (21)
Proceeds from exercise of stock options, net of repurchases 5 1 12 6
Net cash provided by (used in) financing activities 1,651 (1) 5,210
Effect of foreign exchange rate changes on cash and cash equivalents (2) (2)
Net increase (decrease) in cash, cash equivalents, segregated cash and restricted cash 490 (221) 4,420 (1,106)
Cash, cash equivalents, segregated cash and restricted cash, beginning of the period 10,120 9,385 6,190 10,270
Cash, cash equivalents, segregated cash and restricted cash, end of the period$10,610 $9,164 $10,610 $9,164
Cash and cash equivalents, end of the period$6,167 $6,187 $6,167 $6,187
Segregated cash, end of the period 4,418 2,954 4,418 2,954
Restricted cash (current and non-current), end of the period 25 23 25 23
Cash, cash equivalents, segregated cash and restricted cash, end of the period$10,610 $9,164 $10,610 $9,164
Supplemental disclosures:
Cash paid for interest$3 $ $6 $6
Cash paid for income taxes, net of refund received$ $1 $3 $4
Non-cash operating activities:
Asset related to user cryptocurrencies safeguarding obligation$ $768 $ $9,361
User cryptocurrencies safeguarding obligation$ $768 $ $9,361
Non-cash financing activities:
Unpaid offering costs in connection with initial public offering$ $ $5 $


Three Months Ended
September 30,
Three Months Ended June 30, Nine Months Ended
September 30,
(in millions) 2021 2022 2022 2021 2022
Net loss $(1,317) $(175) $(295) $(3,264) $(862)
Net margin (non-GAAP) (361)% (48)% (93)% (225)% (88)%
Add:
Interest expenses related to credit facilities 6 6 6 14 18
Provision for (benefit from) income taxes (50) 1 1 (1) 3
Depreciation and amortization 8 15 17 17 44
EBITDA (non-GAAP) (1,353) (153) (271) (3,234) (797)
Share-based compensation(1) 1,244 110 164 1,254 494
Change in fair value of convertible notes and warrant liability 25 2,045
Restructuring charges(2) 90 17 107
Significant legal and tax settlements and reserves 10 55 20
Adjusted EBITDA (non-GAAP) $(84) $47 $(80) $120 $(176)
Adjusted EBITDA margin (non-GAAP) (23)% 13% (25)% 8% (18)%

________________
(1) In 2022, share-based compensation benefited from restructuring-related net reversals of previously recognized expense as follows:

(2) In 2022, restructuring charges arose as follows:

Three Months Ended
September 30,
Three Months Ended June 30,
2021 2022 2022
(in millions, except percentage data) $ % of
Total Net Revenues
$ % of
Total Net Revenues
$ % of
Total Net Revenues
Brokerage and transaction (GAAP) $44 12% $33 9% $30 9%
Less: SBC 6 2% 2 1% 1 %
Brokerage and transaction prior to SBC (non-GAAP) 38 10% 31 8% 29 9%
Technology and development (GAAP) 679 186% 185 51% 244 77%
Less: SBC 503 138% 25 7% 59 19%
Technology and development prior to SBC (non-GAAP) 176 48 160 44 185 58%
Operations (GAAP) 108 30% 64 18% 86 27%
Less: SBC 16 4% % 1 %
Operations prior to SBC (non-GAAP) 92 26% 64 18% 85 27%
Marketing (GAAP) 87 24% 19 5% 24 8%
Less: SBC 41 11% % (2) (1)%
Marketing prior to SBC (non-GAAP) 46 13% 19 5% 26 9%
General and administration (GAAP) 790 216% 234 65% 226 71%
Less: SBC 678 186% 83 23% 105 33%
General and administration prior to SBC (non-GAAP) 112 30% 151 42% 121 38%
Total operating expenses (GAAP) $1,708 468% $535 148% $610 192%
Less: SBC 1,244 341% 110 31% 164 51%
Total operating expenses prior to SBC (non-GAAP) $464 127% $425 117% $446 141%


Nine Months Ended
September 30,
2021 2022
(in millions, except percentage data) $ % of
Total Net Revenues
$ % of
Total Net Revenues
Brokerage and transaction (GAAP) $123 8% $94 10%
Less: SBC 6 % 4 %
Brokerage and transaction prior to SBC (non-GAAP) 117 8% 90 10%
Technology and development (GAAP) 952 66% 695 71%
Less: SBC 505 35% 166 17%
Technology and development prior to SBC (non-GAAP) 447 31 529 54%
Operations (GAAP) 276 19% 241 25%
Less: SBC 16 1% 5 1%
Operations prior to SBC (non-GAAP) 260 18% 236 24%
Marketing (GAAP) 283 19% 77 8%
Less: SBC 41 3% 3 %
Marketing prior to SBC (non-GAAP) 242 16% 74 8%
General and administration (GAAP) 1,039 72% 728 74%
Less: SBC 686 47% 316 32%
General and administration prior to SBC (non-GAAP) 353 25% 412 42%
Total operating expenses (GAAP) $2,673 184% $1,835 188%
Less: SBC 1,254 86% 494 50%
Total operating expenses prior to SBC (non-GAAP) $1,419 98% $1,341 138%


Year Ended December 31, 2021 Financial Outlook
for the Year Ending December 31, 2022
Financial Outlook for the Quarter Ending December 31, 2022
(in millions) (year- over-year change) (in millions) (in millions)
Total operating expenses (GAAP) $3,456 decrease by 31% – 32% $2,335 – $2,395 $500-$560
Less: SBC $1,572 decrease by 56% – 59% $645– $6851 $150-$190
Total operating expenses prior to SBC (non-GAAP) $1,884 decrease by 9% – 10% $1,690 – $1,7102 $350-$370

________________
(1) These amounts reflect an aggregate benefit of $77 million from share-based compensation net reversals in connection with the April 2022 and August 2022 Restructurings.
(2) These amounts include restructuring charges of $107 million incurred in connection with the April 2022 and August 2022 Restructurings.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding the expected financial performance of Robinhood Markets, Inc. and its consolidated subsidiaries (“we,” “Robinhood,” or the “Company”) and our strategic and operational plans, including (among others) the statements regarding our plans to bring our customers additional products and services throughout the remainder of 2022; our plans to raise the yield on uninvested cash for Robinhood Gold members; our plans to launch the Robinhood Retirement product as well as all statements and information under the headings “Financial Outlook" and "Reconciliation of GAAP to Non-GAAP Financial Outlook." Our forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other factors that may cause our actual future results, performance, or achievements to differ materially from any future results expressed or implied in this press release. Reported results should not be considered an indication of future performance. Factors that contribute to the uncertain nature of our forward-looking statements include, among others: our limited operating history; the difficulty of managing our business effectively, including the size of our workforce, and the risk of continued declining or negative growth; the fluctuations in our financial results and key metrics from quarter to quarter; our reliance on transaction-based revenue, including payment for order flow (“PFOF”), and the risk of new regulation or bans on PFOF and similar practices; the difficulty of raising additional capital (to satisfy any liquidity needs and support business growth and objectives) on reasonable terms or at all; the need to maintain capital levels required by regulators and self-regulatory organizations; the risk that we might mishandle the cash, securities, and cryptocurrencies we hold on behalf of customers, and our exposure to liability for operational errors in clearing functions; the impact of negative publicity on our brand and reputation; the risk that changes in business, economic, or political conditions, or systemic market events, might harm our business; our dependence on key employees and a skilled workforce; the difficulty of complying with an extensive and complex regulatory environment and the need to adjust our business model in response to new or modified laws and regulations; the possibility of adverse developments in pending litigation and regulatory investigations; the effects of competition; our need to innovate and invest in new products and services in order to attract and retain customers and deepen their engagement with us in order to maintain growth; our reliance on third parties to perform some key functions and the risk that operational or technological failures could impair the availability or stability of our platform; the risk of cybersecurity incidents, theft, data breaches, and other online attacks; the difficulty of processing customer data in compliance with privacy laws; our need as a regulated financial services company to develop and maintain effective compliance and risk management infrastructures; the volatility of cryptocurrency prices and trading volumes; the risk that our platform could be exploited to facilitate illegal payments; and the risk that substantial future sales of Class A common shares in the public market could cause the price of our stock to fall. Because some of these risks and uncertainties cannot be predicted or quantified and some are beyond our control, you should not rely on our forward-looking statements as predictions of future events. More information about potential risks and uncertainties that could affect our business and financial results can be found in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, which was filed on August 3, 2022, and in our Form 10-Q for the quarter ended September 30, 2022, which we expect to be available on November 3, 2022, as well as in our other filings with the SEC, all of which are available on the SEC’s web site at www.sec.gov. Moreover, we operate in a very competitive and rapidly changing environment; new risks and uncertainties may emerge from time to time, and it is not possible for us to predict all risks nor identify all uncertainties. The events and circumstances reflected in our forward-looking statements might not be achieved and actual results could differ materially from those projected in the forward-looking statements. Except as otherwise noted, all forward-looking statements are made as of the date of this press release, November 2, 2022, and are based on information and estimates available to us at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by law, Robinhood assumes no obligation to update any of the statements in this press release whether as a result of any new information, future events, changed circumstances, or otherwise. You should read this press release with the understanding that our actual future results, performance, events, and circumstances might be materially different from what we expect.

Non-GAAP Financial Measures

We collect and analyze operating and financial data to evaluate the health of our business, allocate our resources and assess our performance. In addition to total net revenues, net income (loss) and other results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Adjusted EBITDA margin, operating expense prior to share-based compensation, and operating expenses prior to share-based compensation and restructuring charges. This non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with GAAP and may be different from similarly titled non-GAAP measures used by other companies. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss), excluding (i) interest expenses related to credit facilities, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) share-based compensation, (v) change in fair value of convertible notes and warrant liability, (vi) significant legal and tax settlements and reserves, and (vii) other significant gains, losses, and expenses (such as impairments, restructuring charges, and business acquisition- or disposition-related expenses) that we believe are not indicative of our ongoing results.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items are unpredictable, are not driven by core results of operations and render comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.

Adjusted EBITDA Margin

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total net revenues. The most directly comparable GAAP measure is net margin (calculated as net income (loss) divided by total net revenues). We believe Adjusted EBITDA Margin provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Adjusted EBITDA Margin is used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.

Operating Expense Prior to Share-Based Compensation

Operating expense prior to share-based compensation is defined as the applicable GAAP operating expense line item minus the share-based compensation (or SBC) included within such line item. We believe operating expense prior to SBC provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our cost structure.

Operating Expenses Prior to Share-Based Compensation and Restructuring Charges

Operating expenses prior to share-based compensation and restructuring charges is defined as GAAP total operating expenses minus share-based compensation (or SBC) and restructuring charges. We believe operating expenses prior to SBC and restructuring charges provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our cost structure.

Key Performance Metrics

In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the key performance metrics described below to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

Net Cumulative Funded Accounts

A Robinhood account is designed to provide a user with access to any and all of the products offered on our platform. We define “Net Cumulative Funded Accounts” as New Funded Accounts less Churned Accounts plus Resurrected Accounts (each as defined below). A “New Funded Account” is a Robinhood account into which the account user makes an initial deposit or money or asset transfer, of any amount, during the relevant period. An account is considered “Churned” if it was ever a New Funded Account and its balance (measured as the fair value of assets in the account less any amount due from the user and excluding certain Company-initiated credits) drops to or below zero for at least 45 consecutive calendar days. Negative balances typically result from Fraudulent Deposit Transactions (as defined below) and, less often, from margin loans. An account is considered “Resurrected” in a stated period if it was a Churned Account as of the end of the immediately preceding period and its balance (excluding certain Company-initiated credits) rises above zero. Examples of credits excluded for purposes of identifying Churned Accounts and Resurrected Accounts are price correction credits, related interest adjustments, and fee adjustments.

“Fraudulent Deposit Transactions” occur when users initiate deposits into their accounts, make trades on our platform using a short-term extension of credit from us, and then repatriate or reverse the deposits, resulting in a loss to us of the credited amount.

Monthly Active Users (“MAU”)

We define MAU as the number of Monthly Active Users during a specified calendar month. A “Monthly Active User” is a unique user who makes a debit card transaction, or who transitions between two different screens on a mobile device or loads a page in a web browser while logged into their account, at any point during the relevant month. A user need not satisfy these conditions on a recurring monthly basis or have a Funded Account to be included in MAU. Figures in this release reflect MAU for the last month of each period presented. We utilize MAU to measure how many customers interact with our products and services during a given month. MAU does not measure the frequency or duration of the interaction, but we consider it a useful indicator for engagement. Additionally, MAUs are positively correlated with, but are not indicative of, the performance of revenue and other key performance indicators.

Assets Under Custody (“AUC”)

We define AUC as the sum of the fair value of all equities, options, cryptocurrency and cash held by users in their accounts, net of receivables from users, as of a stated date or period end on a trade date basis. Net Deposits and net market gains drive the change in AUC in any given period.

Net Deposits

We define “Net Deposits” as all cash deposits and asset transfers received from customers, net of reversals, customer cash withdrawals, and other assets transferred out of our platform (assets transferred in or out include debit card transactions, Automated Customer Account Transfer Service (“ACATS”) transfers, and custodial crypto wallet transfers) for a stated period.

Average Revenue Per User (“ARPU”)

We define ARPU as total revenue for a given period divided by the average of Net Cumulative Funded Accounts on the last day of that period and the last day of the immediately preceding period. Figures in this release represent annualized ARPU for each three-month period presented.

Growth Rate and Annualized Growth Rate with respect to Net Deposits

When used with respect to Net Deposits, "growth rate" and "annualized growth rate" provide information about Net Deposits relative to total AUC. "Growth rate" is calculated as aggregate Net Deposits over a specified 12 month period, divided by AUC for the fiscal quarter that immediately precedes such 12 month period. "Annualized growth rate" is calculated as Net Deposits for a specified quarter multiplied by 4 and divided by AUC for the immediately preceding quarter.


Categories

Globe Newswire Press Releases

Next Articles