Robinhood Q3 2024 $HOOD (-2.99%)
Financial performance
- Net income: For the nine months ended September 30, 2024, Robinhood reported net income of $495 million, a significant turnaround from a net loss of $571 million for the same period in 2023.
- Total revenues: Total revenues increased 39% year-over-year to $1.937 billion for the nine months ended September 30, 2024.
Balance sheet overview
- Total assets: As of September 30, 2024, total assets were $43.245 billion, an increase from $32.332 billion as of December 31, 2023.
- Total liabilities: Liabilities increased to $36.037 billion from $25.636 billion in the same period.
- Shareholders' equity: Shareholders' equity increased to $7.208 billion, up from $6.696 billion.
Details of the income statement
- Transaction-based revenues: This increased by 67% to 975 million dollars.
- Net interest income: Grew by 17% to 813 million dollars.
- Operating expenses: These fell by 26% to 1.439 billion dollars.
Cash flow overview
- Net cash flow from operating activities: For the nine months ended September 30, 2024, this was $495 million, compared to net cash flow of -$571 million in the same period last year.
- Cash and cash equivalents: These increased to 10.241 billion dollars from 8.380 billion dollars at the end of 2023.
Key figures and profitability ratios
- Adjusted EBITDA margin: Improved to 42% for the nine months ended September 30, 2024, compared to 29% for the same period last year.
Segment information
- Pension assets: Increased nine-fold year-over-year to $9.9 billion.
- Cash Sweep: Grew 80% year-over-year to $24.5 billion.
Competitive position
Robinhood continues to expand its product offerings, including the launch of Robinhood Legend, a desktop trading platform for active traders, and plans to introduce futures and index options.
Forecasts and management commentary
- Outlook for 2024: GAAP operating expenses are estimated to be between $1.86 billion and $1.96 billion.
Risks and opportunities
- Risks: Include regulatory changes, market volatility and competition.
- Opportunities: Expansion into the UK market and new product launches.
Summary of the results
Robinhood Markets, Inc. has demonstrated strong financial performance with significant revenue growth and a return to profitability. The company is expanding its product offering and market presence, particularly in the UK. Nevertheless, it faces risks from regulatory changes and market competition. The financial outlook remains positive, with a focus on strategic growth and efficiency improvements.
Positive aspects
- Sales growth: Total net sales increased by 36% year-on-year to 637 million dollars in the third quarter of 2024.
- Profitability: The company realized net income of $150 million in the third quarter of 2024, compared to a net loss of $85 million in the third quarter of 2023.
- Transaction-based revenue: Transaction-based revenue grew 72% year-over-year to $319 million, driven by significant growth in options and cryptocurrencies.
- Assets under management (AUC): AUC increased 76% year-over-year to $152.2 billion, indicating strong client retention and asset growth.
- Product Development: Robinhood launched Robinhood Legend, a new desktop trading platform, and plans to introduce futures and index options to expand its product offering for active traders.
Negative aspects
- Cash and cash equivalents: Cash and cash equivalents decreased to $4.6 billion from $4.9 billion at the end of the third quarter of 2023, indicating a reduction in liquidity.
- Operating costs: Adjusted operating expenses (non-GAAP) increased 12% year-over-year to $397 million, primarily due to increased marketing and growth investments.
- Regulatory provisions: The company recorded a regulatory provision of $10 million in Q3 2024, although this is a decrease compared to $104 million in Q3 2023, it still remains a significant cost item.
- Market risks: The Company faces ongoing risks from regulatory changes, market volatility and competition that could impact future performance.