Robinhood Markets Inc at Wolfe Research Wealth Symposium Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Chubak - Wolfe Research - Analyst : So maybe just focusing on the Investor Day for a moment. I'm sure that the prediction markets will get touched on as well other opportunities that you're excited about. But just given your journey as a public company since 2021, what are you hoping to accomplish with the day and why is now the right time to be launching this Investor Day?

Question: Steven Chubak - Wolfe Research - Analyst : Thanks Jason. And one of the priorities I know, which I'm sure, we'll hear more about at Investor Day is around Robinhood Gold. And Currently, you have 9% of your customer base, at least that are gold subscribers, but the new customers coming in have been coming in at a much higher attachment rate, north of 20%. Maybe you could just speak to your long-term vision around gold adoption. What are some of the specific initiatives that you have underway just to increase that attachment level?

Question: Steven Chubak - Wolfe Research - Analyst : And the other target that you guys have talked about in the past is a 20% net deposit rate. Admittedly, you've been running well north of that closer to 40% over the last 12 months. As we think about some of the other opportunities, they're still in like their infancy, whether it's international, whether it's the active trader opportunity, do you see a credible case for a higher level of run rate organic growth relative to that 20%? What informs that view?

Question: Steven Chubak - Wolfe Research - Analyst : Certainly delve into the advisory conversation in relatively short order. I mean, after all, it is a wealth symposium. But just was hoping to speak to how much of the improvement in organic flows has really been bolstered by your match offering. So these are quite unique in the marketplace, attractive returns. You've cited very low payback periods or short payback periods. I was hoping to impact just some of the assumptions that you're making around that payback calculus what proportion of the NNA that you're seeing come into Robinhood is coming from the match program today?

Question: Steven Chubak - Wolfe Research - Analyst : And then the you did offer just to drill down a little bit like the near-term guidance around the matches that you're going to see a step up in the fourth quarter relative to the third quarter, but then the cost should begin to moderate. So the second derivative improving what's driving some of that improvement? And just 1 area of pushback has been, how do you prevent bad actors from joining the platform, folks that see 1% match? I'm just going to bring large number of assets and I'm going to trade very little or the activity rates will be much more muted. So how do you protect the overall franchise from some of those bad actors? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 4:45PM, HOOD.OQ - Robinhood Markets Inc at Wolfe Research Wealth Symposium

Question: Steven Chubak - Wolfe Research - Analyst : Just that what's driving that moderation in the ramp?

Question: Steven Chubak - Wolfe Research - Analyst : You guys had a lot of buzz, too around the active trader summit and certainly a lot of excitement. You launched Robinhood Legend, great branding brought it to us, at least just one man's opinion, futures and index options we'll drill down into each of those. But I will say as someone who's covered this space for a long time. There's very little public data around the active trader TAMs, whether it's the US or globally, and I was hoping you could offer some perspective before we drill down into some of the Robin Hood specific opportunities, just how you size the market, how you view the market? Where is your market share today? And what is your North Star?

Question: Steven Chubak - Wolfe Research - Analyst : And you've also seen some really good momentum on the margin side I know that's been a big area of priority for the firm and certainly for the management team. You made some pricing changes that drove an acceleration but margin balances as a percentage of AUC is still only about 4% of Robinhood, what do you think that could get to when you benchmark versus peers? What do you see as an achievable target for that margin penetration?

Question: Steven Chubak - Wolfe Research - Analyst : And the other two exciting areas that you have now dip your toe in our futures and index options; you actually frame futures as a nine figure opportunity for the firm. And I was hoping you could just speak to what are some of the assumptions that are underpinning that and if you can offer a similar context around the index options opportunity as well.

Question: Steven Chubak - Wolfe Research - Analyst : And the other question that we've been building quite a bit. I mean the good news is there's been quite a bit of interest in your stock, especially post the, I guess, the change in administration and around the crypto opportunity. When we look at what some of your peers have done, it does suggest that there is significant room for expansion in terms of launching new clients on the platform, speaking, maybe even waiting your toe into lending, could you speak to how you see the crypto opportunity unfolding relative to what you guys are currently offering on the platform today?

Question: Steven Chubak - Wolfe Research - Analyst : And this is a wealth conference, as we have mentioned earlier, might be a good time just to speak to what your vision is for the wealth product that you're hoping to launch on the platform. I know it's supposed to have like a heavy II -- sorry, AI and tech component. But just given your track record disruption, undercutting competitors on price, like, what's your vision for the product? How do you plan on pricing the product? And how do you avoid some of the falls that maybe the robo advisers and others have had that tried to for something similar?

Question: Steven Chubak - Wolfe Research - Analyst : I mean certainly, the folks here can appreciate that and the size of the TAM, at least on the wealth side. So it's encouraging to see you guys are going after that opportunity. Another exciting opportunity is international. And as we think about -- some of the firms have had tremendous success, like an interactive expanding abroad. What is your vision for what Robinhood accomplishes in terms of footprint? And just penetration rates like across different geographies. And I was hoping just for some additional context around like how the strategy evolves around crypto versus maybe some of the other products and asset classes.

Question: Steven Chubak - Wolfe Research - Analyst : And admittedly, there's been a fair amount of volatility in terms of activity rates in your public history and even prior to that, so one of the questions that we get quite often, Jason, is really around like what's the new normal for activity levels? And part of the challenge, admittedly, although it's a high-class problem is that you're attracting more and more active traders to the platform. Now how should investors think about what is a new normal for activity rates? And do you expect it to trend higher, given that increasing percentage of active traders that are doing that?

Question: Steven Chubak - Wolfe Research - Analyst : And I guess one of the benefits of delivering that level of sustained growth is that you also have very high incremental margins on the business. So a 90% fixed expense base, you guys have consistently delivered a 75% plus incremental margin on every additional dollar of revenue that's come through the door. As you think about where you are today in terms of GAAP EBITDA margins at 30% plus, given the highly scalable model that you've built, like is there anything structural that would preclude you from closing that gap with a Schwab or an interactive that are running with much higher margins than that . REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 4:45PM, HOOD.OQ - Robinhood Markets Inc at Wolfe Research Wealth Symposium

Question: Steven Chubak - Wolfe Research - Analyst : And you also have been fairly active on the M&A front. So though not transformational deals per se, but like small tuck-ins just to bolster the product offering. So X1 credit card, say, technologies only. You mentioned Bitstamp. What are some of the other gaps on the platform where it might make more sense to buy versus build?

Question: Steven Chubak - Wolfe Research - Analyst : Maybe before asking what was probably an inevitable question around the earnings growth algorithm and I'm looking forward to the preview at least the head of Investor Day. So I did want to ask just on the gold ARPU and pricing, just given the benefits from the gold subscribers as being much more active, you guys have quoted in the past 7 times or relative to the rest of the customer base. You may not have imminent plans to change pricing. Maybe just talk about your philosophy around pricing for different products, especially as that value prop improves, how do you think that's ultimately going to evolve over time?

Question: Steven Chubak - Wolfe Research - Analyst : Great. And maybe just a good closure again on the earnings growth algorithm. Just like trying to put a lot of the pieces together, Jason, that you outlined that you're seeing significant growth in accounts. They're much more engaged. You have very high incremental margins in a large, fixed cost base, more consistency with the buyback. I know we didn't touch on that here, but you've alluded to that publicly. What do you see as a sustainable earnings growth algorithm for the company as you think about all those different component pieces?

Question: Steven Chubak - Wolfe Research - Analyst : Well. Great way to close it now, Jason, thanks so much for being here. Really appreciate it and looking forward to Investor Day on December 4.