5 ms·

$1 billion in top line revenue in 2020. Wow.

by bmmayer1 5y ago

paulpauper 5y ago
So much for that media narrative of rh being hurt by bad press about gamestop. Rh is still hugely popular
- conception 5y ago
  Well, said bad press was in 2021 so any effects have yet to be seen.
  - verdverm 5y ago
    Will it be the PR or that people were actively trading while lockdown was on? Anecdotally, I know several people who were active on RH until they went back to work
  - dmode 5y ago
    You should see their 2021 numbers. They are growing faster.
- nerfhammer 5y ago
  My guess is all the media attention actually got them more signups
ac29 5y ago
Certainly puts that $70M SEC fine in perspective - that's not a trivial amount.
arthurcolle 5y ago
Stocks only go up
fullshark 5y ago
~70% was transactions and ~20% was interest. For comparison about 60% of Etrade's revenue is interest and 30% is fees + commissions. Either Robinhood has found a smarter business model re: selling order flow or they are making a killing on crypto fees. The commission business model is dead for good I think. https://www.nasdaq.com/articles/net-interest-revenue-will-form-40-60-or-80-of-e-trades-stock-in-2020-2019-12-01 https://www.nasdaq.com/articles/net-interest-revenue-will-fo...
- fnordfnordfnord 5y ago
  >or they are making a killing on crypto fees. They don't charge commissions to trade crypto. Not sure where they're skimming the money but the terrible order fills you get there gives me an idea.
  - edoceo 5y ago
    Front-running?
    - fnordfnordfnord 5y ago
      A rose by any other name...
    - gruez 5y ago
      No need. It's just like those "commission free" currency exchange places you see at airports and tourist areas. There might not be a commission, but the spread is several percent, and they make all their profit off that.
  - ralph84 5y ago
    There are no regulations on execution quality for crypto. RH treats crypto as forex and quotes their customers a huge markup on the bid/ask spread (think airport forex booth type spreads). RH customers can only trade with RH and their crappy spreads. RH won't match customer crypto orders against each other.
  - raziel2701 5y ago
    In the S-1 they write: "For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020." So they do charge something on crypto transactions?
- wallawe 5y ago
  Commission model is going nowhere. Ask anyone who trades for a living. They pay handsomely for direct market access.
adam_arthur 5y ago
Pretty sure they're counting any crypto bought as revenue, which seems highly misleading. Are they counting any stock purchased as revenue too? I don't understand the justification for that accounting at all. The profit on any transaction for them is 0 dollars, unless they're skimming on spreads or frontrunning or something else scammy. Square does this as well, which is how they got "200%" revenue growth. Correct me if I'm wrong.
- kooshball 5y ago
  you are absolutely wrong. honestly the s-1 is not that hard to read. here is it page 131. Key Components of our Results of Operations Revenues Transaction-based revenues Transaction-based revenues consist of amount earned from routing customer orders for options, equities and cryptocurrencies to market makers. When customers place orders for equities, options or cryptocurrencies on our platform, we route these orders to market makers and we receive consideration from those brokers. With respect to equities and options trading, such fees are known as PFOF. With respect to cryptocurrency trading, we receive “Transaction Rebates.” In the case of equities, the fees we receive are typically based on the size of the publicly quoted bid-ask spread for the security being traded; that is, we receive a fixed percentage of the difference between the publicly quoted bid and ask at the time the trade is executed. For options, our fee is on a per contract basis based on the underlying security. In the case of cryptocurrencies, our rebate is a fixed percentage of the notional order value. Within each asset class, whether equities, options or cryptocurrencies, the transaction-based revenue we earn is calculated in an identical manner among all participating market makers. We route equity and option orders in priority to participating market makers that we believe are most likely to give our customers the best execution, based on historical performance, and we do not consider transaction fees when routing orders. For cryptocurrency orders, we route to various market makers that we believe offer competitive pricing, and we do not consider Transaction Rebates when routing cryptocurrency orders. Net interest revenues Net interest revenues consist of interest revenues less interest expenses. We earn interest revenues and incur interest expenses on securities lending transactions. We also earn interest revenues on margin loans to users, as well as on our segregated cash, cash and cash equivalents, and deposits with clearing organizations. We also incur interest expenses in connection with our revolving credit facilities. Other revenues Other revenues primarily consist of Robinhood Gold, a monthly paid subscription service that provides users with premium features such as enhanced instant deposits, professional research, Nasdaq Level II market data and, upon approval, access to margin investing. Other revenues also include proxy rebate revenues and miscellaneous fees charged to users.

$1 billion in top line revenue in 2020. Wow.

paulpauper 5y ago

So much for that media narrative of rh being hurt by bad press about gamestop. Rh is still hugely popular

conception 5y ago
Well, said bad press was in 2021 so any effects have yet to be seen.
- verdverm 5y ago
  Will it be the PR or that people were actively trading while lockdown was on? Anecdotally, I know several people who were active on RH until they went back to work
- dmode 5y ago
  You should see their 2021 numbers. They are growing faster.
nerfhammer 5y ago
My guess is all the media attention actually got them more signups

ac29 5y ago

Certainly puts that $70M SEC fine in perspective - that's not a trivial amount.

arthurcolle 5y ago

Stocks only go up

fullshark 5y ago

~70% was transactions and ~20% was interest. For comparison about 60% of Etrade's revenue is interest and 30% is fees + commissions. Either Robinhood has found a smarter business model re: selling order flow or they are making a killing on crypto fees. The commission business model is dead for good I think. https://www.nasdaq.com/articles/net-interest-revenue-will-form-40-60-or-80-of-e-trades-stock-in-2020-2019-12-01 https://www.nasdaq.com/articles/net-interest-revenue-will-fo...

fnordfnordfnord 5y ago
>or they are making a killing on crypto fees. They don't charge commissions to trade crypto. Not sure where they're skimming the money but the terrible order fills you get there gives me an idea.
- edoceo 5y ago
  Front-running?
  - fnordfnordfnord 5y ago
    A rose by any other name...
  - gruez 5y ago
    No need. It's just like those "commission free" currency exchange places you see at airports and tourist areas. There might not be a commission, but the spread is several percent, and they make all their profit off that.
- ralph84 5y ago
  There are no regulations on execution quality for crypto. RH treats crypto as forex and quotes their customers a huge markup on the bid/ask spread (think airport forex booth type spreads). RH customers can only trade with RH and their crappy spreads. RH won't match customer crypto orders against each other.
- raziel2701 5y ago
  In the S-1 they write: "For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020." So they do charge something on crypto transactions?
wallawe 5y ago
Commission model is going nowhere. Ask anyone who trades for a living. They pay handsomely for direct market access.

adam_arthur 5y ago

Pretty sure they're counting any crypto bought as revenue, which seems highly misleading. Are they counting any stock purchased as revenue too? I don't understand the justification for that accounting at all. The profit on any transaction for them is 0 dollars, unless they're skimming on spreads or frontrunning or something else scammy. Square does this as well, which is how they got "200%" revenue growth. Correct me if I'm wrong.

kooshball 5y ago
you are absolutely wrong. honestly the s-1 is not that hard to read. here is it page 131. Key Components of our Results of Operations Revenues Transaction-based revenues Transaction-based revenues consist of amount earned from routing customer orders for options, equities and cryptocurrencies to market makers. When customers place orders for equities, options or cryptocurrencies on our platform, we route these orders to market makers and we receive consideration from those brokers. With respect to equities and options trading, such fees are known as PFOF. With respect to cryptocurrency trading, we receive “Transaction Rebates.” In the case of equities, the fees we receive are typically based on the size of the publicly quoted bid-ask spread for the security being traded; that is, we receive a fixed percentage of the difference between the publicly quoted bid and ask at the time the trade is executed. For options, our fee is on a per contract basis based on the underlying security. In the case of cryptocurrencies, our rebate is a fixed percentage of the notional order value. Within each asset class, whether equities, options or cryptocurrencies, the transaction-based revenue we earn is calculated in an identical manner among all participating market makers. We route equity and option orders in priority to participating market makers that we believe are most likely to give our customers the best execution, based on historical performance, and we do not consider transaction fees when routing orders. For cryptocurrency orders, we route to various market makers that we believe offer competitive pricing, and we do not consider Transaction Rebates when routing cryptocurrency orders. Net interest revenues Net interest revenues consist of interest revenues less interest expenses. We earn interest revenues and incur interest expenses on securities lending transactions. We also earn interest revenues on margin loans to users, as well as on our segregated cash, cash and cash equivalents, and deposits with clearing organizations. We also incur interest expenses in connection with our revolving credit facilities. Other revenues Other revenues primarily consist of Robinhood Gold, a monthly paid subscription service that provides users with premium features such as enhanced instant deposits, professional research, Nasdaq Level II market data and, upon approval, access to margin investing. Other revenues also include proxy rebate revenues and miscellaneous fees charged to users.