00:00Let's take a look at how Robinhood shares doing after hours. They're off about one and a half percent at the moment. Robinhood did have a third quarter profit beat. Net income up 271 percent to 556 million. Crypto revenue however did fall short of estimates. That was even though it jumped 300 percent. So the market was expecting quite a bit there. But Robinhood shares a little bit softer after hours. Let's get more now. Bring in Bloomberg tech co-anchor Ed Ludlow in San Francisco. Ed.
00:30Yeah. Thank you team. And believe it or not you find me downtown an in-person earnings call of all things where not just the institutional sell side participates but the institutional buy side the retail buy side and Robinhood's customers. They all got to pose questions to Vlad Tenev Robinhood's CEO.
00:48There's a lot of emphasis on October. Strong third quarter. Got that. October October October. So I think the best place to start is take us through the lens of your customers. What was happening in October.
01:00The underlying trends. The behaviors that you're saying. I mean first of all thank you for being here with us in person to celebrate retail investors being a big part of the financial markets.
01:12October has been a continued strong month. I think you you notice Q3 was particularly strong. You know record net deposits record trading revenues revenues.
01:22Revenues across the board. Prediction markets have also been on fire. So what you're seeing is continued sustained engagement powered by the Robinhood flywheel.
01:36More customers. Deeper engagement. More gold subscribers bringing more assets. And the trading volumes have continued to increase as well.
01:45So it's just been strong across the board. I would say there's not one area that's particular outlier but continued strength across the board.
01:55Markets are a tailwind for Robinhood. Right. And so my question is what is and where is the natural embedded hedge if markets turn on change direction.
02:07What happens. It's a good question. And we try not to get so hung up on output metrics like trading volumes. Right.
02:17Because trading volumes as we've seen in the past do tend to fluctuate with market activity. That said what we look at is our market share.
02:28And we know that you know even though trading volumes can go with markets and can go up and down long term or huge beneficiaries of both the growth in the U.S.
02:39economy and also the generational wealth transfer where hundreds north of 100 trillion of assets and wealth is going to be handed down from older generations to younger
02:50generations. These younger generations are folks that are digitally native tech savvy. They don't particularly want to do their finances at brick and mortar
03:00institutions in person. And they really value user experience and cost. And so I think we track our market share which is
03:09been growing pretty much across the board across every asset. We're now up to a third of a trillion in assets held at Robinhood.
03:18Right. Which has been extraordinary in terms of growth as well. And then there's the secular tailwinds of you know the U.S. economy still remains the hotbed of innovation.
03:30It's where it's the epicenter of A.I. electric vehicles innovation. And I think young people are going to be the generation inheriting all of this wealth.
03:44So is that same group of young people in generation that's driving what you're seeing in prediction markets. I don't want to recount the data too much though.
03:52But just in the month of October contracts and predictions have eclipsed what you did in the entire third quarter. So maybe talking about some of the underlying
04:00trends and activity would give us a better understanding of who's driving it and what's happening. Yeah that's right.
04:06Ed I think the interesting thing about prediction markets is it rounds out the offering and sort of like completes the time at which Robinhood
04:18customers can continue to engage with with the platform. For a while we were offering predominantly U.S. equities which is very much a U.S.
04:28East Coast working hours type of event. Markets are open you know nine to four East Coast hours. And then we've expanded that over time with us
04:39introducing 24 hour market. We've added crypto and now prediction markets. A lot of the events particularly in sports are happening
04:47nights and nights and weekends. So Robinhood is becoming increasingly a 24-7 platform where you can trade and invest in global markets at all times of the day.
05:01And I think our customers do tend to be digitally native and quite savvy that tends to lean younger.
05:11But we also have customers that are you know in their 70s and 80s. And as long as you're comfortable doing your finances on a mobile
05:21device and you want to be at the frontier of technology I think it's something that transcends just young people. Of course we always
05:28want to be relevant to the next generation. But Robinhood I feel like you should be at a disadvantage if you're using any other
05:34platform. I think that's increasingly the competition is sleeping on this a little bit right that you think you can build the
05:40financial super app for an entire family multiple generations to participate in different products and categories.
05:47What why have you got an advantage in going after that. Well I think that nobody has our combination of product depth and product
05:58velocity. So we have a lot of products. We still have a huge amount left to build. But if you think about what we offer now I think we
06:10have the best banking product out on the market that's being rolled out. I think we have the best credit card with three percent cash back on
06:18all categories that just passed half a million cardholders and eight billion in annualized spend. We've we've always been strong across
06:27investing in trading and now retirement as well. You know 25 billion of assets that customers are entrusting with us in
06:34retirement accounts. That is a big number. And this is like very serious long term money. I think we have the best digital
06:41advisor with Robinhood strategies where every other advisor charges you more the more money you have on the platform. Robinhood
06:49strategies inverts that model. And once you get to one hundred thousand managed everything above that has no
06:56management fee. So the incentive is actually to grow with us. And we want to make it a no brainer to have all of your assets
07:04onto Robinhood. This is very much targeted the individual. You have a 10 year plan where within 10 years you want more than half of
07:12revenue to come from the institutional side and from international markets not just the United States. So what's the road map to get
07:20there. Yeah. I mean I think that somewhat paradoxically you might not expect this. But that's why I ask it is paradoxical. Well the
07:28road map is really continuing to build for retail for the time being because when we talk to our institutional potential
07:35customers actually a lot of them are in this room and they've come up and they said we would love to use you guys for an
07:42institutional offering. You know they might be using a legacy provider where they can't trade twenty four five or they're not getting
07:49good stock loan rates or the margin rates are not good. And pretty much nobody has a unified offering between crypto and
07:58traditional assets which I think is being increasingly valuable. So the things that we're offering to retail rock bottom margin rates, great user
08:06experience, 24 hour access to all markets are things that institutional wants as well. And I think for the time being we're in this great
08:15position. We have so much to do on retail that we want to stay very focused for that. But we have been building out our
08:22institutional business with Bitstamp, which is now you know was the 10th business line to get to above 100 million in annualized revenue
08:31prediction markets being the 11th. So I think before long you'll see that really continue to accelerate.
08:36And become a bigger chunk of what we're offering.
08:39Vlad Tenev is the Robin Hood CEO. And as he just pointed to prediction markets also hit 100 million in annualized revenue. And I think
08:49run rate wise, 300 million, a lot of focus on that right now.
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