Item 1. Business
ITEM 1. BUSINESS
Company Overview
Robinhood was founded in 2013 on the belief that everyone should be welcome to participate in our financial system. We are creating a modern financial services platform for everyone, regardless of their wealth, income, or background.
Our mission is to democratize finance for all. We use mobile technology to provide access to the financial system in a way that is simple and convenient for our customers. We believe investing should be familiar and welcoming, with a simple design and an intuitive interface, so that customers are empowered to achieve their goals. We started with a revolutionary, bold brand and design, and the Robinhood app now makes investing approachable for millions. We pioneered commission-free stock trading with no account minimums, which the rest of the industry emulated, and we have continued to build relationships with our customers by introducing new products that further expand access to the financial system. Through these efforts, we believe we have made investing culturally relevant and understandable, and that our platform is enabling our customers to become long-term investors and take greater control of their finances.
At Robinhood, our values are in service of our customers. The following values describe the company that we aspire to become.
• Safety First. Robinhood is a safety-first company. The reliability of our platform takes precedence over all else, so that we can be there for our customers when they need us the most. We relentlessly protect our customers’ security and privacy, and we only share with our counterparties what they need to fulfill our customers’ financial needs, nothing more. We build safeguards and provide education so that our customers are in the best position to succeed. We have high-quality timely customer support, and when things aren’t right, we fix them. We work closely with regulators and lawmakers to protect our customers and the broader financial system. We speak simply, plainly, and truthfully, even if it’s not what others want to hear. We hold ourselves and our colleagues to the highest ethical standards.
• Participation Is Power . We aim to give everyone access to the financial system, regardless of their background or bank account balance. We reflect the world around us, and we elevate and embrace all voices so everyone feels at home at Robinhood.
• Radical Customer Focus . We exist to make our customers happy. From the early days of Robinhood, we have prioritized getting direct customer feedback on what we were building. Talking to our customers forms the kernel of the product development process we have today. We listen with empathy, ask questions, and critically evaluate our work by how valuable our customers find it. We never stop asking how we can make our product better, and we never settle for ‘good enough’. We listen to our colleagues, and we start from a place of believing they are capable and well-intentioned. We delight our customers and take pride in our work.
• First-Principles Thinking . We make bold bets and challenge the status quo. Our foundation is in art, science, and pure mathematics, and we have a deep appreciation for the scientific process. We develop hypotheses and design experiments to test them. We reduce complex problems to their constituent bits. We debate vigorously and change our minds when confronted with the right evidence. We bravely do what’s right, even when it hasn’t been done before. We treat our company like a product and aim to get better, every single day.
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We understand that millions of our customers are using Robinhood to enter the financial markets for the first time, and we take our responsibility to them seriously. We pursue strong, close working relationships with our regulators, and we believe the goals of our regulators and customers are aligned. We are passionate about operating Robinhood in a way that aligns with customer interests, applicable regulations, and with our own mission to democratize finance for all. We plan to create an ecosystem of financial products and services that will enable people across the world to become investors. We believe the products on our roadmap will go a long way toward making that a reality.
Our Products
We believe our products can transform the relationship people have with the financial system. We began by offering our customers the ability to buy and sell equities on a mobile-first platform and have since continued to expand our offerings to add products and features for our customers. Each capability we have added has been the result of a continuous focus on our customers’ needs and feedback, which has guided our product development decisions throughout our history.
The core tenet of the Robinhood offering—expanding access to our financial system through products that empower people to learn, participate, and grow—underpins each of our offerings. We remain focused on building the best products and ultimately aim to serve all of our customers’ financial needs.
Investing Solutions
Our platform allows our customers to invest commission-free in U.S.-listed stocks and exchange traded funds (“ETFs”), as well as related options and American Depository Receipts — all from their smartphones. We believe we have designed an elegant, intuitive investing interface that provides our customers with trading functionality and market information such as historical prices, valuation multiples, recent news, analyst ratings, and more. Stock and ETF trading is immediately available following our simple account onboarding process and funding.
We review eligibility for our customers who wish to trade options, including disclosure of investment experience and knowledge, investment objectives and financial information. Subject to approval from Robinhood, customers can access basic options strategies (Level 2), which permits buying calls and puts and selling covered calls and puts, or more advanced options strategies (Level 3), which permits fixed-risk spreads (such as credit spreads and iron condors) and other advanced trading strategies, depending on their individually disclosed preparedness. We conduct regular reviews of our customers’ eligibility and take action to revoke access to trading options as appropriate, to ensure our customers are accessing the level of options strategies that are appropriate for them based on information such as their trading experience, investment objectives and financial situation.
As we have built out our offerings, we have also added features to help our customers diversify their investments and give them greater access to financial products regardless of their portfolio size:
• Fractional shares . Fractional share trading allows customers to invest in fractions of a share of stock, rather than requiring them to buy and sell whole shares. This service enables customers to build a diversified portfolio regardless of their budget and removes a barrier to investing in higher-priced stocks, thereby providing access to a much greater selection of equities with as little as $1.
• Recurring investments. Our recurring investment feature enables our customers to automatically buy shares of equities and certain ETFs on a set schedule, allowing them to build positions over time and establish regular investing habits, even with small contributions. Our customers can also elect to automatically reinvest dividend income back into the underlying respective shares.
• IPO Access . Our IPO Access feature enables our customers to buy shares in participating initial public offerings (“IPOs”) at the IPO price, before trading begins on public exchanges. With IPO Access, our customers can participate with no account minimums. In November 2021, we also
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launched our Directed Share Program (“DSP”) through IPO Access service that gives an issuing company the chance to set aside a certain amount of shares, at the IPO price, for a specific group of people. This group usually includes employees, valued customers, vendors, or others who have a relationship with the issuer.
• ACATS-in. Robinhood supports the Automated Customer Account Transfer Service (“ACATS”), an automated industry system for account asset transfers, including inbound and outbound transfers. The ACATS-in feature allows our customers to transfer assets from other brokerages into Robinhood instead of selling the assets in the external account and then re-purchasing them in the Robinhood account. This feature was offered to a small set of customers in late December 2021 and was made available to all customers in the first quarter 2022.
Robinhood Crypto
We offer commission-free cryptocurrency trading using the same intuitive, mobile interface as our broader Investing Solutions platform. We have expanded our coverage to include every U.S. state and the District of Columbia, except for Hawaii and Nevada, and support trading in seven different cryptocurrencies: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic and Litecoin. In addition, we support real-time market data for nine cryptocurrencies, which is available to all customers.
We offer crypto recurring investments, allowing customers to automatically buy crypto, commission-free, on a schedule of their choice. This feature allows customers to build positions in their favorite cryptocurrencies over time. We also offer Crypto Gifts, which enables customers to gift crypto to family, friends, and others.
We continue to invest in our cryptocurrency trading offering, evaluating new features and product capabilities as the cryptocurrency landscape develops. During the third quarter of 2021, we opened a waitlist to enroll for crypto wallet transfers (“Crypto Wallets”). Crypto Wallets have been one of the most heavily requested features by Robinhood customers. This feature will enable customers to transfer supported cryptocurrencies into and out of their Robinhood accounts. This means customers can consolidate their coins into one account so it’s easier to track their portfolio and trade those coins commission-free. Robinhood’s Crypto Wallets feature is designed to help make crypto more accessible for the average investor, with an intuitive user experience, low-cost, and competitive pricing. We have successfully completed alpha program launch and public user onboarding of Crypto Wallets and have launched a public beta, which will continue to provide insights as we prepare for a full launch of wallets later in the first quarter of 2022.
Robinhood Gold
Robinhood Gold is a monthly subscription service that grants subscribers access to a number of premium features. After the initial 30-day free trial, subscribers pay a flat monthly rate. Our premium features offered to Gold subscribers include:
• Enhanced instant access to deposits. Subscribers can instantly access $5,000 to $50,000 upon making a deposit, depending on their portfolio value.
• Professional research. Subscribers have unlimited access to in-depth stock research reports on approximately 1,000 stocks through Morningstar.
• Nasdaq Level II market data. Subscribers have the ability to see greater depth of orders for any given stock or option. The ability to see multiple buy and sell requests helps subscribers understand the availability or desire for a stock at a certain price.
• Access to investing on margin. Subject to approval upon meeting eligibility criteria set by Robinhood, subscribers can invest on margin at highly competitive interest rates. This allows
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eligible subscribers to borrow a limited amount of funds, depending on account size, to use as additional investing capital. No interest is charged on the first $1,000 in margin borrowed by each user. If the subscriber chooses to borrow more funds, the subscriber will be charged interest, which interest is calculated daily and charged to the subscriber’s account at the end of each billing cycle . Robinhood decides whether to extend margin to each customer who applies for access based on information regarding customer activity, portfolio equity or net worth criteria, investment objectives, and investing experience reported by the customer.
Cash Management
Our Cash Management product is available on our platform for customers with a Robinhood brokerage account. It provides additional value to our brokerage customers by allowing them to earn interest on idle cash swept to our partner banks and to spend cash through an optional Robinhood-branded Mastercard debit card. There are no maintenance fees or minimum balances, no overdraft fees, no transfer fees, no foreign transaction fees, and no monthly fees. Our customers are able to fund their accounts through either a bank transfer or direct deposit and have free access to their funds from over 75,000 ATMs. Our customers who opt in to Cash Management elect to participate in a deposit sweep program and will have their uninvested cash automatically swept, or moved, into deposits at a network of program banks. Through Cash Management, cash deposited at these banks is eligible for Federal Deposit Insurance Corporation (“FDIC”) insurance.
Learning & Education Solutions
Investing, while an opportunity to partake in the broader financial ecosystem, can be complex and confusing for those who are new to it. While we do not provide investment advice to our customers, we are committed to helping our customers build sustainable, long-term financial habits and to offering a variety of contextual in-app educational tools and resources to help them achieve their goals and maximize their financial well-being, including:
• Robinhood Snacks . “Snacks” is a curated digest of business news stories delivered both daily and weekly. Snacks can be accessed in written, audio or video formats, including via a podcast and newsletter, and allows subscribers to start their days with the top business news of the day in an accessible, digestible format. During the third quarter of 2021, we also launched Snacks on Snapchat, making Snacks one of the first financially-oriented educational channels to ever be made available on Snapchat’s Discover tab.
• Robinhood Learn . We aim to make finance not only more accessible, but more understandable as well. Robinhood Learn is a collection of articles, including guides, tutorials and an extensive financial dictionary available to anyone. It is designed to provide everyone with access to a breadth of financial education, and is frequently updated to provide relevant information for our customers to learn and grow.
• Newsfeeds . Within our newsfeeds, we provide access to free premium news from sites such as Barron’s , Reuters and The Wall Street Journal to keep our customers informed of the latest news and events.
• Robinhood lists and alerts . Our customers are able to create custom watchlists and alerts to monitor equities, options, ETFs, or cryptocurrencies they are interested in following.
• First trade recommendations . We offer first trade recommendations to all new customers who have yet to place a trade, helping users get started with a diversified ETF portfolio based on their risk profile and investment objectives.
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Our Technology
The Robinhood mobile app is the core front-end pathway through which our customers engage with us. Our self-clearing platform, order routing system, data platform, and other back-end infrastructure deliver the capabilities that allow our customers to focus on investing, saving and spending, while also enabling us to rapidly develop products that our customers love to use.
Some of our most critical technologies include:
• Core infrastructure and data platform. Our core infrastructure and data platform are all built on Amazon Web Services, and our platform enables application developers to define their microservices in a simple, standardized manner while also providing built-in scalability and resiliency.
• Self-clearing system. Our self-clearing services allow us to clear and settle trades across stocks, ETFs, and options without relying on a third-party clearing firm, an approach that provides increased internal visibility over clearing and settlement.
• Order routing system. We built a proprietary order routing system that uses statistical models to evaluate past orders and execution quality data, and automatically routes customer orders to the market makers that have historically given customers the best prices. This competition-based system creates an incentive for market makers to provide better prices for our customers, in order to receive more orders in the future. We are committed to seeking a quality execution on every order, and our routing protocols are designed with this in mind.
• Machine learning platform. Our machine learning models are highly advanced and contribute to multiple capabilities across our business. For example, we use machine learning as part of our fraud detection systems and customer support workflows, and even to improve the customer experience in our newsfeed by expanding the number of sources we can pull from, parsing and categorizing these articles, and delivering highly relevant and varied news to our customers for companies, stocks, or cryptocurrencies.
• Experiments infrastructure. To enable our rapid product cycle, we’ve built a proprietary experiments infrastructure that enables us to test product changes through the build process and validate research hypotheses. The iterative, customer-centric product development approach that is so core to our success is enabled by this robust internal technology.
Our Customers
We are empowering a new generation of financial consumers. Robinhood was built to make the financial system more friendly, approachable, and understandable to newcomers and experts alike. We have reached customers across the United States from a wide variety of social and economic backgrounds and many of our customers funding accounts on our platform told us that Robinhood was their first brokerage account. We take pride in the fact that we are expanding the market by welcoming new investors into the financial system and helping the next generation of investors build sound long-term investing, saving, and spending habits.
Customer feedback is at the heart of product development at Robinhood. As such, we regularly communicate with our customers—not just to provide support, but also to learn more about their experiences and insights, and to respond to their feedback about our products. This keeps us connected with customers and enables us to understand their expectations and the problems and opportunities they face financially. During the fourth quarter of 2021, we launched 24/7 live phone support for all logged-in users, giving customers the ability to get phone support at any time and on any topic. We are also the first major crypto platform to provide 24/7 phone support.
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Our Growth Strategies
We aim to serve our customers with existing product offerings, grow with our customers over time as they build their wealth, and create new and innovative products that are relevant to new and existing customers.
Continue Adding New Customers to Our Platform
We are simplifying how people interact with financial products, allowing new customers from all walks of life and generations to participate in the financial system.
We have achieved our growth with relatively little investment in traditional sales and marketing efforts, although we have done substantial in-market testing to determine how to most efficiently utilize paid channels. We plan to increase our brand marketing in the future and anticipate that our marketing efforts will drive higher brand awareness that can further accelerate our growth.
Our brand has faced challenges in recent years, including as a result of, among other things, the March 2020 Outages, the April-May 2021 Disruptions, and the Early 2021 Trading Restrictions (each defined below), as well as criticism regarding the complexity of our options trading offerings and related concerns about limited customer support and controversial customer communications and displays. We have taken these concerns seriously and have prioritized developing responsive solutions, such as by reinforcing our platform infrastructure, raising additional capital to cushion ourselves against the potential for future increased collateral requirements and related market stress, expanding our investor education resources, adding additional eligibility criteria for our options authorization, more than doubling the number of customer support professionals we employ, introducing phone-based voice customer support, and redesigning some of our customer display features. We are determined to keep evolving to better serve our customer base.
Growing with Our Customers
Many of our customers are just beginning their financial journeys. As our customers grow their wealth, we believe they will continue to expand their relationship with our platform, providing an increased opportunity to meet their growing financial needs. We believe that these needs may come in a number of forms, from helping new investors grow into long-term investors to providing other financial services such as saving, spending, or facilitating payments. The younger generation is poised to see its wealth expand in the coming years and participation in the markets will provide a critical opportunity as younger customers grow their assets and build financial security for themselves and their families. We are committed to deepening strong relationships with our loyal customer base and earning our customers’ trust when they choose our platform on their financial journeys.
Expanding Internationally
We believe there is a significant opportunity for Robinhood to grow internationally. Currently, we offer services to only U.S. citizens and permanent residents with a legal address within the continental United States or Puerto Rico. Although our operations are concentrated in the United States, we do have U.K. and Dutch subsidiaries (which have U.K.- and Netherlands-based employees and contractors but no external service offerings and no customers). Over time, we intend to pursue a disciplined approach to international expansion and we will consider factors such as population size and demographics, legal and regulatory environments, and general investing attitudes in potential new markets prior to pursuing such expansion. We intend to expand our international hiring to gain access to a larger talent pool, as well as to support our international service offerings. While our near-term focus remains on our current U.S. customers, we have already made technical investments in our clearing platform that we believe will allow us to expand to serve customers in other geographies more easily in the future. We have also set aggressive goals to open our crypto platform up to new customers internationally in 2022. Our plans to pursue international expansion are uncertain and dependent on a variety of external factors, including, among other things, our obtaining required regulatory approvals, authorizations, licenses and consents,
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our obtaining and protecting intellectual property rights abroad, and the identification of and successful entry into new business partnerships with third-party service providers that would be necessary to provide our products and services in the relevant local market.
Growth Through Acquisition
We have made a number of acquisitions to add specialized employees and complementary companies, products, or technologies that add synergies to our business. For instance, in August 2021, we acquired A Say Inc. and its subsidiaries ("Say Technologies"). Say Technologies built an innovative communication platform that makes it easier for investors to exercise their ownership rights. See Note 3 to our consolidated financial statements in this Annual Report for further information. We expect to continue to consider and evaluate acquisitions as part of our overall growth strategy.
Competition
We believe that we are changing the consumption patterns for financial products and services and growing the market, but will continue to face competition from other firms including large legacy financial institutions, large technology companies, and smaller, new financial technology entrants.
We believe that the key competitive factors in our market include:
• product features, quality and functionality;
• operating efficiency;
• engineering talent;
• brand recognition;
• security and trust;
• cloud-based architecture;
• regulatory licenses; and
• vertical integration.
We seek to differentiate ourselves from competitors primarily through our vertically integrated, mobile-first platform and focus on accessibility, customer experience, and trust. We believe that our ability to innovate quickly further differentiates our platform from our competition. We believe we compete favorably across all key competitive factors and that we have developed a business model that is difficult to replicate.
Our Competitive Advantages
We believe we have a number of competitive advantages that position us well to serve an increasing portion of the population and the broader financial services ecosystem.
Creative Product Design
We believe archaic, cumbersome digital platforms reinforce legacy barriers to participation in the financial system. We put design at the center of our product with the goal of building long-term relationships with customers. We involve our talented product designers early and often throughout our product development process to create intuitive and elegant experiences that efficiently address our customers’ needs. Our customer-centric approach has made our platform easy to use, informative, and familiar in look and feel for a generation of mobile-first customers. For example, we seamlessly integrate information into our platform through Robinhood Learn and our newsfeed, which offers free news from
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trusted sources including Barron’s , Reuters, and The Wall Street Journal . In addition, we continue to work to deliver an intuitive product experience including developing and implementing designs to celebrate investing milestones of our customers in a responsible way. Our products are designed mobile-first, allowing us to offer attractive investing, spending, and saving experiences as more people shift their daily financial services activities to the palm of their hands.
Category-Defining Brand
We believe Robinhood today is a symbol of retail investing and finance in America. By taking a fresh, people-centric approach and creating a delightful, engaging customer experience, we believe we have built a trusted, category-defining brand that has made investing socially relevant for the next generation.
The relationship we have built with our customers has led many to want to talk about Robinhood and share their experience with their friends and family. From Robinhood’s inception, a vast majority of our growth has come directly from customers joining our platform organically or through the Robinhood Referral Program. The excitement around Robinhood demonstrates how our innovative approach to financial products has built deep, loyal customer relationships and positioned us well to continue attracting new people to our platform, and sharing new product experiences with our customers.
Financial Services at Internet Scale
Our people-centric approach has driven customer enthusiasm and engagement, resulting in rapid adoption of our products. We designed our platform to provide our customers with relevant, accessible information when they need it most. Being an investor involves following a regular cycle of events—news releases, earnings announcements, transaction executions—that creates a regular cadence of content and information. We use our platform, from push notifications to widgets, to provide seamless customized updates to our customers. This engenders trust, creates enduring long-term relationships, and has resonated with our customers.
Vertically Integrated Platform
We design our own products and services and deliver them through a single, app-based platform supported by proprietary technology that has been cloud-based from the start. We are a licensed introducing broker-dealer, a licensed clearing broker-dealer, and a licensed money-transmitter. Our digitally-native technology stack also gives us control over our product development from end-to-end, enabling faster development times, better customer experiences, stronger unit economics, greater flexibility, and a robust and dynamic risk management framework. Our vertically integrated platform has enabled us to rapidly introduce new products and services such as cryptocurrency trading, dividend reinvestment, fractional shares, recurring investments and IPO Access, while also supporting our ability to quickly scale.
Seasonality
Our business can be subject to seasonal fluctuations due to such factors as retail interest in investing, overall number of market participants and trading volumes, varying numbers of trading days from quarter-to-quarter, and declines in trading activity around holidays. Seasonal trends may be superseded by market or macroeconomic events, which can have a significant impact on equity and cryptocurrency valuations and trading activity.
Human Capital
Our Employees and Culture
Robinhood employees are key to achieving our company mission. As of December 31, 2021, we had approximately 3,800 full-time employees. We seek to champion a culture that is open and honest. We hold weekly “all-hands” meetings with all employees, during which any employee has the opportunity to
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ask a question of our senior leadership. We use a company-wide surveying tool to facilitate regular check-ins with employees and to provide critical input for company decisions on how to best improve productivity, happiness and retention. Inclusivity is core to our culture and we seek to create an environment where all viewpoints, including opposing ones, are welcomed. We provide tools, opportunities and support for career and personal growth, as well as ongoing company initiatives to maintain high employee engagement.
Our mission to democratize finance for all starts with our people. In the last two years, we have seen how flexibility and trust allows teams to do their best work, attracts top talent, and creates a workplace that’s more inclusive and equitable. With our “Remote First” approach, we provide employees with the flexibility they need to work where they are most comfortable and productive whenever we can, depending on their roles and regulatory requirements. All of our employees have access to our offices whenever they would like to use them. As we move forward, we are committed to continue learning, listening and creating a flexible, accessible and great workplace for everyone.
Talent Acquisition and Development
A critical foundation to our mission starts with building an inclusive environment that attracts and retains diverse, exceptional talent. We prioritize hiring great leaders with deep functional expertise, then we commit to their professional and technical development so we can grow together. We continue to invest in recruiting and fostering diverse talent, supporting our employees and speaking out for our community.
We work to attract the best talent from a range of sources in order to meet the current and future demands of our business. We have relationships with universities, professional associations, and industry groups to proactively reach underrepresented talent. We use trusted third-party partners to help us mitigate potential bias in our hiring process—from the language used in our job descriptions to how technical screening interviews are conducted.
The professional growth of our people is essential to the growth of our business and we aim to empower all Robinhood employees to reach their full potential. We support job-specific capabilities and training to help develop behavioral and leadership capabilities for all employees. All full-time employees are offered an ongoing education stipend to support skill-building both in current and for future roles, as well as access to the LinkedIn Learning platform, which provides thousands of online courses taught by industry experts covering a wide range of technical, business, software, and creative topics. We also offer a variety of formal and informal development and skills-building opportunities to our managers. For example, this year we launched a podcast series of interviews with our senior leaders on how to have career conversations with employees and effectively conduct performance reviews.
Inclusion, Equity, and Belonging (“IEB”)
Prioritizing an inclusive and equitable culture that attracts, motivates, and retains diverse talent within our workplace is critical to delivering on our mission. As our customer base is incredibly diverse, we are building a company that will meet their needs. At Robinhood, inclusivity is core to our culture, and we seek to create an environment where all viewpoints are welcome. We strive to do this in four distinct ways: ensuring our workplace culture is accessible and respectful, broadening the diversity of our workforce at all levels, effectively serving non-traditional investors, and increasing financial literacy among underserved communities. We value each of our employees and their unique contributions as we build our company together.
We have built a comprehensive IEB strategy with a dedicated team to support it. In addition to offering more ways for our employees to self-identify different aspects of their identity, we also rolled out inclusive hiring training to all hiring managers and interviewers, implemented a diverse slate approach to hiring, and increased our community outreach efforts around financial inclusion for underrepresented communities.
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As of December 31, 2021, 61% of our employees are members of at least one of our Robinhood Employee Resource Groups (“ERG”) which are voluntary, identity or experience-based groups led by members and allies who join together to support the creation of an inclusive workplace. We utilize ERGs to create a welcoming environment for new employees by designating Robinhood Ambassadors, leaders within our ERGs who are available to candidates and new employees who want to learn more about working at Robinhood. Robinhood ERGs include: Asianhood, Black Excellence (BEX), Brain Body Heart, Divergent, Latinhood, Parenthood, Rainbowhood, Sisterhood, Veterans at Robinhood, and Women in Tech.
In addition to providing a supportive, safe space for many employees, a number of Robinhood ERGs support specific business objectives that include recruiting, employee engagement, marketing, and more. For example, our ERGs participate in various hiring events, including hosting panels on what it’s like to work at Robinhood and how to think about career development.
Employee Incentives and Benefits
We offer a wide range of benefits designed to attract the best talent and to ensure Robinhood employees are taken care of both at and outside of work. We offer competitive compensation for employees and benefits for themselves and their families. Where applicable, eligibility also extends to domestic partners and their children; our approach is based on the aim of supporting the diverse needs of our employees. Some notable benefits that our employees value include lifetime fertility benefits, backup child care credit, generous paid family leave, retirement savings with employer match, financial planning services, and employer-paid health and wellness benefits.
The health and wellness of our employees is paramount to our success. We offer wellness benefits that include reimbursement for qualified expenses, on-demand emotional health support, and time off to refresh, recharge, and relax. We offer competitive base pay, and all employees are eligible for variable incentive pay (bonus and/or equity) linked to company and individual performance.
COVID-19 continues to be a challenge. In addition to leveraging our third-party survey tool, we conducted company-wide focus groups in 2021 to reach out, listen, and ensure employees got the support they needed through the pandemic. We asked questions that related directly to employees' perception of the company’s handling of the situation, and responded accordingly. To support our employees’ work from home needs during the COVID-19 pandemic, we offer all employees a one-time $1,000 workspace stipend, generous leave arrangements, and a monthly internet stipend.
Intellectual Property
Our success and ability to compete are significantly dependent on our core technology and intellectual property. We rely on trademarks, patents, copyrights, trade secrets, know-how and expertise, registered domain names, license agreements, intellectual property assignment agreements, confidentiality procedures and non-disclosure agreements to establish and protect our intellectual property and proprietary rights. We seek to protect our intellectual property and proprietary rights, including our proprietary technology, software, know-how and brand, by relying on a combination of federal, state, and common law rights in the United States and other countries, as well as on contractual measures. However, these laws, agreements, and procedures provide only limited protection. It is our practice to enter into confidentiality, non-disclosure, and invention assignment agreements with our employees, consultants, contractors and other third parties, and into confidentiality and non-disclosure agreements with other third parties, in order to limit access to, and disclosure and use of, our confidential information, trade secrets, know-how, and proprietary technology. Though we rely in part upon these legal and contractual protections, we believe that factors such as the skills and ingenuity of our employees and the functionality and frequent enhancements to our solutions are larger contributors to our success in the marketplace. Any of our intellectual property rights might be successfully challenged, opposed, diluted, misappropriated, or circumvented by others or invalidated, narrowed in scope or held unenforceable through administrative process or litigation in the United States or in non-U.S. jurisdictions. Furthermore,
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legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain and any changes in, or unexpected interpretations of, intellectual property laws may compromise our ability to enforce our trade secrets and intellectual property rights. Our efforts to enforce our intellectual property rights might also be met with defenses, counterclaims, and counter-suits attacking the validity and enforceability of our intellectual property rights.
We have an ongoing trademark and service mark registration program pursuant to which we register our brand names and solution names, taglines and logos in the United States and certain other jurisdictions to the extent we determine appropriate and cost-effective. We are the registered holder of a variety of U.S. and international trademarks and domain names that include the primary brand “Robinhood,” including variations thereof, as well as brands for other Robinhood products and services, such as our Snacks podcast and newsletter. We also have common law rights in certain unregistered trademarks that were established over years of use. We are the authorized user of a variety of social media handles, pages, and profiles that reflect our primary brand. In addition, we have a suite of defensively registered domains. We believe that the protection of our trademark rights is an important factor in product recognition, protecting our brand, and maintaining goodwill. Litigation or proceedings before the U.S. Patent and Trademark Office or other governmental authorities and administrative bodies in the United States and abroad may be necessary in the future to enforce our trademark rights and to determine the validity and scope of the trademark rights of others.
Despite our efforts to obtain, maintain, protect, defend, and enforce our intellectual property rights, we cannot be certain that the steps we have taken will be sufficient or effective to prevent the unauthorized access, use, copying, or the reverse engineering of our technology and other proprietary information, including by third parties who might use our technology or other proprietary information to develop services that compete with ours, and our intellectual property rights might not be respected in the future or might be invalidated, circumvented, or challenged. See “Risk Factors—Risks Related to Our Intellectual Property” for a more comprehensive description of risks related to our intellectual property and proprietary rights.
Regulation
U.S. and non-U.S. laws and regulations apply to many key aspects of our current business operations and future business plans. These laws and regulations include, but are not limited to, “best execution” requirements under SEC guidelines and FINRA rules, which require our subsidiaries, Robinhood Securities, LLC (“RHS”) and Robinhood Financial LLC (“RHF”), to obtain the best reasonably available terms for customer orders. In part, this requires broker-dealers to use reasonable diligence so that the price to the customer is as favorable as possible under prevailing market conditions, taking into account, among other things, the character of the market for the security, the size and type of the transaction, the number of markets checked, accessibility of quotations, and the terms and conditions of the order as communicated by the broker-dealer’s customer. Although a broker-dealer is not required to examine every customer order individually for compliance with its duty of best execution, it must undertake regular and rigorous reviews of the quality of its customer order executions.
We are also subject to laws and regulations regarding data privacy and security; in the U.S., federal law, such as the Gramm-Leach-Bliley Act of 1999 and its implementing regulations, restricts certain collection, processing, storage, use and disclosure of personal data, requires notice to individuals of privacy practices and provides individuals with some rights to prevent the use and disclosure of nonpublic or otherwise legally protected information. These rules also impose requirements for the safeguarding and proper destruction of personal data through the issuance of data security standards or guidelines. The U.S. government, including Congress, the Federal Trade Commission and the Department of Commerce, has also announced that it is reviewing the need for greater regulation for the collection, use, and other processing of information concerning consumer behavior on the internet, including regulation aimed at restricting some targeted advertising practices, and numerous states, including but not limited to California through the California Consumer Privacy Act and California Privacy Rights Act of 2020, have
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enacted or are in the process of enacting state-level data privacy laws and regulations governing the collection, use, and other processing of state residents’ personal data. The New York State Department of Financial Services (“NYDFS”) also issued Cybersecurity Requirements for Financial Services Companies, which took effect in 2017, and which require banks, insurance companies, and other financial services institutions regulated by the NYDFS, including Robinhood Crypto, LLC (“RHC”), to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of New York State’s financial services industry.
Failure to comply with these requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our ability to continue to operate. For additional information relating to regulation and regulatory actions, see “Risk Factors—Risks Related to Regulation and Litigation” and “Risk Factors—Risks Related to Cybersecurity and Data Privacy.”
Available Information
On our investor relations website, investors.robinhood.com, we post the following filings after they are electronically filed with or furnished to the SEC: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Beneficial Ownership Reports on Forms 3, 4, and 5, and amendments to those reports filed or furnished pursuant to Sections 13(a), 15(d), or 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All such filings are available, free of charge, on our website as soon as reasonably practicable after we file such material electronically with, or furnish it to, the SEC. The SEC also maintains a website that contains our SEC filings. The address of the site is www.sec.gov.
We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs as part of our investor relations website. We intend to use our blog, Under the Hood, as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (Reg. FD). Under the Hood can be accessed at blog.robinhood.com and investors should routinely monitor that website, in addition to Robinhood’s press releases, SEC filings, and public conference calls and webcasts, as information posted on Robinhood’s blog could be deemed to be material information. The contents of our websites are not intended to be incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.