Robinhood Markets, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS PAGE Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 113 Consolidated Balance Sheets 117 Consolidated Statements of Operations 118 Consolidated Statements of Comprehensive Income (Loss) 119 Consolidated Statements of Cash Flows 120 Consolidated Statements of Stockholders’ Equity 122 Notes to the Consolidated Financial Statements Note 1 - Description of Business and Summary of Significant Accounting Policies 125 Note 2 - Recent Accounting Pronouncements 139 Note 3 - Business Combinations 141 Note 4 - Goodwill and Intangible Assets 142 Note 5 - Revenues 144 Note 6 - Restructuring Activities 145 Note 7 - Allowance for Credit Losses 146 Note 8 - Investments and Fair Value Measurement 148 Note 9 - Income Taxes 153 Note 1 0 - Property, Software, and Equipment, net 156 Note 1 1 - Securities Borrowing and Lending 156 Note 1 2 - Financing Activities and Off-Balance Sheet Risk 157 Note 1 3 - Common Stock and Stockholders' Equity 160 Note 1 4 - Net Income (Loss) per Share 166 Note 1 5 - Leases 167 Note 1 6 - Commitments & Contingencies 168 112 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Robinhood Markets, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Robinhood Markets, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss) , stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 18, 2025 expressed an unqualified opinion thereon. Adoption of SAB 122 As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for obligations to safeguard crypto-assets held in custody on behalf of its platform users in 2024 due to the adoption of SAB 122. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, 113 Table of Contents taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Description of the Matter Transaction-based revenues As discussed in Note 1 and Note 5 to the consolidated financial statements, the Company recognized transaction-based revenues of $1,647 million for the year ended December 31, 2024, of which $1,563 million is comprised of revenues earned from routing user orders to market makers when the performance obligation is satisfied, which is at the point in time when a routed order is executed by the market maker. The Company’s transaction-based revenues from routing user orders involves a significant volume of transactions and is earned from various market makers and is sourced from multiple systems across the Company’s information technology environment. Auditing transaction-based revenues from routing user orders was complex and involved significant audit effort to identify, test, and evaluate the Company’s relevant systems used to process and record transaction-based revenues from routing user orders. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the revenue recognition process for transaction-based revenues from routing user orders. With the involvement of our information technology professionals, we identified and tested the relevant systems used to process and record transaction-based revenues earned from routing user orders and tested the relevant information technology general controls over those systems. Our audit procedures included, among others, testing on a sample basis the completeness and accuracy of the underlying data and calculations used to record transaction-based revenues from routing user orders, obtaining external confirmation of revenue recognized and transaction price from market makers, and comparing revenue recognized to cash receipts. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2017. San Jose, California February 18, 2025 114 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Robinhood Markets, Inc. Opinion on Internal Control Over Financial Reporting We have audited Robinhood Markets, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Robinhood Markets, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 18, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 115 Table of Contents /s/ Ernst & Young LLP San Jose, California February 18, 2025 116 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED BALANCE SHEETS December 31, (in millions, except share and per share data) 2023 2024 Assets Current assets: Cash and cash equivalents $ 4,835 $ 4,332 Cash, cash equivalents, and securities segregated under federal and other regulations 4,448 4,724 Receivables from brokers, dealers, and clearing organizations 89 471 Receivables from users, net 3,495 8,239 Securities borrowed 1,602 3,236 Deposits with clearing organizations 338 489 User-held fractional shares 1,592 2,530 Held-to-maturity investments 413 398 Prepaid expenses 63 75 Deferred customer match incentives 11 100 Other current assets 196 509 Total current assets 17,082 25,103 Property, software, and equipment, net 120 139 Goodwill 175 179 Intangible assets, net 48 38 Non-current held-to-maturity investments 73 — Non-current deferred customer match incentives 19 195 Other non-current assets, including non-current prepaid expenses of $ 4 as of December 31, 2023 and $ 17 as of December 31, 2024 107 533 Total assets $ 17,624 $ 26,187 Liabilities and stockholders’ equity Current liabilities: Accounts payable and accrued expenses $ 384 $ 397 Payables to users 5,097 7,448 Securities loaned 3,547 7,463 Fractional shares repurchase obligation 1,592 2,530 Other current liabilities 217 266 Total current liabilities 10,837 18,104 Other non-current liabilities 91 111 Total liabilities 10,928 18,215 Commitments and contingencies (Note 16) Stockholders’ equity: Preferred stock, $ 0.0001 par value. 210,000,000 shares authorized, no shares issued and outstanding as of December 31, 2023 and December 31, 2024. — — Class A common stock, $ 0.0001 par value. 21,000,000,000 shares authorized, 745,401,862 shares issued and outstanding as of December 31, 2023; 21,000,000,000 shares authorized, 764,903,997 shares issued and outstanding as of December 31, 2024. — — Class B common stock, $ 0.0001 par value. 700,000,000 shares authorized, 126,760,802 shares issued and outstanding as of December 31, 2023; 700,000,000 shares authorized, 119,588,986 shares issued and outstanding as of December 31, 2024. — — Class C common stock, $ 0.0001 par value. 7,000,000,000 shares authorized, no shares issued and outstanding as of December 31, 2023 and December 31, 2024. — — Additional paid-in capital 12,145 12,008 Accumulated other comprehensive loss ( 3 ) ( 1 ) Accumulated deficit ( 5,446 ) ( 4,035 ) Total stockholders’ equity 6,696 7,972 Total liabilities and stockholders’ equity $ 17,624 $ 26,187 See Accompanying Notes to the Consolidated Financial Statements. 117 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (in millions, except share and per share data) 2022 2023 2024 Revenues: Transaction-based revenues $ 814 $ 785 $ 1,647 Net interest revenues 424 929 1,109 Other revenues 120 151 195 Total net revenues 1,358 1,865 2,951 Operating expenses: Brokerage and transaction 179 146 164 Technology and development 878 805 818 Operations 249 116 112 Provision for credit losses 36 43 76 Marketing 103 122 272 General and administrative 924 1,169 455 Total operating expenses 2,369 2,401 1,897 Other income (expense), net ( 16 ) 3 10 Income (loss) before income taxes ( 1,027 ) ( 533 ) 1,064 Provision for (benefit from) income taxes 1 8 ( 347 ) Net income (loss) $ ( 1,028 ) $ ( 541 ) $ 1,411 Net income (loss) attributable to common stockholders: Basic $ ( 1,028 ) $ ( 541 ) $ 1,411 Diluted $ ( 1,028 ) $ ( 541 ) $ 1,411 Net income (loss) per share attributable to common stockholders: Basic $ ( 1.17 ) $ ( 0.61 ) $ 1.60 Diluted $ ( 1.17 ) $ ( 0.61 ) $ 1.56 Weighted-average shares used to compute net income (loss) per share attributable to common stockholders: Basic 878,630,024 890,857,659 881,113,156 Diluted 878,630,024 890,857,659 906,171,504 See Accompanying Notes to the Consolidated Financial Statements. 118 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (in millions) 2022 2023 2024 Net income (loss) $ ( 1,028 ) $ ( 541 ) $ 1,411 Other comprehensive income (loss), net of tax: Foreign currency translation ( 1 ) — ( 1 ) Net losses on hedging instruments: Net loss on hedging instruments during the period — ( 4 ) — Reclassification adjustment for net losses included in net income (loss) — 1 3 Net gain (loss) on hedging instruments — ( 3 ) 3 Total other comprehensive income (loss), net of tax ( 1 ) ( 3 ) 2 Total comprehensive income (loss) $ ( 1,029 ) $ ( 544 ) $ 1,413 See Accompanying Notes to the Consolidated Financial Statements. 119 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (in millions) 2022 2023 2024 Operating activities: Net income (loss) $ ( 1,028 ) $ ( 541 ) $ 1,411 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 61 71 77 Impairment of long-lived assets 45 5 2 Provision for credit losses 36 43 76 Deferred income taxes — — ( 369 ) Share-based compensation 654 871 304 Other 35 3 ( 2 ) Changes in operating assets and liabilities: Securities segregated under federal and other regulations — — ( 397 ) Receivables from brokers, dealers, and clearing organizations 12 ( 13 ) ( 382 ) Receivables from users, net 3,386 ( 298 ) ( 4,592 ) Securities borrowed ( 517 ) ( 1,085 ) ( 1,634 ) Deposits with clearing organizations 142 ( 152 ) ( 151 ) Current and non-current prepaid expenses 33 37 ( 25 ) Current and non-current deferred customer match incentives — ( 30 ) ( 265 ) Other current and non-current assets ( 26 ) ( 18 ) ( 415 ) Accounts payable and accrued expenses ( 62 ) 134 ( 35 ) Payables to users ( 1,775 ) 396 2,351 Securities loaned ( 1,817 ) 1,713 3,916 Other current and non-current liabilities ( 31 ) 45 ( 27 ) Net cash provided by (used in) operating activities ( 852 ) 1,181 ( 157 ) Investing activities: Purchases of property, software, and equipment ( 28 ) ( 2 ) ( 13 ) Capitalization of internally developed software ( 29 ) ( 19 ) ( 37 ) Business acquisition, net of cash and cash equivalents acquired — ( 93 ) ( 6 ) Asset acquisition, net of cash acquired — — ( 3 ) Purchases of held-to-maturity investments — ( 759 ) ( 556 ) Proceeds from maturities of held-to-maturity investments — 282 658 Purchases of credit card receivables by Credit Card Funding Trust — — ( 748 ) Collections of purchased credit card receivables — — 556 Purchases of available-for-sale investments ( 25 ) — — Proceeds from sales and maturities of available-for-sale investments 42 10 — Other ( 20 ) ( 1 ) 1 Net cash used in investing activities ( 60 ) ( 582 ) ( 148 ) Financing activities: Proceeds from exercise of stock options, net of repurchases 6 5 18 Proceeds from issuance of common stock under the Employee Share Purchase Plan 16 14 16 Taxes paid related to net share settlement of equity awards ( 12 ) ( 12 ) ( 244 ) Repurchase of Class A common stock — ( 608 ) ( 257 ) Draws on credit facilities 21 20 22 Repayments on credit facilities ( 21 ) ( 20 ) ( 22 ) Borrowings by the Credit Card Funding Trust — — 132 Repayments on borrowings by the Credit Card Funding Trust — — ( 1 ) Change in principal collected from customers due to Coastal Bank — 1 6 Payments of debt issuance costs ( 10 ) ( 10 ) ( 15 ) Net cash used in financing activities — ( 610 ) ( 345 ) Effect of foreign exchange rate changes on cash and cash equivalents ( 1 ) — ( 1 ) Net decrease in cash, cash equivalents, segregated cash, and restricted cash ( 913 ) ( 11 ) ( 651 ) Cash, cash equivalents, segregated cash, and restricted cash, beginning of the period 10,270 9,357 9,346 Cash, cash equivalents, segregated cash, and restricted cash, end of the period $ 9,357 $ 9,346 $ 8,695 120 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Reconciliation of cash, cash equivalents, segregated cash, and restricted cash, end of the period: Cash and cash equivalents, end of the period $ 6,339 $ 4,835 $ 4,332 Segregated cash and cash equivalents, end of the period 2,995 4,448 4,327 Restricted cash in other current assets, end of the period 1 46 18 Restricted cash in other non-current assets, end of the period 22 17 18 Cash, cash equivalents, segregated cash and restricted cash, end of the period $ 9,357 $ 9,346 $ 8,695 Supplemental disclosures: Cash paid for interest $ 12 $ 12 $ 16 Cash paid for income taxes, net of refund received $ 4 $ 9 $ 18 See Accompanying Notes to the Consolidated Financial Statements. 121 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common stock (1) Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity (in millions, except for number of shares) Shares Amount Balance as of December 31, 2021 863,912,613 $ — $ 11,169 $ 1 $ ( 3,877 ) $ 7,293 Net loss — — — — ( 1,028 ) ( 1,028 ) Shares issued in connection with stock option exercises, net of repurchases 2,318,267 — 6 — — 6 Issuance of common stock in connection with Employee Share Purchase Plan 1,907,241 — 16 — — 16 Issuance of common stock upon settlement of restricted stock units, net of shares withheld 24,613,450 — ( 12 ) — — ( 12 ) Change in other comprehensive loss — — — ( 1 ) — ( 1 ) Share-based compensation — — 682 — — 682 Balance as of December 31, 2022 892,751,571 $ — $ 11,861 $ — $ ( 4,905 ) $ 6,956 See Accompanying Notes to the Consolidated Financial Statements. 122 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common stock (1) Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total stockholders’ equity (in millions, except for number of shares) Shares Amount Balance as of December 31, 2022 892,751,571 $ — $ 11,861 $ — $ ( 4,905 ) $ 6,956 Net loss — — — — ( 541 ) ( 541 ) Shares issued in connection with stock option exercises, net of repurchases 2,449,169 — 5 — — 5 Issuance of common stock in connection with Employee Share Purchase Plan 1,968,081 — 14 — — 14 Issuance of common stock upon settlement of restricted stock units, net of shares withheld 30,267,312 — ( 12 ) — — ( 12 ) Repurchase and retirement of Class A common stock ( 55,273,469 ) — ( 611 ) — — ( 611 ) Change in other comprehensive loss — — — ( 3 ) — ( 3 ) Share-based compensation — — 888 — — 888 Balance as of December 31, 2023 872,162,664 $ — $ 12,145 $ ( 3 ) $ ( 5,446 ) $ 6,696 See Accompanying Notes to the Consolidated Financial Statements. 123 Table of Contents ROBINHOOD MARKETS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common stock (1) Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated earnings (deficit) Total stockholders’ equity (in millions, except for number of shares) Shares Amount Balance as of December 31, 2023 872,162,664 $ — $ 12,145 $ ( 3 ) $ ( 5,446 ) $ 6,696 Net income — — — — 1,411 1,411 Shares issued in connection with stock option exercises, net of repurchases 3,954,721 — 18 — — 18 Shares issued in connection with warrants exercises, net of shares withheld 456,764 — — — — — Issuance of common stock in connection with Employee Share Purchase Plan 2,275,623 — 16 — — 16 Issuance of common stock upon settlement of restricted stock units, net of shares withheld 15,999,321 — ( 244 ) — — ( 244 ) Repurchase and retirement of Class A common stock ( 10,356,110 ) — ( 257 ) — — ( 257 ) Change in other comprehensive income — — — 2 — 2 Share-based compensation — — 330 — — 330 Balance as of December 31, 2024 884,492,983 $ — $ 12,008 $ ( 1 ) $ ( 4,035 ) $ 7,972 _______________ (1) The share amounts listed above combine Class A common stock and Class B common stock. See Accompanying Notes to the Consolidated Financial Statements. 124 Table of Contents ROBINHOOD MARKETS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Robinhood Markets, Inc. (“RHM” and, together with its subsidiaries, “Robinhood,” the “Company,” “we,” or “us”) was incorporated in the State of Delaware on November 22, 2013. Our most significant, wholly-owned subsidiaries are: • Robinhood Financial LLC (“RHF”), a registered introducing broker-dealer; • Robinhood Securities, LLC (“RHS”), a registered clearing broker-dealer; • Robinhood Crypto, LLC (“RHC”), which provides users the ability to buy, sell, and transfer cryptocurrencies and is responsible for the custody of user cryptocurrencies held by users on our RHC platform; • Robinhood Credit, Inc. (“Robinhood Credit”), which offers credit cards with certain rewards offerings; and • Robinhood Derivatives, LLC (“RHD”), a registered non-clearing futures commission merchant and a swap firm for trading cleared swaps. Acting as the agent of the user, we facilitate the purchase and sale of options, cryptocurrencies, and equities through our platforms by routing transactions through market makers, who are responsible for trade execution. Upon execution of a trade, users are legally required to purchase options, cryptocurrencies, or equities for cash from the transaction counterparty or to sell options, cryptocurrencies, or equities for cash to the transaction counterparty, depending on the transaction. We facilitate and confirm trades only when there are binding, matched legal obligations from the user and the market maker on both sides of the trade. Our users have ownership of the securities they transact on our platforms, including those that collateralize margin loans, and, as a result, such securities are not presented on our consolidated balance sheets, other than user-held fractional shares which are presented gross. Our users also have ownership of the cryptocurrencies they transact on our platforms (none of which are allowed to be purchased on margin and which do not serve as collateral for margin loans). Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with GAAP. The consolidated financial statements include the accounts of RHM and its wholly-owned direct and indirect subsidiaries. All intercompany balances and transactions have been eliminated. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The impact of these reclassifications is immaterial to the presentation of the consolidated financial statements taken as a whole. Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. We base our estimates on historical experience, and other assumptions we believe to be reasonable under the circumstances. Assumptions and estimates used in preparing our consolidated financial statements include, but are not limited to, those related to revenue recognition, SBC, the determination of allowances for credit losses, investment valuation, capitalization of internally developed software, useful lives of property, software, and equipment, valuation and useful lives 125 Table of Contents of intangible assets, valuation of reporting units in assessing goodwill for impairment, incremental borrowing rate used to calculate operating lease right-of-use assets and related liabilities, impairment of long-lived assets, uncertain tax positions, realizability of deferred tax assets, accrued and contingent liabilities. Actual results could differ from these estimates and could have a material adverse effect on our operating results. Segment Information Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. Our CODM is our CEO and President, Vladimir Tenev. We operate and report financial information in one operating segment. This is because our CODM utilizes consolidated net income and company-wide key performance metrics (as defined in Part II, Item 7 of this Annual Report, “Key Performance Metrics”) to allocate resources and determine performance. The measure of segment assets is not regularly presented to the CODM. Consolidated net income is also used by the CODM to monitor budgeted versus actual results. The monitoring of budgeted versus actual results is used by the CODM to assess performance of the business and in establishing company-wide’s objectives and key results. Substantially all of our revenues and assets are attributed to or located in the United States. Significant segment expenses required to be disclosed as part of the segment disclosure of a single segment entity under Accounting Standards Codification (“ASC”) 280 are presented throughout the consolidated financial statements including the consolidated statements of operations, consolidated statements of cash flows, and Note 5 - Revenues. In August 2022, we announced a reorganization into a general manager (“GM”) structure under which GMs have assumed broad responsibility for our individual businesses. Immediately after the GM reorganization, we began developing processes to enable us to produce sufficiently precise and timely business level financial information that did not exist within the enterprise resource planning system at the time of the announcement. GM level financial information is not currently shared with and used by the CODM to allocate resources and determine performance, and there are no plans to do so in the near future. Revenue Recognition Transaction-Based Revenues We primarily earn transaction-based revenues from routing user orders for options, cryptocurrencies, and, equities to market makers when the performance obligation is satisfied, which is at the point in time when a routed order is executed by the market maker. The transaction price for options is on a per contract basis, while for equities it is primarily based on the bid-ask spread of the underlying trading activity. For cryptocurrencies, the transaction price is a fixed percentage of the notional order value. For each trade type, all market makers pay the same transaction price. Payments are collected monthly in arrears from each market maker. Net Interest Revenues Net interest revenues consist of interest revenues less interest expenses. We earn interest revenues on margin loans to users, segregated cash, cash equivalents, and securities, deposits with clearing organizations, corporate cash and investments, Cash Sweep, and carried customer credit card balances. We also earn and incur interest revenues and expenses on securities lending transactions. We incur interest expenses in connection with our revolving credit facilities and borrowings by the Credit Card Funding Trust. 126 Table of Contents Other Revenues Other revenues primarily consists of Robinhood Gold subscription fees, which is a flat recurring rate. Subscription revenue is recognized ratably over the subscription period as the performance obligation is satisfied. Other revenues also consist of proxy revenues, advertising revenues, and ACATS fees charged to users. We earn proxy revenue directly from issuers through Say Technologies, a wholly-owned subsidiary. Proxy services are made up of two performance obligations, (i) distribution of proxy materials to shareholders and (ii) collection, tallying, and reporting of shareholder response during a voting event. Revenue is recognized at a point in time upon satisfaction of these performance obligations. Advertising revenue, generated from sales of advertising services on Sherwood Media is recognized as advertisements are delivered. ACATS fees are charged to users for facilitating the transfer of part or all of their accounts to another broker-dealer. We recognize revenue when our performance obligation of administering the transfer is satisfied. Robinhood Match Incentives We offer a match incentive on customers’ eligible contributions to their retirement accounts and, from time to time, an incentive on other transfers of assets to our platform. The match on retirement contributions and asset transfers are paid upfront and are subject to forfeiture if the recipient does not hold the contributed funds or transferred assets in their account for a specified period of time. These incentives are deferred and recognized over the specified holding period. For a limited time during 2024, we provided a match on eligible cash deposits made by Robinhood Gold subscribers. Matches on these cash deposits are paid out on a monthly basis ratably over the specified earning period. Future match payments are forfeited if deposits are not held on the platform over the specified earning period. All match incentives are recognized as a reduction to revenue when earned. The matches are allocated to certain revenue categories on a proportional basis. For the years ended December 31, 2023, and 2024, no impairments of the deferred customer match incentive were recognized. Concentrations of Revenue and Credit Risk Concentrations of Revenue We derived transaction-based revenues from individual market makers in excess of 10% of total revenues, as follows: Year Ended December 31, 2022 2023 2024 Market maker: Citadel Securities, LLC 16 % 12 % 12 % Wintermute Trading Ltd — % 2 % 10 % All others individually less than 10% 43 % 26 % 34 % Total as percentage of total revenue: 59 % 40 % 56 % Concentrations of Credit Risk We are engaged in various trading and brokerage activities in which the counterparties primarily include broker-dealers, banks, cryptocurrency market makers, and other financial institutions. In the event our counterparties do not fulfill their obligations, we may be exposed to risk. The risk of default depends 127 Table of Contents on the creditworthiness of the counterparty. Default of a counterparty in equities and options trades, which are facilitated through clearinghouses, would generally be spread among the clearinghouse's members rather than falling entirely on us. It is our policy to review, as necessary, the credit standing of each counterparty. Operating Expenses Brokerage and Transaction Brokerage and transaction costs primarily consist of cash compensation and employee benefits, SBC, as well as allocated overhead for employees engaged in clearing and brokerage functions, market data expenses, expenses related to our instant withdrawals feature, fees paid to centralized clearinghouses and regulatory fees, customer statement-related costs, and other brokerage and transaction costs such as costs related to our Cash Sweep and securities lending programs. A large portion of our brokerage and transaction costs are variable and tied to trading and transaction volumes on our platforms. For the year ended December 31, 2022, brokerage and transaction costs included $ 57 million as a result of the Q4 2022 Processing Error (as defined in Note 16 - Commitments & Contingencies to our consolidated financial statements in this Annual Report). Technology and Development Technology and development costs primarily consist of costs incurred to support and improve our platforms and develop new products, costs associated with computer hardware and software, including amortization of internally developed software, and compensation and benefits, including SBC, for engineering, data science, and design personnel, as well as allocated overhead. Operations Operations costs consist of customer service related expenses, including cash compensation and employee benefits, SBC, as well as allocated overhead for employees engaged in customer support, and costs incurred to support and improve customer experience (such as third-party customer service vendors). Provision for Credit Losses The provision for credit losses consists of expected credit losses related to credit card and brokerage products. For credit card related, we have two types of provision for credit losses: i) one related to off-balance sheet credit card principal receivables, and ii) one related to on-balance sheet purchased credit card and interest receivables. Brokerage-related provision for credit losses primarily relates to unsecured balances of receivables from users due to Fraudulent Deposit Transactions and losses on margin lending. Marketing Marketing costs primarily consist of paid marketing channels such as digital marketing and brand marketing, as well as cash compensation, and employee benefits, SBC, and allocated overhead for employees engaged in the marketing function. Advertising costs are expensed as incurred and were $ 52 million, $ 74 million and $ 179 million in the years ended December 31, 2022, 2023, and 2024. General and Administrative General and administrative costs primarily consist of cash compensation and employee benefits, SBC, as well as allocated overhead for certain executives and employees engaged in legal, finance, human resources, risk, and compliance. General and administrative costs also include legal expenses, other professional fees, business insurance, and real estate charges including impairments on our operating leases and leasehold improvements, lease terminations, and settlements and penalties. For the 128 Table of Contents year ended December 31, 2023, general and administrative costs included a $ 485 million SBC charge related to the 2021 Founders Award Cancellation. Employee Retirement Benefits We offer a defined contribution 401(k) plan to full-time employees. Employees may elect to contribute to a traditional 401(k) plan, which qualifies as a deferred compensation arrangement under Section 401 of the Code. In this case, participating employees defer a portion of their pre-tax earnings. Employees may also contribute to a Roth 401(k) plan using post-tax dollars. We match employee contributions up to 3 %, and have incurred $ 14 million, $ 12 million, and $ 12 million of expense related to matching for the years ended December 31, 2022, 2023, and 2024. Research and Development Costs Research and development costs described in ASC 730, Research and Development, are expensed as incurred. Our research and development costs consist primarily of employee compensation and benefits for our engineering and research teams, including SBC. Research and development costs recorded in operating expenses under ASC 730 were $ 381 million, $ 349 million, and $ 323 million for the years ended December 31, 2022, 2023, and 2024. Share-based Compensation Common Stock Fair Value The fair value of our common stock is determined on the grant date using the closing price of our common stock, which is traded on the Nasdaq Global Select Market. Stock Options We estimate the fair value of stock options granted to employees using the Black-Scholes option-pricing model. The fair value of stock options is recognized as compensation on a straight-line basis over the requisite service period. Forfeitures are accounted for when they occur. The Black-Scholes option-pricing model incorporates various assumptions in estimating the fair value of stock-based awards. In addition to the fair value of our common stock, these variables include: Expected volatility —As we do not have sufficient trading history of our common stock, we estimate the volatility of our common stock on the date of grant using the blended approach which considers the weighted average of historical stock price of our own stock and comparable publicly-traded companies over a period equal to the expected term of the award. Expected term —We determine the expected term based on the average period the stock options are expected to remain outstanding using the simplified method, generally calculated as the midpoint of the stock options’ vesting term and contractual expiration period, as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Risk-free interest rate —Based on the U.S. Treasury yield curve that corresponds with the expected term at the time of grant. Expected dividend yield —We utilize a dividend yield of 0 % as we have not paid, and do not anticipate paying, dividends on our common stock. 129 Table of Contents Time-Based RSUs We have granted time-based RSUs that vest upon the satisfaction of a time-based service condition (“Time-Based RSUs”) and record SBC expense on a straight-line basis over the requisite service period, which is generally satisfied over one or four years . We have elected to account for forfeitures as they occur, with previously recognized SBC reversed in the period that the awards are forfeited. Market-Based RSUs We have granted RSUs that vest upon the satisfaction of all the following conditions: time-based service conditions, performance-based conditions, and market-based conditions. The time-based service condition for these awards is generally satisfied over six years . The performance-based conditions were satisfied upon the occurrence of an IPO. The market-based conditions are satisfied upon our achievement of specified share prices. For market-based awards, we determined the grant-date fair value utilizing a Monte Carlo valuation model, which incorporates various assumptions including expected stock price volatility, expected term, risk-free interest rates, expected date of an IPO, and expected capital raise percentage. We estimated the expected term based on various vesting scenarios, as these awards were not considered “plain vanilla.” We estimated the expected date of an IPO based on our expectation at the time of measurement of the award’s value. We recorded SBC expense for market-based equity awards on an accelerated attribution method over the requisite service period, and only if performance-based conditions are considered probable to be satisfied. We determined the requisite service period by comparing the derived service period to achieve the market-based condition and the explicit time-based service period, using the longer of the two service periods as the requisite service period. Upon the occurrence of our IPO in 2021, we recorded a cumulative one-time SBC expense determined using the grant-date fair values. Remaining SBC related to the Market-Based RSUs was fully recorded over the remaining derived requisite service period by December 31, 2024. Previously recognized SBC related to the Market-Based RSUs will not be reversed even if the specified share prices are not achieved. Net Income (Loss) per Share We present net income (loss) per share using the two-class method required for multiple classes of common stock. The rights, including the liquidation and dividend rights, of the holders of Class A common stock and Class B common stock are identical, except with respect to voting. As the liquidation and dividend rights are identical for Class A common stock and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting income (loss) per share will, therefore, be the same for both Class A common stock and Class B common stock on an individual or combined basis. Basic earnings per share is computed by dividing net income available to our common stockholders, adjusted to exclude earnings allocated to participating securities, by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. The computation of the diluted earnings per share of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Cash and Cash Equivalents Cash and cash equivalents include deposits with banks and money market funds or highly liquid financial instruments with maturities of three months or less at the time of purchase. We maintain cash in 130 Table of Contents bank accounts at financial institutions that exceed federally insured limits. We also maintain cash in money market funds which are not FDIC insured. We are subject to credit risk to the extent any financial institution with which we conduct business is unable to fulfill contractual obligations on our behalf. As we have not experienced any material losses in such accounts and we believe that we have placed our cash on deposit with financial institutions which are financially stable, we do not have an expectation of credit losses for these arrangements. Cash, Cash Equivalents, and Securities Segregated Under Federal and Other Regulations We are required to segregate cash, cash equivalents, and securities for the exclusive benefit of customers and proprietary accounts of brokers in accordance with the provision of Rule 15c3-3 under the Exchange Act. We continually review the credit quality of our counterparties and have not experienced a default. As a result, we do not have an expectation of credit losses for these arrangements. Segregated cash also includes certain customer funds for which we are an agent and custodian on behalf of our customers that are reflected on our consolidated balance sheets, and for which we follow statutory requirements to keep these funds segregated. Restricted Cash We are required to maintain restricted cash deposits to back letters of credit for certain property leases. We have no ability to draw on such funds as long as they remain restricted under the applicable agreements. Restricted cash also includes customers’ credit card payments that we collect on behalf of other financial institutions that are pending remittance. Cash subject to restrictions that expire within one year is included in other current assets in our consolidated balance sheets. For the years ended December 31, 2023 and 2024, current restricted cash balances included in other current assets in our consolidated balance sheets were $ 46 million and $ 18 million. Cash subject to restrictions that exceed one year is included in other non-current assets in our consolidated balance sheets. For the years ended December 31, 2023 and 2024, non-current restricted cash balances were $ 17 million and $ 18 million. Securities Borrowing and Lending We operate a securities lending program under which shares that users have pledged to us to collateralize their margin borrowing are lent by us to third parties and a Fully-Paid Securities Lending program under which we borrow fully-paid shares from participating users and lend them to third parties. We also occasionally borrow securities from third parties for operational purposes, and we occasionally lend to third parties securities that we hold for our own account (such as our holdings to support fractional share operations). When we lend securities to third parties, the borrower provides cash as collateral. We earn interest revenue on cash collateral deposited by borrowers, and we can also earn additional revenue for lending certain securities based on demand for those securities. For our Fully-Paid Securities Lending, portions of such revenues are paid to participating users, and those payments are recorded as interest expense. When we borrow securities from users participating in the Fully-Paid Securities Lending program or from third parties, we provide cash as collateral and we record a receivable representing our right to the return of that collateral. The amount of that receivable is presented in “securities borrowed” on our consolidated balance sheets. In the case of our Fully-Paid Securities Lending program, the cash collateral is held by a third-party bank in a deposit account pledged to the user, which we administer as the user’s agent. Users are not entitled to interest on such account, and any interest earned is for our benefit. Our authorization from users to lend shares that collateralize their margin borrowing is found in our margin account agreement, our borrowing of fully-paid shares from users is conducted under the terms of our Fully-Paid Securities Lending program to which users consent when they enroll in that program, and 131 Table of Contents substantially all of our securities lending and borrowing transactions with third parties are conducted under terms based on an industry-standard master securities loan agreement (“MSLA”), which has an open contractual term and may be terminated upon notice by either party. We have also entered into fixed-term securities lending agreements with two financial institution counterparties (the “Fixed-Term Securities Lending Agreements”). One of these agreements has a contractual term of 30 days per lending transaction with a daily minimum commitment of $ 25 million and the other has a contractual term of 21 days per lending transaction with a daily minimum commitment of $ 35 million. Under these two agreements we lend to the counterparties (for a fixed term) securities that collateralize users’ margin borrowing, and we obtain cash collateral from the counterparties that we use to provide liquidity support for our margin lending to users. Each of the MSLAs and Fixed-Term Securities Lending Agreements establishes a master netting arrangement between the lender and the borrower. A master netting arrangement is an agreement between two counterparties that creates a right of set-off for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. In connection with our securities borrowing and lending activities, however, our policy is to recognize all amounts that are subject to master netting arrangements on a gross basis in our consolidated balance sheets even though some of those amounts may be eligible for offset (i.e., to be presented on a net basis) under GAAP. Cash Sweep Our users may elect to participate in Cash Sweep, which allows them to earn interest on their uninvested brokerage cash. These balances are automatically swept to our partner banks, and are not reflected on the consolidated balance sheet. Cryptocurrencies We act as an agent in the cryptocurrency transactions that users initiate on our platforms. We have determined we are an agent, for accounting purposes, because we do not control the cryptocurrency before delivery to the user, we are not primarily responsible for the delivery of cryptocurrency to our users, we are not exposed to risks arising from fluctuations of the market price of cryptocurrency before delivery to the user, and we do not set the prices charged to users. After purchasing cryptocurrency on the platform, users are the legal owners of cryptocurrency held under custody by us and users have all the rights and benefits of ownership, including the rights to appreciation and depreciation of the cryptocurrency. We do not allow users to purchase cryptocurrency on margin and cryptocurrency does not serve as collateral for margin loans. We hold cryptocurrency in custody for users in one or more omnibus cryptocurrency wallets; we do not utilize third-party custodians. We hold cryptographic key information and maintain internal record keeping for the cryptocurrencies we hold in custody for users, and we are obligated to secure such assets from loss or theft. Based on the terms of our user agreement, the structure of our crypto offerings, and applicable law, and, although we have not obtained a formal legal opinion on this matter, after consultation with internal and external legal counsel, we believe the cryptocurrency we hold in custody for users of our platforms should be respected as users’ property (and should not be available to satisfy the claims of our general creditors) in the event we were to enter bankruptcy. For additional information relating to platform bankruptcy generally, see Part I, Item 1A of this Annual Report, “Risk Factors—Risks Related to Cryptocurrency Products and Services—Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are rapidly evolving in ways that are difficult to predict. Changes in these laws and regulations, or our failure to comply with them, could negatively impact cryptocurrency trading on our platform. ” Investments We invest in marketable debt securities and determine the classification at the time of purchase. Available-for-sale investments are recorded at fair value. We have elected the fair value option for our available-for-sale investments as we believe carrying these investments at fair value and taking changes 132 Table of Contents in fair value through earnings best reflects their underlying economics. Fair value adjustments are presented in other (income) expense, net and interest earned on the debt securities as net interest revenues in our consolidated statements of operations. Held-to-maturity investments are securities that we have both the ability and positive intent to hold until maturity and are recorded at amortized cost. Interest income is calculated using the effective interest method, adjusted for deferred fees or costs, premium, or discount existing at the date of purchase. Interest earned is included in net interest revenues in our consolidated statements of operations. We evaluate held-to-maturity investment for credit losses on a quarterly basis. We do not expect credit losses for our held-to-maturity investments that are obligations of states and political subdivisions and securities issued by U.S. government sponsored agencies. We monitor remaining securities by type and standard credit rating. Fair Value of Financial Instruments We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we may use various valuation approaches, including market, income and/or cost approaches. The fair value hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is a market-based measure considered from the perspective of a market participant. Accordingly, even when market assumptions are not readily available, our own assumptions reflect those that market participants would use in pricing the asset or liability at the measurement date. The fair value measurement accounting guidance describes the following three levels used to classify fair value measurements: Level 1 Inputs: unadjusted quoted prices in active markets for identical assets or liabilities that are accessible by us Level 2 Inputs: quoted prices for similar assets and liabilities in an active market, quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly Level 3 Inputs: unobservable inputs that are significant to the fair value of the assets or liabilities A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying amounts of certain financial instruments approximate their fair value due to the short-term nature, which include cash and cash equivalents, cash segregated under federal and other regulations, receivables from brokers, dealers, and clearing organizations, receivables from users, net, deposits with clearing organizations, other current assets, accounts payable and accrued expenses, payable to users, securities loaned, and other current liabilities. Credit Card Program The Robinhood Credit Card program is funded under the Program Agreement between Robinhood Credit and Coastal Bank, where Coastal Bank is the legal lender and originator, the party to which the customer has a creditor-borrower relationship, and the legal owner of the receivables. Robinhood Credit is responsible for administering the credit card program on a mobile app, including, (i) setting customer credit limits within Coastal Bank’s underwriting standards, (ii) loan servicing, (iii) remitting collected principal from customers to Coastal Bank, and (iv) offering and maintaining the customer rewards program. Coastal Bank is responsible for (i) funding the customer credit, (ii) reporting customer credit activities, and (iii) holding customer receivables. Under the Program Agreement, Robinhood Credit collects interest from customers that carry a balance and pays interest on the amount funded by Coastal Bank, with the difference between those 133 Table of Contents amounts resulting in net interest revenue. The interest collections and payments are indexed to the Federal Funds Rate and are settled monthly based on a notional of the outstanding principal balances at period end which are revolving with no fixed term. In addition, Robinhood Credit earns revenue from interchange fees from each credit card transaction. Robinhood Credit recognizes interchange revenue net of rewards paid to customers. Under the terms of the Program Agreement, Robinhood Credit has the ability to purchase credit card receivables originated and held for a period of time by Coastal Bank. Prior to the purchase of the credit card receivables, the customer balances are off-balance sheet. Once purchased, the customer balances are shown on-balance sheet. Robinhood Credit continues to earn interest from customers and uses these purchased credit card receivables as collateral under a trust structure to access debt financing in the ordinary course of business. To help facilitate these transactions, we created a variable interest entity known as the Credit Card Funding Trust. We have credit exposure related to outstanding principal balances of customer credit cards whether they are owned by Coastal Bank or the Credit Card Funding Trust. We guarantee payment to Coastal Bank in the event Coastal experiences a loss due to a failure by the customer to pay. Robinhood Credit is responsible to pay Coastal Bank customer balances that are ultimately charged off or deemed uncollectible, generally when balances become outstanding for over 180 days. Robinhood Credit estimates the related allowance for credit card loss based on outstanding customer credit card principal balances and anticipated future customer payment rates based on past portfolio performance, both of which are unobservable inputs. The measurement of this allowance using this method approximates fair value. Receivables From Brokers, Dealers, and Clearing Organizations Receivables from brokers, dealers, and clearing organizations include receivables from market makers for routing user orders for execution and other receivables from third-party brokers. These receivables are short term and settle within 30 days. We continually review the credit quality of our counterparties and have not experienced a default. As a result, we do not have an expectation of credit losses for these arrangements. Receivables From Users, Net Receivables from users, net are primarily made up of margin receivables. Margin receivables are adequately collateralized by users’ securities balances and are reported at their outstanding principal balance, net of an allowance for credit losses. We monitor margin levels and require users to deposit additional collateral, or reduce margin positions, to meet minimum collateral requirements and to avoid automatic liquidation of their positions. We apply the practical expedient based on collateral maintenance provisions in estimating an allowance for credit losses for receivables from users. We have no expectation of credit losses for receivables from users that are fully secured, where the fair value of the collateral securing the balance is equal to or in excess of the receivable amount. This is based on our assessment of the nature of the collateral, potential future changes in collateral values, and historical credit loss information relating to fully secured receivables. In cases where the fair value of the collateral is less than the outstanding receivable balance from a user, we recognize an allowance for credit losses in the amount of the difference, or unsecured balance, immediately. We write-off unsecured balances when the balance becomes outstanding for over 180 days or when we otherwise deem the balance to be uncollectible. 134 Table of Contents Receivables from users, net also consists of credit card receivables purchased from Coastal Bank. From time to time, purchased credit card receivables may be considered pledged under secured borrowings with Coastal Bank. As of December 31, 2024, none of the balance of the purchased credit card receivables was considered pledged. We record an allowance for credit losses related to purchased credit card principal balances receivable and credit card interest receivable from customers, shown as a reduction of receivables from users, net on the consolidated balance sheet. This represents management’s estimate of expected credit losses from credit exposure over the remaining expected life of credit card receivables, and takes into account information from internal and external sources, including historical collection data, charge off trends by FICO cohort, and market data. We write-off balances outstanding over 180 days or when we otherwise deem the balance to be uncollectible. The accrual of interest revenue is suspended for aged credit card receivables past 90 days. Interest payments on such nonaccrual receivables are recorded as interest revenue on a cash basis. Once the balance is satisfied and brought current, the receivable returns to accrual status. Deposits With Clearing Organizations We are required to maintain collateral deposits with clearing organizations such as Depository Trust & Clearing Corporation and Options Clearing Corporation which allow us to use their security transactions services for trade comparison, clearance, and settlement. The clearing organizations establish financial requirements, including deposit requirements, to reduce their risk. The required level of deposits may fluctuate significantly from time to time based upon the nature, size of users’ trading activity, and market volatility. As we have not experienced historic defaults, we do not have an expectation of credit losses for these arrangements. Fractional Share Program We operate our fractional share program for the benefit of our users and maintain an inventory of securities held exclusively for the fractional share program. This proprietary inventory is recorded within other current assets on our consolidated balance sheets. When a user purchases a fractional share, we record the cash received for the user-held fractional share as pledged collateral and an offsetting liability to repurchase the shares as we concluded that we did not meet the criteria for derecognition under the accounting guidance. We measure our inventory of securities, user-held fractional shares and our repurchase obligation at fair value at each reporting period via the election of the fair value option, with realized and unrealized gains and losses recorded in brokerage and transaction expenses in our consolidated statement of operations. We do not earn revenue from our users when they purchase or sell fractional shares from us. We earn transaction-based revenue when shares are purchased from or routed to market makers to fulfill fractional share transactions. Other Current Assets Other current assets include USDC stablecoin assets owned by us that are considered financial assets, restricted cash subject to restrictions that expire within one year, other receivables, deferred costs of Robinhood Match Incentive Program (defined below), interest and dividends receivable, and securities owned by us used for the fractional share program. 135 Table of Contents Property, Software, and Equipment Property, software, and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is recorded on a straight-line basis over the useful life of the asset, which is as follows: Property, Software, and Equipment Useful Life Computer equipment 3 years Fixture and furniture 7 years Leasehold improvements Shorter of estimated useful life or lease term Internally developed software 3 years Repairs and maintenance that do not enhance or extend the asset’s function and/or useful life are charged to expenses as incurred. When items are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gains or losses arising from such transactions are recognized. Internally developed software is capitalized when preliminary development efforts are successfully completed and it is probable that the project will be completed and the software will be used as intended. Capitalized costs consist of SBC, salaries, and payroll related costs for employees, and fees paid to third-party consultants who are directly involved in development efforts. Capitalized costs are amortized over the estimated useful life of the software on a straight-line basis and included in technology and development in the consolidated statements of operations. We expense software development costs as they are incurred during the preliminary project stage. Non-Marketable Equity Securities Investments in non-marketable equity securities without readily determinable fair values are initially recorded at cost and are subsequently adjusted to fair value for impairments and price changes from observable transactions in the same or a similar security from the same issuer. Non-marketable equity securities are included in other non-current assets on the consolidated balance sheets and the related balances were not material for the periods presented. Leases We elected to apply the short-term lease measurement and recognition practical expedient to our leases where applicable, thus leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease right-of-use assets and operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date for each lease. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate because the interest rate implicit in most of our leases is not readily determinable. Our incremental borrowing rate is estimated to approximate the interest rate that we would pay to borrow on a collateralized basis with similar terms and payments as the lease. Operating lease right-of-use assets also include any prepaid lease payments and lease incentives. Our lease agreements generally contain lease and non-lease components. Non-lease components, which primarily include payments for maintenance and utilities, are combined with lease payments and accounted for as a single lease component. We include the fixed non-lease components in the determination of the right-of-use assets and operating lease liabilities. We record the amortization of the right-of-use asset and the accretion of lease liability as rent expense and allocate it as overhead in the consolidated statements of operations. 136 Table of Contents Variable Interest Entities We evaluate our ownership, contractual and other interests in entities to determine if we have a variable interest in an entity. These evaluations are complex, involve judgment, and the use of estimates and assumptions based on available historical and prospective information, among other factors. If we determine that an entity for which we hold a contractual or ownership interest in is a variable interest entity (“VIE”) and that we are the primary beneficiary, we consolidate such entity in the consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. We continuously monitor if any changes in the interest or relationship with the entity may impact the determination of whether we are still the primary beneficiary and require us to revise our previous conclusion. Business Combinations and Asset Acquisitions We account for acquisitions of entities or asset groups that qualify as businesses using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of operations. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. We allocate the cost of the acquisition, including direct and incremental transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination and is allocated to reporting units expected to benefit from the business combination. We test goodwill for impairment at least annually in the fourth quarter or whenever events or changes in circumstances indicate that goodwill might be impaired. We evaluate our reporting units when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach. In testing for goodwill impairment, we first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if we conclude otherwise, we proceed to a quantitative assessment. The quantitative assessment compares the estimated fair value of a reporting unit to its book value, including goodwill. If the fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. However, if the book value of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. 137 Table of Contents Intangible Assets, Net Intangible assets are carried at cost and amortized on a straight-line basis over their estimated useful lives. We evaluate the remaining estimated useful life of its intangible assets being amortized on an ongoing basis to determine whether events and circumstances warrant a revision to the remaining period of amortization. Impairment of Long-lived Assets We evaluate the recoverability of long-lived assets, including property, software, and equipment, leases, and finite-lived intangible assets whenever events or circumstances indicate that the carrying amounts of such assets may not be recoverable compared to the undiscounted future net cash flows the assets are expected to generate. The impairment test is performed at the asset group level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When the test results indicate that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third–party independent appraisals, as considered necessary. Payables to Users Payables to users represent users’ funds on deposit, and/or funds accruing to users as a result of settled trades and other security related transactions. Loss Contingencies We are subject to claims and lawsuits in the ordinary course of business, including arbitration, class actions and other litigation, some of which include claims for substantial or unspecified damages. We are also the subject of inquiries, investigations, and proceedings by regulatory and other governmental agencies. We review our lawsuits, regulatory inquiries and other legal proceedings on an ongoing basis and provide disclosures and record loss contingencies in accordance with the loss contingencies accounting guidance. We establish an accrual for losses at management’s best estimate when we assess that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If the reasonable estimate is a range and no amount within that range is considered a better estimate than any other amount, an accrual is recorded based on the bottom amount of the range. Accrual for loss contingencies are recorded in accounts payable and accrued expenses on the consolidated balance sheets and expensed in general and administrative expenses in our consolidated statements of operations. We monitor these matters for developments that would affect the likelihood of a loss and the accrued amount, if any, and adjust the amount as appropriate. Income Taxes Income tax expense is an estimate of current income taxes payable in the current fiscal year based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences and carryforwards that we recognize for financial reporting and income tax purposes at enacted tax rates expected to be in effect when taxes are actually paid or recovered. We account for income taxes under the asset and liability method, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements, but have not been reflected in our taxable income. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe that they will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets including, but not limited to, historical cumulative loss experience and expectations of future earnings, tax planning strategies, and the carry-forward 138 Table of Contents periods available for tax reporting purposes. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our tax provision would increase or decrease in the period in which the assessment is changed. We recognize a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized. We account for uncertain tax positions, including net interest and penalties, as a component of income tax expense or benefit. We make adjustments to these uncertain tax positions in accordance with applicable income tax guidance and based on changes in facts and circumstances. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact to our consolidated financial statements and operating results. Related Parties We have defined related parties as members of our board of directors, executive officers, principal owners of our outstanding stock, and any immediate family members of each such related party, as well as any other person or entity with significant influence over our management or operations and any other affiliates. Related party transactions may include any transaction between entities under common control or with a related party. NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In January 2025, the staff of the SEC issued SAB 122 which rescinded the SAB 121 requirement for entities that have obligations to safeguard users’ crypto assets to recognize both a safeguarding liability and asset on the balance sheet measured at fair value of crypto in custody initially and at each subsequent reporting period. As permitted, we early adopted SAB 122 as part of the consolidated financial statements for the year ended December 31, 2024, with retrospective application for all comparative periods. As a result of our adoption of SAB 122, we derecognized both the asset captioned “Asset related to user cryptocurrencies safeguarding obligation” of $ 14.71 billion and $ 35.21 billion and liability captioned “User cryptocurrencies safeguarding obligation” of $ 14.71 billion and $ 35.21 billion as well as their related tax effects of $ 3.66 billion and $ 8.84 billion on our consolidated balance sheets as of December 31, 2023 and 2024. We also considered whether a liability representing anticipated losses from crypto assets which we hold in custody on behalf of users should be recognized under the ASC 450-20, Loss Contingencies framework. As of December 31, 2023 and 2024, the likelihood of loss from crypto assets which we held in custody on behalf of users was remote; as such, no liability was recorded on our consolidated balance sheets. In November 2023, the FASB issued Accounting Standards Update 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in guidance improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted this guidance for our fiscal year ending December 31, 2024 and interim periods thereafter. For further information, refer to the Segment Information section in Note 1 - Description of Business and Summary of Significant Accounting Policies 139 Table of Contents Recently Issued Accounting Pronouncements Not Yet Adopted In October 2023, the FASB issued Accounting Standards Update 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” The amendments will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives, and transfers of financial assets. The amendments in this guidance will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. We are currently evaluating the impacts of the amendments on our consolidated financial statements. In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income taxes (Topic 740): Improvements to Income Taxes Disclosures.” This guidance requires annual disclosure of specific categories in the rate reconciliation and provides additional information for reconciling items that meet a quantitative threshold. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and related disclosures. In March 2024, the SEC adopted final rules under SEC Release No. 34-99678 and No. 33-11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “Final Rules”), which requires registrants to provide certain climate-related information in their registration statements and annual reports. The Final Rules require, among other things, disclosure in the notes to the audited financial statements of the effects of severe weather events and other natural conditions, subject to certain thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates in certain circumstances. The disclosure requirements of the Final Rules were to begin phasing in for annual periods beginning in fiscal year 2025. In April 2024, the SEC stayed the effectiveness of the Final Rules and the timing of the effectiveness of these disclosure requirements remain uncertain. We are currently monitoring the status of the Final Rules and evaluating the potential impact of the Final Rules. In November 2024, the FASB issued Accounting Standards Update 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40).” This guidance requires additional disclosures about certain amounts included in the expense captions presented on the statement of operations as well as disclosures about selling expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The guidance can either be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and related disclosures. 140 Table of Contents NOTE 3: BUSINESS COMBINATIONS Acquisition of X1 On July 3, 2023, we acquired all of the outstanding equity of X1 Inc. (“X1”), a U.S.-based company that offers a no-fee credit card with rewards on each purchase. The acquisition of X1 allows us to provide access to credit for our customers. In August 2023, X1 was renamed Robinhood Credit. The acquisition date fair value of the consideration transferred for Robinhood Credit was $ 104 million, which was entirely paid in cash. The following table summarizes the fair value of assets acquired and liabilities assumed as of the date of acquisition: In millions Fair Value Cash and cash equivalents $ 14 Receivable from users, net 3 Prepaid expenses 1 Other current assets 48 Goodwill 72 Intangible assets 36 Accounts payable and accrued expenses ( 44 ) Other current liabilities ( 25 ) Other non-current liabilities ( 1 ) Net assets acquired $ 104 The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, which is not deductible for tax purposes. Goodwill is primarily attributed to the assembled workforce of Robinhood Credit and anticipated operational synergies. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions at the time of acquisition. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition: (in millions, except years) Fair Value Useful Life Developed technology $ 25 4 Customer relationships 10 7 Trade names 1 1 Total $ 36 The overall weighted average useful life of the identified amortizable intangible assets acquired is 5 years. The estimated fair value of the intangible assets acquired approximate the amounts a market participant would pay for these intangible assets as of July 3, 2023. We used the replacement cost method to estimate the fair value of developed technology, and a multi-period excess earnings method was used to estimate the fair value of customer relationships. Tangible net assets were valued at their respective carrying amounts as of the acquisition date, as these amounts approximated fair value. During the fourth quarter of 2023, we recorded a $ 7 million measurement period adjustment to accounts payable and accrued expenses with a corresponding increase to goodwill, and an adjustment to increase other current assets and other current liabilities by $ 25 million based on facts and circumstances as of the acquisition date. 141 Table of Contents Pro forma results of operations for Robinhood Credit have not been presented as the effect of this acquisition was not material. Asset Acquisitions On January 3, 2024, we acquired all outstanding stock of MNA Holdco LLC and its subsidiary Marex North America LLC (“Marex”) and licenses held by Marex for approximately $ 3 million (net of cash acquired in the amount of $ 125 million), which was determined to be an asset acquisition. The license acquired was recognized as an indefinite-lived intangible asset. Pending Acquisitions In June 2024, we entered into an agreement to acquire all outstanding equity of Bitstamp, a globally-scaled cryptocurrency exchange with retail and institutional customers, for an aggregate consideration of approximately $ 200 million, subject to customary purchase price adjustments and payable in cash. In November 2024, we entered into an agreement to acquire all outstanding equity of TradePMR, a custodial and portfolio management platform for registered investment advisors, for cash consideration of approximately $ 180 million and post-close equity compensation of approximately $ 120 million, for aggregate consideration and post-close compensation of approximately $ 300 million. The purchase consideration is subject to customary purchase price adjustments. Both pending acquisitions are subject to customary closing conditions, including regulatory approvals, and are expected to close in the first half of 2025. NOTE 4: GOODWILL AND INTANGIBLE ASSETS Goodwill The following table summarizes the carrying amount of goodwill: December 31, (in millions) 2023 2024 Beginning balance $ 100 $ 175 Less: Accumulated impairment — — Beginning balance, net 100 175 Additions due to business combinations (1) 68 4 Post-acquisition adjustments 7 — Ending balance $ 175 $ 179 _______________ (1) During the year ended December 31, 2023, substantially all of the additions related to the acquisition of Robinhood Credit as disclosed in Note 3 - Business Combinations, and the remainder related to other immaterial business acquisitions. There was no impairment of goodwill for the years ended December 31, 2023 and 2024. 142 Table of Contents Intangible Assets The following tables summarize the components of intangible assets: December 31, 2023 (in millions, except years) Gross Carrying Value Accumulated Amortization Net Carrying Value Weighted Average Remaining Useful Life - Years Finite-lived intangible assets Developed technology $ 48 $ ( 21 ) $ 27 2.98 Customer relationships 23 ( 4 ) 19 7.04 Trade names 1 ( 1 ) — — Indefinite-lived intangible assets 2 — 2 N/A Total $ 74 $ ( 26 ) $ 48 December 31, 2024 (in millions, except years) Gross Carrying Value Accumulated Amortization Net Carrying Value Weighted Average Remaining Useful Life - Years Finite-lived intangible assets Developed technology $ 51 $ ( 33 ) $ 18 2.63 Customer relationships 23 ( 13 ) 10 4.72 Indefinite-lived intangible assets 10 — 10 N/A Total $ 84 $ ( 46 ) $ 38 Amortization expense of intangible assets was $ 9 million, $ 14 million, and $ 20 million for the years ended December 31, 2022, 2023, and 2024. There was no impairment of intangible assets for the years ended December 31, 2023 and 2024. As of December 31, 2024, the estimated future amortization expense of finite-lived intangible assets was as follows: (in millions) Finite-lived Intangible Assets 2025 $ 10 2026 8 2027 5 2028 2 2029 2 Thereafter 1 Total $ 28 143 Table of Contents NOTE 5: REVENUES Disaggregation of Revenues The following table presents our revenues disaggregated by revenue source: Year Ended December 31, (in millions) 2022 2023 2024 Transaction-based revenues: Options $ 488 $ 505 $ 760 Cryptocurrencies 202 135 626 Equities 117 104 177 Other 7 41 84 Total transaction-based revenues 814 785 1,647 Net interest revenues: Margin interest 177 243 319 Interest on segregated cash, cash equivalents, securities, and deposits 57 210 261 Interest on corporate cash and investments 103 288 256 Cash Sweep 22 123 179 Securities lending, net 89 79 94 Credit card, net — 9 24 Interest expenses related to credit facilities ( 24 ) ( 23 ) ( 24 ) Total net interest revenues 424 929 1,109 Other revenues: Gold subscription revenues 68 75 109 Proxy revenues 44 61 60 Other 8 15 26 Total other revenues 120 151 195 Total net revenues $ 1,358 $ 1,865 $ 2,951 Fully-Paid Securities Lending For our Fully-Paid Securities Lending program, we earn revenue for lending certain securities based on demand for those securities and portions of such revenues are paid to participating users, and those payments are recorded as interest expense. The program was launched during the three months ended June 30, 2022. The following table presents interest revenue earned and interest expense paid from Fully-Paid Securities Lending: Year Ended December 31, (in millions) 2022 2023 2024 Interest revenue $ 11 $ 44 $ 85 Interest expense ( 2 ) ( 7 ) ( 13 ) Fully-Paid Securities Lending, net $ 9 $ 37 $ 72 144 Table of Contents Contract Balances Contract receivables are recognized when we have an unconditional right to invoice and receive payment under a contract and are derecognized when cash is received. Transaction-based revenue receivables due from market makers are reported in receivables from brokers, dealers, and clearing organizations while other revenue receivables related to proxy revenues due from issuers are reported in other current assets on the consolidated balance sheets. Contract liabilities, which primarily consist of unearned subscription revenue, are recognized when users remit cash payments in advance of the time we satisfy our performance obligations and are recorded as other current liabilities on the consolidated balance sheets. The table below sets forth contract receivables and liabilities balances for the periods indicated: December 31, 2023 (in millions) Contract Receivables Contract Liabilities Beginning of the period, January 1, 2023 $ 60 $ 3 End of the period, December 31, 2023 87 4 Changes during the period $ 27 $ 1 December 31, 2024 (in millions) Contract Receivables Contract Liabilities Beginning of the period, January 1, 2024 $ 87 $ 4 End of the period, December 31, 2024 294 11 Changes during the period $ 207 $ 7 The difference between the opening and ending balances of our contract receivables was primarily driven by higher transaction-based revenues due to increased trading volumes and timing differences between our performance and counterparties’ payments. We recognized all revenue from amounts included in the opening contract liabilities balance for the year end December 31, 2024. NOTE 6: RESTRUCTURING ACTIVITIES April 2022 Restructuring On April 26, 2022, we announced the April 2022 Restructuring as part of our efforts to improve efficiency and operating costs, increase our velocity, and ensure that we are responsive to the changing needs of our customers. The April 2022 Restructuring involved approximately 330 employees, representing approximately 9 % of our full-time employees at that time. We allowed affected employees’ share-based awards to continue vesting over a transitional period (generally two months during which they remained employed but were not expected to provide active service), which were generally accounted for as a modification allowing a portion of the awards to vest that otherwise would have been forfeited. However, as a result of the reversal of SBC expense that had been previously recognized (under the accelerated attribution method, generally), the April 2022 Restructuring resulted in a net reduction to SBC of $ 24 million, which was recognized in the second quarter of 2022 (refer to Note 13 - Common Stock and Stockholders' Equity, for more information). In addition, we recognized $ 17 million of cash restructuring and related charges in the second quarter of 2022, which primarily consisted of employee-related wages, benefits, and severance expense. All of the restructuring charges relating to the April 2022 Restructuring had been paid in full in 2022. 145 Table of Contents August 2022 Restructuring On August 2, 2022, we announced the August 2022 Restructuring, which involved approximately 780 employees, representing approximately 23 % of our full-time employees at the time, the planned closure of two offices, and related matters. These actions were part of a Company reorganization into a GM structure under which GMs have assumed broad responsibility for our individual businesses. As we continued to execute the August 2022 Restructuring, our lower headcount led us to evaluate our real estate portfolio. In the third quarter of 2022, we decided to partially or completely close five additional offices as part of the August 2022 Restructuring, four of which were not occupied. In connection with the office closures describe above, we determined the carrying amount of the right-of-use assets and associated leasehold improvements exceeded their respective fair value, resulting in impairments of $ 30 million and $ 15 million. We utilized a probability-weighted approach and market estimates from a third-party real estate brokerage firm to project sublease income cash flows, net of brokerage commissions, for each of the office spaces and applied a market rate of return on similar assets as a discount factor to determine fair value. We attributed the impairments on a relative carrying value basis between the right-of-use assets and leasehold improvements. In addition, we accelerated depreciation of $ 9 million related to other fixed assets. The impairments were recognized in general and administrative expense on our consolidated statements of operations. Similar to the April 2022 Restructuring, we allowed affected employees’ share-based awards to continue vesting over a transitional period allowing a portion of the awards to vest that otherwise would have been forfeited. However, as a result of the reversal of SBC expense that had been previously recognized (under the accelerated attribution method, generally), the August 2022 Restructuring resulted in a net reduction to SBC of $ 53 million, which was recognized in the third quarter of 2022 (refer to Note 13 - Common Stock and Stockholders' Equity for more information). In addition, we recognized $ 34 million of cash restructuring and related charges primarily related to employee-related wages, benefits, and severance expense. All of the restructuring charges relating to the August 2022 Restructuring had been paid in full in 2022. NOTE 7: ALLOWANCE FOR CREDIT LOSSES Allowance for Credit Losses - Brokerage Related The following table summarizes the brokerage related allowance for credit losses as a reduction of receivables from users, net on the consolidated balance sheet: Year Ended December 31, (in millions) 2022 2023 2024 Beginning balance $ 40 $ 18 $ 15 Provision for credit losses 36 22 21 Write-offs ( 58 ) ( 25 ) ( 23 ) Recoveries — — 1 Ending Balance $ 18 $ 15 $ 14 146 Table of Contents Allowance for Credit Losses - Credit Card Related We have two types of allowance for credit losses related to credit cards: i) an allowance related to off-balance sheet credit card receivables, shown as part of accounts payable and accrued expenses on the consolidated balance sheet, and ii) an allowance related to purchased credit card receivables and interest receivable from customers, shown as a reduction of receivables from users, net on the consolidated balance sheet. The following table summarizes the allowance related to off-balance sheet credit card receivables: Year Ended December 31, (in millions) 2023 2024 Beginning balance $ — $ 32 Opening balance from acquisition of Robinhood Credit 23 — Provision for credit losses 19 40 Payments to Coastal Bank ( 11 ) ( 34 ) Recoveries 1 2 Ending balance $ 32 $ 40 The following table summarizes the allowance related to purchased credit card receivables and interest receivables from customers: Year Ended December 31, (in millions) 2023 2024 Beginning balance $ — $ 1 Provision for credit losses 2 15 Write-offs ( 1 ) ( 5 ) Ending balance $ 1 $ 11 147 Table of Contents The following tables present the aging analysis of our credit card receivables for the periods presented and the delinquency aging includes all past due principal on loans. Accrued interest receivable of $ 5 million and $ 3 million as of December 31, 2023 and 2024 were not included in the tables below. (in millions) December 31, 2023 Past due receivables Current <90 Days ≥ 90 days Total Past due receivables Total Receivables On-balance sheet $ — $ — $ — $ — $ — Off-balance sheet 174 20 11 31 205 Total credit card loans $ 174 $ 20 $ 11 $ 31 $ 205 % of Total loans 85 % 10 % 5 % 15 % 100 % (in millions) December 31, 2024 Past due receivables Current <90 Days ≥ 90 days Total Past due receivables Total Receivables On-balance sheet $ 186 $ 2 $ 1 $ 3 $ 189 Off-balance sheet 177 15 10 25 202 Total credit card loans $ 363 $ 17 $ 11 $ 28 $ 391 % of Total loans 93 % 4 % 3 % 7 % 100 % The risk in our credit card receivables portfolio correlates to broad economic trends as well as customers' financial condition. The key indicator we monitor when assessing the credit quality and risk is customers' credit scores as they measure the creditworthiness of customers. We use a national third-party provider to update FICO credit scores on a monthly basis. The updated scores are incorporated into a series of credit management reports, which are utilized to monitor risk. The table below presents our credit card receivables by our credit quality indicator, FICO score, including both on-balance sheet and off-balance sheet amounts, as of December 31, 2023 and December 31, 2024. We present our receivables by FICO scores. December 31, (in millions, except FICO scores) 2023 2024 Below 640 $ 55 $ 64 640-690 64 100 Greater than 690 86 227 Total credit card loans $ 205 $ 391 NOTE 8: INVESTMENTS AND FAIR VALUE MEASUREMENT Investments Available-for-sale As of December 31, 2023 and December 31, 2024, we had $ 500 million and $ 750 million of available-for-sale time deposits classified as cash equivalents on the consolidated balance sheets. These investments had a maturity of three months or less at the time of purchase, and an aggregate market value equal to amortized cost. Refer to Fair Value of Financial Instruments below for further details. 148 Table of Contents Held-to-maturity The following tables summarize our held-to-maturity investments: December 31, 2023 (in millions) Amortized Cost Allowance for Credit Losses Unrealized Gains Unrealized Losses Fair Value Debt securities: Corporate debt securities $ 205 $ — $ — $ ( 1 ) $ 204 U.S. Treasury securities 202 — — — 202 U.S. government agency securities 42 — — — 42 Certificates of deposit 34 — — — 34 Commercial paper 3 — — — 3 Total held-to-maturity investments $ 486 $ — $ — $ ( 1 ) $ 485 December 31, 2024 (in millions) Amortized Cost Allowance for Credit Losses Unrealized Gains Unrealized Losses Fair Value Debt securities: U.S. Treasury securities $ 337 $ — $ 1 $ — $ 338 Corporate debt securities 51 — — — 51 U.S. government agency securities 10 — — — 10 Total held-to-maturity investments $ 398 $ — $ 1 $ — $ 399 There were no sales of held-to-maturity investments during the year ended December 31, 2024. 149 Table of Contents The table below presents the amortized cost and fair value of held-to-maturity investments by contractual maturity: December 31, 2023 (in millions) Within 1 Year 1 to 2 Years Total Amortized cost Debt securities: Corporate debt securities $ 153 $ 52 $ 205 U.S. Treasury securities 184 18 202 U.S. government agency securities 39 3 42 Certificates of deposit 34 — 34 Commercial paper 3 — 3 Total held-to-maturity investments $ 413 $ 73 $ 486 Fair value Debt securities: Corporate debt securities $ 152 $ 52 $ 204 U.S. Treasury securities 184 18 202 U.S. government agency securities 39 3 42 Certificates of deposit 34 — 34 Commercial paper 3 — 3 Total held-to-maturity investments $ 412 $ 73 $ 485 December 31, 2024 (in millions) Within 1 Year 1 to 2 Years Total Amortized cost Debt securities: U.S. Treasury securities $ 337 $ — $ 337 Corporate debt securities 51 — 51 U.S. government agency securities 10 — 10 Total held-to-maturity investments $ 398 $ — $ 398 Fair value Debt securities: U.S. Treasury securities $ 338 $ — $ 338 Corporate debt securities 51 — 51 U.S. government agency securities 10 — 10 Total held-to-maturity investments $ 399 $ — $ 399 150 Table of Contents Fair Value of Financial Instruments Financial assets and liabilities measured at fair value on a recurring basis as of the date indicated below were presented on our consolidated balance sheets as follows: December 31, 2023 (in millions) Level 1 Level 2 Level 3 Total Assets Cash equivalents: Time deposits $ — $ 500 $ — $ 500 Money market funds 146 — — 146 Deposits with clearing organizations: U.S. Treasury securities (1) 50 — — 50 Asset-backed securities Stablecoin 20 — — 20 Equity securities - securities owned 10 — — 10 Other non-current assets: Money market funds - escrow account 2 — — 2 User-held fractional shares 1,592 — — 1,592 Total financial assets $ 1,820 $ 500 $ — $ 2,320 Liabilities Fractional shares repurchase obligations 1,592 — — 1,592 Total financial liabilities $ 1,592 $ — $ — $ 1,592 151 Table of Contents December 31, 2024 (in millions) Level 1 Level 2 Level 3 Total Assets Cash equivalents: Time deposits $ — $ 750 $ — $ 750 Money market funds 53 — — 53 Cash, cash equivalents, and securities segregated under federal and other regulations: U.S. Treasury securities 1,193 — — 1,193 Other current assets: Stablecoin 361 — — 361 Equity securities - securities owned 15 — — 15 Other non-current assets: Money market funds - escrow account 2 — — 2 User-held fractional shares 2,530 — — 2,530 Total financial assets $ 4,154 $ 750 $ — $ 4,904 Liabilities Fractional shares repurchase obligations 2,530 — — 2,530 Total financial liabilities $ 2,530 $ — $ — $ 2,530 ____________________________ (1) As of December 31, 2023, U.S. Treasury securities were pledged to a clearing organization to meet margin requirements for our security lending program. The fair value for certain financial instruments that are not required to be measured or reported at fair value was presented on our consolidated balance sheets as follows: December 31, 2023 (in millions) Level 1 Level 2 Level 3 Total Assets Held-to-maturity investments: Corporate debt securities $ — $ 204 $ — $ 204 U.S. Treasury securities 202 — — 202 U.S. government agency securities — 42 — 42 Certificates of deposit — 34 — 34 Commercial paper — 3 — 3 Total held-to-maturity investments $ 202 $ 283 $ — $ 485 December 31, 2024 (in millions) Level 1 Level 2 Level 3 Total Assets Held-to-maturity investments: U.S. Treasury securities $ 338 $ — $ — $ 338 Corporate debt securities — 51 — 51 U.S. government agency securities — 10 — 10 Total held-to-maturity investments $ 338 $ 61 $ — $ 399 152 Table of Contents The fair values used for held-to-maturity investments are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, relevant yield curves, credit spreads and prices from market makers and live trading systems. Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment of the reasonableness of the fair values provided. During the year ended December 31, 2024, we did not have any transfers in or out of Level 3 assets or liabilities. NOTE 9: INCOME TAXES The components of income (loss) before income taxes were as follows: Year Ended December 31, (in millions) 2022 2023 2024 Domestic $ ( 1,028 ) $ ( 534 ) $ 1,063 Foreign 1 1 1 Income (loss) before income taxes $ ( 1,027 ) $ ( 533 ) $ 1,064 The components of the provision for (benefit from) income taxes were as follows: Year Ended December 31, (in millions) 2022 2023 2024 Current: Federal $ — $ 5 $ 16 State 1 3 6 Foreign — — — Total current tax expense (benefit) 1 8 22 Deferred: Federal — — ( 333 ) State — — ( 36 ) Foreign — — — Total deferred tax expense (benefit) — — ( 369 ) Total provision for (benefit from) income taxes $ 1 $ 8 $ ( 347 ) 153 The reconciliation of statutory federal income tax rate and our effective income tax rate was as follows (in percentages): Year Ended December 31, 2022 2023 2024 Federal tax benefit at statutory rate 21.0 % 21.0 % 21.0 % State tax benefit, net of federal benefit 1.8 ( 1.9 ) 1.1 Share-based compensation ( 12.3 ) ( 29.7 ) ( 3.5 ) Research and development credits 3.6 5.6 ( 4.8 ) Non-deductible regulatory settlements ( 0.3 ) ( 4.6 ) ( 0.7 ) Other — 0.2 0.3 Change in valuation allowance ( 13.9 ) 8.0 ( 46.0 ) Effective tax rate ( 0.1 ) % ( 1.4 ) % ( 32.6 ) % Significant components of our deferred tax assets and liabilities consisted of the following: Year Ended December 31, (in millions) 2023 2024 Deferred tax assets: Research and experimentation expenditure amortization 151 248 Tax credit carryforwards 161 174 Lease liabilities 27 33 Net operating loss carryforwards 176 29 Share-based compensation 43 16 Accruals and other liabilities 17 16 Provision for credit losses 12 16 Other 26 31 Total deferred tax assets $ 613 $ 563 Deferred tax liabilities: Deferred customer match incentives ( 7 ) ( 74 ) Right of use assets ( 17 ) ( 24 ) Depreciation and amortization ( 14 ) ( 6 ) Total deferred tax liabilities ( 38 ) ( 104 ) Valuation allowance ( 574 ) ( 88 ) Net deferred tax assets $ 1 $ 371 The reconciliation of the beginning and ending amount of the deferred tax asset valuation allowance was as follows: Year ended December 31, (in millions) 2022 2023 2024 Balance at beginning of period $ 495 $ 607 $ 574 Charged/(credited) to net income 112 ( 34 ) ( 486 ) Charges utilized/(write-offs) — 1 — Balance at end of period $ 607 $ 574 $ 88 The realization of tax benefits of net deferred assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. 154 Based on our analysis of all positive and negative evidence available for the year ended December 31, 2024, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that our U.S. federal, and certain U.S. states net deferred tax assets will be realizable. Accordingly, we have recognized a non-recurring tax benefit of $ 506 million related to the valuation allowance release. In addition, we recognized deferred tax expense of $ 137 million for the portion of U.S. federal and certain U.S. states deferred tax assets benefited during the year, resulting in a net deferred tax benefit of $ 369 million for the year ended December 31, 2024. We continue to maintain a valuation allowance for our California, and other certain other U.S. states and certain foreign net deferred tax assets, as we believe it is more likely than not that the tax benefits of these jurisdictions’ net deferred tax assets may not be realized. The Company continues to maintain a valuation allowance against its Californian net deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as the Company expects research and development tax credit generation to exceed its ability to use the credits in future years. The valuation allowance for California, and other certain U.S. states and certain foreign net deferred tax assets increased by approximately $8 million for the year ended December 31, 2024. As of December 31, 2024, we have $ 20 million of U.S. federal, $ 354 million of state, and $ 4 million of non-U.S. net operating loss carryforwards available to reduce future taxable income. Of the U.S. federal net operating loss carryforwards, $ 20 million will carryforward indefinitely. Our state net operating losses begin to expire in 2026 , while our non-U.S. net operating losses do not expire. As of December 31, 2024, we have utilized federal and state net operating losses generated from tax years 2013 through 2022. We have U.S. federal tax credit carryforwards of $ 170 million that will begin to expire in 2041 , if not utilized, and state tax credit carryforwards of $ 119 million that will begin to expire in 2025 . As of December 31, 2024, we have utilized U.S. federal and state tax credits generated from tax years 2014 through 2021. Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Code, and similar state provisions. The annual limitation may result in the expiration of net operating losses and tax credits before utilization. We had unrecognized tax benefits of approximately $ 98 million of which $ 65 million would affect our effective tax rate if recognized as of December 31, 2024. The remaining $ 33 million of unrecognized tax benefits would not impact the effective tax rate due to realizability of those deferred tax assets. As of December 31, 2023, we had $ 74 million of unrecognized tax benefits, which would not affect the effective tax rate due to realizability of those deferred tax assets. We record interest and penalties related to unrecognized tax benefits in income tax expenses. There were no interest or penalties accrued during the years ended December 31, 2023 and 2024. The reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows (in millions): Year Ended December 31, 2023 2024 Unrecognized benefit - beginning of period $ 58 $ 74 Gross increases - current year tax positions 16 23 Gross increases - prior year tax positions — 1 Gross decrease - prior year tax positions — — Unrecognized benefit - end of period $ 74 $ 98 155 We file in U.S. federal, various state, and foreign jurisdictions. The tax years from 2013 remain open to examination by the U.S. federal and state authorities, due to carryover of unused net operating losses and tax credits. The tax years from 2023 remain open for the most significant foreign jurisdiction. NOTE 10: PROPERTY, SOFTWARE, AND EQUIPMENT, NET Property, software, and equipment are presented net of accumulated depreciation and amortization and summarized as follows: Year Ended December 31, (in millions) 2023 2024 Internally developed software $ 122 $ 171 Leasehold improvements 39 42 Computer equipment 27 28 Furniture and fixtures 13 13 Construction in progress 30 39 Total 231 293 Less: accumulated depreciation and amortization ( 111 ) ( 154 ) Property, software, and equipment, net $ 120 $ 139 Depreciation expense of property and equipment was $ 26 million, $ 16 million, and $ 14 million for the years ended December 31, 2022, 2023, and 2024. Amortization expense of internally developed software was $ 26 million, $ 41 million, and $ 43 million for the years ended December 31, 2022, 2023, and 2024. NOTE 11: SECURITIES BORROWING AND LENDING Our securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers; however, we do not net securities borrowing and lending transactions. Therefore, activity related to securities borrowing and lending activities are presented gross on our consolidated balance sheets. When we borrow securities from users participating in the Fully-Paid Securities Lending program or from third parties, we provide cash collateral to our users and third parties, which is recorded on our consolidated balance sheets as “securities borrowed”, an asset, representing our rights to the return of that collateral. When we lend securities to third parties, we receive cash as collateral, which is recorded on our consolidated balance sheets as “securities loaned”, a liability, representing our obligation to return the collateral. 156 The following tables set forth certain balances related to our securities borrowing and lending activities: December 31, (in millions) 2023 2024 Assets Securities borrowed Gross amount of cash collateral provided to users for securities borrowing transactions $ 1,602 $ 3,236 Gross amount offset on the consolidated balance sheets — — Amounts of assets presented on the consolidated balance sheets 1,602 3,236 Gross amount not offset on the consolidated balance sheets: Cash collateral provided to users and third parties for securities borrowing transactions 1,602 3,236 Fair value of securities borrowed from users and third parties ( 1,536 ) ( 3,118 ) Net amount $ 66 $ 118 Liabilities Securities loaned Gross amount of cash collateral received from counterparties for securities lending transactions $ 3,547 $ 7,463 Gross amount offset on the consolidated balance sheets — — Amounts of liabilities presented on the consolidated balance sheets 3,547 7,463 Gross amount not offset on the consolidated balance sheets: Cash collateral received from counterparties for securities lending transactions 3,547 7,463 Fair value of securities pledged to counterparties ( 3,188 ) ( 6,887 ) Net amount $ 359 $ 576 As described in Note 1 - Description of Business and Summary of Significant Accounting Policies, we obtain securities on terms that permit us to pledge and/or transfer securities to others. As of December 31, 2023 and 2024, we were permitted to re-pledge securities with a fair value of $ 4.78 billion and $ 11.04 billion under margin account agreements with users, and securities with a fair value of an immaterial balance for fiscal year 2023 and 2024 that we borrowed under MSLAs with third parties. Under the Fully-Paid Securities Lending program, as of December 31, 2023 and 2024, we were permitted to borrow securities with a fair value of $ 14.03 billion and $ 38.70 billion including securities with a fair value of $ 1.54 billion and $ 3.12 billion that we had borrowed from users. As of December 31, 2023 and 2024, we had re-pledged securities with a fair value of $ 3.19 billion and $ 6.89 billion, in each case under MSLAs and Fixed-Term Securities Lending Agreements with third parties. In addition, as of December 31, 2023 and 2024, we had re-pledged $ 676 million and $ 1.60 billion of the permitted amounts under the margin account agreements with clearing organizations to meet deposit requirements. NOTE 12: FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK Revolving Credit Facilities RHM March 2024 Credit Agreement On March 22, 2024, RHM entered into a second amended and restated credit agreement with a syndicate of banks (the “RHM March 2024 Credit Agreement”) amending and restating the unsecured revolving line of credit entered into in October 2019 and as thereafter amended. The RHM March 2024 157 Credit Agreement has an initial commitment of $ 750 million with a maturity date of March 22, 2027. Under circumstances described in the RHM March 2024 Credit Agreement, the aggregate commitments may be increased by up to $ 187.5 million, for a total commitment of up to $ 937.5 million. Borrowings under the RHM March 2024 Credit Agreement will bear interest at a rate per annum equal to the Alternate Base Rate or Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin rate of 1.50 %. For purposes of the RHM Credit Agreement, the Alternate Base Rate is the greatest of (i) the prime rate then in effect, (ii) the Federal Reserve Bank of New York rate then in effect plus 0.5 % and (iii) the Adjusted Term SOFR for a one month interest period plus 1.0 %. The Adjusted Term SOFR Rate is equal to the Term SOFR, published by the Term SOFR Administrator, plus the Term SOFR Adjustment. The Term SOFR Adjustment is 0.10 %. If the Adjusted Term SOFR Rate is less than the floor of 0.0 %, such rate shall be deemed to be equal to the floor. RHM is obligated to pay a commitment fee calculated at a per annum rate equal to 0.25 % on any unused amount of the RHM March 2024 Credit Agreement. RHS March 2024 Credit Agreement On March 22, 2024, RHS, our wholly-owned subsidiary, entered into the Third Amended and Restated Credit Agreement (the “RHS March 2024 Credit Agreement”) among RHS, as borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, amending and restating the $ 2.175 billion 364-day senior secured revolving credit facility entered into in March 2023. The RHS March 2024 Credit Agreement provides for a 364-day senior secured revolving credit facility with a total commitment of $ 2.25 billion. Under circumstances described in the RHS March 2024 Credit Agreement, the aggregate commitments may be increased by up to $ 1.125 billion, for a total commitment of $ 3.375 billion. Borrowings under the credit facility must be specified to be Tranche A, Tranche B, Tranche C or a combination thereof. Tranche A loans are secured by users’ securities purchased on margin and are used primarily to finance margin loans. Tranche B loans are secured by the right to the return from NSCC of NSCC margin deposits and cash and property in a designated collateral account and used for the purpose of satisfying NSCC deposit requirements. Tranche C loans are secured by the right to the return of eligible funds from any reserve account of the borrower and cash and property in a designated collateral account and used for the purpose of satisfying reserve requirements under Rule 15c3-3 of the Exchange Act. Borrowings under the RHS March 2024 Credit Agreement will bear interest at a rate per annum equal to the greatest of (i) Daily Simple SOFR plus 0.10 % (as defined in the RHS March 2024 Credit Agreement), (ii) the Federal Funds Effective Rate (as defined in the RHS March 2024 Credit Agreement) and (iii) the Overnight Bank Funding Rate (as defined in the RHS March 2024 Credit Agreement), in each case, as of the day the loan is initiated, plus an applicable margin rate. The applicable margin rate is 1.25 % for Tranche A loans and 2.50 % for Tranche B and Tranche C loans. Undrawn commitments will accrue commitment fees at a rate per annum equal to 0.50 %. The RHS March 2024 Credit Agreement requires RHS to maintain a minimum consolidated tangible net worth and a minimum excess net capital, and subjects RHS to a specified limit on minimum net capital to aggregate debit items. In addition, the RHS March 2024 Credit Agreement contains certain customary affirmative and negative covenants, including limitations with respect to debt, liens, fundamental changes, asset sales, restricted payments, investments and transactions with affiliates, subject to certain exceptions. Amounts due under the RHS March 2024 Credit Agreement may be accelerated upon an “event of default,” as defined in the RHS March 2024 Credit Agreement, such as failure to pay amounts owed thereunder when due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject in some cases to cure periods. As of December 31, 2023 and December 31, 2024, there were no borrowings outstanding and we were in compliance with all covenants, as applicable, under our revolving credit facilities. 158 Credit Card Funding Trust Under terms of the Coastal Bank Program Agreement (discussed below), Robinhood Credit has the ability to purchase credit card receivables originated and held for a period of time by Coastal Bank. Robinhood Credit continues to earn interest from customers and uses these purchased credit card receivables as collateral under a trust structure to access debt financing in the ordinary course of business. To help facilitate these transactions, we created a VIE known as the Credit Card Funding Trust (the “Trust”). We are the primary beneficiary of the Trust as, through our role as the servicer and administrator, we have the power to direct the activities that most significantly affect the Trust ’ s economic performance and, due to owning all the equity interest in the Trust, have the right to receive benefits or the obligation to absorb losses. As such, we consolidate the Trust in the consolidated financial statements. Substantially all of the Trust’s assets and liabilities are the purchased credit card receivables, included in receivables from users, net, and the outstanding borrowing, included in other current liabilities, on the consolidated balance sheets. Our exposure to losses in the Trust is limited to the carrying value of net assets held by the Trust, including expected credit losses related to the purchased credit card receivables (Refer to Note 7 - Allowance for Credit Losses). For the Trust, the creditors have no recourse to our general credit and the liabilities of the Trust can only be settled by the Trust’s assets. Additionally, the assets of the Trust can only be used to settle obligations of the Trust. The credit card receivables of the Trust have risks and characteristics similar to other off-balance sheet credit card receivables owned by Coastal Bank and were underwritten to the same standard. Accordingly, the performance of these assets is expected to be similar to other comparable credit card receivables. As of December 31, 2024, the Trust had two arrangements in place, one to borrow up $ 200 million from Barclays Bank (“Barclays”) and one to borrow up to $ 100 million from Silicon Valley Bank (“SVB”). Borrowings under the Barclays arrangement will mature November 2026 and bear interest at Barclays commercial paper rate plus 1.75 % during the revolving period and a higher fixed margin during the other periods. Borrowings under the SVB arrangement will mature in April 2025 and bear interest at an annual rate of SOFR plus 2.75 % for outstanding borrowings less than $ 50 million, and SOFR plus 2.50 % for outstanding borrowings greater than $ 50 million. The weighted average interest rate of the SVB and Barclays arrangements is 7.81 %. During the year ended December 31, 2024, we purchased $ 748 million of credit card receivables. As of December 31, 2024, the carrying value of purchased credit card receivables that had not been collected, net of provision for credit losses, was $ 179 million, and the outstanding balance of borrowing principal and interest was $ 131 million. There were no purchases of credit card receivables or borrowings under this arrangement for the year ended December 31, 2023. For the year ended December 31, 2024, the related interest revenue and expense of the Trust were immaterial . Off-Balance Sheet Risk Coastal Bank Program Agreement Under the Program Agreement most recently amended in November 2023, Coastal Bank may fund up to $ 300 million of credit card receivables. Robinhood Credit pays Coastal Bank interest based on the average balance of advances during the month at the federal funds rate plus a margin of 3.75 % on the first $ 150 million and 3.00 % on such amounts in excess of $ 150 million. The credit card receivables and the funding from Coastal Bank are off-balance sheet, considering Coastal Bank is the legal lender and originator, the party to which the customer has a creditor-borrower 159 relationship, and the legal owner of the receivables. As of December 31, 2024, the off-balance sheet credit card receivables funded under the Program Agreement was $ 202 million. Transaction Settlement In the normal course of business, we engage in activities involving settlement and financing of securities transactions. User securities transactions are recorded on a settlement date basis. Effective May 2024, the settlement date for equities has been shortened from two business days after the trade date to one business day after the trade date, while the settlement date for options remains unchanged at one business day after the trade date. These activities may expose us to off-balance sheet risk in the event that the other party to the transaction is unable to fulfill its contractual obligations. In such events, we may be required to purchase financial instruments at prevailing market prices in order to fulfill our obligations. NOTE 13: COMMON STOCK AND STOCKHOLDERS' EQUITY Preferred Stock Pursuant to our Charter, our board of directors may issue shares of our preferred stock in one or more series and, subject to the applicable law of the State of Delaware, our board of directors may set the powers, rights, preferences, qualifications, limitations and restrictions of such preferred stock. As of December 31, 2024, no terms of the preferred stock were designated, and no shares of preferred stock were outstanding. Common Stock Voting Rights We have three authorized classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock are entitled to one vote per share on all matters to be voted upon by our stockholders, holders of our Class B common stock are entitled to 10 votes per share on all matters to be voted upon by our stockholders and, except as otherwise required by applicable law, holders of our Class C common stock are not entitled to vote on any matter to be voted upon by our stockholders. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by our Charter or applicable law. Conversion of Class B Common Stock Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. All Class B common stock will automatically convert (as a class) into Class A common stock upon the earliest of (i) the date and time specified by the affirmative vote of the holders of at least 80 % of the then-outstanding shares of Class B common stock, voting separately as a class, (ii) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the date on which the number of then-outstanding shares of Class B common stock represents less than 5 % of the aggregate number of shares of Class A common stock and Class B common stock then outstanding, (iii) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the date that (A) each founder is no longer providing services to our Company as an officer, employee, or consultant and (B) each founder is not a director of our Company as a result of a voluntary resignation by such founder from our board of directors or as a result of a written request or agreement by such founder not to be renominated as a director of our Company at an annual or special meeting of stockholders, (iv) nine months after the death or total disability of both founders (subject to a delay of up to 18 months as may be approved by a majority of our independent directors), or (v) August 2, 2036, the date that is 15 years from the completion of our IPO. 160 Shares of Class B common stock will also automatically convert into shares of Class A common stock upon sale or transfer except for certain permitted transfers described in our Charter. In addition, each share of Class B common stock held by a stockholder who is a natural person, or held by permitted transferees or permitted entities of such natural person (each as described in our Charter) will automatically convert into shares of Class A common stock nine months following the death or total disability of such natural person (subject to a delay of up to 18 months as may be approved by a majority of our independent directors). Notwithstanding the foregoing, in the event such natural person is a founder, to the extent (i) a person designated by such founder and approved by a majority of the independent directors then in office or (ii) the other founder, in each case, has or shares voting control over the shares of Class B common stock held by the deceased or disabled founder, such shares will be treated as being held of record by such person or other founder and will not convert into shares of Class A common stock as a result of such founder’s death or total disability. Conversion of Class C Common Stock Upon the conversion or exchange of all outstanding shares of our Class B common stock into shares of Class A common stock, each outstanding share of Class C common stock will convert automatically into one share of Class A common stock on the date or time fixed by our board of directors. Dividend Rights Subject to the rights of any holders of our preferred stock, the holders of our common stock will be entitled to receive ratable dividends, if any, as may be declared from time to time by our board of directors out of funds legally available for the payment of dividends. Right to Receive Liquidation Distributions If we liquidate, dissolve or wind up, after all liabilities and, if applicable, the holders of each series of our preferred stock have been paid in full, the holders of our common stock will be entitled to share ratably in all remaining assets. No Preemptive or Similar Rights Our common stock has no preemptive or conversion rights or other subscription rights. No redemption or sinking fund provisions are applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future. Warrants As of December 31, 2024, we had outstanding warrants with a strike price of $ 26.60 that can be exercised to purchase 12.87 million shares of Class A common stock. The warrants expire on February 12, 2031 and can be exercised with cash or net shares settled at the holder’s option. As of December 31, 2024, 1.4 million warrants had been exercised via net settlement, resulting in 456,764 shares of Class A common stock issued, and the maximum purchase amount of all outstanding warrants was $ 342 million. Share Repurchases On August 30, 2023, we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with the United States Marshal Service (the “USMS”), for and on behalf of the United States, pursuant to which we agreed to repurchase 55,273,469 shares of the Company ’ s Class A common stock from the USMS for $ 10.96 per share. The transaction closed on August 31, 2023. We repurchased, and subsequently retired, all of the shares for an aggregate amount of $ 608 million, recorded entirely in additional paid-in capital on the consolidated balance sheet in absence of retained earnings, which included $ 2 million in transaction costs. In 2024, we paid $ 3 million in taxes related to the 1% excise tax 161 on net share repurchases as a result of the Inflation Reduction Act of 2022, which was also recorded in additional paid-in capital. On May 28, 2024, we announced that our board of directors approved the Repurchase Program authorizing the Company to repurchase up to $ 1 billion of its outstanding Class A common stock. While the Repurchase Program does not have an expiration date, we continue to expect to complete over a period of two to three years . The timing and amount of repurchase transactions will be determined by us from time to time at our discretion based on our evaluation of market conditions, share price, and other factors. Repurchase transactions may be made using a variety of methods, such as open market share repurchases, including the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, or other financial arrangements or transactions. The Repurchase Program does not obligate us to acquire any particular amount of Class A common stock and the Repurchase Program may be suspended or discontinued at any time at our discretion. All shares repurchased will be subsequently retired. As of December 31, 2024, we repurchased 10 million shares of our Class A common stock for $ 257 million. Equity Incentive Plans Amended and Restated 2013 Stock Plan and 2020 Equity Incentive Plan Our Amended and Restated 2013 Stock Plan, as amended (the “2013 Plan”), and our 2020 Equity Incentive Plan, as amended (the “2020 Plan”), provided for share-based awards to eligible participants, granted as incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), RSUs, stock appreciation rights (“SARs”) or restricted stock awards (“RSAs”). Our 2013 Plan was terminated in connection with adoption of our 2020 Plan, and our 2020 Plan was terminated in connection with the adoption of our 2021 Plan (defined below) but any awards outstanding under our 2013 Plan and 2020 Plan remain in effect in accordance with their terms. Any shares that were or otherwise would become available for grant under the 2013 Plan or 2020 Plan will be available for grant under the 2021 Plan. No new awards may be granted under our 2013 Plan or 2020 Plan. 2021 Omnibus Incentive Plan Our 2021 Omnibus Incentive Plan (the “2021 Plan”) became effective on July 27, 2021, and provides for the grant of share-based awards (such as options, including ISOs and NSOs, SARs, RSAs, RSUs, performance units, and other equity-based awards) and cash-based awards. Under the 2021 Plan, options could be granted with an exercise price per share not less than the fair market value at the date of grant. Options granted generally vest over a four-year term from the date of grant, at a rate of 25 % after one year , then monthly on a straight-line basis thereafter. Generally, options granted are exercisable for up to ten years from the date of grant. RSUs granted mostly vest monthly on a straight-line basis and expire seven or ten years from the date of grant. As of December 31, 2024, an aggregate of 448 million shares had been authorized for issuance under the 2013 Plan, 2020 Plan, and 2021 Plan, of which 151 million shares had been issued under the plans, 37 million shares were reserved for issuance upon the exercise or settlement of outstanding equity awards under the plans, and 260 million shares remained available for new grants under the 2021 Plan. On January 1, 2025, an additional 44.2 million shares became available for grant under the 2021 Plan pursuant to its annual evergreen feature. 162 Stock Option Activity A summary of stock option activity for the year ended December 31, 2024 is as follows: Number of Shares Weighted-Average Exercise Price Weighted- Average Remaining Life Total Intrinsic Value (in millions) Balance at December 31, 2023 12,141,566 $ 4.78 3.76 $ 100 Granted during the period — — Exercised during the period ( 3,954,721 ) 4.54 Expired during the period ( 55,184 ) 14.15 Forfeited during the period ( 288,107 ) 14.15 Balance at December 31, 2024 7,843,554 $ 4.49 2.80 $ 257 Options vested and expected to vest at December 31, 2024 7,843,554 $ 4.49 2.80 $ 257 Options exercisable at December 31, 2024 7,278,423 $ 3.74 2.72 $ 244 The weighted-average grant date fair value of options granted during the years ended December 31, 2022 was $ 14.15 . No options were granted during 2023 nor 2024. The fair value of each stock option was estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions: Year Ended December 31, 2022 2023 2024 Dividend yield 0 % N/A N/A Risk-free interest rate 1.61 % N/A N/A Expected volatility 40.72 % N/A N/A Expected term (years) 4.61 N/A N/A The total intrinsic value of options exercised during 2022, 2023, and 2024 was $ 25 million, $ 20 million, and $ 74 million. The intrinsic value is calculated as the difference between the exercise price of the underlying stock option award and the market value of the stock at the time of exercise. The total grant date fair value of options that vested during 2023 and 2024 was $ 7 million and $ 3 million and was immaterial for 2022. Time-Based RSUs We have granted Time-Based RSUs that vest upon the satisfaction of a time-based service condition. The following table summarizes the activity related to our Time-Based RSUs for the year ended December 31, 2024: Number of RSUs Weighted- average grant date fair value Unvested at December 31, 2023 34,551,998 $ 14.99 Granted 17,313,464 17.81 Vested ( 26,502,597 ) 16.56 Forfeited ( 7,129,777 ) 15.44 Unvested at December 31, 2024 18,233,088 $ 15.20 The fair value of Time-Based RSUs vested during 2022, 2023, and 2024 was $ 542 million, $ 490 million and $ 439 million, respectively. 163 Market-Based RSUs In 2019 and 2021, we granted Market-Based RSUs to our founders under which vesting is conditioned upon both the achievement of share price targets and the continued employment by each recipient over defined service periods. There were no Market-Based RSUs granted during 2022, 2023 or 2024. In February 2023, we cancelled the 2021 Market-Based RSUs of 35.5 million unvested shares. We recognized $ 485 million SBC expense related to the cancellation during the year ended December 31, 2023 , which was included in the general and administrative expense in our consolidated statements of operations. No further expense associated with these awards was recognized after the cancellation. No other payments, replacement equity awards or benefits were granted in connection with the cancellation. The following table summarizes the activity related to our Market-Based RSUs for the year ended December 31, 2024: Eligible to Vest (1) Not Eligible to Vest (2) Total Number of RSUs Weighted- average grant date fair value Unvested at December 31, 2023 345,796 22,130,926 22,476,722 $ 25.67 Granted — — — — Vested ( 230,532 ) — ( 230,532 ) 2.34 Forfeited (3) ( 115,264 ) ( 11,065,463 ) ( 11,180,727 ) 25.79 Unvested at December 31, 2024 — 11,065,463 11,065,463 $ 26.04 _______________ (1) Represents RSUs that became eligible to vest upon achievement of share price targets and vest upon satisfaction of time-based service requirements. (2) Represents RSUs that have not yet become eligible to vest because share price targets have not yet been achieved. (3) The 11 million forfeited shares reflects the impact of the resignation of our co-founder and former Chief Creative Officer during the first quarter of 2024. The fair value of Market-Based RSUs that vested during 2022, 2023, and 2024 was $ 5 million,$ 5 million and $ 4 million. 2021 Employee Share Purchase Plan Our ESPP became effective on July 27, 2021 and enables eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 15 % of their eligible compensation up to the statutory maximum. The purchase price is equal to 85 % of the fair market value of a share of our common stock on the first date of an offering or the date of purchase, whichever is lower. The ESPP has an automatic rollover feature, whereby employees begin a new 12-month offering period if the fair value of the Company’s common stock on a purchase date is less than that on the original offering date. The aggregate number of shares reserved for issuance under the ESPP will automatically increase on the first day of each calendar year beginning on January 1, 2022 and ending with (and including) January 1, 2031. Such annual increase will be equal to the lesser of (i) 1 % of the outstanding shares of all classes of our common stock on the last day of the immediately preceding calendar year and (ii) such number of shares determined by the board of directors. No more than 200 million shares of common stock may be issued under our ESPP. In the year ended December 31, 2024 , 2 million shares were purchased under the ESPP at a weighted-average price of $ 7.17 . The fair value of shares to be issued under our ESPP was estimated on the grant date using the Black-Scholes option pricing model. As of December 31, 2024 , approximately 36.8 million shares remained available for issuance under the ESPP. On January 1, 2025, an additional 8.8 million shares became authorized for issuance under the ESPP pursuant to its annual evergreen feature. 164 Share-Based Compensation The following table presents SBC in our consolidated statements of operations for the periods indicated: Year Ended December 31, (in millions) 2022 2023 2024 Brokerage and transaction $ 5 $ 7 $ 9 Technology and development 212 211 192 Operations 8 8 7 Marketing 4 5 8 General and administrative 425 640 88 Total $ 654 $ 871 $ 304 _______________ ( 1) For the year ended December 31, 2022 and 2023, SBC expense primarily consisted $ 314 million and $ 292 million related to Time-Based RSUs and $ 323 million and $ 567 million related to Market-Based RSUs. For year ended 2024, SBC expense primarily consisted of $ 300 million related to Time-Based RSUs and negative $ 8 million related to Market-Based RSUs, as a portion of the Market-Based RSUs became fully vested in prior periods and was net of an $ 11 million reversal of previously recognized expense related to unvested awards that were forfeited upon the resignation of our co-founder and former Chief Creative Officer during the first quarter of 2024. The tax benefits recognized in the consolidated statements of operations for SBC were $ 154 million and $ 73 million for year ended December 31, 2024 and December 31, 2023 and were no t material during the year ended December 31, 2022. We have capitalized SBC expense related to internally developed software of $ 28 million , $ 17 million , and $ 26 million for years 2022, 2023, and 2024. The April 2022 Restructuring and the August 2022 Restructuring resulted in net reductions of $ 24 million and $ 53 million in SBC expense, respectively. Both reductions were substantially related to Time-Based RSUs. The net reductions were primarily recognized in technology and development expense, $ 16 million and $ 22 million, and general and administrative expense, $ 6 million and $ 28 million. As of December 31, 2024, there was $ 230 million of unrecognized SBC expense that is expected to be recognized over a weighted-average period of 0.86 years. 165 NOTE 14: NET INCOME (LOSS) PER SHARE The following table presents the calculation of basic and diluted income (loss) per share: (in millions, except share and per share data) Year Ended December 31, 2022 2023 2024 Class A Class B Class A Class B Class A Class B Basic EPS: Numerator Net income (loss) $ ( 878 ) $ ( 150 ) $ ( 465 ) $ ( 76 ) $ 1,214 $ 197 Net income (loss) attributable to common stockholders $ ( 878 ) $ ( 150 ) $ ( 465 ) $ ( 76 ) $ 1,214 $ 197 Denominator Weighted-average common shares outstanding - basic 750,681,627 127,948,397 763,580,698 127,276,961 758,213,055 122,900,101 Basic EPS $ ( 1.17 ) $ ( 1.17 ) $ ( 0.61 ) $ ( 0.61 ) $ 1.60 $ 1.60 Diluted EPS: Numerator Net income (loss) $ ( 878 ) $ ( 150 ) $ ( 465 ) $ ( 76 ) $ 1,214 $ 197 Reallocation of net income as a result of conversion of Class B to Class A common stock — — — — 197 — Reallocation of net income to Class B common stock — — — — — $ ( 5 ) Net income (loss) for diluted EPS $ ( 878 ) $ ( 150 ) $ ( 465 ) $ ( 76 ) $ 1,411 $ 192 Denominator Weighted-average common shares outstanding - basic 750,681,627 127,948,397 763,580,698 127,276,961 758,213,055 122,900,101 Dilutive effect of stock options and unvested shares — — — — 25,058,348 — Conversion of Class B to Class A common stock — — — — 122,900,101 — Weighted-average common shares outstanding - diluted 750,681,627 127,948,397 763,580,698 127,276,961 906,171,504 122,900,101 Diluted EPS $ ( 1.17 ) $ ( 1.17 ) $ ( 0.61 ) $ ( 0.61 ) $ 1.56 $ 1.56 166 The following potential common shares were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions that were not satisfied by the end of the period: Year Ended December 31, 2022 2023 2024 Time-Based RSUs 56,156,677 34,625,253 828,224 Market-Based RSUs 58,457,784 22,476,722 11,065,463 Stock options 15,226,096 12,141,566 — Warrants 14,278,034 14,278,034 12,868,262 ESPP 364,427 305,692 — Total anti-dilutive securities 144,483,018 83,827,267 24,761,949 NOTE 15: LEASES Our operating leases are comprised of office facilities, with the most significant leases relating to our corporate headquarters in Menlo Park, CA and our office in New York City, NY. Our leases have remaining terms of one year to eight years , and many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. We do not have any finance leases. Refer to Note 6 - Restructuring Activities, for further information relating to impacts on leases due to the April and August 2022 Restructurings. Lease assets and liabilities recognized on our consolidated balance sheets were as follows: December 31, (in millions) Classification 2023 2024 Lease right-of-use assets Operating lease assets Other non-current assets $ 68 $ 94 Lease liabilities Current operating lease liabilities Other current liabilities 20 21 Non-current operating lease liabilities Other non-current liabilities 89 110 Total lease liabilities $ 109 $ 131 Fixed operating lease costs primarily consist of monthly base rent amounts due. Variable operating lease costs primarily relate to common area maintenance, property taxes, insurance, and other operating expenses. The components of lease expense were as follows: Year Ended December 31, (in millions) 2022 2023 2024 Fixed operating lease costs $ 33 $ 21 $ 22 Variable operating lease costs 7 7 8 Short-term lease costs — 1 1 Sublease income — ( 3 ) ( 6 ) Total lease costs $ 40 $ 26 $ 25 167 Other information related to our operating leases was as follows: December 31, 2023 2024 Weighted-average remaining lease term 6.57 years 6.86 years Weighted-average discount rate 7.24 % 6.92 % Cash flows related to leases were as follows: Year Ended December 31, (in millions) 2022 2023 2024 Operating cash flows: Payments for operating lease liabilities $ 23 $ 39 $ 28 Supplemental cash flow data: Lease liabilities arising from obtaining right-of-use assets (1) $ 32 $ ( 8 ) $ 42 _______________ (1) For the year ended December 31, 2022, lease liabilities arising from obtaining right-of-use assets primarily related to initial recognition of new leases. For the year ended December 31, 2023, lease liabilities arising from obtaining right-of-use assets primarily related to a lease modification, partially offset by remeasurements resulting from reassessments of existing lease terms. For the year ended December 31, 2024, lease liabilities arising from obtaining right-of-use assets primarily related to initial recognition of new leases and lease extensions. Future minimum lease payments under non-cancellable operating leases (with initial lease terms in excess of one year) as of December 31, 2024 are as follows: (in millions) 2025 $ 29 2026 27 2027 25 2028 25 2029 23 Thereafter 60 Total undiscounted lease payments 189 Less: imputed interest ( 38 ) Less: lease incentives ( 14 ) Less: leases executed but not yet commenced ( 6 ) Total lease liabilities $ 131 NOTE 16: COMMITMENTS & CONTINGENCIES We are subject to contingencies arising in the ordinary course of our business, including contingencies related to legal, regulatory, non-income tax and other matters. We record an accrual for loss contingencies at management’s best estimate when we determine that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If the reasonable estimate is a range and no amount within that range is considered a better estimate than any other amount, an accrual is recorded based on the bottom amount of the range. If a loss is not probable, or a probable loss cannot be reasonably estimated, no accrual is recorded. Amounts accrued for contingencies in the aggregate were $ 190 million and $ 128 million as of December 31, 2023 and 2024. In our opinion, an adequate 168 accrual had been made as of each such date to provide for the probable losses of which we are aware and for which we can reasonably estimate an amount. Legal and Regulatory Matters The securities industry, and many other industries in which we operate, are highly regulated and many aspects of our business involve substantial risk of liability. In past years, there has been an increase in litigation and regulatory investigations involving the brokerage, cryptocurrency, derivatives, and credit card industries. Litigation has included and may in the future include class action suits that generally seek substantial and, in some cases, punitive damages. Federal and state regulators, exchanges, other SROs, or international regulators investigate issues related to regulatory compliance that may result in enforcement action. We are also subject to periodic regulatory audits and inspections that have in the past and could in the future lead to enforcement investigations or actions. We have been named as a defendant in lawsuits and from time to time we have been threatened with, or named as a defendant in arbitrations and administrative proceedings. The outcomes of these matters are inherently uncertain and some may result in adverse judgments or awards, including penalties, injunctions, or other relief, and we may also determine to settle a matter because of the uncertainty and risks of litigation. With respect to matters discussed below, we believe, based on current knowledge, that any losses (in excess of amounts accrued, if applicable) as of December 31, 2024 that are reasonably possible and can be reasonably estimated will not, in the aggregate, have a material adverse effect on our business, financial position, operating results, or cash flows. However, for many of the matters disclosed below, particularly those in early stages, we cannot reasonably estimate the reasonably possible loss (or range of loss), if any. In addition, the ultimate outcome of legal proceedings involves judgments and inherent uncertainties and cannot be predicted with certainty. Any judgment entered against us, or any adverse settlement, could materially and adversely impact our business, financial condition, operating results, and cash flows. We might also incur substantial legal fees, which are expensed as incurred, in defending against legal and regulatory claims. Described below are certain pending matters in which there is at least a reasonable possibility that a material loss could be incurred. We intend to continue to defend these matters vigorously. Best Execution, Payment for Order Flow, and Sources of Revenue Civil Litigation Beginning in December 2020, multiple putative securities fraud class action lawsuits were filed against RHM, RHF, and RHS. Five cases were consolidated in the United States District Court for the Northern District of California. An amended consolidated complaint was filed in May 2021, alleging violations of Section 10(b) of the Exchange Act and various state law causes of action based on claims that we violated the duty of best execution and misled putative class members by publishing misleading statements and omissions in customer communications relating to the execution of trades and revenue sources (including PFOF). Plaintiffs seek unspecified monetary damages, restitution, disgorgement, and other relief. In February 2022, the court granted Robinhood’s motion to dismiss the amended consolidated complaint without prejudice. In March 2022, plaintiffs filed a second consolidated amended complaint, alleging only violations of Section 10(b) of the Exchange Act, which Robinhood moved to dismiss. In October 2022, the court granted Robinhood’s motion in part and denied it in part. In November 2022, Robinhood filed a motion for judgment on the pleadings, which the court denied in January 2023. In March 2024, Plaintiffs filed a motion for class certification, which Robinhood opposed. In October 2024, the court denied class certification without prejudice. Plaintiffs filed a renewed motion for class certification in January 2025, which Robinhood is opposing. 169 State Regulatory Matters The New York Attorney General is conducting an investigation into brokerage execution quality and collaring the prices of certain trade orders. The MSD is examining RHF’s customer complaint supervision, the disruptions experienced by BOATS during the Robinhood 24 Hour Market overnight trading session on August 4-5, 2024, and the offering of presidential election event contracts. We are cooperating with these investigations. SEC Settlement On January 13, 2025, as part of the January 2025 SEC Settlement, RHF and RHS resolved the SEC’s investigations concerning Regulation SHO, Electronic Blue Sheets requests, account takeovers, anti-money laundering compliance and cybersecurity issues, including the data security incident we experienced in November 2021 when an unauthorized third-party socially engineered a customer support employee by phone and obtained access to certain customer support systems (the “November 2021 Data Security Incident”), and various brokerage recordkeeping issues, including off-channel communications. RHF and RHS paid penalties totaling $ 45 million for these violations, were censured, and agreed to certain undertakings. The settlement related to (i) RHS’s failures to comply with various provisions of Regulation SHO in connection with its stock lending and fractional trading programs from May 2019 until March 2020 and December 2019 until December 2023, respectively; (ii) RHS’s failures to submit complete and accurate electronic blue sheet data in response to SEC staff Electronic Blue Sheet requests from at least October 2018 through April 2024; (iii) RHF and RHS’s untimely filing of suspicious activity reports from January 2020 through March 2022; (iv) RHF and RHS’s failure to implement adequate policies and procedures designed to detect, prevent, and mitigate identity theft in connection with customer accounts from April 2019 through June 2022 in violation of Regulation S-ID; (v) RHF and RHS’s failure to adequately address known risks posed by a vulnerability related to remote access to our systems from at least June 28, 2021 through November 3, 2021 in violation of Regulation S-P; and (vi) RHF and RHS’s failures to maintain and preserve (a) off-channel brokerage communications sent or received by employees from at least 2019 through 2022, (b) core operational databases in a manner required by regulation or for the required length of time between December 2020 and December 2023, and (c) certain customer communications between 2020 and March 2021 due to our third-party archiving vendor’s ingestion limits being exceeded. Brokerage Enforcement Matters FINRA Enforcement and Examination staff are conducting investigations related to, among other things, RHS’s reporting of fractional share trades, as applicable, to a Trade Reporting Facility, the Over-the-Counter Reporting Facility, the Order Audit Trail System, and the Consolidated Audit Trail; RHS’s reporting of accounts holding significant options positions to the Large Option Position Report system; processing of certain requests for transfers of assets from Robinhood through ACATS; responses to Electronic Blue Sheets requests from FINRA; the delays in notification from third parties and process failures within our brokerage systems and operations in connection with the handling of a 1-for-25 reverse stock split transaction of Cosmo Health, Inc, in December 2022 (the “Q4 2022 Processing Error”); RHF’s and RHS’s compliance with FINRA registration requirements for member personnel; marketing involving social media influencers and affiliates; collaring the prices of certain trade orders; RHS’s and RHF’s compliance with best execution obligations; RHS’s compliance with FINRA Rules 6190, 5260 and 6121; RHF’s compliance with regulations governing the delivery of required documents; matters related to RHS’s and RHF’s supervision of technology; origin code reporting; short interest reporting; customer complaint supervision and restriction issues; the disruptions experienced by BOATS during the Robinhood 24 Hour Market overnight trading session on August 4-5, 2024; account takeovers (i.e., circumstances under which an unauthorized actor successfully logs into a customer account), anti-money laundering compliance and cybersecurity issues; and the Early 2021 Trading Restrictions (as defined below) and employee trading issues as described more fully below. We are in advanced discussions with FINRA to resolve the majority of these matters. There can be no assurances that these discussions will lead to resolution of the investigations and examinations. 170 In December 2024 and January 2025, FINRA advised us in writing that it had closed the previously disclosed examinations and investigations into compliance with Rule 3210, Regulation SHO, and recordkeeping, including off-channel communications. The FDIC is investigating issues related to compliance with the Electronic Funds Transfer Act (“EFTA”). On January 13, 2025, the SEC advised us in writing that it had closed the previously disclosed investigation into the broker-dealers’ compliance with the EFTA. Robinhood Crypto Matters RHC received subpoenas from the California Attorney General’s Office (the “CAGO”) seeking information about, among other things, RHC’s trading platform, business and operations, custody of customer assets, customer disclosures, and coin listings. On August 31, 2024, RHC reached a settlement with the CAGO to resolve this matter for which we paid $ 3.9 million. The settlement related to certain disclosures by RHC and delivery of customers’ cryptocurrency assets under California Corporations Code Sections 29520 and 29505 during the period January 2018 through April 2022. RHC also has received investigative subpoenas from the SEC regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations. RHC is cooperating with this investigation. On May 4, 2024, RHC received a “Wells Notice” (the “May 2024 Wells Notice”) from the SEC Staff stating that the SEC Staff has advised RHC that it made a “preliminary determination” to recommend that the SEC file an enforcement action against RHC alleging violations of Sections 15(a) and 17A of the Exchange Act. The potential action may involve a civil injunctive action, public administrative proceeding, and/or a cease-and-desist proceeding and may seek remedies that include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest, civil money penalties, and censure, revocation, and limitations on activities. Text Message Litigation In August 2021, Cooper Moore filed a putative class action against RHF alleging that RHF initiated or assisted in the transmission of commercial electronic text messages to Washington State residents without their consent in violation of Washington state law. The complaint sought unspecified total statutory and treble monetary damages, injunctive relief, and attorneys’ fees and costs. In July 2024, the court granted final approval of a $ 9 million settlement. Early 2021 Trading Restrictions Matters Beginning on January 28, 2021, due to increased deposit requirements imposed on RHS by the NSCC in response to unprecedented market volatility, particularly in certain securities, RHS temporarily restricted or limited its customers’ purchase of certain securities, including GameStop Corp. and AMC Entertainment Holdings, Inc., on our U.S. trading platform (the “Early 2021 Trading Restrictions”). A number of individual and putative class actions related to the Early 2021 Trading Restrictions were filed against RHM, RHF, and RHS, among others, in various federal and state courts. In April 2021, the Judicial Panel on Multidistrict Litigation entered an order centralizing the federal cases identified in a motion to transfer and coordinate or consolidate the actions filed in connection with the Early 2021 Trading Restrictions in the United States District Court for the Southern District of Florida. The court subsequently divided plaintiffs’ claims against Robinhood into three tranches: federal antitrust claims, federal securities law claims, and state law claims. In January 2022, the court dismissed the state law claims with prejudice. In August 2023, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s order. 171 In May 2022, the court dismissed the federal antitrust claims with prejudice. In June 2024, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s order. In November 2021, plaintiffs for the federal securities tranche filed a complaint alleging violations of Sections 9(a) and 10(b) of the Exchange Act. The complaint seeks unspecified monetary damages, costs and expenses, and other relief. In January 2022, we moved to dismiss the federal securities law complaint. In August 2022, the court granted in part and denied in part Robinhood’s motion to dismiss. In November 2023, the court denied Plaintiffs’ motion for class certification without prejudice. In April 2024, the court denied Plaintiffs’ motion for leave to file a renewed motion for class certification. On May 28, 2024, Robinhood notified the court that it had reached a settlement in principle with the Plaintiffs in their individual capacities. Robinhood subsequently notified the court that one of these Plaintiffs was unwilling to sign the settlement agreement and requested additional time to negotiate with that individual. On August 14, 2024, the court dismissed the lead and named Plaintiffs’ claims. Robinhood has reached settlements with a number of remaining individual plaintiffs, continues to negotiate with others, and has filed a motion to compel arbitration of the majority of the remaining claims. RHM, RHF, RHS, and our CEO Vladimir Tenev, among others, have received requests for information, and in some cases, subpoenas and requests for testimony, related to investigations and examinations of the Early 2021 Trading Restrictions from the USAO, DOJ, Antitrust Division, the SEC’s Division of Enforcement, FINRA, the New York Attorney General’s Office, other state attorneys general offices, and a number of state securities regulators. Also, a related search warrant was executed by the USAO to obtain Mr. Tenev's cell phone. There have been several inquiries based on specific customer complaints. We have received requests from the SEC Division of Enforcement and FINRA related to employee trading in certain securities that were subject to the Early 2021 Trading Restrictions, including GameStop Corp. and AMC Entertainment Holdings, Inc., during the week of January 25, 2021. These matters include requests related to whether any employee trading in these securities may have occurred after the decision to impose the Early 2021 Trading Restrictions and before the public announcement of the Early 2021 Trading Restrictions on January 28, 2021. We are cooperating with these investigations. FINRA Enforcement has also requested information about policies, procedures, and supervision related to employee trading generally. On January 10, 2025, SEC Enforcement advised us in writing that it had closed its investigation into the Early 2021 Trading Restrictions and any contemporaneous employee trading issues. IPO Litigation In December 2021, Philip Golubowski filed a putative class action in the U.S. District Court for the Northern District of California against RHM, the officers and directors who signed Robinhood’s IPO offering documents, and Robinhood’s IPO underwriters. Plaintiff’s claims are based on alleged false or misleading statements in Robinhood’s IPO offering documents allegedly in violation of Sections 11 and 12(a) of the Securities Act. Plaintiff seeks unspecified compensatory damages, rescission of shareholders’ share purchases, and an award for attorneys’ fees and costs. In February 2022, certain alleged Robinhood stockholders submitted applications seeking appointment by the court to be the lead plaintiff to represent the putative class in this matter, and in March 2022, the court appointed lead plaintiffs. In June 2022, plaintiffs filed an amended complaint. In August 2022, Robinhood filed a motion to dismiss the complaint. In February 2023, the court granted Robinhood’s motion without prejudice. In March 2023, plaintiffs filed a second amended complaint. In January 2024, the court granted Robinhood’s motion to dismiss the second amended complaint without leave to amend. In February 2024, plaintiffs filed a notice of appeal to the 9th Circuit and the appeal is currently pending. In January 2022, Robert Zito filed a complaint derivatively on behalf of Robinhood against Robinhood’s directors at the time of its IPO in the U.S. District Court for the District of Delaware. Plaintiff alleges breach of fiduciary duties, waste of corporate assets, unjust enrichment, and violations of Section 10(b) of the Exchange Act. Plaintiff’s claims are based on allegations of false or misleading statements in Robinhood’s IPO offering documents, and plaintiff seeks an award of unspecified damages and restitution 172 to the Company, injunctive relief, and an award for attorney’s fees and costs. In March 2022, the district court entered a stay of this litigation pending resolution of Robinhood’s motion to dismiss in the Golubowski securities action discussed above. In August 2022, a shareholder sent a letter to the RHM board of directors demanding, among other things, that the board of directors pursue causes of action on behalf of the Company related to allegations of misconduct in connection with the Early 2021 Trading Restrictions, Robinhood’s IPO offering documents, and the November 2021 Data Security Incident. The board of directors has formed a Demand Review Committee that is reviewing the demand. Pay Transparency Litigation In July 2024, RHM, RHY, and RHC were sued in a putative class action captioned John Milito v. Robinhood Markets, Inc. et. al., alleging that Robinhood violated Washington’s Equal Pay and Opportunity Act, because some of the Company’s job postings allegedly failed to include a wage scale or salary range. The complaint seeks unspecified total statutory damages, attorneys’ fees and costs, injunctive relief, and declaratory relief. The case is currently stayed in the Superior Court in King County in Washington pending a certified question to the Washington Supreme Court. Cash Sweep Litigation In October 2024, RHM, RHF, and RHS were sued in a putative class action captioned Dey v. Robinhood Markets, Inc. et. al., in the U.S. District Court for the Northern District of California. Plaintiff asserts breach of fiduciary duty, gross negligence, negligent misrepresentation and omissions, breach of implied covenant of good faith and dealing, and violation of California’s unfair competition law based on allegations that defendants failed to pay a reasonable rate of interest to non-Robinhood Gold brokerage account holders on cash balances swept to program bank deposit programs. The complaint seeks, among other things, certification of the class, unspecified monetary, punitive, treble, and statutory damages, restitution, disgorgement, attorneys’ fees and costs, injunctive relief, and declaratory relief. In January 2025, Robinhood filed a motion to dismiss. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.