Good day, and thank you for standing by. Welcome to the Robinhood First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Koegel, Vice President of Investor Relations for Robinhood. Please go ahead.

Thank you, Liz. And thank you everyone for joining Robinhood’s first quarter earnings call. With us today are CEO and Co-Founder, Vlad Tenev; and CFO, Jason Warnick. Before getting started, I want to remind you that today's call will contain forward-looking statements. Actual results could differ materially from our expectations, and we have no duty to provide updates unless legally required. Potential risk factors that could cause differences, including regulatory developments that we continue to monitor, are described in the press release issued today, the earnings presentation on our Investor Relations website at investors.robinhood.com. Our Form 10-Q filed this afternoon and in our other SEC filings. Today's discussion will also include non-GAAP financial measures. Reconciliations to the GAAP results we consider most comparable can be found in the earnings presentation. With that, let me turn it over to Vlad.

Thanks for the intro Chris. And thanks to everyone for joining us today. We had a strong quarter. I want to call out three things that I am especially proud of. First our product velocity continued to accelerate with several innovative products delivered to customers. And we’re not slowing down, we’re enabling 24-hour individual stock trading for customers by launching 24 Hour Market next week. Second, we’re continuing to see significant growth from the new products we launched last year. And third, in the face of uncertainty in the banking sector, we’re continuing to see strong net deposits and improving customer satisfaction. All of this is leading to financial results that keep getting better as we move closer to GAAP profitability. I’m excited to tell you about all this. So, let's start with our business results. In Q1 customer assets under custody were up 26% sequentially to $78 billion driven by rebounding stock and crypto valuations as well as continuing net deposits. If we look at net deposits, we saw $1.5 billion in March and $4.4 billion for all of Q1 which translates to a 29% annualized growth rate. And perhaps most importantly all of the new products and features we’ve launched in the past year are continuing to drive higher customer satisfaction with Q1 net promoter scores improving more than 20 points from a year ago. Now if you look at financial results, Q1 we grew total net revenues by 16% from Q4. And by keeping our costs lean, we drove nice operating leverage in our business with adjusted EBITDA up 40% sequentially. I’d also highlight that two new products I mentioned last quarter continue to accelerate. Stock lending and instant withdrawals. Each of these had Q1 annualized revenues that grew 50%, 50% above their January levels. If you…

Thanks, Vlad. It's good to speak with everyone today. In the first quarter, we stayed focused on serving customers, growing our business, and driving long-term shareholder value. Our team continued to execute on our product roadmap, scale products we launched over the past year, and drive adjusted EBITDA higher. As I look back over the past year, I'm incredibly proud of how our team executed to transform the financial profile of our business. While a year ago, we had our lowest quarter of adjusted EBITDA, in Q1, we matched our all-time high. We grew revenues for four quarters in a row while getting to a leaner operating model. As a result, our Q1 adjusted EBITDA of $115 million is up over $250 million from a year ago. On an annualized run rate basis, that's an increase of more than $1 billion. And our Q1 adjusted EBITDA margin of 26% was an all-time high. And we aren't stopping here. We are committed to becoming profitable on a GAAP basis, and we're making good progress on that front. Looking at our Q1 GAAP results, EPS was negative $0.57. This included a one-time non-cash charge from our founders who canceled their 2021 equity awards that significantly reduces our SBC quarterly run rate going forward. EPS, prior to the 2021 founder award cancellation, was negative $0.03, so we're getting much closer to GAAP profitability. Now let's look at our first quarter business results. Customer assets under custody increased 26% sequentially in Q1 to $78 billion as growth stock and crypto valuations rebounded and customers continued to deposit money into Robinhood. Looking at net deposits, they were $4.4 billion in Q1, which translates to a 29% annualized growth rate relative to Q4 AUC. These resilient customer net deposits position us really well for continued asset…

Thank you, Jason. For the Q&A session, we'll start by answering shareholder questions from Say Technologies. These are ranked by number of votes. We'll pass over any questions that were already answered on the call or in prior quarters. We'll also group together questions that share a common theme. After that, we'll turn to live questions from our analysts. So, I'll kick it off with our first question from Say. This one's for Jason. So, two questions we're combining here. The first is, Siraj P. asks, what is the plan to be a profitable company? And Gregory P. asks, what are the primary ways management plans to return value to shareholders in 2023?

Great. Thanks for the questions. We're really focused on three things to drive shareholder value. First, we want to keep launching new products and improve upon our existing products. We've made a lot of momentum here and our product velocity is fast as we've seen it so far as a company. So, we feel really good about that. The second is, is we want to drive profitable growth. And we're going to keep our costs lean and find ways to drive even more efficiency over time. This quarter, it was nice to see our adjusted EBITDA grow at twice the rate of our revenue growth. And we're working on driving leverage in our business even more over time. And then lastly, what I'd say is we want to efficiently deploy our capital. This would include how we deploy capital for organic growth opportunities, for possible M&A growth. And as well, over time, could include returning some capital to shareholders. And I think if we do these three things really well over time, it should create a lot of shareholder value. In terms of reaching profitable growth, I don't want to predict any particular timeline on that. But we are getting really close. Excluding the founder award cancellation our EPS was minus $0.03 per share. So, we're going to keep focusing on rolling out new products and keeping our costs lean. And we should get there over time. Thanks for the question.

All right. Thanks, Jason. Next question is also for you. Philip S. asks, what does Robinhood's financial position look like after all the recent regional bank failures? What does Robinhood do to ensure that it doesn't find itself in the same position as those from SVB, Signature Bank, and First Republic Bank? And a similar question comes from [Messer] (ph). With so many banks going under, what is the Robinhood exposure?

Yeah, thanks for these questions. First, I think it's really important to clarify that Robinhood is not a bank. We keep our customer cash liquid, and we don't have the risk of asset liability mismatch that banks have to manage. Also, it's great to see that our customers continue to deposit funds with us. Gold cash suite balances were up 67% from last quarter, up to $8 billion. And in March, when all the banking turbulence happened, our customers deposited $1.5 billion with us. So, we think we're in a really good position, and particularly as customers respond to our great offerings for Gold members. So, thanks for the question.

All right. Thanks, Jason. The next question is for Vlad. It's from Edward O., who asks, any plans to add custodial accounts to allow parents to teach their children about investing?

Yeah, in short, absolutely. This is part of our longer-term roadmap. And we recently launched retirement, as you're probably aware. And we now have hundreds of thousands of customers that have multiple accounts with us. So, with retirement, it was really the first time that a customer could open multiple brokerage accounts within our product. And it took a lot of work to build the infrastructure for that and build the product affordances necessary. So now it's much easier for us to add different account types. And we hear from customers. They want to teach their children about investing. They also are interested in joint accounts and would like to collaborate with their finances and manage them with their partner. So, these things are definitely part of the longer-term roadmap. We want to make sure we continue deepening relationships with our customers, as we've been doing with the launch of retirement. Keen to do it. No specific timeline to share, but stay tuned.

All right. Thanks, Vlad. The next question is also from Edward O., who asks, Robinhood launched IRAs about six months ago. How has adoption been? How does it compare to leadership expectations? And are retirement accounts a key part of Robinhood strategy going forward?

Yeah, we're really pleased with the contributions we've seen so far, over half a billion in assets, leading to $5 million in matches to customers. And we're seeing customers continuing to bring more of their cash onto the platform. The feedback that we're hearing has been really good as well. Customers love the match. They also love the fact that we're providing recommendations. And the recommendations are now being used by two-thirds of customers that onboard onto retirement. And we're excited about that, especially when we think about what that means for the future of advisory and providing personalized ongoing advice to our customers to help them manage their investments.

One thing that I'd add is if you look at total accounts that we added this year between brokerage and retirement, it was about the same number of total accounts that we opened in all of last year. So, it's really nice to see this kind of acceleration and new account growth.

Right. Thank you, Vlad. Thank you, Jason. The next question is for Jason, and Richard S. asks, can Robinhood shareholders have free access to Gold?

Yeah, thanks for the question. And thanks for letting me answer this one instead of Vlad. Want to make Gold the best deal in financial services, we think it's a great deal at $5 per month, just a great value overall, we're going to keep investing in the product to make it even better. And for now, we don't have any plans to give it away for free.

All right. Thanks, Jason. Next questions is for Vlad. And it's from Sujan T. Who asks, on the last call, it was mentioned that Robinhood was looking into adding an advisory program to their services. What will this look like? And are there plans to work with a seasoned wealth management company or will it be kept in house?

Hi, Sujan, yes, we mentioned it on the last call. And we are getting very excited about what we can do in advisory. We've hired some great people, in particular, our Head of Investment Strategy, Steph Guild, who's an industry vet, with 20 years of experience at large financial institutions. You might have seen, she's got a weekly column where she talks about the markets. That's quite good. And we really think that in Robinhood, we can build the expertise necessary to give our customers amazing advice. And we've got teams hard at work building a great advisory product. And we believe that we can deliver that to customers, using the teams we have in house. So, more to come, obviously, as the work progresses, but we think we can we can build something really great for customers here.

Awesome. Thanks, Vlad. The next question is also for you. G. C. asks, is Robinhood exploring ways to leverage AI into its services?

Yeah. I think that over the next few decades, every company will have to transform into an AI company. Looking at the past 20 years, and how sort of the companies that have been able to move ahead and create differentiated value, have been technology companies, in the same way that every company sort of has needed to become a technology company. I think AI will sort of be embedded into the fabric of all companies. And that's how we're thinking about it. Robinhood has always been early to adopt new technologies like data science and machine learning, both to lower our costs and deliver product experiences and value for our customers. And we're really excited to continue to embed AI as a tool, both internally and helping us ship products even faster, and incorporating into existing products and new products. So, we think that the impact of AI and other tools that we've seen thus far is going to be extraordinary.

All right. Thank you, Vlad. The next question is also for you. It's from Justin P. who asks, when will Robinhood support an official trading API for creating trade automation like other brokers?

Yeah, this is something we're excited about. And we hear from our active traders about but we don't offer it today. If you look at Robinhood Connect, which we announced and started rolling out recently, that leverages some of the trading infrastructure on our crypto side for a developer and B2B targeted product. Making it easier for our active traders and innovating for them is top of mind. So, this is definitely something we would look to offer over time. So, stay tuned.

All right. Next question is also for you, Vlad. Tarun G asks, there's a perception that Robinhood is not as safe as other older brokerage firms like Fidelity and Schwab, Robinhood doing anything to change this perception.

At Robinhood safety is our top company value. And when I think about what that means, several things come to mind. First is great customer support. And we made tremendous progress over the past few years, adding more channels improving the quality of customer support overall and making it much better and the progress there continues. The second thing is making sure that our app in our infrastructure is reliable and available to customers when they need us the most and we made tremendous progress there to -- the third is the safety of customers assets within Robinhood. And as we announced earlier in the call with Robinhood, Gold, we're offering a 4.65% APY on customer uninvested cash. And we're also offering 2 million of FDIC insurance starting June 1st. So, your money is going to have higher insurance in Robinhood, Gold and in our cash sweep than you would get at a typical bank. I should also mention, as with every brokerage account, your brokerage assets are SIPC insured, and we also have access to big coverage. So, what does this what does this mean? When we look at kind of how customers are engaging with the service, we're seeing higher NPS indicative of increasing customer trust. And the results speak for themselves, customers are continuing to trust us with their deposits. When we see a lot of institutions in the banking sector and elsewhere are seeing outflows in this quarter, we're continuing to see strong inflows with 1.4 billion in net deposits and 4.4 billion and in Q1. So, we feel really, really good about customers increasingly trusting us.

Alright, last question from Say, and this is from -- for Vlad, it's [indiscernible] asks, How is Robinhood better or different from other platforms? What moves will Robinhood be making to become the top trading platform?

Well, in my opinion, we are the most innovative trading platform in the marketplace. We've introduced several new industry innovations that have become norms, not just zero commission, no account minimum trading, but also recently retirement with a 1% embedded match, which we're very excited about. And with the announcement of 24/5 trading, we're leading the industry once again. So, we're going to continue to focus on our customers. We're going to make progress, launching products in a way that emphasizes customer safety. But we're going to continue to innovate. And I'm very, very excited about the things that we're launching and we have launched in the past few months.

All right. Thank you, Vlad. Thank you, Jason. And that concludes our shareholder questions from Say Technologies. We really do appreciate all our shareholders taking time to asking these questions to Vlad and Jason. We're looking forward to more next quarter. Now I'll turn the call over to Liz to lead Q&A from our analysts.

[Operator Instructions] Our first question comes from a line of Rich Repetto with Piper Sandler.

Yeah, good evening, Vlad. Good evening, Jason. And congrats on the improved profitability of the quarter and great disclosures, too. So, my question is Vlad and Jason is on the net interest income, it improved 25%. Quarter-over-quarter. And, Jason, I know you talked about a $20 million increase. But this turned out to be 41 million. And I guess I'm trying to see what surprised you. I can see the fully paid securities lending was a little bit better. But what surprised you that give you that bump up and NII quarter-over-quarter?

Yeah, thanks for the question. Rich, and we were pleased to see that the pickup in NII. I mean, there's a few things that I call out you highlighted, securities lending, you'll recall that last quarter, was a particularly soft quarter for sec lending. And at the time of the call, we were cautious in the way that we were evaluating the outlook for Q1. And the activity for sec lending in Q1 was strong and in addition to the strength of just the activity, which increased the rebates as well as the interest we earn on collateral. We also saw rebate rates tick up meaningfully in the quarter and so this led to some outperformance. We also saw strength in customer deposits. And also, the flow through of interest rate on those incremental deposits beyond kind of what we were anticipating. So, overall, really pleased it was higher than we expected. And we were pleased with that.

Got it. And my follow-up will be on sort of the product innovation side Vlad and you talked a lot about advisory and hiring a new person but I would expect when you talk, that Robinhood could do with technology driven I would expect. So, any color is it going to be more of a robo advisor, type platform or any insight into what the product will look like?

Yeah, I don't want to share too much. But what I'll tell you is we want to go beyond just being a robo advisor. And we really want to use technology to give personalized advice at scale, much like what a high-net-worth individual would come to expect from a financial advisor that they'd be paying 1%, 1% AUM advisory fee for and Robinhood can build a great experience for that. That's mobile first. And of course, we'll plan to use every technology that that we think is going to be useful in the market to make that happen and deliver it in a scalable way.

Thank you guys. Very helpful.

Thanks, Rich.

Our next question comes from Dan Dolev with Mizuho?

Hi, guys, excellent results. Maybe if I missed it but on mix by the depo trends and FDA? Can you give us a sense of, what is going on? Is this seasonal? Or how should we interpret it? And then – etcetera?

April thank you. Yeah, the connection is a little poor Dan, but I think we got your question. So, April, as is tax months. And, across the industry, you tend to see customer dollars flowing, flowing for taxes and less in trading and engagement in deposits. We actually had a really strong April from a deposits perspective. 1.4 million coming in, the trading was softer than what we saw in Q1. That's normal. It's expected. We saw it last year. And as we look across industry results, it's pretty much in line with what others are seeing as well.

Perfect, a really quick follow-up. Coinbase said that they raised prices for small ticket items on crypto. Have you seen any of that on your platform? Thank you and great results.

Yeah, we've kept the rebates on our crypto offering the same. And, we've been pleased by the market share that we have in the retail US crypto offering, we want to make sure that we offer great pricing to customers. And we think that over time, keeping the pricing very competitive is going to lead to increase market share gains over time. So, it's really, we want to make sure our pricing is awesome. And the user experience continues to be great for the crypto offerings. And we think that it's got a bright future, and we see potential to grow our market share there.

Great, excellent stuff. Thank you.

Thanks, Dan.

Our next question comes from the line of Alex Markgraff with KeyBanc Capital Markets.

Hey, everyone, thank you for taking the question. Just maybe a couple first on Robinhood. Connect, just kind of curious how you see this product scaling, just considering kind of the external nature of the product? And then any comments on monetization of Connect would be helpful.

Yeah, absolutely, I can feel that one. So, really Robinhood Connect is an on ramp for third party developers to integrate Fiat to crypto into their apps. And we see a big opportunity for us in this space, because the infrastructure that we've developed for the Robinhood App and the Robinhood Wallet to not just move money into the platform but also integrate with various trading partners and get great trade execution allows us to offer not just great customer experience to developers, but great pricing. So, as we look at kind of the space, we see that other on ramps don't have great funding options. They either offer only card, or some of them that offer bank linking are just prohibitively expensive. And in general, the costs are quite high, like north of 5% per transaction. And so, we see an opportunity to take what we built on the consumer side and really offer a differentiated product for customers. In terms of monetization, we believe that we can offer the product at lower prices and still monetize with taking a percentage of every transaction and earn healthy margins for the business over time.

That's great, thank you. And then just around 24/5 trading, just kind of curious, any thoughts in terms of what sort of engagement uplift you might expect or anticipate around that? Thank you.

Yeah, it's very hard to predict what's going to happen with 24/5 trading. It's fundamentally new in the market, and Robinhood is going to be the first retail broker in the US to offer this for individual names. I think that what we'd like to see is sort of good liquidity available for these symbols, and liquidity to be a little bit smoother, and not as much happening on the open and the close. And I think that would be really, really interesting for the markets. In terms of engagement. We have seen with hyper extended hours, which we launched last year that we saw increased volumes, but I think it's probably a little bit early to, to give estimates for, for what we'd see in terms of volumes there.

Makes sense. Thank you.

Our next question comes from a line of Devin Ryan with JMP Securities.

Great. Hi, Vlad. Hi, Jason, how are you?

Hey, Devin, how are you doing?

Doing great. Start with one for Jason on just the corporate cash. So, obviously the firm continues to sit on a lot of cash and liquidity here. Adjusted EBITDA’s now you're very solidly positive. So, it seemed like you're in improving position to play offense and so appreciate you're looking into repurchasing the shares from emerging technologies as one use, but just love to maybe talk about or get an update on what the other top priorities are. And then on the M&A front, the type of opportunities that you're seeing in the market today. And Jason, if you can just remind us on those financial hurdles that you need, and maybe how that’s interplayed with some of the recent deals that you've done for context?

Yeah, thanks, Devin. Great, question. So first of all, in this market backdrop, I do like having a really strong balance sheet. And as you mentioned, $6 billion in cash and investments, given this market backdrop, I think has been a source of strength for us. I like that. But it's not an ideal capital structure. And over time, I think you'll see us continue to work on that, to be even more efficient. My mind goes to the M&A front when I think about use of capital, beyond just running our business. And I'd say that the environments becoming more constructive, the bid ask spread has been incredibly wide, as public markets corrected, and I think private markets are a bit slow to face that reality. And I think it's been more constructive now. And it's up to us to look at opportunities. You talked about hurdle rates, it's looking at things like what's the return on invested capital? Will it be accretive to our business? And then in terms of the business itself? Is it going to accelerate our roadmap and does the team that we acquire, share the values that we have around a culture around safety and compliance, as well as an obsession for customer experience? So, these are all the things that we are looking at. And like I said, I'd say that the backdrop is improving there.

Okay, great color, thank you. Just a follow-up here want to dig in a little bit on the futures offering, and just to get a sense of what the timeline is going to look like to get into that business. And then, in terms of, the target audience here, how much demand are you seeing from your existing customers for this product? Or is this is more about kind of accelerating the push with active traders and just sizing the opportunity? Could this actually be more than 10% of darts over time, we've seen what it is for some others, but just love to get a sense of the addressable market for you. Thanks.

I'd be happy to feel that one. We're very excited about launching futures trading to our customers. And, as I mentioned in the call, the goal is to launch at around the end of this year pending, of course, regulatory approvals. On our application. I think as we think about it, we see two opportunities. One is making a really great product for our active traders. As we've talked about a little bit over the past few quarters, active traders have been an increasing area of focus for us. We've been able to drive Active Trader NPS significantly higher in the past year. We love that our active traders are feeling the love and seeing improvements in the customer experience for the product. And we think that futures trading is an innovative new asset that allow them to manage their risk and in new ways. The second thing that we think we have an opportunity to do is if you look at what we've done with fractional shares, and options, trading Robinhood, historically brought new investors to the market who haven't been investing and haven't had access to these products in the past. With futures trading, we see a lot of complexity in the existing products and interfaces, which I think makes them less accessible. So, one thing we'd like to do is just simplify that and make that really, really useful and easy to use in mobile. And we think that there's a lot of whitespace ahead of us there. And I want to give a special shout out to JB Mckenzie, who joined as the GM of our futures business. And I know that he's very, very excited to launch this as quickly as possible. And maybe this question provides a little bit extra motivation, not that he needs that.

Exactly. Great. Thanks so much. Appreciate, Vlad.

Our next question comes from the line of Michael Cyprys with Morgan Stanley.

Great day. Good afternoon, and great to see the progress inching towards GAAP profitability here. So, the question is, how do you think about sustaining GAAP profitability once you've crossed there, you've benefited from interest rates haven't gone higher. So, if the Fed were to cut, how do you think that impacting revenues at this point, and which products and revenue pools do you think have the most compelling profitable growth over the next 12 to 24 months?

Yeah, thanks, Mike. It's Jason I’ll start. And we'll see if Vlad wants to add any color, in terms of reaching and ultimately sustaining GAAP profitability. There's a couple of elements that are really important. The first is continuing to improve our user experience on our existing products, expand the service capability of existing products, and then also keep rolling out new products for customers. And we're seeing a lot of traction here, our product velocity is only getting faster, and customers are really responding, we're seeing that in our NPS score being up over 20 points, overall, and up over 30 points for our most active customers. So really, really encouraging signals. To your point, our revenue is diversifying interest income is becoming a larger portion of that things like securities lending is also contributing but also interest on cash as well. When we think about the dynamic between, rising rates and falling rates and the effect on revenue, there's a couple things that I point out first, there is a bit of a natural offset between changes in interest rates and demand for equities or trading activity. And so, while it's not a perfect correlation, they do tend to move in opposite directions. And we think that's, good for the balance of our business. I'd also say that as we continue to roll out new products that that's just going to further diversify and really strengthen the revenue profile, of our business. The last thing we're looking at, and I mentioned it last quarter, is we are evaluating whether we want to use any kind of hedging for significant rate drops, to manage our sensitivity to interest rates, we've been looking at whether, option floor strategy, for example, that could be a way to maintain liquidity, do it at a modest cost, and not introduce any P&L variability. We haven't made a decision there yet. But it's something that we're continuing to look at.

Yeah, the only thing I'd add is just that I think the team has done a fantastic job over the past year, diversifying our business, so that, we can be sustainable in a high interest rate environment. I think, before the fear that we were getting from analysts and the community was doing great in a low interest rate environment, but what if rates tick up? How will you do then, and I think we've shown that this is a resilient business, the team moves fast and innovates. And we're really pleased with how diversified the business has become, and we see opportunities to keep pulling on that and do it even further.

Great, thanks. Just a follow up question on the crypto, the regulatory environment in the US continues to tighten around cryptos just curious, your perspectives there on the regulatory landscape. What steps are you taking to protect Robinhood and what risks if any do you see?

Yeah, so the crypto environment has, faced, increasing regulatory scrutiny. The things that I'd point out is that, we've been a safety first company, for a long time, it's been a core value. In fact, it's our top company value and Vlad talked about it on these calls in the past. What this has meant is that, we've been very deliberate in the way that we expand our coin offering, we've got a rigorous coin framework, and we're very careful in the way that we evaluate those points. I'd say if you if you compare Robinhood to perhaps others, across the industry, we consistently demonstrate that we have respect for the securities regulations of the country. And, and this has led to us making tough decisions on product selection, don't offer staking, that's something that's been under scrutiny as well. And so, we'll continue to operate with that mindset. We want to be on the right side of these decisions at the same time we want to innovate for customers. And I think additional regulatory clarity would be super helpful on that front.

Great, thank you.

Thanks.

Our next question comes from Will Nance with Goldman Sachs.

Good evening. I wanted to follow up on the earlier question on the securities lending as it sounds like fully paid adoption was partial driver there, that sounds like that's, you're baking in consistent securities lending revenue in the current quarter, when I look at the fully paid versus margin fully paid, definitely more than margin sequentially, but even the base level of margin, I think, was up 70% sequentially. So, I was just wondering if you could maybe talk about, how much of this was sort of environmental to the demand? And what kind of rates you are able to get on that, and how much of this, you think is maybe just talk about the sustainability in the current macro environment, particularly in light of some of the reduced engagement levels that we've seen that you're kind of referencing in the month of April?

Yeah, and I'd say that, thanks for your question Will. I'd say that the securities lending business is less beholding to monthly engagement metrics. It's based more on how many of our customers have opted in whether or not they're engaging on a monthly on a monthly basis with us. We've seen overall strength in the market for securities lending this quarter, I'd say Q4 was unusually soft, it was one of the softest quarters that I've seen in the years that I've been here. But there was a strong backdrop. In Q1 that continues here into Q2. So, demand was higher, it allowed us with the backdrop of adding more customers to the fully paid securities program. Securities lending program to be able to lend out even more help our customers, optimize their own yield by participating. And the rebates that we saw were particularly strong, so far, in Q2, we continue to see, levels, consistent with what we were seeing in Q1.

Got it. That's super helpful. And just maybe a detailed model like question on the options take rate, it seems like that's been coming down a little bit over the past several quarters, and came in a little bit lower than what we were looking forward to, just wondering if you could talk about drivers of that seems like it's been more on the rebate side and less on the actual volume?

Yeah, sure. So, the take rate is really just an effect of mix. So, no change in the pricing structure, but the tier that includes spy contracts has just been increasing as an overall percentage in this market backdrop, and that's shown up in a reduced blended rate.

Got it? Appreciate you taking the questions.

You bet. Thanks, Will.

Our next question comes from Ken Worthington with JP Morgan.

Hi good evening, and thanks for taking the question. Can you give us an update on the new cash card? What has been the uptake on the new card? And any color on what transaction activity looks like there?

Yeah, sure. I mean, the cash card, is off to a good start. I'd say it's really early Ken. And, the uptake, is a few 100, a couple 100,000 customers. And what we're really working on is continuing to iterate on the value proposition. We want that card to be kind of top of wallet, and we're not there yet. So, the team is hard at work. We're talking to customers, we're evaluating the value proposition. I think longer term, this has potential to be, a meaningful, engagement driver for us and will help us deepen our relationships. But we're not there yet, but it's early.

Thank you. And then maybe following up on options, trading there continues to represent the majority of transaction revenue for Robinhood. We've seen index options, trading dominate certain parts of retail, particularly zero day options. Any color, you can give us some what portion either index options are, or if zero day options has been a driver of some of the growth that you've seen. And then maybe just to help size, size options for us, you had 23.1 million accounts, and a use of 11.8. What portion of your customers are trading options for you, in this quarter, over the last year? Thanks.

Sure, Ken I’ll start and we'll see if Vlad adds any colors. So, first, I'd say hundreds of thousands is the order of magnitude on options traders. So, a relatively small portion of our customers are engaged in in options trading every month. In terms of zero day options. We don't currently offer those. It's something that we do hear from customers that they're interested in --

But we don't offer cash settled index options. We don't offer cash settled index options. We have zero day, but their ETF yet, ETF options traded on the platform.

Thanks, Vlad. And so in terms of expanding that to cash settled, it's something that we’ll evaluate over time.

Okay, great. Thank you.

Our next question comes from Matthew O'Neill with FT Partners.

Yeah. Hi, thank you so much for taking my question. I just wanted to confirm the April. One of one of the April trends, I believe it was mentioned that the MA use were down after it was, nice to see them increase -- about the trend this past quarter. Anything to sort of take into account that I know there's a lot of discussions already on some of the April dynamics with tax season and so forth. Thank you.

Yeah, thanks for the question. So, yeah, we saw MA use go from 11.8 to 11.4 in April. And really what I’d pointed, it's in the zone of where we were, sorry, 11.5. It's in the zone of where we were in in Q1, it's nice to see that it's kind of stabilized. And I just point to the seasonal dynamics of April that I referred to earlier in my comments.

Under understood, thanks so much.

Our next question comes from Mark McLaughlin, with Bank of America.

He guys, thanks for taking my question. I had for the first one. I was curious, what was the decision behind the reallocation of, I assume cash to held to maturity securities? Because I know you guys had mentioned earlier, you're not taking on a lot of duration risk. So, I just wanted to know the accounting reason behind that?

Yeah, it's more. Thanks for the question. So, first of all, in the broader context, we've got $6 billion of cash on our balance sheet, and it just was good hygiene for us to take a small portion of that, and extend the duration of it. So, it's held to maturity, it's, it's a laddered portfolio that's rolling. So, it's highly liquid. And that was the logic behind it. Just looking at the fair value, it's right on what the purchase price was of the portfolio.

Awesome. Thank you. And then for a quick follow-up. I know in quarters past, you guys have kind of talked about expansion, especially starting in the UK. Not obviously trying to monetize client cash balances with a bank charter helps when moving abroad, makes things a lot less complicated. Any updates on international expansion or how are you guys thinking about that going forward?

Yeah, we're making progress towards the goal of launching brokerage in the UK by the end of the year. As I mentioned in the past, we've got an existing license in place. We think that our brand is very strong and will resonate very well in the UK and experienced leaders running the effort. So, stay tuned, but we're excited to make it happen.

Awesome, thanks, guys.

Thank you.

That concludes today's question and answer session. I'd like to turn the call back to Vlad Tenev for closing remarks.

Yeah, thank you guys so much for listening and asking questions. So, we're very excited by the progress. And check out 24 hour market very excited for that to be launching next week.

This concludes today's conference call. Thank you for participating. You may now disconnect.