Most of our deposits come from existing customers, says Robinhood CEO Vlad Tenev

Robin Hood earnings, they are out right now and that stock is popping. It’s up about 3 1/2 percent. The company posting its second straight quarterly profit, fueled in part by a 232% jump in crypto transaction revenue, which accounted for $126 million in revenue in the quarter. But there’s, as always, a lot more to the story. So let’s just continue our West Coast jaunt and go up the coast to Kate Rooney, who is live at Robin Hood’s headquarters with the CEO, Vlad Tenev. I’m going to shut up and let you take it away, Kate. We’ll see you in about 6 minutes. Kate Rooney, Sully, thank you so much. Brian Vlad, it’s great to see you. Thank you so much for being here, having us here at Menlo Park. Yeah, Thanks for coming. Yeah. So big earnings day. Brian mentioned it, Really strong crypto volume, but also net deposits. What was fueling that and where was most of this money coming from? Yeah. I mean, we were proud of this quarter because it really shows that the strategy is working. And if you remember, we’re focused on three things, winning the active trader market, growing wallet share with our customers and expanding internationally. So crypto was strong. We saw growth in equities and options market share as well, which rounded out the active trader investments we’ve been making. We also had the largest net deposits in the history of the company. So that’s net cash and assets moving into Robin Hood of over $11 billion, which is the highest ever. So where are they coming from? Was it crypto deposits, were these deposits from you mentioned other incumbent brokerage firms, was this Robin Hood stealing market share from Schwab and Fidelity? It it was and it was actually well diversified between asset transfers from other brokerages and that was in the in the range of three to 4 billion. But it was also quite strong in terms of just normal customers that were depositing from their bank accounts. So yeah, it wasn’t any one thing that we can point to, of course crypto was strong. But I think across the board the business is growing and we’re just getting started. Retirement accounts as well had a big quarter. Some of this was incentive. So you guys were offering 3% for people to essentially take their money and transfer it out of one of the incumbents. There wasn’t chatter ahead of earnings that that might end. You know, once you stop paying people to move their money, people might not want to be moving their money to Robin Hood. Is that something you’re worried about? Do you anticipate those flows continuing after some of these incentives slow down? Yeah, I mean again there we, we do run promos and incentives. You mentioned the 3% IRA transfer match. So for customers that were transferring their assets from another brokerage, we are matching 3% on retirement accounts and that ended and now we’re doing a 1% match on individual taxable accounts. So those have been effective and we’ve really been experimenting with with those, but they only account for a minority of the net deposits that are coming into the platform. A lot of it is just strength of the existing user base deposits predominantly coming from customers that have been on the platform for a year or more. So I want to talk about Crypto for a second. You saw really strong volume growth with Crypto. But over the weekend, SEC or you guys at least disclosed as well as notice from the SEC, essentially we did. Yeah, saying that Robin Hood was offering unregistered securities feels like there’s a bit of a disconnect. So you’ve got Gary Gensler on one side saying just come on in and register. You, Coinbase, the other crypto trading platforms out there, have said it’s impossible. We’re going to fight this. What is the disconnect? You’re a stock brokerage firm, Why couldn’t you just do the same thing you do with stocks? Go in there, register everything, and call it a debt? It’s not that easy. The existing securities laws and framework don’t account for crypto assets. And there’s a number of reasons why the the notion of a clearing agency and transfer agent and all sorts of details. But The upshot of it is we tried to create what’s called a special purpose broker dealer for the purpose of transacting in crypto assets, and we actually came in good faith to meet with the SEC. I think we met with them 16 times and unfortunately that was not reciprocated and it was clear that there didn’t seem to be a path. And so here we are. You met with the 16 times and made no progress. 16 times. What is that about? It’s it’s hard to impute the reasoning behind that, but they told us they didn’t want to keep meeting about it and they didn’t see a path toward it. So definitely the SEC has the ability to change the rules to allow for brokers to accommodate crypto assets and they don’t seem intent on doing that and rather they’re proceeding with regulation by enforcement. And that’s disappointing and I didn’t want to have to get into this situation, but we have to defend ourselves and advocate for our customers. We do believe that crypto assets are becoming more and more important and it would not be acceptable to us to not have Americans have access to them.