Robinhood S-1 Teardown

My review of Robinhood’s S-1 & IPO including revenue, customers, product segments, shareholders, and the company’s key metrics.

Company Overview

  • Robinhood, the fintech brokerage app, released their S-1 and will be going public with the ticker HOOD.

  • Robinhood raised $5.6B in the private markets from DST, Ribbit Capital, NEA, and others. 

  • Founded in 2013, Robinhood is one of the fastest growing fintech companies with a ~$2B annualized revenue run-rate based on their Q1 2021 metrics. 

  • Robinhood is targeting a $40B valuation at IPO which is 40x their 2020 annual revenue run-rate. 

Key Metrics

  • Robinhood has 18M total funded accounts, of which 17.7 are monthly active users (MAU).

  • Robinhood is generating $959M in revenue in 2020, which is a 245% growth rate compared to 2019.

  • Robinhood has $81B of assets under custody including equities, options, cash, and cryptocurrencies.

Revenue

  • Robinhood did $959M in revenue for 2020, and $278M in revenue in 2019. 

  • For 2021 they are doing a forward looking revenue run rate of ~$2B based on $522 million revenue for the first three months of 2021.

  • The biggest drivers of Robinhood’s revenue include: 

    • 80% of their revenue is generated through payment for order flow and other transaction fees.

    • 12% of their revenue is generated through net interest margin on idle cash.

    • 8% of their revenue is generated through Robinhood Gold (premium accounts)

  • While not the fastest growing segment, options make up a disproportionate % of transaction revenue of 38% of all transaction revenue. 

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Customers

  • Today Robinhood has 18M funded accounts, in 2020 they had 12.5M accounts, and in 2019 they had 5M accounts.

  • This is a 143% increase between the full year of 2019 to 2020.

  • Their average revenue per user (ARPU) is $137

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Product Segments

  • Robinhood's core products include their trading platform, crypto trading, and cash management. With their retail brokerage and crypto trading making up the vast majority of all of the revenue for Robinhood. 

  • The fastest growing product segments of Robinhood (by transaction revenue) are:

  • Crypto, which is growing 1,967%

  • Equities, which is growing 322%

  • Options, which is growing 231%

  • Robinhood has $81B of assets under custody including:

    • Equities - $65B

    • Options - $2B

    • Crypto - $11.5B

    • Cash - $7.6B

    • Margin - $5B

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Robinhood Crypto

  • In Q1 2021, 9.5M Robinhood customers traded $88B of crypto on the platform. 

  • Robinhood is holding ~$12B of crypto assets which is a 23x fold increase from 2020.

  • 34% of all of their crypto revenue was attributable to Dogecoin. 

Shareholders

  • The biggest shareholders of Robinhood (own more than 5% of the stock) include: DST Global, Index Ventures, New Enterprise Associates, and Ribbit Capital