WEBVTT - Robinhood CEO Vlad Tenev Talks 3Q Earnings, Prediction Markets

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Robin Hood did have a third quarter profited, beating it

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<v Speaker 2>income up two hundred and seventy one percent to five

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<v Speaker 2>hundred and fifty six million. Crypto revenue, however, did fall

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<v Speaker 2>short of estimates. That was even though it chumped three

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<v Speaker 2>hundred percent, So the margat was expecting quite a bit there,

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<v Speaker 2>But robin Hood shares a little bit softer after ours.

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<v Speaker 2>Let's get more. Now, bring in Bloomberg Tech co anchor

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<v Speaker 2>Ed Ludlow in San Francisco.

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<v Speaker 3>Ed, Yeah, thank you, team, and believe it or not,

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<v Speaker 3>you find me downtown at an in person earning score

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<v Speaker 3>of all things, where not just the institutional sell side participates,

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<v Speaker 3>but the institutional byside, the retail buyside, and robin Hood's customers.

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<v Speaker 3>They all got to post questions to Vlad Tenev, Robinhood CEO.

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<v Speaker 4>There's a lot of.

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<v Speaker 3>Emphasis on October strong third quarter, got that October October October.

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<v Speaker 3>So I think the best place to start is take

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<v Speaker 3>us through the lens of your customers what was happening,

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<v Speaker 3>and I'll tell you that the underlying trends, the behaviors

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<v Speaker 3>that you're saying.

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<v Speaker 1>I mean, first of all, thank you for being here

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<v Speaker 1>with us in person to celebrate retail investors being a

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<v Speaker 1>big part of the financial markets. October has been a

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<v Speaker 1>continued strong month, and then you notice Q three was

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<v Speaker 1>particularly strong, record net deposits, record trading revenues, revenues across

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<v Speaker 1>the board, prediction markets have also been on fire. So

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<v Speaker 1>what you're seeing is continued sustained engagement powered by the

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<v Speaker 1>Robinhood flywheel, more customers, deeper engagement, more Gold subscribers bringing

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<v Speaker 1>more assets, and the trading volumes have continued to increase

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<v Speaker 1>as well. So it's just been strong across the board.

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<v Speaker 1>I would say there's not one area that's particular outlier,

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<v Speaker 1>but continued strength across the board.

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<v Speaker 4>Markets are a tailwind and head right.

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<v Speaker 3>And so my question is what is and where is

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<v Speaker 3>the natural embedded hedge. If markets ton on you change direction,

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<v Speaker 3>what happens.

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<v Speaker 1>It's a good question, and we try not to get

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<v Speaker 1>so hung up on output metrics like trading volumes, because

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<v Speaker 1>trading volumes, as we've seen in the past, do tend

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<v Speaker 1>to fluctuate with market activity. That said, what we look

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<v Speaker 1>at is our market share, and we know that. You know,

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<v Speaker 1>even though trading volumes can go with markets and can

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<v Speaker 1>go up and down long term or huge beneficiaries of

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<v Speaker 1>both the growth in the US economy and also the

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<v Speaker 1>generational wealth transfer where hundreds north of one hundred trillion

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<v Speaker 1>of assets and wealth is going to be handed down

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<v Speaker 1>from older generations to younger generations. These younger generations are

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<v Speaker 1>folks that are digitally native, tech savvy. They don't particularly

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<v Speaker 1>really want to do their finances at brick and mortar

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<v Speaker 1>institutions in person, and they really values or experience and cost.

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<v Speaker 1>And so I think we track our market share, which

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<v Speaker 1>has been growing pretty much across the board, across every asset.

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<v Speaker 1>We're now up to a third of a trillion in

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<v Speaker 1>assets held at robin Hood, which has been extraordinary in

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<v Speaker 1>terms of growth as well. And then there's the secular

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<v Speaker 1>tailwinds of you know, the US economy still remains the

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<v Speaker 1>hotbed of innovation. It's where it's the epicenter of AI

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<v Speaker 1>electric vehicles innovation, and I think young people are going

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<v Speaker 1>to be the generation inheriting all of this wealth.

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<v Speaker 4>So Robin at the center.

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<v Speaker 3>Because of young people in generation that's driving what you're

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<v Speaker 3>seeing in prediction markets. I don't want to recount the

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<v Speaker 3>data too much they but just in a month, folk

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<v Speaker 3>tell you contracts and predictions have it clipped what you

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<v Speaker 3>did in.

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<v Speaker 4>The entire thad quota.

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<v Speaker 3>So maybe talking about some of the underlying trends and

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<v Speaker 3>activity would give us a better understanding of who's driving

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<v Speaker 3>it and what's happening.

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<v Speaker 4>Yeah, that's right, Ed.

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<v Speaker 1>I think the interesting thing about prediction markets is it

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<v Speaker 1>rounds out the offering in sort of like completes the

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<v Speaker 1>time at which Robinhood customers can continue to engage with

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<v Speaker 1>the platform. For a while, we were offering predominantly US equities,

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<v Speaker 1>which was very much a US East Coast working hours

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<v Speaker 1>type of event. Markets are open, you know, nine to

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<v Speaker 1>four East Coast hours, and then we've expanded that over

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<v Speaker 1>time with us introducing twenty four hour market, we've added

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<v Speaker 1>crypto and now prediction markets. A lot of the events,

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<v Speaker 1>particularly in sports, are happening nights and weekends, so Robinhood

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<v Speaker 1>is becoming increasingly a twenty four to seven platform where

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<v Speaker 1>you can trade and invest global markets at all times

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<v Speaker 1>of the day. And I think our customers do tend

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<v Speaker 1>to be digitally native and quite savvy. That tends to

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<v Speaker 1>lean younger, but we also have customers that are in

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<v Speaker 1>their seventies and eighties, and as long as you're comfortable

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<v Speaker 1>doing your finances on a mobile device and you want

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<v Speaker 1>to be at the frontier of technology, I think it's

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<v Speaker 1>something that transcends just young people. Of course, we always

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<v Speaker 1>want to be relevant to the next generation. But Robinhood,

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<v Speaker 1>I feel like you should be at a disadvantage if

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<v Speaker 1>you're using any other platform.

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<v Speaker 4>I think that's increasing.

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<v Speaker 3>The competition is sleeping on this a little bit right

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<v Speaker 3>that you think you can build the financial super app

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<v Speaker 3>for an entire family, multiple generations, to participate in different

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<v Speaker 3>products and categories.

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<v Speaker 4>Why have you got an advantage in going off to that.

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<v Speaker 1>Well, I think that nobody has our combination of product

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<v Speaker 1>depth and product velocity. So we have a lot of products.

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<v Speaker 1>We still have a huge amount left to build, but

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<v Speaker 1>if you think about what we offer now, I think

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<v Speaker 1>we have the best banking product out on the market

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<v Speaker 1>that's being rolled out. I think we have the best

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<v Speaker 1>credit card with three percent cash back on all categories

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<v Speaker 1>that just passed half a million card holders and eight

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<v Speaker 1>billion and annualized spend. We've always been strong across investing

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<v Speaker 1>in trading and now retirement as well. You know, twenty

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<v Speaker 1>five billion of assets that customers are entrusting with us

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<v Speaker 1>in retirement accounts at is a big number, and this

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<v Speaker 1>is like very serious, long term money. I think we

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<v Speaker 1>have the best digital advisor with Robinhood Strategies. Where every

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<v Speaker 1>other advisor charges you more the more money you have

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<v Speaker 1>on the platform. Robinhood Strategies inverts that model, and once

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<v Speaker 1>you get to one hundred thousand managed, everything above that

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<v Speaker 1>has no management feed. So the incentive is actually to

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<v Speaker 1>grow with us, and we want to make it a

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<v Speaker 1>no brainer.

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<v Speaker 4>To have all of your assets under Robinhood.

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<v Speaker 3>This is very much tuget at the individual. You have

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<v Speaker 3>a ten year plan where within ten years you want

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<v Speaker 3>more than half of revenue to come from the institutional

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<v Speaker 3>side and from international markets, not just the United States.

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<v Speaker 4>So what's the roadmap to get there?

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<v Speaker 1>Yeah, I mean I think that somewhat paradoxically. You might

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<v Speaker 1>not expect this, but that road mask it is paradoxical. Well,

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<v Speaker 1>the roadmap is really continuing to build for retail for

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<v Speaker 1>the time being, because when we talk to our institutional

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<v Speaker 1>potential customers actually a lot of them are in this

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<v Speaker 1>room and they've come up and they said, we would

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<v Speaker 1>love to use, you guys for an institutional offering. You know,

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<v Speaker 1>they might be using a legacy provider where they can't

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<v Speaker 1>trade twenty four to five, or they're not getting good

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<v Speaker 1>stock loan rates, or the margin rates are not good.

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<v Speaker 1>And pretty much nobody has a unified offering between crypto

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<v Speaker 1>and traditional assets, which I think is being increasingly valuable.

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<v Speaker 1>So the things that we're offering to retail, rock bottom

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<v Speaker 1>margin rate's, great user experience twenty four are access to

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<v Speaker 1>all markets are things that institutional wants as well. And

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<v Speaker 1>I think for the time being, we're in this great position.

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<v Speaker 1>We have so much to do on retail that we

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<v Speaker 1>want to stay very focused for that. But we have

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<v Speaker 1>been building out our institutional business with bitstamp, which is

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<v Speaker 1>now you know, was the tenth business line to get

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<v Speaker 1>to above one hundred million in annualized revenue, Prediction Markets

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<v Speaker 1>being the eleventh. So I think before long you'll see

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<v Speaker 1>that really continue to accelerate and become a bigger chunk

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<v Speaker 1>of what we're offering.

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<v Speaker 3>Lat Tenef is the Robin Hood CEO, and is he

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<v Speaker 3>just pointed to prediction markets also eight one hundred millionized

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<v Speaker 3>eight one hundred million annualized revenue and I think run

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<v Speaker 3>rate wise three hundred million.

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<v Speaker 4>A lot of focus on that right now,