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Speaker 1: We are joined by Robinhood co founder and CEO Vlad Tenev,

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Speaker 1: and fascinating Vlad. Want to talk to you actually about

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Speaker 1: the quarter in just a minute, but I would actually

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Speaker 1: love to talk to you about what happened after the quarter,

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Speaker 1: because you saw August hit and all of a sudden,

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Speaker 1: a manic Monday, and a lot of questions out there

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Speaker 1: about how the retail trader in particular has behaved, what

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Speaker 1: do your volumes look like for August and in Monday

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Speaker 1: in particular.

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Speaker 2: Thanks for having me, Shanali and Matt. August has been

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Speaker 2: very strong. We shared in the earnings call that July

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Speaker 2: volumes were about twenty percent higher than what we reported

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Speaker 2: across June. August has continued very much the same one

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Speaker 2: billion in net deposits in the first week, about half

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Speaker 2: a billion of that came this Monday, and the overnight

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Speaker 2: session for twenty four hour market on Sunday night was

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Speaker 2: about three x a typical day.

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Speaker 3: So twenty four.

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Speaker 2: Hour markets have just been ripping and customers tend to

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Speaker 2: be buying the dip. They're more buyers than sellers, which

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Speaker 2: we think is a really good sign for the help

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Speaker 2: of the retail market.

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Speaker 4: We saw on Monday morning, glad as the market's kind

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Speaker 4: of tanked and there was a lot of fear out there.

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Speaker 4: Some of the more traditional your more traditional competitors have

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Speaker 4: problems with logins, and obviously it makes customers very angry,

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Speaker 4: especially if they want to get in there and buy

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Speaker 4: the dip when it's at five percent and it could

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Speaker 4: lose opportunity at any minute that goes by. How did

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Speaker 4: your technology hold up during during those shutdowns other platforms.

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Speaker 2: Our technology is strong, you know, We've made a lot

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Speaker 2: of investments. We were fortunate not to have any issues

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Speaker 2: of a significant nature when all of the competitors were

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Speaker 2: down and a lot of customers were actually looking to Robinhood.

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Speaker 2: And we've had challenges in the past, no doubt about that,

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Speaker 2: but that's hardened the company, hardened the infrastructure, and now

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Speaker 2: when we see high volumes, we're ready for it. So

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Speaker 2: we were happy to see customers moving to Robinhood and

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Speaker 2: kind of pointing to us as one of the most

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Speaker 2: reliable platforms during this recent bout of volatility.

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Speaker 1: Well, the Blue Ocean ats in particular, that's facilitated a

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Speaker 1: lot of this twenty four hour trading activity was suspended

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Speaker 1: in recent days what exactly happened there and what do

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Speaker 1: you do to make sure it doesn't happen again.

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Speaker 2: Yeah, So, like you mentioned, Blue Ocean ATS, which facilitates

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Speaker 2: the overnight session that's eight pm to four am Eastern,

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Speaker 2: it really closes the loop to enable us to offer

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Speaker 2: twenty four hour trading for customers. And by the way,

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Speaker 2: just want to kind of make it clear, we're at

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Speaker 2: the absolute bleeding edge of this technology, so not many

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Speaker 2: people are offering this. You basically have to go to

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Speaker 2: Robinhood to get this type of experience, and we offered

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Speaker 2: over one thousand individual stocks for twenty four hour, So

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Speaker 2: we really think this is the future. And you know,

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Speaker 2: Blue Ocean had some technical issues. They were not able

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Speaker 2: to handle the scale and their infrastructure basically fell over,

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Speaker 2: and they've been they've been working to improve that, and

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Speaker 2: we have experience dealing with massive scale, so we're being

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Speaker 2: as helpful as possible and we look to make sure

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Speaker 2: they enable it for all of their customers and all

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Speaker 2: of our customers as soon as possible. I think it's

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Speaker 2: scheduled to be re enabled next Thursday, so we're getting close.

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Speaker 3: But in terms of the future, you know, I've heard.

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Speaker 4: Some older market participants express concerns about twenty four to

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Speaker 4: seven three sixty five trading just because of the liquidity

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Speaker 4: and the way markets were set up.

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Speaker 3: Do you think that changes.

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Speaker 4: Do we move to a model where clients can trade

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Speaker 4: across assets any time?

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Speaker 3: Yeah, we're pretty much already there.

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Speaker 2: I mean that was a concern until Robinhood really entered

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Speaker 2: the market and brought the liquidity, and it.

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Speaker 3: Hasn't been a concern.

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Speaker 2: We've been actually seeing the liquidity in those markets. The

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Speaker 2: volume has exceeded our expectations. We announced in the earnings

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Speaker 2: called that volume in the overnight session has approached thirty billion,

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Speaker 2: which you know, you're starting to get into significant volumes.

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Speaker 2: And as the US markets become more and more global,

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Speaker 2: and you're starting to see the APAC countries plug in

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Speaker 2: to access US capital markets, I think this is going

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Speaker 2: to become more and more important. So absolutely, it's the future,

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Speaker 2: and we're proud to be at the bleeding edge of that.

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Speaker 1: You know, Glad, it's interesting this morning your stock was

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Speaker 1: really on a tear. It's kind of moderated a little bit,

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Speaker 1: down a little bit as we speak. Investors are looking

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Speaker 1: to understand how to feel about your stock and One

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Speaker 1: of the big stories is diversification. You had a record

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Speaker 1: number of cash sleep balances. For example, Gold members get

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Speaker 1: a very competitive rate on those balances five percent. As

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Speaker 1: interest rates drop. What kind of rate are you planning

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Speaker 1: on giving investors for a product like that in order

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Speaker 1: to stay competitive and how far can it go At

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Speaker 1: the end of the day, it does cost you something

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Speaker 1: to be giving out five percent.

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Speaker 3: Yeah.

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Speaker 2: The general principle that we operate by is being a

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Speaker 2: technology company is a core competitive advantage and that allows

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Speaker 2: us to offer low costs and operate the business giving

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Speaker 2: more value to customers. I mean, if you look at

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Speaker 2: what Robinin's done, one of the big innovations is we're

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Speaker 2: the first digital brokerage. Our competitors have physical stores that

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Speaker 2: they staff with people, and in order for them to

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Speaker 2: expand they rely on that footprint.

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Speaker 3: And so if we think.

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Speaker 2: About where advantages are as a technology company making investments

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Speaker 2: largely fixed cost base, we can offer lower cost to customers,

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Speaker 2: pass more abings back to them and that results in

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Speaker 2: these awesome rates and we've seen that resonating with customers.

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Speaker 2: Net deposits, as you mentioned, we're a record at over

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Speaker 2: thirteen billion.

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Speaker 3: We're continuing to see that we.

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Speaker 2: Just I mean, frankly, one area where we candidly hadn't

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Speaker 2: been doing as well is margin, and we fix that.

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Speaker 2: Now we're offering the leading margin rates in the market.

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Speaker 2: You can see our margin book up north of fifty

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Speaker 2: percent year over year to a two year high of

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Speaker 2: five billion, and it's continued to grow so far in

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Speaker 2: Q three.

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Speaker 3: So I think we're just getting started.

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Speaker 2: I think that the overall principles, regardless of the market environment,

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Speaker 2: regardless of the product that we're offering, you should assume

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Speaker 2: that Robinhood's going to be the value leader and the

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Speaker 2: leader and user experience, and the combination of both is

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Speaker 2: going to be how we'll continue to grow market share

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Speaker 2: as we expand.

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Speaker 4: I have a viewer writing in with a question, Lad.

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Speaker 4: He's asking why payment for worderflow companies always have outages,

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Speaker 4: but IBKR pro, which doesn't participate in payment for orderflow,

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Speaker 4: does not experience these outages. I don't know about the

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Speaker 4: validity of the question, but a client's writing in with that,

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Speaker 4: so I'm going to throw it up to you.

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Speaker 2: Well, we didn't have a significant outage so far this week.

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Speaker 2: Of course, the Blue Ocean Ats had their issues, But

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Speaker 2: that's not Robinhood, even though we rely on them for

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Speaker 2: the overnight session and payment for orderflow is just a

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Speaker 2: component of the business model.

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Speaker 3: It has become the standard.

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Speaker 2: Of course, IBKR makes use of that for some of

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Speaker 2: their products as well. But yeah, the business model has

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Speaker 2: really nothing to do with the technology infrastructure.

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Speaker 1: There new technology. Let's talk about it, because of course,

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Speaker 1: one of the big acquisitions you made recently and you've

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Speaker 1: been throwing through acquisition is in an AI research platform.

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Speaker 1: How far Vlad can AI really go to transform Robinhood?

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Speaker 3: Looks like.

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Speaker 2: I think that Robinhood's been the beneficiary of several technology trends.

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Speaker 2: I mean, if you look at the rise of mobile

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Speaker 2: and cloud, that really set the foundation that enabled Robinhood

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Speaker 2: to be successful and take market share in this new

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Speaker 2: industry and really change the dynamics of the industry and

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Speaker 2: move everyone to zero commissions. And I think that AI

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Speaker 2: has the potential to be another platform shift. And like

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Speaker 2: I've said to the team, platform shifts are an opportunity

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Speaker 2: to grow market share, to continue to increase what you're

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Speaker 2: doing relative to incumbents, and we all have to become.

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Speaker 3: Experts in this.

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Speaker 2: It's sort of like the first accountants that used spreadsheets

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Speaker 2: and VisiCalc in the eighties. There's a huge advantage imparted

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Speaker 2: upon those that can adopt the technology early, become conversant

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Speaker 2: in it, and use it to accelerate their business. And

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Speaker 2: that's what everyone at Robinhood is thinking about. Whether it's

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Speaker 2: an AI or cryptocurrency, which are the two big technological

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Speaker 2: shifts that are affecting our space.

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Speaker 4: You know, I've come to expect AI from a number

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Speaker 4: of apps across the range now, not just chat GPT.

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Speaker 4: Are you embedding more AI and Robinhood? And also, what's

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Speaker 4: the deal with Harmonic it's your AI startup?

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Speaker 2: Yeah, yeah, very so Harmonic is separate from Robinhood. And

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Speaker 2: basically what Harmonics trying to do is create mathematical superintelligence.

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Speaker 2: If you look at the AI models that are out

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Speaker 2: there right now, two big problems.

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Speaker 3: One is hallucinations.

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Speaker 2: They don't generate correct outputs and in fact, they can

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Speaker 2: very very confidently say the wrong things. And the second

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Speaker 2: problem is they're trained with Internet data, and basically, if

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Speaker 2: you look at this generation of models, internet data is

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Speaker 2: basically out They've already trained on everything that's out there.

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Speaker 2: So Harmonic aims to make a mathematical superintelligence, which is

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Speaker 2: something that can solve math problems and quantitative problems at

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Speaker 2: a capability and excess of all humans.

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Speaker 3: And I think that this is going to be the

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Speaker 3: next frontier in AI research.

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Speaker 2: And what you'll see is no hallucinations and also a

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Speaker 2: lot of the data for training these models being generated

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Speaker 2: synthetically through conjecturing and other things.

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Speaker 1: Well, do you see a universe in which Robin Hood

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Speaker 1: worked with works with Harmonic? More closely, we should also

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Speaker 1: mention that this morning, Sequoia Capital, according to the information,

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Speaker 1: has discussed funding the startup Harmonic as well. What's the

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Speaker 1: future Can Robinhood be working with Harmonic?

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Speaker 2: I think it's a little bit too early for that.

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Speaker 2: I mean it's very much an applied research lab. They're

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Speaker 2: working on solving mathematical problems, and I think over time

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Speaker 2: the applications of that are.

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Speaker 3: Too many things.

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Speaker 2: I mean, if you think about what AI can do

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Speaker 2: and what superintelligence, which is kind of the next level

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Speaker 2: of AI, can do, the possibilities are profound. I mean,

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Speaker 2: we can change the way that software is written, make

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Speaker 2: sure that software that's written is verifiably correct. You see

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Speaker 2: all of these cybersecurity incidents that are generated by very intricate.

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Speaker 3: Small software bugs and glitches.

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Speaker 2: A lot of that happens in the cryptocurrency space, So

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Speaker 2: I do think there's applications across financial services and the

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Speaker 2: broad set of domains that involve technology.

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Speaker 1: But also wanting to ask you about this, wells notice

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Speaker 1: from the SEC that robin Hood has disclosed regarding crypto activities.

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Speaker 1: How is robin Hood planning to respond and what exactly

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Speaker 1: is it that they're concerned about most sure?

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Speaker 2: Yeah, I mean this landed right around the last earnings call. Basically,

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Speaker 2: we have formulated a response, We've spent a lot of

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Speaker 2: time making sure that the response is as high quality

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Speaker 2: as possible, and we've submitted that. So no updates to share,

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Speaker 2: but of course as we have them, we'll share them

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Speaker 2: with the broader community.

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Speaker 1: Glad, we appreciate your time that as robin Hood, co

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Speaker 1: founder and CEO of lad tena