2021

Annual Report
 Our mission is
to democratize
finance for all.
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

FORM 10-K
(Mark One) ______________________
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission File Number: 001-40691

______________________

Robinhood Markets, Inc.

(Exact name of registrant as specified in its charter)
______________________
Delaware 46-4364776
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
85 Willow Rd, Menlo Park, CA 94025
(Address of principal executive offices, including zip code)
(844) 428-5411
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Class A Common Stock - $0.0001 par value per share HOOD The Nasdaq Stock Market

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ☒ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer ý Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☒

The registrant was not a public company as of June 30, 2021, the last business day of its most recently completed second fiscal quarter, and
therefore, cannot calculate the aggregate market value of its voting and non-voting common equity held by non-affiliates as of such date. The
registrant’s Class A common stock began trading on the Nasdaq Global Select Market on July 29, 2021. As of February 18, 2022, the numbers
of shares of the issuer’s Class A and Class B common stock outstanding were 740,034,469 and 127,955,246.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant’s
definitive proxy statement relating to the Annual Meeting of Stockholders to be held in 2022, which definitive proxy statement shall be filed with
the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.
[This page is intentionally blank.]
 TABLE OF CONTENTS
PART I PAGE
ITEM 1. BUSINESS ..................................................................................................................................... 5
ITEM 1A. RISK FACTORS ............................................................................................................................ 16
ITEM 2. PROPERTIES ................................................................................................................................ 61
ITEM 3. LEGAL PROCEEDINGS .............................................................................................................. 61
ITEM 4. MINE SAFETY DISCLOSURES ................................................................................................. 61

PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ................................... 62
ITEM 6. [REMOVED AND RESERVED] .................................................................................................. 64
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS .................................................................................................... 65
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .............. 87
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ............................................... 88
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES............................................................................................. 138
ITEM 9A. CONTROLS AND PROCEDURES ............................................................................................ 138
ITEM 9B. OTHER INFORMATION .............................................................................................................. 139
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS .............................................................................................................................. 139

PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ................. 140
ITEM 11. EXECUTIVE COMPENSATION................................................................................................. 140
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS ......................................................................... 140
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE ......................................................................................................................... 140
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES ............................................................. 140

PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES .................................................... 141
ITEM 16. FORM 10-K SUMMARY .............................................................................................................. 141
SIGNATURES ............................................................................................................................... 145

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 CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) of Robinhood Markets, Inc (together with its
subsidiaries, “we,” “Robinhood,” or the “Company”) contains forward-looking statements (as such phrase
is used in the federal securities laws), which involve substantial risks and uncertainties. Forward-looking
statements generally relate to future events or our future financial or operating performance. In some
cases, you can identify forward-looking statements because they contain words such as “believe,” “may,”
“will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “estimate,”
“predict,” “potential” or “continue” or the negative of these words or other similar terms or expressions that
concern our expectations, strategy, plans or intentions. This Annual Report includes, among others,
forward-looking statements regarding:

• our expectations for headcount growth and the projects on which the additional employees will be
staffed;

• our preparations for a full launch of crypto wallet transfers later in the first quarter of 2022;

• our expectations regarding legal and regulatory proceedings and investigations;

• our plan to attract new customers to accelerate our growth by continuing to introduce new
products and features and by continuing to invest in broad-scale brand marketing and the
Robinhood Referral Program (defined below), and our expectation that our efforts will drive higher
brand awareness and increase customer adoption of our platform;

• our intent to continue investing in our platform capabilities and regulatory and compliance
functions; our expectation that as our customer base and platform functionalities expand, areas of
investment priority will likely include product innovation, educational content, and technology and
infrastructure improvements; and our belief that these investments will contribute to our long-term
growth;

• our belief that as our customers grow their wealth, they will continue to expand their relationship
with our platform, providing an increased opportunity to meet their growing financial needs;

• our belief that there is a significant opportunity for Robinhood to grow internationally; our intent to
pursue a disciplined approach to international expansion; our plan to consider factors such as
population size and demographics, legal and regulatory environments, and general investing
attitudes in potential new markets when pursuing such expansion; our intent to expand our
international hiring to gain access to a larger talent pool, as well as to support our international
service offerings; and our aggressive goals to open our crypto platform up to new customers
internationally in 2022;

• our expectations about continued growth through acquisitions; and

• our expectations about meeting our current liquidity needs for the next 12 months and our long-
term liquidity needs.

Our forward-looking statements are subject to a number of known and unknown risks, uncertainties,
assumptions, and other factors that may cause our actual future results, performance, or achievements to
differ materially from any future results expressed or implied in this Annual Report. Reported results
should not be considered an indication of future performance. Factors that contribute to the uncertain
nature of our forward-looking statements include, among others:

• our limited operating history;

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 • the difficulty of managing rapid growth and the risk of declining or negative growth;

• the fluctuations in our financial results and key metrics from quarter to quarter;

• our reliance on transaction-based revenue, including payment for order flow (“PFOF”), and the
risk of new regulation or bans on PFOF and similar practices;

• the difficulty of raising additional capital (to satisfy any liquidity needs and support business
growth and objectives) on reasonable terms or at all;

• the need to maintain capital levels required by regulators and self-regulatory organizations;

• the risk that we might mishandle the cash, securities, and cryptocurrencies we hold on behalf of
customers, and our exposure to liability for operational errors in clearing functions;

• the impact of negative publicity on our brand and reputation;

• the risk that changes in business, economic, or political conditions, or systemic market events,
might harm our business;

• our dependence on key employees and a skilled workforce;

• the difficulty of complying with an extensive and complex regulatory environment and the need to
adjust our business model in response to new or modified laws and regulations;

• the possibility of adverse developments in pending litigation and regulatory investigations;

• the effects of competition;

• our need to innovate and invest in new products and services in order to attract and retain
customers and deepen their engagement with us in order to maintain growth;

• our reliance on third parties to perform some key functions and the risk that operational or
technological failures could impair the availability or stability of our platform;

• the risk of cybersecurity incidents, theft, data breaches, and other online attacks;

• the difficulty of processing customer data in compliance with privacy laws;

• our need as a regulated financial services company to develop and maintain effective compliance
and risk management infrastructures;

• the volatility of cryptocurrency prices and trading volumes; and

• the risk that substantial future sales of Class A common shares in the public market could cause
the price of our stock to fall.

Because some of these risks and uncertainties cannot be predicted or quantified and some are
beyond our control, you should not rely on our forward-looking statements as predictions of future events.
More information about potential risks and uncertainties that could affect our business and financial
results is included in the section of this Annual Report titled “Risk Factors” and our other filings with the
U.S. Securities and Exchange Commission (“SEC”), which are available on the SEC’s web site at
www.sec.gov. Moreover, we operate in a very competitive and rapidly changing environment; new risks
and uncertainties may emerge from time to time and it is not possible for us to predict all risks nor identify
all uncertainties. The events and circumstances reflected in our forward-looking statements might not be
achieved and actual results could differ materially from those projected in the forward-looking statements.
Except as otherwise noted, all forward-looking statements are made as of the date we file this Annual

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Report, and are based on information and estimates available to us at this time. Although we believe that
the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future
results, performance, or achievements. Except as required by law, Robinhood assumes no obligation to
update any of the statements in this Annual Report whether as a result of any new information, future
events, changed circumstances, or otherwise. You should read this Annual Report with the understanding
that our actual future results, performance, events, and circumstances might be materially different from
what we expect.

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 PART I
ITEM 1. BUSINESS
Company Overview
Robinhood was founded in 2013 on the belief that everyone should be welcome to participate in our
financial system. We are creating a modern financial services platform for everyone, regardless of their
wealth, income, or background.

Our mission is to democratize finance for all. We use mobile technology to provide access to the
financial system in a way that is simple and convenient for our customers. We believe investing should be
familiar and welcoming, with a simple design and an intuitive interface, so that customers are empowered
to achieve their goals. We started with a revolutionary, bold brand and design, and the Robinhood app
now makes investing approachable for millions. We pioneered commission-free stock trading with no
account minimums, which the rest of the industry emulated, and we have continued to build relationships
with our customers by introducing new products that further expand access to the financial system.
Through these efforts, we believe we have made investing culturally relevant and understandable, and
that our platform is enabling our customers to become long-term investors and take greater control of
their finances.

At Robinhood, our values are in service of our customers. The following values describe the company
that we aspire to become.

• Safety First. Robinhood is a safety-first company. The reliability of our platform takes precedence
over all else, so that we can be there for our customers when they need us the most. We
relentlessly protect our customers’ security and privacy, and we only share with our
counterparties what they need to fulfill our customers’ financial needs, nothing more. We build
safeguards and provide education so that our customers are in the best position to succeed. We
have high-quality timely customer support, and when things aren’t right, we fix them. We work
closely with regulators and lawmakers to protect our customers and the broader financial system.
We speak simply, plainly, and truthfully, even if it’s not what others want to hear. We hold
ourselves and our colleagues to the highest ethical standards.

• Participation Is Power. We aim to give everyone access to the financial system, regardless of
their background or bank account balance. We reflect the world around us, and we elevate and
embrace all voices so everyone feels at home at Robinhood.

• Radical Customer Focus. We exist to make our customers happy. From the early days of
Robinhood, we have prioritized getting direct customer feedback on what we were building.
Talking to our customers forms the kernel of the product development process we have today.
We listen with empathy, ask questions, and critically evaluate our work by how valuable our
customers find it. We never stop asking how we can make our product better, and we never settle
for ‘good enough’. We listen to our colleagues, and we start from a place of believing they are
capable and well-intentioned. We delight our customers and take pride in our work.

• First-Principles Thinking. We make bold bets and challenge the status quo. Our foundation is in
art, science, and pure mathematics, and we have a deep appreciation for the scientific process.
We develop hypotheses and design experiments to test them. We reduce complex problems to
their constituent bits. We debate vigorously and change our minds when confronted with the right
evidence. We bravely do what’s right, even when it hasn’t been done before. We treat our
company like a product and aim to get better, every single day.

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 We understand that millions of our customers are using Robinhood to enter the financial markets for
the first time, and we take our responsibility to them seriously. We pursue strong, close working
relationships with our regulators, and we believe the goals of our regulators and customers are aligned.
We are passionate about operating Robinhood in a way that aligns with customer interests, applicable
regulations, and with our own mission to democratize finance for all. We plan to create an ecosystem of
financial products and services that will enable people across the world to become investors. We believe
the products on our roadmap will go a long way toward making that a reality.

Our Products
We believe our products can transform the relationship people have with the financial system. We
began by offering our customers the ability to buy and sell equities on a mobile-first platform and have
since continued to expand our offerings to add products and features for our customers. Each capability
we have added has been the result of a continuous focus on our customers’ needs and feedback, which
has guided our product development decisions throughout our history.

The core tenet of the Robinhood offering—expanding access to our financial system through products
that empower people to learn, participate, and grow—underpins each of our offerings. We remain focused
on building the best products and ultimately aim to serve all of our customers’ financial needs.

Investing Solutions

Our platform allows our customers to invest commission-free in U.S.-listed stocks and exchange
traded funds (“ETFs”), as well as related options and American Depository Receipts — all from their
smartphones. We believe we have designed an elegant, intuitive investing interface that provides our
customers with trading functionality and market information such as historical prices, valuation multiples,
recent news, analyst ratings, and more. Stock and ETF trading is immediately available following our
simple account onboarding process and funding.

We review eligibility for our customers who wish to trade options, including disclosure of investment
experience and knowledge, investment objectives and financial information. Subject to approval from
Robinhood, customers can access basic options strategies (Level 2), which permits buying calls and puts
and selling covered calls and puts, or more advanced options strategies (Level 3), which permits fixed-
risk spreads (such as credit spreads and iron condors) and other advanced trading strategies, depending
on their individually disclosed preparedness. We conduct regular reviews of our customers’ eligibility and
take action to revoke access to trading options as appropriate, to ensure our customers are accessing the
level of options strategies that are appropriate for them based on information such as their trading
experience, investment objectives and financial situation.

As we have built out our offerings, we have also added features to help our customers diversify their
investments and give them greater access to financial products regardless of their portfolio size:

• Fractional shares. Fractional share trading allows customers to invest in fractions of a share of
stock, rather than requiring them to buy and sell whole shares. This service enables customers to
build a diversified portfolio regardless of their budget and removes a barrier to investing in higher-
priced stocks, thereby providing access to a much greater selection of equities with as little as $1.

• Recurring investments. Our recurring investment feature enables our customers to automatically
buy shares of equities and certain ETFs on a set schedule, allowing them to build positions over
time and establish regular investing habits, even with small contributions. Our customers can also
elect to automatically reinvest dividend income back into the underlying respective shares.

• IPO Access. Our IPO Access feature enables our customers to buy shares in participating initial
public offerings (“IPOs”) at the IPO price, before trading begins on public exchanges. With IPO
Access, our customers can participate with no account minimums. In November 2021, we also

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 launched our Directed Share Program (“DSP”) through IPO Access service that gives an issuing
company the chance to set aside a certain amount of shares, at the IPO price, for a specific
group of people. This group usually includes employees, valued customers, vendors, or others
who have a relationship with the issuer.

• ACATS-in. Robinhood supports the Automated Customer Account Transfer Service (“ACATS”),
an automated industry system for account asset transfers, including inbound and outbound
transfers. The ACATS-in feature allows our customers to transfer assets from other brokerages
into Robinhood instead of selling the assets in the external account and then re-purchasing them
in the Robinhood account. This feature was offered to a small set of customers in late December
2021 and was made available to all customers in the first quarter 2022.

Robinhood Crypto

We offer commission-free cryptocurrency trading using the same intuitive, mobile interface as our
broader Investing Solutions platform. We have expanded our coverage to include every U.S. state and
the District of Columbia, except for Hawaii and Nevada, and support trading in seven different
cryptocurrencies: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic and Litecoin.
In addition, we support real-time market data for nine cryptocurrencies, which is available to all
customers.

We offer crypto recurring investments, allowing customers to automatically buy crypto, commission-
free, on a schedule of their choice. This feature allows customers to build positions in their favorite
cryptocurrencies over time. We also offer Crypto Gifts, which enables customers to gift crypto to family,
friends, and others.

We continue to invest in our cryptocurrency trading offering, evaluating new features and product
capabilities as the cryptocurrency landscape develops. During the third quarter of 2021, we opened a
waitlist to enroll for crypto wallet transfers (“Crypto Wallets”). Crypto Wallets have been one of the most
heavily requested features by Robinhood customers. This feature will enable customers to transfer
supported cryptocurrencies into and out of their Robinhood accounts. This means customers can
consolidate their coins into one account so it’s easier to track their portfolio and trade those coins
commission-free. Robinhood’s Crypto Wallets feature is designed to help make crypto more accessible
for the average investor, with an intuitive user experience, low-cost, and competitive pricing. We have
successfully completed alpha program launch and public user onboarding of Crypto Wallets and have
launched a public beta, which will continue to provide insights as we prepare for a full launch of wallets
later in the first quarter of 2022.

Robinhood Gold

Robinhood Gold is a monthly subscription service that grants subscribers access to a number of
premium features. After the initial 30-day free trial, subscribers pay a flat monthly rate. Our premium
features offered to Gold subscribers include:

• Enhanced instant access to deposits. Subscribers can instantly access $5,000 to $50,000 upon
making a deposit, depending on their portfolio value.

• Professional research. Subscribers have unlimited access to in-depth stock research reports on
approximately 1,000 stocks through Morningstar.

• Nasdaq Level II market data. Subscribers have the ability to see greater depth of orders for any
given stock or option. The ability to see multiple buy and sell requests helps subscribers
understand the availability or desire for a stock at a certain price.

• Access to investing on margin. Subject to approval upon meeting eligibility criteria set by
Robinhood, subscribers can invest on margin at highly competitive interest rates. This allows

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 eligible subscribers to borrow a limited amount of funds, depending on account size, to use as
additional investing capital. No interest is charged on the first $1,000 in margin borrowed by each
user. If the subscriber chooses to borrow more funds, the subscriber will be charged interest,
which interest is calculated daily and charged to the subscriber’s account at the end of each
billing cycle. Robinhood decides whether to extend margin to each customer who applies for
access based on information regarding customer activity, portfolio equity or net worth criteria,
investment objectives, and investing experience reported by the customer.

Cash Management

Our Cash Management product is available on our platform for customers with a Robinhood
brokerage account. It provides additional value to our brokerage customers by allowing them to earn
interest on idle cash swept to our partner banks and to spend cash through an optional Robinhood-
branded Mastercard debit card. There are no maintenance fees or minimum balances, no overdraft fees,
no transfer fees, no foreign transaction fees, and no monthly fees. Our customers are able to fund their
accounts through either a bank transfer or direct deposit and have free access to their funds from over
75,000 ATMs. Our customers who opt in to Cash Management elect to participate in a deposit sweep
program and will have their uninvested cash automatically swept, or moved, into deposits at a network of
program banks. Through Cash Management, cash deposited at these banks is eligible for Federal
Deposit Insurance Corporation (“FDIC”) insurance.

Learning & Education Solutions

Investing, while an opportunity to partake in the broader financial ecosystem, can be complex and
confusing for those who are new to it. While we do not provide investment advice to our customers, we
are committed to helping our customers build sustainable, long-term financial habits and to offering a
variety of contextual in-app educational tools and resources to help them achieve their goals and
maximize their financial well-being, including:

• Robinhood Snacks. “Snacks” is a curated digest of business news stories delivered both daily
and weekly. Snacks can be accessed in written, audio or video formats, including via a podcast
and newsletter, and allows subscribers to start their days with the top business news of the day in
an accessible, digestible format. During the third quarter of 2021, we also launched Snacks on
Snapchat, making Snacks one of the first financially-oriented educational channels to ever be
made available on Snapchat’s Discover tab.

• Robinhood Learn. We aim to make finance not only more accessible, but more understandable
as well. Robinhood Learn is a collection of articles, including guides, tutorials and an extensive
financial dictionary available to anyone. It is designed to provide everyone with access to a
breadth of financial education, and is frequently updated to provide relevant information for our
customers to learn and grow.

• Newsfeeds. Within our newsfeeds, we provide access to free premium news from sites such as
Barron’s, Reuters and The Wall Street Journal to keep our customers informed of the latest news
and events.

• Robinhood lists and alerts. Our customers are able to create custom watchlists and alerts to
monitor equities, options, ETFs, or cryptocurrencies they are interested in following.

• First trade recommendations. We offer first trade recommendations to all new customers who
have yet to place a trade, helping users get started with a diversified ETF portfolio based on their
risk profile and investment objectives.

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Our Technology
The Robinhood mobile app is the core front-end pathway through which our customers engage with
us. Our self-clearing platform, order routing system, data platform, and other back-end infrastructure
deliver the capabilities that allow our customers to focus on investing, saving and spending, while also
enabling us to rapidly develop products that our customers love to use.

Some of our most critical technologies include:

• Core infrastructure and data platform. Our core infrastructure and data platform are all built on
Amazon Web Services, and our platform enables application developers to define their
microservices in a simple, standardized manner while also providing built-in scalability and
resiliency.

• Self-clearing system. Our self-clearing services allow us to clear and settle trades across stocks,
ETFs, and options without relying on a third-party clearing firm, an approach that provides
increased internal visibility over clearing and settlement.

• Order routing system. We built a proprietary order routing system that uses statistical models to
evaluate past orders and execution quality data, and automatically routes customer orders to the
market makers that have historically given customers the best prices. This competition-based
system creates an incentive for market makers to provide better prices for our customers, in order
to receive more orders in the future. We are committed to seeking a quality execution on every
order, and our routing protocols are designed with this in mind.

• Machine learning platform. Our machine learning models are highly advanced and contribute to
multiple capabilities across our business. For example, we use machine learning as part of our
fraud detection systems and customer support workflows, and even to improve the customer
experience in our newsfeed by expanding the number of sources we can pull from, parsing and
categorizing these articles, and delivering highly relevant and varied news to our customers for
companies, stocks, or cryptocurrencies.

• Experiments infrastructure. To enable our rapid product cycle, we’ve built a proprietary
experiments infrastructure that enables us to test product changes through the build process and
validate research hypotheses. The iterative, customer-centric product development approach that
is so core to our success is enabled by this robust internal technology.

Our Customers
We are empowering a new generation of financial consumers. Robinhood was built to make the
financial system more friendly, approachable, and understandable to newcomers and experts alike. We
have reached customers across the United States from a wide variety of social and economic
backgrounds and many of our customers funding accounts on our platform told us that Robinhood was
their first brokerage account. We take pride in the fact that we are expanding the market by welcoming
new investors into the financial system and helping the next generation of investors build sound long-term
investing, saving, and spending habits.

Customer feedback is at the heart of product development at Robinhood. As such, we regularly

communicate with our customers—not just to provide support, but also to learn more about their
experiences and insights, and to respond to their feedback about our products. This keeps us connected
with customers and enables us to understand their expectations and the problems and opportunities they
face financially. During the fourth quarter of 2021, we launched 24/7 live phone support for all logged-in
users, giving customers the ability to get phone support at any time and on any topic. We are also the first
major crypto platform to provide 24/7 phone support.

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Our Growth Strategies
We aim to serve our customers with existing product offerings, grow with our customers over time as
they build their wealth, and create new and innovative products that are relevant to new and existing
customers.

Continue Adding New Customers to Our Platform

We are simplifying how people interact with financial products, allowing new customers from all walks
of life and generations to participate in the financial system.

We have achieved our growth with relatively little investment in traditional sales and marketing efforts,
although we have done substantial in-market testing to determine how to most efficiently utilize paid
channels. We plan to increase our brand marketing in the future and anticipate that our marketing efforts
will drive higher brand awareness that can further accelerate our growth.

Our brand has faced challenges in recent years, including as a result of, among other things, the
March 2020 Outages, the April-May 2021 Disruptions, and the Early 2021 Trading Restrictions (each
defined below), as well as criticism regarding the complexity of our options trading offerings and related
concerns about limited customer support and controversial customer communications and displays. We
have taken these concerns seriously and have prioritized developing responsive solutions, such as by
reinforcing our platform infrastructure, raising additional capital to cushion ourselves against the potential
for future increased collateral requirements and related market stress, expanding our investor education
resources, adding additional eligibility criteria for our options authorization, more than doubling the
number of customer support professionals we employ, introducing phone-based voice customer support,
and redesigning some of our customer display features. We are determined to keep evolving to better
serve our customer base.

Growing with Our Customers

Many of our customers are just beginning their financial journeys. As our customers grow their
wealth, we believe they will continue to expand their relationship with our platform, providing an increased
opportunity to meet their growing financial needs. We believe that these needs may come in a number of
forms, from helping new investors grow into long-term investors to providing other financial services such
as saving, spending, or facilitating payments. The younger generation is poised to see its wealth expand
in the coming years and participation in the markets will provide a critical opportunity as younger
customers grow their assets and build financial security for themselves and their families. We are
committed to deepening strong relationships with our loyal customer base and earning our customers’
trust when they choose our platform on their financial journeys.

Expanding Internationally

We believe there is a significant opportunity for Robinhood to grow internationally. Currently, we offer
services to only U.S. citizens and permanent residents with a legal address within the continental United
States or Puerto Rico. Although our operations are concentrated in the United States, we do have U.K.
and Dutch subsidiaries (which have U.K.- and Netherlands-based employees and contractors but no
external service offerings and no customers). Over time, we intend to pursue a disciplined approach to
international expansion and we will consider factors such as population size and demographics, legal and
regulatory environments, and general investing attitudes in potential new markets prior to pursuing such
expansion. We intend to expand our international hiring to gain access to a larger talent pool, as well as
to support our international service offerings. While our near-term focus remains on our current U.S.
customers, we have already made technical investments in our clearing platform that we believe will allow
us to expand to serve customers in other geographies more easily in the future. We have also set
aggressive goals to open our crypto platform up to new customers internationally in 2022. Our plans to
pursue international expansion are uncertain and dependent on a variety of external factors, including,
among other things, our obtaining required regulatory approvals, authorizations, licenses and consents,

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our obtaining and protecting intellectual property rights abroad, and the identification of and successful
entry into new business partnerships with third-party service providers that would be necessary to provide
our products and services in the relevant local market.
Growth Through Acquisition

We have made a number of acquisitions to add specialized employees and complementary

companies, products, or technologies that add synergies to our business. For instance, in August 2021,
we acquired A Say Inc. and its subsidiaries ("Say Technologies"). Say Technologies built an innovative
communication platform that makes it easier for investors to exercise their ownership rights. See Note 3
to our consolidated financial statements in this Annual Report for further information. We expect to
continue to consider and evaluate acquisitions as part of our overall growth strategy.

Competition
We believe that we are changing the consumption patterns for financial products and services and
growing the market, but will continue to face competition from other firms including large legacy financial
institutions, large technology companies, and smaller, new financial technology entrants.

We believe that the key competitive factors in our market include:

• product features, quality and functionality;

• operating efficiency;

• engineering talent;

• brand recognition;

• security and trust;

• cloud-based architecture;

• regulatory licenses; and

• vertical integration.

We seek to differentiate ourselves from competitors primarily through our vertically integrated, mobile-
first platform and focus on accessibility, customer experience, and trust. We believe that our ability to
innovate quickly further differentiates our platform from our competition. We believe we compete favorably
across all key competitive factors and that we have developed a business model that is difficult to
replicate.

Our Competitive Advantages

We believe we have a number of competitive advantages that position us well to serve an increasing
portion of the population and the broader financial services ecosystem.

Creative Product Design

We believe archaic, cumbersome digital platforms reinforce legacy barriers to participation in the
financial system. We put design at the center of our product with the goal of building long-term
relationships with customers. We involve our talented product designers early and often throughout our
product development process to create intuitive and elegant experiences that efficiently address our
customers’ needs. Our customer-centric approach has made our platform easy to use, informative, and
familiar in look and feel for a generation of mobile-first customers. For example, we seamlessly integrate
information into our platform through Robinhood Learn and our newsfeed, which offers free news from

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trusted sources including Barron’s, Reuters, and The Wall Street Journal. In addition, we continue to work
to deliver an intuitive product experience including developing and implementing designs to celebrate
investing milestones of our customers in a responsible way. Our products are designed mobile-first,
allowing us to offer attractive investing, spending, and saving experiences as more people shift their daily
financial services activities to the palm of their hands.

Category-Defining Brand

We believe Robinhood today is a symbol of retail investing and finance in America. By taking a fresh,
people-centric approach and creating a delightful, engaging customer experience, we believe we have
built a trusted, category-defining brand that has made investing socially relevant for the next generation.

The relationship we have built with our customers has led many to want to talk about Robinhood and
share their experience with their friends and family. From Robinhood’s inception, a vast majority of our
growth has come directly from customers joining our platform organically or through the Robinhood
Referral Program. The excitement around Robinhood demonstrates how our innovative approach to
financial products has built deep, loyal customer relationships and positioned us well to continue
attracting new people to our platform, and sharing new product experiences with our customers.

Financial Services at Internet Scale

Our people-centric approach has driven customer enthusiasm and engagement, resulting in rapid
adoption of our products. We designed our platform to provide our customers with relevant, accessible
information when they need it most. Being an investor involves following a regular cycle of events—news
releases, earnings announcements, transaction executions—that creates a regular cadence of content
and information. We use our platform, from push notifications to widgets, to provide seamless customized
updates to our customers. This engenders trust, creates enduring long-term relationships, and has
resonated with our customers.

Vertically Integrated Platform

We design our own products and services and deliver them through a single, app-based platform
supported by proprietary technology that has been cloud-based from the start. We are a licensed
introducing broker-dealer, a licensed clearing broker-dealer, and a licensed money-transmitter. Our
digitally-native technology stack also gives us control over our product development from end-to-end,
enabling faster development times, better customer experiences, stronger unit economics, greater
flexibility, and a robust and dynamic risk management framework. Our vertically integrated platform has
enabled us to rapidly introduce new products and services such as cryptocurrency trading, dividend
reinvestment, fractional shares, recurring investments and IPO Access, while also supporting our ability to
quickly scale.

Seasonality
Our business can be subject to seasonal fluctuations due to such factors as retail interest in investing,
overall number of market participants and trading volumes, varying numbers of trading days from quarter-
to-quarter, and declines in trading activity around holidays. Seasonal trends may be superseded by
market or macroeconomic events, which can have a significant impact on equity and cryptocurrency
valuations and trading activity.

Human Capital
Our Employees and Culture

Robinhood employees are key to achieving our company mission. As of December 31, 2021, we had
approximately 3,800 full-time employees. We seek to champion a culture that is open and honest. We
hold weekly “all-hands” meetings with all employees, during which any employee has the opportunity to

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ask a question of our senior leadership. We use a company-wide surveying tool to facilitate regular check-
ins with employees and to provide critical input for company decisions on how to best improve
productivity, happiness and retention. Inclusivity is core to our culture and we seek to create an
environment where all viewpoints, including opposing ones, are welcomed. We provide tools,
opportunities and support for career and personal growth, as well as ongoing company initiatives to
maintain high employee engagement.

Our mission to democratize finance for all starts with our people. In the last two years, we have seen
how flexibility and trust allows teams to do their best work, attracts top talent, and creates a workplace
that’s more inclusive and equitable. With our “Remote First” approach, we provide employees with the
flexibility they need to work where they are most comfortable and productive whenever we can,
depending on their roles and regulatory requirements. All of our employees have access to our offices
whenever they would like to use them. As we move forward, we are committed to continue learning,
listening and creating a flexible, accessible and great workplace for everyone.

Talent Acquisition and Development

A critical foundation to our mission starts with building an inclusive environment that attracts and
retains diverse, exceptional talent. We prioritize hiring great leaders with deep functional expertise, then
we commit to their professional and technical development so we can grow together. We continue to
invest in recruiting and fostering diverse talent, supporting our employees and speaking out for our
community.

We work to attract the best talent from a range of sources in order to meet the current and future
demands of our business. We have relationships with universities, professional associations, and industry
groups to proactively reach underrepresented talent. We use trusted third-party partners to help us
mitigate potential bias in our hiring process—from the language used in our job descriptions to how
technical screening interviews are conducted.

The professional growth of our people is essential to the growth of our business and we aim to
empower all Robinhood employees to reach their full potential. We support job-specific capabilities and
training to help develop behavioral and leadership capabilities for all employees. All full-time employees
are offered an ongoing education stipend to support skill-building both in current and for future roles, as
well as access to the LinkedIn Learning platform, which provides thousands of online courses taught by
industry experts covering a wide range of technical, business, software, and creative topics. We also offer
a variety of formal and informal development and skills-building opportunities to our managers. For
example, this year we launched a podcast series of interviews with our senior leaders on how to have
career conversations with employees and effectively conduct performance reviews.

Inclusion, Equity, and Belonging (“IEB”)

Prioritizing an inclusive and equitable culture that attracts, motivates, and retains diverse talent within
our workplace is critical to delivering on our mission. As our customer base is incredibly diverse, we are
building a company that will meet their needs. At Robinhood, inclusivity is core to our culture, and we
seek to create an environment where all viewpoints are welcome. We strive to do this in four distinct
ways: ensuring our workplace culture is accessible and respectful, broadening the diversity of our
workforce at all levels, effectively serving non-traditional investors, and increasing financial literacy among
underserved communities. We value each of our employees and their unique contributions as we build
our company together.

We have built a comprehensive IEB strategy with a dedicated team to support it. In addition to
offering more ways for our employees to self-identify different aspects of their identity, we also rolled out
inclusive hiring training to all hiring managers and interviewers, implemented a diverse slate approach to
hiring, and increased our community outreach efforts around financial inclusion for underrepresented
communities.

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 As of December 31, 2021, 61% of our employees are members of at least one of our Robinhood
Employee Resource Groups (“ERG”) which are voluntary, identity or experience-based groups led by
members and allies who join together to support the creation of an inclusive workplace. We utilize ERGs
to create a welcoming environment for new employees by designating Robinhood Ambassadors, leaders
within our ERGs who are available to candidates and new employees who want to learn more about
working at Robinhood. Robinhood ERGs include: Asianhood, Black Excellence (BEX), Brain Body Heart,
Divergent, Latinhood, Parenthood, Rainbowhood, Sisterhood, Veterans at Robinhood, and Women in
Tech.

In addition to providing a supportive, safe space for many employees, a number of Robinhood ERGs
support specific business objectives that include recruiting, employee engagement, marketing, and more.
For example, our ERGs participate in various hiring events, including hosting panels on what it’s like to
work at Robinhood and how to think about career development.

Employee Incentives and Benefits

We offer a wide range of benefits designed to attract the best talent and to ensure Robinhood
employees are taken care of both at and outside of work. We offer competitive compensation for
employees and benefits for themselves and their families. Where applicable, eligibility also extends to
domestic partners and their children; our approach is based on the aim of supporting the diverse needs of
our employees. Some notable benefits that our employees value include lifetime fertility benefits, backup
child care credit, generous paid family leave, retirement savings with employer match, financial planning
services, and employer-paid health and wellness benefits.

The health and wellness of our employees is paramount to our success. We offer wellness benefits
that include reimbursement for qualified expenses, on-demand emotional health support, and time off to
refresh, recharge, and relax. We offer competitive base pay, and all employees are eligible for variable
incentive pay (bonus and/or equity) linked to company and individual performance.

COVID-19 continues to be a challenge. In addition to leveraging our third-party survey tool, we

conducted company-wide focus groups in 2021 to reach out, listen, and ensure employees got the
support they needed through the pandemic. We asked questions that related directly to employees'
perception of the company’s handling of the situation, and responded accordingly. To support our
employees’ work from home needs during the COVID-19 pandemic, we offer all employees a one-time
$1,000 workspace stipend, generous leave arrangements, and a monthly internet stipend.

Intellectual Property
Our success and ability to compete are significantly dependent on our core technology and
intellectual property. We rely on trademarks, patents, copyrights, trade secrets, know-how and expertise,
registered domain names, license agreements, intellectual property assignment agreements,
confidentiality procedures and non-disclosure agreements to establish and protect our intellectual
property and proprietary rights. We seek to protect our intellectual property and proprietary rights,
including our proprietary technology, software, know-how and brand, by relying on a combination of
federal, state, and common law rights in the United States and other countries, as well as on contractual
measures. However, these laws, agreements, and procedures provide only limited protection. It is our
practice to enter into confidentiality, non-disclosure, and invention assignment agreements with our
employees, consultants, contractors and other third parties, and into confidentiality and non-disclosure
agreements with other third parties, in order to limit access to, and disclosure and use of, our confidential
information, trade secrets, know-how, and proprietary technology. Though we rely in part upon these legal
and contractual protections, we believe that factors such as the skills and ingenuity of our employees and
the functionality and frequent enhancements to our solutions are larger contributors to our success in the
marketplace. Any of our intellectual property rights might be successfully challenged, opposed, diluted,
misappropriated, or circumvented by others or invalidated, narrowed in scope or held unenforceable
through administrative process or litigation in the United States or in non-U.S. jurisdictions. Furthermore,

14
legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights
are uncertain and any changes in, or unexpected interpretations of, intellectual property laws may
compromise our ability to enforce our trade secrets and intellectual property rights. Our efforts to enforce
our intellectual property rights might also be met with defenses, counterclaims, and counter-suits
attacking the validity and enforceability of our intellectual property rights.

We have an ongoing trademark and service mark registration program pursuant to which we register
our brand names and solution names, taglines and logos in the United States and certain other
jurisdictions to the extent we determine appropriate and cost-effective. We are the registered holder of a
variety of U.S. and international trademarks and domain names that include the primary brand
“Robinhood,” including variations thereof, as well as brands for other Robinhood products and services,
such as our Snacks podcast and newsletter. We also have common law rights in certain unregistered
trademarks that were established over years of use. We are the authorized user of a variety of social
media handles, pages, and profiles that reflect our primary brand. In addition, we have a suite of
defensively registered domains. We believe that the protection of our trademark rights is an important
factor in product recognition, protecting our brand, and maintaining goodwill. Litigation or proceedings
before the U.S. Patent and Trademark Office or other governmental authorities and administrative bodies
in the United States and abroad may be necessary in the future to enforce our trademark rights and to
determine the validity and scope of the trademark rights of others.

Despite our efforts to obtain, maintain, protect, defend, and enforce our intellectual property rights, we
cannot be certain that the steps we have taken will be sufficient or effective to prevent the unauthorized
access, use, copying, or the reverse engineering of our technology and other proprietary information,
including by third parties who might use our technology or other proprietary information to develop
services that compete with ours, and our intellectual property rights might not be respected in the future or
might be invalidated, circumvented, or challenged. See “Risk Factors—Risks Related to Our Intellectual
Property” for a more comprehensive description of risks related to our intellectual property and proprietary
rights.

Regulation
U.S. and non-U.S. laws and regulations apply to many key aspects of our current business operations
and future business plans. These laws and regulations include, but are not limited to, “best execution”
requirements under SEC guidelines and FINRA rules, which require our subsidiaries, Robinhood
Securities, LLC (“RHS”) and Robinhood Financial LLC (“RHF”), to obtain the best reasonably available
terms for customer orders. In part, this requires broker-dealers to use reasonable diligence so that the
price to the customer is as favorable as possible under prevailing market conditions, taking into account,
among other things, the character of the market for the security, the size and type of the transaction, the
number of markets checked, accessibility of quotations, and the terms and conditions of the order as
communicated by the broker-dealer’s customer. Although a broker-dealer is not required to examine
every customer order individually for compliance with its duty of best execution, it must undertake regular
and rigorous reviews of the quality of its customer order executions.

We are also subject to laws and regulations regarding data privacy and security; in the U.S., federal
law, such as the Gramm-Leach-Bliley Act of 1999 and its implementing regulations, restricts certain
collection, processing, storage, use and disclosure of personal data, requires notice to individuals of
privacy practices and provides individuals with some rights to prevent the use and disclosure of nonpublic
or otherwise legally protected information. These rules also impose requirements for the safeguarding
and proper destruction of personal data through the issuance of data security standards or guidelines.
The U.S. government, including Congress, the Federal Trade Commission and the Department of
Commerce, has also announced that it is reviewing the need for greater regulation for the collection, use,
and other processing of information concerning consumer behavior on the internet, including regulation
aimed at restricting some targeted advertising practices, and numerous states, including but not limited to
California through the California Consumer Privacy Act and California Privacy Rights Act of 2020, have

15
enacted or are in the process of enacting state-level data privacy laws and regulations governing the
collection, use, and other processing of state residents’ personal data. The New York State Department
of Financial Services (“NYDFS”) also issued Cybersecurity Requirements for Financial Services
Companies, which took effect in 2017, and which require banks, insurance companies, and other financial
services institutions regulated by the NYDFS, including Robinhood Crypto, LLC (“RHC”), to establish and
maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness
of New York State’s financial services industry.

Failure to comply with these requirements may result in, among other things, revocation of required
licenses or registrations, loss of approved status, private litigation, administrative enforcement actions,
sanctions, civil and criminal liability, and constraints on our ability to continue to operate. For additional
information relating to regulation and regulatory actions, see “Risk Factors—Risks Related to Regulation
and Litigation” and “Risk Factors—Risks Related to Cybersecurity and Data Privacy.”

Available Information
On our investor relations website, investors.robinhood.com, we post the following filings after they are
electronically filed with or furnished to the SEC: Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, Beneficial Ownership Reports on Forms 3, 4, and 5, and
amendments to those reports filed or furnished pursuant to Sections 13(a), 15(d), or 16 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). All such filings are available, free of charge, on
our website as soon as reasonably practicable after we file such material electronically with, or furnish it
to, the SEC. The SEC also maintains a website that contains our SEC filings. The address of the site is
www.sec.gov.

We webcast our earnings calls and certain events we participate in or host with members of the
investment community on our investor relations website. Additionally, we provide notifications of news or
announcements regarding our financial performance, including SEC filings, investor events, press and
earnings releases, and blogs as part of our investor relations website. We intend to use our blog, Under
the Hood, as a means of disclosing material information to the public in a broad, non-exclusionary
manner for purposes of the SEC’s Regulation Fair Disclosure (Reg. FD). Under the Hood can be
accessed at blog.robinhood.com and investors should routinely monitor that website, in addition to
Robinhood’s press releases, SEC filings, and public conference calls and webcasts, as information
posted on Robinhood’s blog could be deemed to be material information. The contents of our websites
are not intended to be incorporated by reference into this Annual Report or in any other report or
document we file with the SEC, and any references to our websites are intended to be inactive textual
references only.

ITEM 1A. RISK FACTORS

A description of the risks and uncertainties associated with our business is set forth below. You should
carefully consider the risks and uncertainties described below, as well as the other information included
in this Annual Report, including our consolidated financial statements and the related notes and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our
business, financial condition, results of operations, and prospects could be materially and adversely
affected by any of these risks or uncertainties. In that case, the trading price of our Class A common
stock could decline, and you could lose all or part of your investment. The risks and uncertainties
described below are not the only ones we face. Additional risks and uncertainties that we are unaware
of or that we currently see as immaterial might also adversely affect our business. Some statements in
this Annual Report, including statements in the following risk factors, constitute forward-looking
statements. Please refer to “Cautionary Note Regarding Forward-Looking Statements.”

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Summary of Risk Factors
Our business is subject to a number of risks and uncertainties including those described at length in
the Risk Factors section below. We consider the following to be our most material risks:

• We have a limited operating history, which makes it difficult to evaluate our business and
prospects and increases the risks associated with an investment in our Class A common stock.

• We have grown rapidly in recent years and we have limited operating experience at our current
scale. If we are unable to manage our growth effectively, our financial performance might suffer
and our brand and company culture could be harmed.

• We might not continue to grow in line with historical rates.

• Our results of operations and other operating metrics fluctuate from quarter to quarter, which
makes these metrics difficult to predict.

• We have incurred operating losses in the past and might not be profitable in the future.

• Because a majority of our revenue is transaction-based (including PFOF), factors that affect
transaction-based revenue — such as reduced spreads in securities pricing, reduced levels of
trading activity generally, changes in our business relationships with market makers, and any new
regulation of, or any bans on, PFOF and similar practices — might result in reduced profitability,
increased compliance costs, and negative publicity.

• As registered broker-dealers, we are subject to “best execution” requirements under SEC

guidelines and FINRA rules. We could be penalized if we fail to comply with these requirements
and these requirements might be modified in the future in a way that could harm our business.

• We might need additional capital to provide liquidity and support business growth and objectives,
and this capital might not be available to us on reasonable terms, if at all, might result in
stockholder dilution, or might be delayed or prohibited by applicable regulations.

• Unfavorable media coverage and other events that harm our brand and reputation could
adversely affect our revenue and the size, engagement, and loyalty of our customer base.

• Our business may be harmed by changes in business, economic, or political conditions that
impact global financial markets, or by a systemic market event.

• Our future success depends on the continuing efforts of our key employees and our ability to
attract and retain senior management and other highly skilled personnel.

• Our business is subject to extensive, complex and changing laws and regulations, and related
regulatory proceedings and investigations. Changes in these laws and regulations, or our failure
to comply with these laws and regulations, could harm our business.

• We have been subject to regulatory investigations, actions, and settlements and we expect to
continue to be subject to such proceedings in the future, which could cause us to incur substantial
costs or require us to change our business practices in a materially adverse manner.

• We are involved in numerous litigation matters that are expensive and time consuming, and, if
resolved adversely, could expose us to significant liability and reputational harm.

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 • We operate in highly competitive markets, and many of our competitors have greater resources
than we do and may have products and services that are more appealing than ours to our current
or potential customers.

• If we fail to retain existing customers or attract new customers, or if our customers decrease their
use of our products and services, our revenue will decline.

• If we fail to provide and monetize new and innovative products and services that are adopted by
customers, our business may become less competitive and our revenue might decline.

• Our products and services rely on software and systems that are highly technical and have been,
and may in the future be, subject to interruption and instability due to software errors, design
defects, and other operational and technological failures, whether internal or external.

• We rely on third parties to perform some key functions, and their failure to perform those
functions could adversely affect our business, financial condition and results of operations.

• Our business could be materially and adversely affected by a cybersecurity breach or other attack
involving our computer systems or data or those of our customers or third-party service providers.

• If we do not maintain the net capital levels required by regulators, our broker-dealer business may
be restricted and we may be fined or subject to other disciplinary or corrective actions.

• Our compliance and risk management policies and procedures as a regulated financial services
company might not be fully effective in identifying or mitigating compliance and risk exposure in
all market environments or against all types of risk.

• The prices of cryptocurrencies are extremely volatile. Fluctuations in the price of various
cryptocurrencies may cause uncertainty in the market and could negatively impact trading
volumes of cryptocurrencies, which would adversely affect the success of our business, financial
condition and results of operations.

• Substantial future issuances and sales of shares of our Class A common stock in the public
market could result in significant dilution to our stockholders and cause the trading price of our
Class A common stock to fall.

• The multi-class structure of our common stock has the effect of concentrating voting power with
our founders, which limits your ability to influence the outcome of matters submitted to our
stockholders for approval. In addition, the Founder Voting Agreement and any future issuances of
our Class C common stock could prolong the duration of our founders’ voting control.

Risks Related to Our Business

We have a limited operating history, which makes it difficult to evaluate our business and
prospects and increases the risks associated with an investment in our Class A common stock.

We began operations in 2013, publicly launched our first product in 2015, and have since continued
to introduce new products and services to our platform. As a result, our business model has not been fully
proven and we have limited financial data that can be used to evaluate our current business and future
prospects, which subjects us to a number of uncertainties, including our ability to plan for, model and
manage future growth and risks. Our historical revenue growth should not be considered indicative of our
future performance. For example, our operating history has coincided with an extended period of general
macroeconomic growth in the United States, particularly in U.S. equity markets, as well as growth in the
financial services and technology industries in which we operate. We therefore have not experienced any
prolonged downturn or slowdown in macroeconomic or industry growth or any significant downturn in U.S.

18
equity markets and we might not be able to respond effectively to any such downturn or slowdown in the
future. We have also encountered, and will continue to encounter, risks and difficulties frequently
experienced by growing companies in rapidly changing and heavily regulated industries, including
challenges associated with achieving market acceptance of our products and services, attracting and
retaining customers, and complying with laws and regulations (particularly those that are subject to
evolving interpretations and application), as well as increased competition and the complexities of
managing expenses as we expand our business. We might fail to adequately address these and other
challenges we may face, and our business will be adversely affected if we do not manage these risks
successfully. In addition, we might not achieve sufficient revenue to maintain positive cash flows from
operations or profitability in any given period, or at all.

We have grown rapidly in recent years and we have limited operating experience at our current
scale. If we are unable to manage our growth effectively, our financial performance might suffer
and our brand and company culture could be harmed.

We have expanded our operations rapidly and have limited operating experience at our current size
and scale. Between December 31, 2018 and December 31, 2021, our employee headcount increased
from 289 to approximately 3,800, and we expect our headcount to continue to grow for the foreseeable
future, though at a lesser rate given the foundation we now have in place. We face a risk that continued
growth could strain our existing resources, and we could experience ongoing operating difficulties in
managing our business across numerous jurisdictions, including difficulties in hiring, training, and
managing a dispersed and growing employee base.

Our growth strategy contemplates significant expenditures for marketing, investing in customer
support, acquisitions, expansion into new countries and markets, enhancements to our current offerings
and development of new products and services, and these efforts might not be successful. In addition,
our business is highly dependent on our technology platform, and we also rely on certain third-party
service providers and computer systems. Any failure to maintain or upgrade our technology or network
infrastructure effectively to support our growth, particularly as our customer base grows and we
experience any corresponding surges in trading volume, or any interruption in the third-party services or
deterioration in the quality of their service or performance, could result in unanticipated system
disruptions, partial or full platform outages or other performance problems which have in the past and
may in the future result in degraded service, costly litigation, regulatory and U.S. Congressional inquiries,
examinations and investigations, customer dissatisfaction, arbitration and complaints and reputational
harm and may have an adverse effect on our business. For example, we experienced (i) service outages
on our stock trading platform on March 2-3, 2020 and March 9, 2020 (the “March 2020 Outages”) and (ii)
partial service outages and degraded service on our cryptocurrency platform from time to time in mid-April
and early May 2021 caused by a surging demand for cryptocurrency trading (the “April-May 2021
Disruptions”). In addition, our customer service team has historically experienced, from time to time, and
continues to experience backlogs responding to customer support requests, including in connection with
the April-May 2021 Disruptions, and reviewing new account applications, due to significant spikes in
volumes. Further, any growth must be accomplished in a manner that is consistent with regulatory
requirements that apply to our business. If we do not adapt to meet these evolving challenges and
requirements, or if our management team does not effectively scale with our growth, we may experience
erosion to our brand, the quality of our products and services might suffer, we might face regulatory
obstacles, including adverse enforcement actions, other regulatory restrictions or limitations, or failure to
obtain regulatory approvals required for certain types of growth, and our company culture might be
harmed. We might also experience difficulties in providing adequate customer support to our customer
base. Failure to improve, maintain or increase customer support now or in the future could inhibit our
growth.

Because we have limited experience operating our business at its current scale, it is difficult to
evaluate our current business and future prospects, including our ability to plan for and model future
growth. Our limited operating experience at this scale, combined with the rapidly evolving nature of the
market for our products and services, substantial uncertainty concerning how these markets may develop,
the complex regulatory regimes applicable to different aspects of our business, and other factors beyond

19
our control, reduces our ability to accurately forecast quarterly or annual results and to predict the risks
and challenges we may encounter.

We might not continue to grow in line with historical rates.

We have grown rapidly over the last few years. In particular, since March 2020, we have experienced
a significant increase in revenue, Monthly Active Users (“MAU”), Assets Under Custody (“AUC”), and Net
Cumulative Funded Accounts. For example, for full years 2019, 2020, and 2021, our revenue was
$277.5 million, $958.8 million, and $1,815.1 million, respectively, representing annual growth of 245% in
2020 and 89% in 2021. Similarly, at year-end 2019, 2020, and 2021 we had Net Cumulative Funded
Accounts of 5.1 million, 12.5 million, and 22.7 million, respectively, representing annual growth of 143% in
2020 and 81% in 2021.

The circumstances that accelerated the growth of our business might not continue in the future, and
we expect our growth rates in revenue, MAU, AUC, and Net Cumulative Funded Accounts to decline in
future periods, and such declines could be significant. It is also possible that revenue, MAU, AUC, and
Net Cumulative Funded Accounts might fail to grow at all, and might decline. For example, during the first
half of 2021 we experienced high trading volume and account sign-ups as well as high market volatility,
particularly in certain market sectors, but those growth factors were largely absent during the second half
of 2021. Sequentially from the first half of the year compared to the second half of 2021, revenue declined
by 33% and Net Cumulative Funded Accounts remained roughly flat. You should not rely on our revenue
or key business metrics for any previous quarterly or annual period as any indication of our revenue,
revenue growth, key business metrics or key business metrics growth in future periods. Our historical
annual revenue growth rates are likely to decline in future periods as the size of our business grows and
as we achieve higher market adoption rates. We might be negatively impacted as the pandemic wanes,
stimulus is phased out, and customers spend less time at home. We might also experience declines in
our revenue growth rate (or negative growth) as a result of a number of other factors, including slowing
demand for our platform, insufficient growth in the number of customers that utilize our platform,
macroeconomic factors, increasing competition, a decrease in the growth of our overall market, or our
failure to continue to capitalize on growth opportunities, including as a result of our inability to scale to
meet such growth and economic conditions that could reduce financial activity and the maturation of our
business, among others. Any failure to successfully address these risks and challenges as we encounter
them, will negatively affect our growth. If our revenue growth rate declines, investors’ perceptions of our
business and the trading price of our Class A common stock could be adversely affected.

Our results of operations and other operating metrics fluctuate from quarter to quarter, which
makes these metrics difficult to predict.

Our results of operations are heavily reliant on the level of trading activity on our platform and net
deposits. In the past, our results of operations and other operating metrics have fluctuated from quarter to
quarter, including due to movements and trends in the underlying markets, changes in general economic
conditions, interest in investing, and fluctuations in trading levels generally, each of which is outside our
control and will continue to be outside of our control. As a result, period-to-period comparisons of our
results of operations might not be meaningful, and our past results of operations should not be relied on
as indicators of future performance. Further, we are subject to additional risks and uncertainties that are
frequently encountered by companies in rapidly evolving markets. Our financial condition and results of
operations in any given quarter can be influenced by numerous factors, including the occurrence of any of
the risks described elsewhere in this Risk Factors section, many of which we are unable to predict or are
outside of our control. Factors contributing to quarterly fluctuations could include, among others:

• our ability to retain and engage existing customers and attract new customers;
• the timing and success of new product and service introductions by us or our competitors, or
other changes in the competitive landscape of our market;
• volatility in the market generally or the occurrence of so-called “meme” trading in equities,
options, or cryptocurrencies, which can cause our trading volumes to fluctuate;

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 • the occurrence of so-called “meme” trading in equities, options, or cryptocurrencies;
• increases in marketing, sales, compensation (for example, due to increased headcount), cloud
infrastructure, and other operating expenses that we may incur to grow and expand our
operations and to remain competitive;
• the timing and amount of non-cash expenses, such as share-based compensation and asset
impairment;
• the success of our expansion into new markets;
• trading volume and the prevailing trading prices for cryptocurrencies, which can be highly volatile;
• changes in the public’s perception, adoption, and use of cryptocurrencies and other asset
classes;
• any inability of customers to place trades, due to system disruptions, outages, or trading
restrictions;
• any events that damage customer confidence in Robinhood, such as breaches of security or
privacy;
• the impacts of the ongoing COVID-19 pandemic, unemployment, and inflation; and
• changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the
period such laws are enacted or interpretations are issued, and may significantly affect the
effective tax rate of that period.

Any of the factors above or listed elsewhere in this Risk Factors section, or the cumulative effect of
some of those factors, could result in significant fluctuations in our results of operations.

We have incurred operating losses in the past and might not be profitable in the future.

We incurred operating losses each year from our inception in 2013 through 2019, including net losses
of $6.1 million, $57.5 million, and $106.6 million for years 2017, 2018, and 2019, respectively. Although
we generated positive net income for 2020, we returned to a net loss position for 2021. Our operating
expenses increased substantially in 2021 and we expect them to continue to increase in the future as we
increase our sales and marketing efforts, continue to invest in research and development, further develop
our products, services, and customer support, increase our headcount, and expand into new
geographies. These efforts and additional expenses may be more costly than we expect, and we might
not be able to increase our revenue by an amount sufficient to offset our increased operating expenses or
to become profitable again. If we are unable to generate adequate revenue to offset our operating
expenses, we will continue to incur operating losses, which could be significant, and we might not be able
to achieve profitability in the future.

Because a majority of our revenue is transaction-based (including PFOF), factors that affect
transaction-based revenue — such as reduced spreads in securities pricing, reduced levels of
trading activity generally, changes in our business relationships with market makers, and any new
regulation of, or any bans on, PFOF and similar practices — might result in reduced profitability,
increased compliance costs, and negative publicity.

A majority of our revenue is transaction-based, in that we receive consideration in exchange for

routing our users’ equity, option, and cryptocurrency trade orders to market makers for execution. With
respect to equities and options trading, such fees are known as payment for order flow, or “PFOF.” With
respect to cryptocurrency trading, we receive “Transaction Rebates.” Our transaction-based revenue is
sensitive to and dependent on trading volumes and therefore tends to decline during periods in which we
experience decreased levels of trading generally. Computer-generated buy/sell programs and other
technological advances and regulatory changes in the marketplace might continue to tighten spreads on
transactions, which could also lead to a decrease in our PFOF earned from market makers. In addition,
the regulatory landscape involving cryptocurrencies is subject to change and is experiencing rapid

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evolution, and future regulatory actions or policies could reduce demand for cryptocurrency trading and
might materially decrease our revenue derived from Transaction Rebates in absolute terms and as a
proportion of our total revenues.

Risks Related to our Business Relationships with Market Makers

Our PFOF and Transaction Rebate arrangements with market makers are a matter of practice and
business understanding and not documented under binding contracts. If any of these market makers
were unwilling to continue to receive orders from us or to pay us for those orders (including, for example,
as a result of unusually high volatility), we might have little to no recourse and, if there are no other
market makers that are willing to receive such orders from us or to pay us for such orders, or if we are
unable to find replacement market makers in a timely manner, our transaction-based revenue would be
negatively impacted. This risk is particularly heightened for cryptocurrencies because fewer market
makers are currently able to execute cryptocurrency trades. Furthermore, if market makers decide to alter
our fee structure, our transaction-based revenue could significantly decrease.

Risks Related to Regulation of PFOF

PFOF practices have drawn heightened scrutiny from the U.S. Congress, the SEC, state regulators,
and other regulatory and legislative authorities. For example, in November 2018, the SEC amended its
rules relating to broker-dealer disclosure of order handling and routing to require that, among other things,
such public disclosures must now describe additional detail regarding terms of PFOF arrangements and
profit-sharing relationships that may influence a broker-dealer’s routing decision, including information
about average rebates the broker received from, and fees the broker paid to, market makers. As
previously disclosed, in December 2020, we settled an SEC investigation into our best execution and
PFOF practices and are defending putative class actions in federal district courts relating to the same
factual allegations. Additionally, our PFOF practices were the subject of a line of critical questioning
during a February 18, 2021 U.S. Congressional hearing related to the Early 2021 Trading Restrictions
(defined below). We also face a risk that the SEC, other regulatory authorities, or legislative bodies might
adopt additional regulation or legislation relating to PFOF practices as a result of such heightened
scrutiny or otherwise, including regulation that could substantially limit or ban such practices, or pursue
additional inquiries or investigations relating to PFOF practices. For example, a bill to direct the SEC to
study and consider banning or limiting PFOF in the form of exchange rebates or payments from market
centers to broker dealers, conflicts of interest based on PFOF arrangements, and the impact of PFOF on
the quality of order execution passed out of the House Financial Services Committee in July 2021. In an
August 2021 interview, Gary Gensler, Chair of the SEC, commented that a full ban of PFOF was “on the
table.” Any new or heightened PFOF regulation could result in increased compliance costs and otherwise
materially decrease our transaction-based revenue, might also make it more difficult for us to expand our
platform in certain jurisdictions, and could require us to make significant changes to our revenue model,
which changes might not be successful. Because some of our competitors either do not engage in PFOF
or derive a lower percentage of their revenues from PFOF than we do, any such heightened regulation or
ban of PFOF could have an outsized impact on our results of operations. Furthermore, depending on the
nature of any new requirements, heightened regulation could also increase our risk of potential regulatory
violations and civil litigation, which could result in fines or other penalties, as well as negative publicity.

Risks Related to Negative Publicity Associated with PFOF or our Market Makers

Additionally, any negative publicity surrounding PFOF or Transaction Rebate practices generally, or
our implementation of these practices, could harm our brand and reputation. For example, as a result of
the Early 2021 Trading Restrictions, we faced allegations that our decision to temporarily prevent our
customers from purchasing specified securities was influenced by our relationship with certain market
makers. Furthermore, as registered broker-dealers, market makers must comply with rules and
regulations that are generally intended to prohibit them from taking advantage of information they obtain
while executing orders (e.g., through the prohibition on “front running”). Market makers also have a duty

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to seek "best execution" of customers’ equity and option orders we send to them. If the market makers we
use to execute our customer’s equity and option trades were to violate such rules and regulations and
use this data for their own benefit in violation of applicable rules and regulations, it could result in negative
publicity for us by association. Developments in any proposals related to the regulation of PFOF might
themselves generate negative publicity associated with PFOF.

Additionally, if our customers or potential customers believe that they might get better execution
quality (including better price improvement) directly from stock exchanges or from our competitors that
have different execution arrangements, or if our customers perceive our PFOF practices to create a
conflict of interest between us and them, or if they begin to disfavor the specific market markers with
which we do business due to any negative media attention, they might come to have an adverse view of
our business model and might decide to limit or cease the use of our platform. Some customers might
prefer to invest through our competitors that do not engage in PFOF or Transaction Rebate practices or
engage in them differently than do we. Any such loss of customer engagement as a result of any negative
publicity associated with PFOF or Transaction Rebate practices could adversely affect our business,
financial condition, and results of operations.

As registered broker-dealers, we are subject to “best execution” requirements under SEC

guidelines and FINRA rules. We could be penalized if we fail to comply with these requirements
and these requirements might be modified in the future in a way that could harm our business.

As registered broker-dealers, we are subject to “best execution” requirements under SEC guidelines
and FINRA rules, which requires us to obtain the best reasonably available terms for customer orders, as
described in Part I, Item 1 “Business”. As previously disclosed, in December 2019 and 2020, we settled
an SEC investigation and FINRA disciplinary action, respectively, that related to our best execution
practices. We face a risk of additional investigations or penalties in the future related to our best
execution practices.

We also may be adversely affected in the future by regulatory changes related to our obligations with
regard to best execution. In particular, PFOF practices and best execution requirements have drawn
heightened scrutiny from the U.S. Congress, the SEC, and other regulatory and legislative authorities,
who have at times alleged that PFOF arrangements, like those we have with our market makers, can
result in harm to customer execution quality. In his September 2021 testimony before the U.S. Senate
Committee on Banking, Housing and Urban Affairs, Gary Gensler, Chair of the SEC, described a number
of on-going projects he had instructed SEC staff to pursue related to market structure, including review of
PFOF, best execution in the context of the National Best Bid and Offer system, and cryptocurrency asset
markets and trading platforms. Chair Gensler made similar comments in his October 2021 testimony
before the U.S. House Committee on Financial Services, including noting that the National Best Bid and
Offer system might benefit from modernization and might no longer necessarily be an appropriate
baseline from which to measure price improvement in the context of assessing best execution (together
with his September 2021 testimony, the “Gensler Market Structure Testimony”). There is a risk that these
bodies might adopt additional regulation relating to PFOF practices and best execution requirements as a
result of such heightened scrutiny or otherwise. Any such regulation could have a material adverse impact
on our business and our primary source of revenue.

We might need additional capital to provide liquidity and support business growth and objectives,
and this capital might not be available to us on reasonable terms, if at all, might result in
stockholder dilution, or might be delayed or prohibited by applicable regulations.

Maintaining adequate liquidity is crucial to our securities brokerage and our money services business
operations, including key functions such as transaction settlement, custody requirements, and margin
lending. The SEC, FINRA, and various state regulators also have stringent rules with respect to the
maintenance of specific levels of net capital by securities broker-dealers. We meet our liquidity needs
primarily from working capital and cash generated by customer activity, as well as from external debt and

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equity financing. Increases in the number of customers, and fluctuations in customer cash or deposit
balances, as well as market conditions or changes in regulatory treatment of customer deposits, could
affect our ability to meet our liquidity needs.

In addition, our clearing and carrying broker-dealer is subject to cash deposit and collateral
requirements under the rules of the clearinghouses in which it participates (including the Depository Trust
Company (“DTC”), the National Securities Clearing Corporation (“NSCC”), and the Options Clearing
Corporation (“OCC”)), which requirements fluctuate significantly from time to time based upon the nature
and volume of customers’ trading activity and volatility in the market or individual securities. If we fail to
meet any such deposit requirements, our ability to settle trades through the clearinghouse may be
suspended or we may be forced to restrict trading in certain stocks in order to limit clearinghouse deposit
requirements. For example, from January 28 to February 5, 2021, due to increased deposit requirements
imposed on our clearing and carrying broker-dealer by NSCC in response to unprecedented market
volatility, particularly in certain securities, we temporarily restricted or limited our customers from
purchasing certain specified securities, including GameStop Corp. and AMC Entertainment Holdings, Inc.,
on our trading platform (the “Early 2021 Trading Restrictions”). This resulted in negative media attention,
customer dissatisfaction, reputational harm, litigation, and regulatory and U.S. Congressional inquiries
and investigations, as well as capital raising by us in order to lift the trading restrictions while remaining in
compliance with our net capital and deposit requirements. We face a risk that similar events could occur
in the future and, if we are unable to satisfy our deposit requirements, the clearinghouse may cease to act
for us and may liquidate our unsettled clearing portfolio.

A reduction in our liquidity position could reduce our customers’ confidence in us, which could result
in the withdrawal of customer assets and loss of customers, or could cause us to fail to satisfy broker-
dealer or other regulatory capital guidelines, which may result in immediate suspension of securities
activities, regulatory prohibitions against certain business practices, increased regulatory inquiries and
reporting requirements, increased costs, fines, penalties or other sanctions, including suspension or
expulsion by the SEC, FINRA or other Self-Regulatory Organizations (“SROs”) or state regulators, and
could ultimately lead to the liquidation of our broker-dealers or other regulated entities. Factors which may
adversely affect our liquidity positions include temporary liquidity demands due to timing differences
between brokerage transaction settlements and the availability of segregated cash balances, timing
differences between cryptocurrency transaction settlements between us and our cryptocurrency market
makers and between us and our cryptocurrency customers, fluctuations in cash held in customer
accounts, a significant increase in our margin lending activities, increased regulatory capital requirements,
changes in regulatory guidance or interpretations, other regulatory changes, or a loss of market or
customer confidence resulting in unanticipated withdrawals of customer assets.

We might also need additional capital to continue to support the growth of our business and respond
to competitive challenges, including the need to promote our products and services, develop new
products and services, enhance our existing products, services and operating infrastructure, acquire and
invest in complementary businesses and technologies, and to fund payments on our obligations at the
parent company level, such as any debt obligations we may incur. To meet liquidity needs at the parent
level, we might need to rely on dividends, distributions and other payments from our subsidiaries.
Regulatory and other legal restrictions might limit our ability to transfer funds to or from some subsidiaries.
For example, under FINRA rules applicable to RHS, a dividend of over 10% of a member firm’s excess
net capital must not be paid without FINRA’s prior written approval.

When available cash is not sufficient, we may seek to engage in equity or debt financings to secure
additional funds. However, such additional funding might not be available on terms attractive to us, or at
all, and our inability to obtain additional funding when needed could have an adverse effect on our
business, financial condition, and results of operations. If we issue equity or convertible debt securities,
our stockholders could suffer significant dilution, and the new shares could have rights, preferences and
privileges superior to those of our current stockholders. Any debt financing could involve restrictive
covenants relating to our capital-raising activities and other financial and operational matters, which might
make it more difficult for us to obtain additional capital and to pursue future business opportunities.

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 As a result of a cease-and-desist order issued by the SEC on December 17, 2020 and our related
settlement in connection with the SEC’s investigation of our best execution and PFOF practices, we are
currently an “ineligible issuer,” as the term is defined under Rule 405 of the Securities Act of 1933, as
amended (the “Securities Act”), and we will remain an ineligible issuer until December 17, 2023. As long
as we are an ineligible issuer, we will generally be prevented from using free writing prospectuses and
recorded roadshows in securities offerings, and we will not qualify as a “well-known seasoned
issuer” (“WKSI”) (which status we would otherwise likely achieve by August 2022). We will therefore be
unable to take advantage of benefits associated with WKSI status, such as the ability to file universal
shelf registration statements on Form S-3 that are automatically effective. These restrictions could impair
our ability to raise additional capital quickly in response to changing requirements and market conditions.

Unfavorable media coverage and other events that harm our brand and reputation could adversely
affect our revenue and the size, engagement, and loyalty of our customer base.

Our brand and our reputation are two of our most important assets. Our ability to attract, build trust
with, engage, and retain existing and new customers may be adversely affected by events that harm our
brand and reputation, such as public complaints and unfavorable media coverage about us, our platform,
and our customers, even if factually incorrect or based on isolated incidents.

We receive a high volume of media coverage, which has increased as our company has grown and
has included, and may continue to include, negative coverage regarding our products and services and
the risk of our customers’ misuse or misunderstanding of our products and services, inappropriate or
otherwise unauthorized behavior by our customers and litigation or regulatory activity. In addition, given
our public profile, any unanticipated system disruptions, outages, technical or security-related incidents,
or other performance problems relating to our platform, such as the March 2020 Outages and the April-
May 2021 Disruptions, are likely to receive extensive media attention. Furthermore, any negative
experiences our customers have in connection with their use of our products and services, including as a
result of any such performance problems, could diminish customer confidence in us and our products and
services, which could result in unfavorable media coverage or publicity. For example, we received
customer complaints and significant media attention as a result of the Early 2021 Trading Restrictions.

Damage to our brand and reputation could also be caused by:

• cybersecurity attacks, privacy or data security breaches, or other security incidents, payment
disruptions or other incidents that impact the reliability of our platform;
• actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our
management team, our other employees or contractors, our customers or third-party service
providers as well as complaints or negative publicity about such individuals;
• any repeat imposition of temporary trading restrictions (similar to our Early 2021 Trading
Restrictions), or any outright failure to meet our deposit requirements;
• litigation involving, or regulatory actions or investigations into, our platform or our business;
• any failures to comply with legal, tax and regulatory requirements;
• any perceived or actual weakness in our financial strength or liquidity;
• any regulatory action that results in changes to, or prohibits us from offering, certain features or
services;
• changes to our policies, features or services that customers or others perceive as overly
restrictive, unclear, inconsistent with our values or mission, or not clearly articulated;
• a failure to operate our business in a way that is consistent with our values and mission;

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 • inadequate or unsatisfactory customer support experiences. For example, prior to October 2021,
we did not offer general customer support by telephone for all use cases;
• negative responses by customers or regulators to our business model or to particular features or
services;
• a failure to adapt to new or changing customer preferences;
• a prolonged weakness in popular equities or cryptocurrencies specifically or in U.S. equity and
cryptocurrency markets generally, or a sustained downturn in the U.S. economy; and
• any of the foregoing with respect to our competitors, to the extent the resulting negative
perception affects the public’s perception of us or our industry as a whole.

These and other events could negatively impact the willingness of our existing customers, and
potential new customers, to do business with us, which could adversely affect our trading volumes and
number of funded accounts, as well as our ability to recruit and retain personnel, any of which could have
an adverse effect on our business, financial condition, and results of operations, as well as the trading
price of our Class A common stock.

Our business may be harmed by changes in business, economic, or political conditions that impact
global financial markets, or by a systemic market event.

As we are a financial services company, our business, results of operations, and reputation are
directly affected by elements beyond our control, such as economic and political conditions including
unemployment rates, inflation and tax rates, financial market volatility (such as we experienced during the
COVID-19 pandemic), significant increases in the volatility or trading volume of particular securities or
cryptocurrencies (such as we experienced during the meme stock events of early 2021 and the Dogecoin
surge of mid-2021), broad trends in business and finance, changes in volume of securities or
cryptocurrencies trading generally, changes in the markets in which such transactions occur, and
changes in how such transactions are processed. These elements can arise suddenly and the full impact
of such conditions could remain uncertain indefinitely. A prolonged market weakness, such as a
slowdown causing reduced trading volume in securities, derivatives, or cryptocurrency markets, could
result in reduced revenues and adversely affect our business, financial condition, and results of
operations. Significant downturns in such markets or in general economic and political conditions could
also cause individuals to be reluctant to make their own investment decisions and thus decrease the
demand for our products and services and could also result in our customers reducing their engagement
with our platform. Conversely, significant upturns in such markets or conditions may cause individuals to
be less proactive in seeking ways to improve the returns on their trading or investment decisions and,
thus, decrease the demand for our products and services. Any of these changes could cause our future
performance to be uncertain or unpredictable, and could have an adverse effect on our business results.

The long-term impact of the COVID-19 pandemic on our business, financial condition, and results
of operations is uncertain.

At the onset of the COVID-19 pandemic, we saw substantial growth in our user base, retention,
engagement, and trading activity metrics, and over the course of the pandemic we saw periodic all-time
highs achieved by the equity markets generally. During this period, market volatility, stay-at-home orders,
and increased interest in investing and personal finance, coupled with low interest rates and a positive
market environment, especially in the U.S. equity and cryptocurrency markets, helped foster an
environment that encouraged an unprecedented number of first-time retail investors to become our users
and begin trading on our platform.

However, we have seen the growth of our user base in recent periods slow compared to the
accelerated growth we experienced in 2020 and the first half of 2021. For example, the pace of growth in
new funded accounts slowed considerably in the second half of 2021 compared to the first half of 2021.

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Additionally, to the extent that government stimulus measures enacted in response to the pandemic
contributed to an increase in customer engagement, that benefit may not have continued as those
stimulus measures have expired. For example, we saw MAU decline from 21.3 million in June 2021 to
17.3 million in December 2021. Further, if the financial markets experience a downturn, we might have
difficulty retaining customers, particularly any first-time retail investors, who might elect not to continue to
invest in the financial markets by trading on our platform or at all due to any number of factors: as a result
of any such downturn, a lack of access to additional stimulus funds, the ability to resume pre-COVID-19
activities, or otherwise. To the extent that customer preferences revert to pre-COVID-19 behaviors or the
financial markets experience reduced volatility or decline, our trading volumes and transaction-based
revenues could decline.

Notwithstanding the foregoing, the COVID-19 pandemic and the various measures instituted by
governments and businesses to mitigate its spread, including travel restrictions, stay-at-home orders and
quarantine restrictions, could adversely impact our customers, employees and business partners, and
continue to disrupt our operations, including as the pandemic contributes to a general slowdown in the
global economy. The COVID-19 pandemic also resulted, in part, in inefficiencies or delays in our
business, operational challenges, additional costs related to business continuity initiatives as our
workforce had to transition suddenly to working remotely, and increased vulnerability to cybersecurity
attacks or other privacy or data security incidents. The extent of the continuing impact of COVID-19 on
our business, financial condition and results of operations will depend largely on future developments,
including the duration of the pandemic, actions taken to contain COVID-19 or address its impact, our
ability to adapt to the long-term distributed “Remote First” workforce model we have adopted, the impact
on capital and financial markets, and the related impact on the financial circumstances of our customers,
all of which are highly uncertain and difficult to predict. The future of remote work and our physical office
build-out strategy have been challenged by the COVID-19 pandemic, which may adversely affect
successful cross-functional collaboration, product development velocity, and our company culture. In
particular, our new Remote First workforce model increases risk of culture drift and could lead to lower
operational effectiveness. As vaccination rates among the population have increased, we have started to
allow some employees to voluntarily return to work in our corporate offices. The timing of any full return
for those employees who will eventually be required to come into the office has not been determined and
will be impacted by developments related to the pandemic, such as the severity and transmission rate of
the virus and its variants. Even after the COVID-19 outbreak has subsided, we may continue to
experience adverse impacts to our business as a result of the global economic impact, including the
availability of credit, adverse impacts on our liquidity, and any recession that has occurred or may occur in
the future. A sustained or prolonged COVID-19 pandemic or a resurgence could exacerbate the factors
described above and intensify the impact on our business.

Our future success depends on the continuing efforts of our key employees and our ability to
attract and retain senior management and other highly skilled personnel.

Our future success depends, in part, on our ability to continue to identify, attract, develop, integrate
and retain qualified and highly skilled personnel. In particular, our Co-Founder and CEO, Vladimir Tenev,
and our Co-Founder and Chief Creative Officer, Baiju Bhatt, have been critical to the development and
execution of our business, vision, and strategic direction. In addition, we have heavily relied, and expect
we will continue to heavily rely, on the services and performance of our senior management team, which
provides leadership, contributes to the core areas of our business and helps us to efficiently execute our
business. Although we have entered into employment offer letters with some of our key personnel, these
agreements have no specific duration and are terminable by either party at-will. We do not maintain key
person life insurance policies on any of our employees.

We also might not be successful in attracting, integrating or retaining qualified personnel to fulfill our
current or future needs. In particular, there is particularly high competition in the San Francisco Bay Area
for software engineers, computer scientists and other technical personnel. In the fourth quarter of 2021,
we experienced higher rates of employee attrition as well as recruiting challenges in the post-IPO context.

27
We might continue to experience difficulty in hiring and retaining highly skilled employees with appropriate
qualifications.

We believe that a critical component of our efforts to attract and retain employees has been our
corporate culture. We have invested substantial time and resources in building our team. As we continue
to grow, we will face new challenges to maintain our corporate culture among a larger number of more
geographically dispersed employees. Failure to preserve our company culture could harm our ability to
retain and recruit personnel. Our transition to having a more dispersed, remote-working employee base
may exacerbate these challenges.

If we are unable to attract, integrate, or retain our key employees and qualified and highly skilled
personnel, our ability to effectively focus on and pursue our corporate objectives will decline, and our
business and future growth prospects could be harmed.

Future acquisitions of, or investments in, other companies, products, technologies or specialized
employees could require significant management attention, disrupt our business, dilute
stockholder value, and adversely affect our results of operations.

As part of our business strategy, we might make acquisitions of, or investments in, specialized
employees or other compatible companies, products, or technologies. We also might enter into
relationships with other businesses in order to expand our products and services. Negotiating these
transactions can be time-consuming, difficult, and expensive and our ability to close these transactions
might be subject to third-party approvals, such as governmental and other regulatory approvals, which are
beyond our control. Further, we might not be able to find suitable acquisition or investment candidates
and we might not be able to complete acquisitions on favorable terms, if at all. Moreover, these kinds of
acquisitions or investments can result in unforeseen operating difficulties and expenditures, including
disrupting our ongoing operations, diverting management from their primary responsibilities, subjecting us
to additional liabilities, increasing our expenses, and adversely impacting our business, financial condition
and results of operations. If we acquire businesses or technologies, we might not be able to integrate the
acquired personnel, operations, and technologies successfully, or effectively manage the combined
business following the acquisition. Moreover, the anticipated benefits of any acquisition or investment
might not be realized and we might be exposed to unknown liabilities.

In connection with these types of transactions, we might issue additional equity securities that would
dilute our stockholders, use cash that we might need in the future to operate our business, incur debt on
terms unfavorable to us or that we are unable to repay, incur large charges or substantial liabilities,
encounter difficulties integrating diverse business cultures, and become subject to adverse tax
consequences, substantial depreciation, or deferred compensation charges.

We intend to expand into international markets, which will expose us to significant new risks, and
our international expansion efforts might not succeed.

We currently do not offer services to the public outside the United States. However, we currently have
corporate subsidiaries, offices, and some employees or contractors, in each of the U.K. and the
Netherlands (and, in the case of the U.K., our U.K. subsidiary Robinhood U.K. Ltd is authorized and
regulated by the U.K. Financial Conduct Authority).

We intend to expand our operations to other countries outside of the United States, which will require
significant resources and management attention and will subject us to regulatory, economic, operational,
and political risks in addition to those we already face in the United States. There are significant risks and
costs inherent in establishing and doing business in international markets, including:

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 • difficulty establishing and managing international entities, offices, and/or operations and the
increased operations, travel, infrastructure, and legal and compliance costs associated with
operations, entities, and/or people in different countries or regions;
• the need to understand, interpret and comply with local laws, regulations and customs in multiple
jurisdictions, including laws and regulations governing cryptocurrency-related, broker-dealer or
regulated entity practices, some of which may require permissions, registrations, authorizations,
licenses or consents, or may be different from, or conflict with, those of other jurisdictions or
foreign cybersecurity, data privacy or labor and employment laws;
• the additional complexities of any merger or acquisition activity internationally, which would be
new for us and could subject us to additional regulatory scrutiny or approvals;
• the need to adapt, localize, and position our products for specific countries (also known as
“product-market fit”);
• increased competition from local providers of similar products and services;
• challenges of obtaining, maintaining, protecting, defending and enforcing intellectual property
rights abroad, including the challenge of extending or obtaining third-party intellectual property
rights to use various technologies in new countries;
• the need to offer customer support and other aspects of our offering (including websites, articles,
blog posts, and customer support documentation) in various languages or locations;
• compliance with anti-bribery laws, such as the Foreign Corrupt Practices Act (the “FCPA”) and
equivalent anti-money laundering rules and requirements, and with anti-bribery and anti-
corruption requirements in local markets, by us, our employees, and our business partners;
• the need to recruit and manage staff in new countries and regions to support international
operations, and comply with employment law, payroll, and benefits requirements in multiple
countries;
• the need to enter into new business partnerships with third-party service providers in order to
provide products and services in the local market, or to meet regulatory obligations;
• varying levels of internet technology adoption and infrastructure, and increased or varying
network and hosting service provider costs and differences in technology service delivery in
different countries;
• fluctuations in currency exchange rates and the requirements of currency control regulations,
which might restrict or prohibit conversion of other currencies into U.S. dollars;
• taxation of our international earnings and potentially adverse tax consequences due to
requirements of or changes in the income and other tax laws of the United States or the
international jurisdictions in which we operate; and
• political or social change or unrest or economic instability in a specific country or region in which
we operate.

We have limited experience with international legal and regulatory environments and market
practices, and we might not be able to penetrate or successfully operate in the markets we choose to
enter. In addition, we might incur significant expenses as a result of our international expansion, and we
might not be successful, which could lead to substantial losses.

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Risks Related to Regulation and Litigation

Our business is subject to extensive, complex and changing laws and regulations, and related
regulatory proceedings and investigations. Changes in these laws and regulations, or our failure to
comply with these laws and regulations, could harm our business.

The securities industry is subject to extensive regulation by federal, state and non-U.S. regulators and
SROs, and broker-dealers and financial services companies are subject to laws and regulations covering
all aspects of the securities industry. The substantial costs and uncertainties related to complying with
these regulations continue to increase, and our introduction of new products or services, expansion of our
business into new jurisdictions or subindustries, acquisitions of other businesses that operate in similar
regulated spaces, or other actions that we may take might subject us to additional laws, regulations, or
other government or regulatory scrutiny. Regulations are intended to ensure the integrity of financial
markets, to maintain appropriate capitalization of broker-dealers and other financial services companies,
and to protect customers and their assets. These regulations could limit our business activities through
capital, customer protection, and market conduct requirements, as well as restrictions on the activities
that we are authorized to conduct.

Federal, state and non-U.S. regulators and SROs, including the SEC and FINRA, can among other
things investigate, censure or fine us, issue cease-and-desist orders or otherwise restrict our operations,
require changes to our business practices, products or services, limit our acquisition activities or suspend
or expel a broker-dealer or any of its officers or employees. Similarly, state attorneys general and other
state regulators, including state securities and financial services regulators, can bring legal actions on
behalf of the citizens of their states to assure compliance with state laws. In addition, criminal authorities
such as state attorneys general or the U.S. Department of Justice may institute civil or criminal
proceedings against us for violating applicable laws, rules, or regulations. We operate in a highly
regulated industry and, despite our efforts to comply with applicable legal requirements, like all companies
in our industry, we must adapt to frequent changes in laws and regulations, and face complexity in
interpreting and applying evolving laws and regulations to our business, heightened scrutiny of the
conduct of financial services firms and increasing penalties for violations of applicable laws and
regulations. We might fail to establish and enforce procedures that comply with applicable legal
requirements and regulations. We might be adversely affected by new laws or regulations, changes in the
interpretation of existing laws or regulations, or more rigorous enforcement. We also may be adversely
affected by other regulatory changes related to our obligations with regard to suitability of financial
products, supervision, sales practices, application of fiduciary or best interest standards (including the
interpretation of what constitutes an “investment recommendation” for the purposes of the SEC’s
“Regulation Best Interest” and state securities laws) and best execution in the context of our business and
market structure, any of which could limit our business, increase our costs and damage our reputation.

We have been subject to regulatory investigations, actions, and settlements and we expect to
continue to be subject to such proceedings in the future, which could cause us to incur substantial
costs or require us to change our business practices in a materially adverse manner.

From time to time, we have been subject, and, given the highly regulated nature of the industries in
which we operate, expect that we will be subject in the future, to a number of legal and regulatory
proceedings arising out of our business practices and operations, brought by the SEC or FINRA, other
federal agencies such as the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”),
and state regulatory agencies, such as the Massachusetts Securities Division (“MSD”), the California
Attorney General’s Office, and the NYDFS, among other authorities. These proceedings have in the past
and might in the future include lawsuits, arbitration claims, and regulatory, governmental and SRO
inquiries, examinations, investigations, and enforcement proceedings, as well as other actions and
claims, that result in injunctions, fines, penalties, and monetary settlements. For example:

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 • In December 2020, we settled an SEC investigation under which we paid a $65 million civil
penalty and agreed to engage an independent compliance consultant.
• In June 2021, we resolved multiple matters with FINRA (including investigations into systems
outages, our options product offering, and margin-related communications with customers),
resulting in censure, fines and restitution of $70 million, and engagement of an independent
consultant.
• In connection with the Early 2021 Trading Restrictions, we and our employees, including our co-
founder and CEO, Vladimir Tenev, have received requests for information, and in some cases,
subpoenas and requests for testimony from the USAO (as defined below), the U.S. Department
of Justice, Antitrust Division, the SEC staff, FINRA, the New York Attorney General’s Office, other
state attorneys general offices, and a number of state securities regulators. Also, a related search
warrant was executed by the USAO to obtain Mr. Tenev’s cell phone. We have also received
inquiries from the SEC’s Division of Examinations and Division of Enforcement and FINRA
related to employee trading during the week of January 25, 2021 in some of the securities that
were subject to the Early 2021 Trading Restrictions, including GameStop Corp. and AMC
Entertainment Holdings, Inc., and specifically as to whether any employee trading in these
securities occurred after the decision to impose the Early 2021 Trading Restrictions and before
the public announcement of the Early 2021 Trading Restrictions on January 28, 2021. We are
cooperating with these investigations and examinations.

These and other proceedings, some of which are described in Note 16 to our consolidated financial
statements in this Annual Report, have in the past and may in the future relate to broker-dealer and
financial services rules and regulations, including our trading and supervisory policies and procedures,
our clearing practices, our trade reporting, our public communications, our compliance with FINRA
registration requirements, anti-money laundering and other financial crimes regulations, cybersecurity
matters, and our business continuity plans, among other topics. These sorts of proceedings, inquiries,
examinations, investigations, and other regulatory matters might subject us to fines, penalties, and
monetary settlements, harm our reputation and brand, require substantial management attention, result in
additional compliance requirements, result in certain of our subsidiaries losing their regulatory licenses or
ability to conduct business in some jurisdictions (which could, among other things, result in statutory
disqualification by FINRA and the SEC), increase regulatory scrutiny of our business, restrict our
operations or require us to change our business practices, require changes to our products and services,
require changes in personnel or management, delay planned product or service launches or
development, limit our ability to acquire other complementary businesses and technologies, or lead to the
suspension or expulsion of our broker-dealer or other regulated subsidiaries or their officers or
employees.

In connection with litigation settlements, we have in the past and may in the future be required to
make expenditures to enhance our compliance activities. For example, the independent consultant we
engaged in connection with the June 2021 FINRA multi-matter settlement (mentioned above) delivered its
initial report in December 2021. While we believe we have made significant improvements to address
FINRA’s original allegations, the independent consultant recommended additional enhancements in
certain areas identified in the settlement. Implementing these recommendations will require significant
effort and expense.

Additionally, our broker-dealer subsidiaries are registered in the United States but are not licensed,
authorized, or registered in any other jurisdiction. Under the terms of our customer agreements, we
currently offer services only to U.S. citizens and permanent residents with a legal address within the
United States or Puerto Rico, and our application includes features designed to block access to our
services from certain countries. However, to the extent a customer accesses our application or services
from outside the United States, we face a risk of becoming subject to regulations in that local jurisdiction.
A regulator’s conclusion that we are servicing customers in its jurisdiction without being appropriately
licensed, registered, or authorized could result in fines or other enforcement actions.

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Recent statements by lawmakers, regulators and other public officials have signaled an increased
focus on new or additional regulations that could impact our business and require us to make
significant changes to our business model and practices.

Various lawmakers, regulators and other public officials have recently made statements about our
business and that of other broker-dealers and signaled an increased focus on new or additional laws or
regulations that, if acted upon, could impact our business. Over three days in the spring of 2021, the
Committee on Financial Services of the U.S. House of Representatives held hearings on the January
2021 market volatility and disruptions surrounding GameStop and other “meme” stocks at which various
members of Congress expressed concerns about various market practices, including PFOF and options
trading. In his testimony, Chair Gensler indicated that he had instructed the staff of the SEC to study, and
in some cases make rulemaking recommendations to the SEC regarding, a variety of market issues and
practices, including PFOF, so-called gamification, and whether broker-dealers are adequately disclosing
their policies and procedures around potential trading restrictions; whether margin requirements and other
payment requirements are sufficient; and whether broker-dealers have appropriate tools to manage their
liquidity and risk. Chair Gensler also discussed the use of mobile app features such as rewards, bonuses,
push notifications and other prompts. Chair Gensler suggested that such prompts could promote behavior
that is not in the interest of the customer, such as excessive trading. Chair Gensler also advised that he
had directed the SEC staff to consider whether expanded enforcement mechanisms are necessary. The
fall 2021 regulatory agenda published by the SEC, also indicated that the SEC would consider proposing
rules in 2022 to modernize equity market structure, including possible new rules on PFOF, best execution
(amendments to Rule 605), market concentration, the disclosure of best execution statistics, and certain
other practices. On August 27, 2021, the SEC issued a request for information and public comment on
matters related to the use of digital engagement practices by broker-dealers and investment advisers,
including behavioral prompts, differential marketing, game-like features and other design elements or
features designed to engage with retail investors on digital platforms (e.g., websites, portals, and
applications), as well as related analytical and technological tools and methods. In an August 2021
interview, Chair Gensler commented that a full ban on PFOF was “on the table.” Chair Gensler also
described a number of on-going projects he had instructed SEC staff to pursue related to market structure
in the Gensler Market Structure Testimony. Also in October 2021, the SEC staff released its report on the
equity and options market structure conditions surrounding the Early 2021 Trading Restrictions, which
concluded in part that the episode may "present an opportunity to reflect" on market structure issues such
as digital engagement practices, PFOF, dark pool trading, and other structures that affect Robinhood’s
operations.

In addition, on March 18, 2021, FINRA issued a regulatory notice reminding member firms of their
obligations with respect to maintaining margin requirements, customer order handling, and effectively
managing liquidity, with a particular focus on best execution practices and the need for member firms to
make “meaningful disclosures” to inform customers of a firm’s order handling procedures during extreme
market conditions. Further, at a public conference on May 19, 2021, FINRA indicated an intention to
solicit public feedback, such as through notices or surveys, regarding so-called gamification in order to
determine whether to adopt additional guidance or additional rules in that regard. Also, on June 23, 2021,
FINRA issued a regulatory notice reminding member firms of the requirement that customer order flow be
directed to markets providing the “most beneficial terms for their customers” and indicated that member
firms may not negotiate the terms of order routing arrangements in a manner that reduces price
improvement opportunities that would otherwise be available to those customers in the absence of PFOF.
The impact that this notice may have on the ability of market participants to enter into PFOF
arrangements, if any, has not been determined.

To the extent that the SEC, FINRA, or other regulatory authorities or legislative bodies adopt
additional regulations or legislation in respect of any of these areas or relating to any other aspect of our
business, we could face a heightened risk of potential regulatory violations and could be required to make
significant changes to our business model and practices, which changes may not be successful. Any of

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these outcomes could have an adverse effect on our business, financial condition and results of
operations.

We are involved in numerous litigation matters that are expensive and time consuming, and, if
resolved adversely, could expose us to significant liability and reputational harm.

In addition to regulatory proceedings, we are also involved in numerous other litigation matters,
including putative class action lawsuits, and we anticipate that we will continue to be a target for litigation
in the future. Potential litigation matters include commercial litigation matters, insurance matters, privacy
and cybersecurity disputes, intellectual property disputes, contract disputes, consumer protection matters,
and employment matters. This risk may be more pronounced during market downturns, during which the
volume of legal claims and amount of damages sought in litigation and regulatory proceedings against
financial services companies have historically increased.

For more information about the legal proceedings in which we are currently involved, see Note 16 to
our consolidated financial statements in this Annual Report.

Litigation matters brought against us may require substantial management attention and may result in
settlements, awards, injunctions, fines, penalties, and other adverse results. A substantial judgment,
settlement, fine, penalty, or injunctive relief could be material to our results of operations or cash flows for
a particular period, or could cause us significant reputational harm.

We are subject to governmental laws and requirements regarding anti-corruption, anti-bribery

economic and trade sanctions, anti-money laundering and counter-terror financing that could
impair our ability to compete in international markets or subject us to criminal or civil liability if we
violate them.

We are required to comply with U.S. economic and trade sanctions administered by OFAC and we
have processes in place to facilitate compliance with the OFAC regulations. As part of our customer
onboarding process, in accordance with the Customer Identification Program rules under Section 326 of
the USA PATRIOT ACT of 2001, we screen all potential customers against OFAC watchlists and continue
to screen all customers, vendors and employees daily against OFAC watchlists. Although our application
includes features designed to block access to our services from sanctioned countries, if our services are
accessed from a sanctioned country in violation of trade and economic sanctions, we could be subject to
enforcement actions.

We are subject to the FCPA, U.S. domestic bribery laws, and other U.S. and foreign anti-corruption
laws. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are
interpreted broadly to generally prohibit companies, their employees and their third-party intermediaries
from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in
the public sector. These laws also require that we keep accurate books and records and maintain internal
controls and compliance procedures designed to prevent any such actions. The failure to comply with any
such laws could subject us to criminal or civil liability, cause us significant reputational harm, and have an
adverse effect on our business, financial condition, and results of operations.

We are also subject to various anti-money laundering and counter-terrorist financing laws and
regulations that prohibit, among other things, our involvement in transferring the proceeds of criminal
activities. In the United States, most of our services are subject to anti-money laundering laws and
regulations, including the Bank Secrecy Act, as amended (“BSA”), and similar laws and regulations. The
BSA is the primary U.S. anti-money laundering law and has been amended to include certain provisions
of Title III of the USA PATRIOT ACT of 2001 to detect, deter, and disrupt terrorist financing networks.
Regulators in the United States continue to increase their scrutiny of compliance with these obligations.
For example, in July 2020, the NYDFS issued a report of its examination of our cryptocurrency business
citing a number of “matters requiring attention” focused primarily on anti-money laundering and

33
cybersecurity-related issues, which we expect will result in a significant monetary penalty and a
requirement that we engage a monitor.

Although our operations are currently concentrated in the United States (with the limited exception of
our U.K. and Dutch subsidiaries, which have U.K.- and Netherlands-based employees and contractors,
but currently have no customers), we intend to expand internationally and we will become subject to
additional non-U.S. laws, rules, regulations, and other requirements regarding economic and trade
sanctions, anti-money laundering, and counter-terror financing. In order to comply with applicable laws,
we will need to further revise or expand our compliance program, including the procedures we use to
verify the identity of our customers and to monitor transactions on our system, including payments to
persons outside of the United States. The need to comply with multiple sets of laws, rules, regulations,
and other requirements could substantially increase our compliance costs, impair our ability to compete in
international markets, and subject us to risk of criminal or civil liability for violations.

Risks Related to Attracting, Retaining, and Engaging Customers

We operate in highly competitive markets, and many of our competitors have greater resources
than we do and may have products and services that are more appealing than ours to our current
or potential customers.

The markets in which we compete are evolving and highly competitive, with multiple participants
competing for the same customers. Our current and potential future competition principally comes from
incumbent brokerages, established financial technology companies, venture-backed financial technology
firms, banks, cryptocurrency exchanges, asset management firms, financial institutions, and technology
platforms. The majority of our competitors have longer operating histories and greater capital resources
than we have and offer a wider range of products and services. Some of our competitors, particularly new
and emerging technology companies, are not subject to the same regulatory requirements or scrutiny to
which we are subject, which could allow them to innovate more quickly or take more risks, placing us at a
competitive disadvantage. The impact of competitors with superior name recognition, greater market
acceptance, larger customer bases, or stronger capital positions could adversely affect our results of
operations and customer acquisition and retention. Our competitors might also be able to respond more
quickly to new or changing opportunities and demands and withstand changing market conditions better
than we can, especially larger competitors that may benefit from more diversified product and customer
bases. For example, some of our competitors have quickly adopted, or are seeking to adopt, some of our
key offerings and services, including commission-free trading, fractional share trading, and no account
minimums, since their introduction on our platform in order to compete with us. In addition, competitors
may conduct extensive promotional activities, offer better terms or offer differentiating products and
services that could attract our current and prospective customers and potentially result in intensified
competition within our markets. We continue to experience aggressive price competition in our markets
and we might not be able to match the marketing efforts or prices of our competitors. In addition, our
competitors might choose to forgo PFOF, which could create downward pressure on PFOF and make it
more difficult for us to maintain our PFOF arrangements, which are a significant source of our revenue.
We might also be subject to increased competition as our competitors enter into business combinations or
partnerships, or established companies in other market segments expand to become competitive with our
business.

Our ability to compete successfully in the financial services and cryptocurrency markets depends on a
number of factors, including, among other things:

• maintaining competitive pricing;

• providing easy-to-use, innovative, and attractive products and services that are adopted by
customers;
• retaining customers (such as by providing effective customer support and avoiding outages,
security breaches, and trading restrictions);

34
 • recruiting and retaining highly skilled personnel and senior management;
• maintaining and improving our reputation and the market perception of our brand and overall
value;
• maintaining our relationships with our counterparties; and
• adjusting to a dynamic regulatory environment.

Our competitive position within our markets could be adversely affected if we are unable to
adequately address these factors.

If we fail to retain existing customers or attract new customers, or if our customers decrease their
use of our products and services, our revenue will decline.

We have experienced significant customer growth over the past several years, including a significant
fraction of new customers, often more than 50%, who have told us that Robinhood is their first brokerage
account. We have historically relied significantly on our customers joining organically or through the
Robinhood Referral Program, which accounted for over 80% of the customers that joined our platform in
each of 2020 and 2021. Our continued business and revenue growth depends on our efforts to attract
new customers, retain existing customers, and increase the amount that our customers use our products
and services (including premium services, such as Robinhood Gold). These efforts might fail due to a
number of factors, including our customers losing confidence in us or preferring a competitor’s offerings.
Additional factors that could lead to a decline in our number of customers or their usage of our products
and services or that could prevent us from increasing our number of customers include:

• a decline in our brand and reputation;

• increased pricing for our products and services;
• ineffective marketing efforts or a reduction in marketing activity;
• our customers, due to being new and inexperienced, may be less loyal to our product or less
likely to maintain historical trading patterns and interest in investing;
• a broad decline in the equity or other financial markets, which could result in many of these
investors feeling discouraged and exiting the markets altogether;
• our customers experiencing difficulties using the Robinhood app as intended, due to any number
of reasons such as design errors, service outages, or trading restrictions imposed by us;
• our customers experiencing security or data breaches, account intrusions, or other unauthorized
access;
• our failure to provide adequate customer service;
• customer resistance to and non-acceptance of cryptocurrencies; and
• customer dissatisfaction with the limited number of cryptocurrencies available on our platform.

Our customers may choose to cease using our platform, products, and services at any time, and may
choose to transfer their accounts to another broker-dealer. For example, during the first quarter of 2021
many customers became upset by our imposition of the Early 2021 Trading Restrictions and we saw an
increase in customers choosing to transfer their accounts to other broker-dealers. The total value of
outbound Automated Customer Account Transfer Service (“ACATS”), an automated industry system for
account asset transfers, was $4.2 billion in the first quarter of 2021, involving 5.2% of AUC from
approximately 206,000 accounts, as compared to outbound transfers of $0.5 billion, involving 1.2% of
AUC from approximately 24,000 accounts during each quarter of 2020 on average.

If we fail to retain current customers or attract new customers, or if we experience a decrease in

customers’ usage of our products and services, our revenue will decline, which could cause the trading
price of our Class A common stock to decline significantly.

35
If we fail to provide and monetize new and innovative products and services that are adopted by
customers, our business may become less competitive and our revenue might decline.

Our ability to attract, engage, and retain our customers and to increase our revenue depends heavily
on our ability to evolve our existing products and services and to create and monetize new products and
services that are adopted by customers. Rapid and significant technological changes continue to confront
the financial services industry, including developments in the methods in which securities are traded and
developments in cryptocurrencies. To keep pace or to innovate we might introduce significant changes to
our existing products and services or acquire or introduce new and unproven products and services,
including using technologies with which we have little or no prior development or operating experience.
Our efforts might be inhibited by industry-wide standards, legal restrictions, incompatible customer
expectations, demands, and preferences, or third-party intellectual property rights. Our efforts to innovate
might also be delayed or blocked by new or enhanced regulatory scrutiny or technical complications.
Incorporating new technologies into our products and services might require substantial expenditures and
take considerable time, and we might not be successful in realizing a return on these development efforts
in a timely manner or at all. It might be difficult to monetize products in a manner consistent with our
brand’s focus on low prices. If we fail to innovate and deliver products and services with market fit and
differentiation, or fail to do so quickly enough as compared to our competitors, we might fail to attract and
retain customers and maintain customer engagement, causing our revenue to decline.

Risks Related to Our Platform, Systems, and Technology

Our products and services rely on software and systems that are highly technical and have been,
and may in the future be, subject to interruption and instability due to software errors, design
defects, and other operational and technological failures, whether internal or external.

We rely on technology, including the internet and mobile services, to conduct much of our business
activity and allow our customers to conduct financial transactions on our platform. Our systems and
operations, including our Cloud-based operations and disaster recovery operations, as well as those of
the third parties on which we rely to conduct certain key functions, are vulnerable to disruptions from
natural disasters, power and service outages, interruptions or losses, computer and telecommunications
failures, software bugs, cybersecurity attacks, computer viruses, malware, distributed denial of service
attacks, spam attacks, phishing or other social engineering, ransomware, security breaches, credential
stuffing, technological failure, human error, terrorism, improper operation, unauthorized entry, data loss,
intentional bad actions, and other similar events and we have experienced such disruptions in the past.
Further, we might be particularly vulnerable to any such internal technology failures because we rely
heavily on our own self-clearing platform, proprietary order routing system, data platform, and other back-
end infrastructure for our operations, and any such failures could have an adverse effect on our
reputation, business, financial condition, and results of operations. For example, in December 2018, we
experienced a failure of our order routing technology caused by code being inadvertently pushed to the
production environment that led to option trades being incorrectly routed, resulting in estimated out-of-
pocket losses to us of approximately $0.9 million.

Our products and internal systems also rely on software that is highly technical and complex
(including software developed or maintained internally and/or by third parties and also including machine
learning models) in order to collect, store, retrieve, transmit, manage and otherwise process immense
amounts of data. The software on which we rely may contain errors, bugs, vulnerabilities, design defects,
or technical limitations that may compromise our ability to meet our objectives. Some such problems are
inherently difficult to detect and some such problems might only be discovered after code has been
released for external or internal use. From time to time media outlets learn of our plans for features
(including Crypto Wallets, for example, in the third quarter of 2021) by examining hidden but unprotected
images and code in publicly available beta versions of our app, resulting in unwanted publicity prior to our
intended announcement dates. Such problems might also lead to negative customer experiences

36
(including the communication of inaccurate information to customers), compromised ability of our
products to perform in a manner consistent with customer expectations, delayed product introductions,
compromised ability to protect data and intellectual property, or an inability to provide some or all of our
services.

While we have made, and continue to make, significant investments designed to correct software
errors and design defects and to enhance the reliability and scalability of our platform and operations, the
risk of software and system failures and design defects is always present, we do not have fully redundant
systems, and we might fail to maintain, expand, and upgrade our systems and infrastructure to meet
future requirements and mitigate future risks on a timely basis. It may become increasingly difficult to
maintain and improve the availability of our platform, especially as our platform and product offerings
become more complex and our customer base grows. For example, the customer waitlist to use our
Crypto Wallets feature grew to more than one million users in less than a month. Because we only
recently started testing this new feature, there may be risks related to the technology and operation of
Crypto Wallets that we have not yet identified or cannot foresee, and any failure or interruption of the
Crypto Wallets feature on our platform could adversely affect our relationships with customers that use
this feature. We may also encounter technical issues in connection with changes and upgrades to the
underlying networks of supported cryptocurrencies. Any number of technical changes, software upgrades,
soft or hard forks, cybersecurity incidents, or other changes to the underlying blockchain networks may
occur from time to time, causing incompatibility, technical issues, disruptions or security weaknesses to
our platform. If we are unable to identify, troubleshoot, and resolve any such issues successfully, we
might no longer be able to support such cryptocurrency, our customers’ assets may be frozen or lost, the
security of our hot or cold wallets may be compromised, and our platform and technical infrastructure may
be affected.

In addition, surges in trading volume on our platform have in the past and may in the future cause our
systems to operate at diminished speed or even fail, temporarily or for a more prolonged period of time,
which would affect our ability to process transactions and potentially result in some customers’ orders
being executed at prices they did not anticipate, executed incorrectly, or not executed at all. For example,
the March 2020 Outages resulted in some of our customers being unable to buy and sell securities and
other financial products on our platform for a period of time. Similarly, the April-May 2021 Disruptions
resulted in some of our customers being unable to buy and sell cryptocurrencies for a period of time. Our
platform has otherwise in the past and may in the future experience outages. The March 2020 Outages
resulted in putative class action lawsuits, arbitrations, and regulatory examinations and investigations. We
provided remediation to many of our customers impacted by the March 2020 Outages through cash
payments, resulting in out-of-pocket losses to us of approximately $3.6 million. See Note 16 to our
consolidated financial statements in this Annual Report. Disruptions to, destruction of, improper access to,
breach of, instability of, or failure to effectively maintain our information technology systems (including our
data processing systems, self-clearing platform, and order routing system) that allow our customers to
use our products and services, and any associated degradations or interruptions of service could result in
damage to our reputation, loss of customers, loss of revenue, regulatory or governmental investigations,
civil litigation, and liability for damages. Frequent or persistent interruptions, or perceptions of such
interruptions whether true or not, in our products and services could cause customers to believe that our
products and services are unreliable, leading them to switch to our competitors or to otherwise avoid our
products and services. Additionally, our insurance policies may be insufficient to cover a claim made
against us by any such customers affected by any disruptions, outages, or other performance or
infrastructure problems.

Our success depends in part upon continued distribution through app stores and effective
operation with mobile operating systems, networks, technologies, products, hardware and
standards that we do not control.

A substantial majority of our customers’ activity on our platform occurs on mobile devices. We are
dependent on the interoperability of our app with popular mobile operating systems, networks,
technologies, products, hardware, and standards that we do not control, such as the Android and iOS
operating systems. Any changes, bugs or technical issues in such systems, new generations of mobile

37
devices or new versions of operating systems, or changes in our relationships with mobile operating
system providers, device manufacturers or mobile carriers, or in their terms of service or policies that
degrade the functionality of our app, reduce or eliminate our ability to distribute applications, give
preferential treatment to competitive products, limit our ability to target or measure the effectiveness of
applications, or impose fees or other charges related to our delivery of our application could adversely
affect customer usage of the Robinhood app. Further, we are subject to the standard policies and terms
of service of these operating systems, as well as policies and terms of service of the various application
stores that make our application and experiences available to our developers, creators and customers.
These policies and terms of service govern the availability, promotion, distribution, content and operation
generally of applications and experiences on such operating systems and stores. Each provider of these
operating systems and stores has broad discretion to change and interpret its terms of service and
policies with respect to our platform and those changes may be unfavorable to us and our customers’ use
of our platform. If we were to violate, or an operating system provider or application store believes that we
have violated, its terms of service or policies, that operating system provider or application store could
limit or discontinue our access to its operating system or store. Any limitation or discontinuation of our
access to any third-party platform or application store could adversely affect our business, financial
condition or results of operations.

Additionally, in order to deliver a high-quality mobile experience for our customers, it is important that
our products and services work well with a range of mobile technologies, products, systems, networks,
hardware and standards that we do not control. We need to continuously modify, enhance, and improve
our products and services to keep pace with changes in internet-related hardware, mobile operating
systems and other software, communication, browser, and database technologies. We might not be
successful in developing products that operate effectively with these technologies, products, systems,
networks or standards or in bringing them to market quickly or cost-effectively in response to market
demands. In the event that it is more difficult for our customers to access and use our app, or if our
customers choose not to access or use our app on their mobile devices or use mobile products that do
not offer access to our app, our customer growth and engagement could be adversely affected and our
revenues might decline.

We rely on third parties to perform some key functions, and their failure to perform those functions
could adversely affect our business, financial condition and results of operations.

We rely on certain third-party computer systems or third-party service providers, including cloud
technology providers such as Amazon Web Services (on which we primarily rely to deliver our services to
customers on our platform), internet service providers, payment services providers, market and third-party
data providers, regulatory services providers, clearing systems, market makers, exchange systems,
banking systems, co-location facilities, communications facilities, and other third-party facilities to run our
platform, facilitate trades by our customers, and support or carry out some regulatory obligations. In
addition, external content providers provide us with financial information, market news, charts, option and
stock quotes, cryptocurrency quotes, research reports, and other fundamental data that we provide to our
customers. These providers are susceptible to operational, technological and security vulnerabilities,
including security breaches, which may impact our business, and our ability to monitor our third-party
service providers’ data security is limited. In addition, these third-party service providers may rely on
subcontractors to provide services to us that face similar risks.

We face a risk that our third-party service providers might be unable or unwilling to continue to
provide these services to meet our current needs in an efficient, cost-effective manner or to expand their
services to meet our needs in the future. Any failures by our third-party service providers that result in an
interruption in service, unauthorized access, misuse, loss or destruction of data or other similar
occurrences could interrupt our business, cause us to incur losses, result in decreased customer
satisfaction and increase customer attrition, subject us to customer complaints, significant fines, litigation,
disputes, claims, regulatory investigations or other inquiries and harm our reputation. Regulators might
also hold us responsible for the failures of our providers.

38
 To the extent the operation of our systems relies on our third-party service providers, through either a
connection to, or an integration with, third parties’ systems, the risk of cybersecurity attacks and loss,
corruption, or unauthorized access to or publication of our information or the confidential information and
personal data of customers and employees may increase. Third-party risks may include insufficient
security measures, data location uncertainty, and the possibility of data storage in inappropriate
jurisdictions where laws or security measures may be inadequate, and our ability to monitor our third-
party service providers’ data security practices are limited. Although we generally have agreements
relating to cybersecurity and data privacy in place with our third-party service providers, such agreements
might not prevent the accidental or unauthorized access to or disclosure, loss, destruction, disablement or
encryption of, use or misuse of, or modification of data (including personal data) and/or might not enable
us to obtain adequate (or any) reimbursement from our third-party service providers in the event we
should suffer any such incidents. Due to applicable laws and regulations or contractual obligations, we
could be held responsible for any information security failure or cybersecurity attack attributed to our
vendors as they relate to the information we share with them. A vulnerability in a third-party service
provider’s software or systems, a failure of our third-party service providers’ safeguards, policies or
procedures, or a breach of a third-party service provider’s software or systems could result in the
compromise of the confidentiality, integrity, or availability of our systems or the data housed in our third-
party solutions.

Risks Related to Cybersecurity and Data Privacy

Our business could be materially and adversely affected by a cybersecurity breach or other attack
involving our computer systems or data or those of our customers or third-party service providers.

Our systems and those of our customers and third-party service providers have been and may in the
future be vulnerable to cybersecurity issues. We, like other financial technology organizations, routinely
are subject to cybersecurity threats and our technologies, systems, and networks have been and may in
the future be subject to attempted cybersecurity attacks. Such issues are increasing in frequency and
evolving in nature, including employee theft or misuse, denial-of-service attacks, and sophisticated nation-
state and nation-state-supported actors engaging in attacks. The operation of our platform involves the
use, collection, storage, sharing, disclosure, transfer, and other processing of customer information,
including personal data. Security breaches and other security incidents could expose us to a risk of loss
or exposure of this information, which could result in potential liability, investigations, regulatory fines,
penalties for violation of applicable laws or regulations, litigation, and remediation costs, as well as
reputational harm. As the breadth and complexity of the technologies we use and the software and
platforms we develop continue to grow, the potential risk of security breaches and cybersecurity attacks
increases. For instance, in December 2021, a vulnerability was discovered in Apache Software
Foundation’s Log4j internet software, which is broadly used (including by us and some of our service
providers) in a variety of consumer and enterprise services, websites, applications, and operational
technology products. In general, the vulnerability could have allowed malicious attackers to execute code
remotely on any exposed computer, which could have enabled the attackers to then steal data, install
malware, or take control of the device. We have updated the software to patch the vulnerability and to
date we are not aware of any related malicious activity affecting us or our users.

Cybersecurity attacks and other malicious internet-based activity continue to increase and financial
technology platform providers have been and expect to continue to be targeted. In light of media
attention, we may be a particularly attractive target of attacks seeking to access customer data or assets.
For example, from January 1, 2020 to October 16, 2020, approximately 2,000 Robinhood customer
accounts were allegedly accessed by unauthorized users. We believe these incidents resulted from
compromised passwords off of our platform, rather than any failure of our security or systems.
Nonetheless, we experienced negative publicity in connection with these events and may in the future
experience similar adverse effects relating to real or perceived security incidents, whether or not related
to the security of our platform or systems. We have also received customer complaints and been subject

39
to litigation and regulatory inquiries, examinations, enforcement actions, and investigations by various
state and federal regulatory bodies, including the SEC, FINRA, and certain state regulators, including the
NYDFS and the New York Attorney General, related to these events. The increasing sophistication and
resources of cyber criminals and other non-state threat actors and increased actions by nation-state
actors make it difficult to keep up with new threats and could result in a breach of security. Additionally,
due to the current COVID-19 pandemic, there is an increased risk that we may experience cybersecurity-
related incidents as a result of our employees, service providers and other third parties working remotely
on less secure systems and environments. While we take significant efforts to protect our systems and
data, including establishing internal processes and implementing technological measures designed to
provide multiple layers of security, and contract with third-party service providers to take similar steps, our
safety and security measures (and those of our third-party service providers) might be insufficient to
prevent damage to, or interruption or breach of, our information systems, data (including personal data),
and operations. For example, in November 2021 we experienced a data security incident when an
unauthorized third party socially engineered a customer support employee by phone and obtained access
to certain customer support systems. Based on our investigation and that of a third-party security firm, we
believe that the unauthorized party obtained names or email addresses for millions of people, phone
numbers for several thousand people, additional personal information for a few hundred people, and
extensive account details for about ten people, though we believe no Social Security numbers, bank
account numbers, or credit or debit card numbers were exposed and that there has been no financial loss
to any customers as a result of the incident.

Any unauthorized access to or disclosure, loss, destruction, disablement or encryption of, use or
misuse of or modification of data, including personal data, cybersecurity breach or other security incident
that we, our customers or our third-party service providers experience or the perception that one has
occurred or may occur, could harm our reputation, reduce the demand for our products and services and
disrupt normal business operations. In addition, it may require us to expend significant financial and
operational resources in response to a security breach, including repairing system damage, increasing
security protection costs by deploying additional personnel and modifying or enhancing our protection
technologies, investigating, remediating, or correcting the breach and any security vulnerabilities,
defending against and resolving legal and regulatory claims, and preventing future security breaches and
incidents, all of which could expose us to uninsured liability, increase our risk of regulatory scrutiny,
expose us to legal liabilities, including litigation, regulatory enforcement, indemnity obligations, or
damages for contract breach, divert resources and the attention of our management and key personnel
away from our business operations, and cause us to incur significant costs, any of which could materially
adversely affect our business, financial condition, and results of operations. Moreover, our efforts to
improve security and protect data from compromise might identify previously undiscovered security
breaches. There could be public announcements regarding any security incidents and any steps we take
to respond to or remediate such incidents, and if securities analysts or investors perceive these
announcements to be negative, it could have an adverse effect on the trading price of our Class A
common stock.

We are subject to stringent laws, rules, regulations, policies, industry standards and contractual
obligations regarding data privacy and security and may be subject to additional related laws and
regulations in jurisdictions into which we expand. Many of these laws and regulations are subject
to change and reinterpretation and could result in claims, changes to our business practices,
monetary penalties, increased cost of operations, or other harm to our business.

We are subject to a variety of federal, state, local, and non-U.S. laws, directives, rules, policies,
industry standards and regulations, as well as contractual obligations, relating to privacy and the
collection, protection, use, retention, security, disclosure, transfer and other processing of personal data
and other data, including the Gramm-Leach-Bliley Act of 1999, Section 5(c) of the Federal Trade
Commission Act and state laws such as the California Consumer Privacy Act. We will also face particular
privacy, data security and data protection risks if we continue to expand into the U.K. and the EU and
other jurisdictions in connection with the General Data Protection Regulation and other data protection
regulations. The regulatory framework for data privacy and security worldwide is continuously evolving
and developing and, as a result, interpretation and implementation standards and enforcement practices

40
are likely to remain uncertain for the foreseeable future. New laws, amendments to or reinterpretations of
existing laws, regulations, standards and other obligations may require us to incur additional costs and
restrict our business operations, and may require us to change how we use, collect, store, transfer or
otherwise process certain types of personal data, to implement new processes to comply with those laws
and our customers’ exercise of their rights thereunder, and could greatly increase the cost of providing
our offerings, require significant changes to our operations, or even prevent us from providing some
offerings in jurisdictions in which we currently operate and in which we might operate in the future or incur
potential liability in an effort to comply with certain legislation. There is a risk of enforcement actions in
response to rules and regulations promulgated under the authority of federal agencies and state attorneys
general and legislatures and consumer protection agencies. For instance, we have in the past (as
discussed in Note 16 to our consolidated financial statements in this Annual Report) and may in the future
be subject to investigations and examinations by the NYDFS regarding, among other things, our
cybersecurity practices. In addition, if we fail to follow these security standards, even if no customer
information is compromised, we might incur significant fines or experience a significant increase in costs.

Any failure or perceived failure by us or our third-party service providers to comply with our posted
privacy policies or with any applicable federal, state or similar foreign laws, rules, regulations, industry
standards, policies, certifications or orders relating to data privacy and security, or any compromise of
security that results in the theft, unauthorized access, acquisition, use, disclosure, or misappropriation of
personal data or other customer data, could result in significant awards, fines, civil and/or criminal
penalties or judgments, proceedings or litigation by governmental agencies or customers, including class
action privacy litigation in certain jurisdictions and negative publicity and reputational harm, one or all of
which could have an adverse effect on our reputation, business, financial condition and results of
operations.

Risks Related to Our Brokerage Products and Services

If we do not maintain the net capital levels required by regulators, our broker-dealer business may
be restricted and we may be fined or subject to other disciplinary or corrective actions.

The SEC, FINRA, and various state regulators have stringent rules with respect to the maintenance
of specific levels of net capital by securities broker-dealers. For example, our broker-dealer subsidiaries
are each subject to Rule 15c3-1 under the Exchange Act (the “SEC Uniform Net Capital Rule”), which
specifies minimum capital requirements intended to ensure the general financial soundness and liquidity
of broker-dealers, and our clearing and carrying broker-dealer subsidiary is subject to Rule 15c3-3 under
the Exchange Act, which requires broker-dealers to maintain liquidity reserves. Our failure to maintain the
required net capital levels could result in immediate suspension of securities activities, suspension or
expulsion by the SEC or FINRA, restrictions on our ability to expand our existing business or to
commence new businesses, and could ultimately lead to the liquidation of our broker-dealer entities and
winding down of our broker-dealer business. If such net capital rules are changed or expanded, if there is
an unusually large charge against net capital, or if we make changes in our business operations that
increase our capital requirements, operations that require an intensive use of capital could be limited. A
large operating loss or charge against net capital could have adverse effects on our ability to maintain or
expand our business.

Our compliance and risk management policies and procedures as a regulated financial services
company might not be fully effective in identifying or mitigating compliance and risk exposure in
all market environments or against all types of risk.

As a financial services company, our business exposes us to a number of heightened risks. We have
devoted significant resources to develop our compliance and risk management policies and procedures
and will continue to do so, but our efforts might be insufficient. Our limited operating history, evolving
business, and rapid growth make it difficult to predict all of the risks and challenges we may encounter
and therefore increase the risk that our policies and procedures to identify, monitor and manage

41
compliance risks might not be fully effective in mitigating our exposure in all market environments or
against all types of risk. Further, some controls are manual and are subject to inherent limitations and
errors in oversight, which could cause our compliance and other risk management strategies to be
ineffective. Other compliance and risk management methods depend upon the evaluation of information
regarding markets, customers, catastrophe occurrences, or other matters that are publicly available or
otherwise accessible to us, which might not always be accurate, complete, up-to-date, or properly
evaluated. Insurance and other traditional risk-shifting tools might be held by or available to us in order to
manage some exposures, but they are subject to terms such as deductibles, coinsurance, limits, and
policy exclusions, as well as risk of counterparty denial of coverage, default, or insolvency. Any failure to
maintain effective compliance and other risk management strategies could have an adverse effect on our
business, financial condition, and results of operations.

We are also exposed to heightened regulatory risk because our business is subject to extensive
regulation and oversight in a variety of areas, and such regulations are subject to revision,
supplementation, or evolving interpretations and application, and it can be difficult to predict how they
may be applied to our business, particularly as we introduce new products and services and expand into
new jurisdictions. For example, when we launched our fractional shares program in late 2019, based on
our understanding of the reporting requirements we did not report proprietary fractional trades to FINRA’s
Trade Reporting Facility. Since then, FINRA has informed us that such trades should be reported. As a
result, we began reporting fractional shares in January 2021, and we continue to work with FINRA to
complete back reporting, which may result in fines or penalties for failing to do so at the time of the trades.

We are subject to potential losses as a result of our clearing and execution activities.

We provide clearing and execution services for our securities brokerage business. Clearing and
execution services include the confirmation, receipt, settlement and delivery functions involved in
securities transactions. Clearing brokers also assume direct responsibility for the possession or control of
customer securities and other assets, the clearing of customer securities transactions and lending money
to customers on margin. Self-clearing securities firms are subject to substantially more regulatory control
and examination than introducing brokers that rely on others to perform clearing functions. Errors in
performing clearing functions, including clerical and other errors related to the handling of funds and
securities on behalf of customers, could lead to (i) civil penalties, as well as losses and liability as a result
of related lawsuits brought by customers and others and any out-of-pocket costs associated with
remediating customers for losses, and (ii) the risk of fines or other actions by regulators.

Our clearing operations also require a commitment of our capital and, despite safeguards
implemented by our software, involve risks of losses due to the potential failure of our customers to
perform their obligations under these transactions and margin loans. If our customers default on their
obligations, including failing to pay for securities purchased, deliver securities sold, or meet margin calls,
we remain financially liable for such obligations, and although these obligations are collateralized, we are
subject to market risk in the liquidation of customer collateral to satisfy those obligations. While we have
established systems and processes to manage risks related to our clearing and execution services, we
face a risk that such systems and processes might be inadequate. Any liability arising from clearing and
margin operations could have an adverse effect on our business, financial condition and results of
operations.

In addition, as a clearing member firm of securities and derivatives clearinghouses in the United
States, we are also exposed to clearing member credit risk. Securities and derivatives clearinghouses
require member firms to deposit cash, stock and/or government securities for margin requirements and
for clearing funds. If a clearing member defaults in its obligations to the clearinghouse in an amount larger
than its own margin and clearing fund deposits, the shortfall is absorbed pro rata from the deposits of the
other clearing members. Many clearinghouses of which we are members also have the authority to
assess their members for additional funds if the clearing fund is depleted. A large clearing member default
could result in a substantial cost to us if we are required to pay such assessments. Furthermore, in the

42
event that a significant amount of our customers’ open trades fail to settle, we may be exposed to
potential loss of the capital we committed to meet our deposit requirements.

Our exposure to credit risk with customers, market makers, and other counterparties could result
in losses.

We extend margin credit and leverage to customers, which are collateralized by customer cash and
securities. We also borrow and lend securities in connection with our broker-dealer business. By
permitting customers to purchase securities on margin, we are subject to risks inherent in extending
credit, especially during periods of rapidly declining markets (including rapid declines in the trading price
of individual securities) in which the value of the collateral held by us could fall below the amount of a
customer’s indebtedness. In addition, in accordance with regulatory guidelines, we collateralize
borrowings of securities by depositing cash or securities with lenders. Sharp changes in market values of
substantial amounts of securities in a short period of time and the failure by parties to the borrowing
transactions to honor their commitments could result in substantial losses. Such changes could also
adversely impact our capital because our clearing operations require a commitment of our capital and,
despite safeguards implemented by our software, involve risks of losses due to the potential failure of our
customers to perform their obligations under these transactions and margin loans.

We are also exposed to credit risk in our dealings with the market makers to which we route
cryptocurrency orders. Unlike equities and option trades, cryptocurrency trades do not settle through any
central clearinghouses but rather are conducted under bilateral agreements between us and each crypto
market maker. (The risk of the market maker's default therefore falls upon us rather than being distributed
among a clearinghouse's members.) The terms of these bilateral agreements vary but spot transactions
are generally aggregated and settled on a net basis once per business day (with the crypto deliveries
occurring first and the net cash moving within 24 hours thereafter) and payment obligations are generally
unsecured during the interval between delivery and payment. It is not uncommon for us to have an intra-
day outstanding net receivable of $100 million that we are owed by any one cryptocurrency market
maker. Similarly, we routinely have unsecured PFOF receivables from equities and options market
makers. Any payment default by a market maker could have adverse effects on our financial condition
and results of operations.

We have policies and procedures designed to manage credit risk, but we face a risk that such policies
and procedures might not be fully effective.

Providing investment recommendations could subject us to investigations, penalties, and liability

for customer losses if we fail to comply with applicable regulatory standards, and providing
investment education tools could subject us to additional risks if such tools are construed to be
investment advice or recommendations.

We recently launched (other than in Massachusetts) a recommended portfolio feature for customers
who have not yet placed any trades as described further in Part I, Item I “Business.”

Risks associated with providing investment recommendations include those arising from how we
disclose and address possible conflicts of interest, inadequate due diligence, inadequate disclosure, and
human error. New regulations, such as the SEC’s Regulation Best Interest and certain state broker-dealer
regulations, impose heightened conduct standards and requirements on recommendations to retail
investors. In addition, various states are considering potential regulations or have already adopted certain
regulations that could impose additional standards of conduct or other obligations on us to the extent we
provide investment advice or recommendations to our customers.

We also provide customers with a variety of educational materials, investment tools, and financial
news (including our “Robinhood Snacks” newsletters and podcasts). Additionally, Robinhood Gold
members have access to stock research reports prepared by our third-party collaborator, Morningstar,

43
Inc. Based on current law and regulations, we believe these services do not constitute investment advice
or investment recommendations. If the law were to change or if a court or regulator were to interpret
current law and regulations in a novel manner, we face a risk that these services could come to be
considered as investment advice.

If services that we do not consider to be recommendations (such as educational materials and

Snacks) are construed as constituting investment advice or recommendations, we could be subject to
investigations by regulatory agencies. For example, in December 2020, the Enforcement Section of MSD
filed a complaint against us alleging that a fiduciary conduct standard applies to us under Massachusetts
securities law by claiming that our product features and marketing strategies amount to investment
recommendations. See Note 16 to our consolidated financial statements in this Annual Report for more
information. Changes in law or changes in interpretations of existing law may also require us to modify the
nature of these services or discontinue them altogether, one or more of which could have an adverse
effect on our ability to attract and retain customers.

To the extent our investment education tools and news are determined to constitute investment
advice or recommendations and to the extent our recommendations fail to satisfy regulatory
requirements, or we fail to know our customers, or improperly advise our customers, or if risks associated
with advisory services otherwise materialize, we could be found liable for losses suffered by such
customers, or could be subject to regulatory fines, penalties, and other actions such as business
limitations, any of which could harm our reputation and business.

Risks Related to Cryptocurrency Products and Services

The loss, destruction or unauthorized use or access of a private key required to access any of the
cryptocurrencies we hold on behalf of customers could result in irreversible loss of such
cryptocurrencies. If we are unable to access the private keys or if we experience a hack or other
data loss relating to the cryptocurrencies we hold on behalf of customers, our customers may be
unable to trade their cryptocurrency, our reputation and business could be harmed, and we may be
liable for losses in excess of our ability to pay.

As our business continues to grow and we expand cryptocurrency product and service offerings, so
do the risks associated with failing to safeguard and manage cryptocurrencies we hold on behalf of our
customers. Our success and the success of our offerings requires significant public confidence in our
ability to properly manage customers’ balances and handle large and growing transaction volumes and
amounts of customer funds. Any failure by us to maintain the necessary controls or to manage the
cryptocurrencies we hold on behalf of our customers and funds appropriately and in compliance with
applicable regulatory requirements could result in reputational harm, significant financial losses, lead
customers to discontinue or reduce their use of our services, and result in significant penalties and fines
and additional restrictions.

We hold all cryptocurrencies in custody on behalf of customers in two types of wallets: (i) hot wallets,
which are managed online, and (ii) cold wallets, which are managed entirely offline on a computer stored
in one or more secure data facilities. In general, the overwhelming majority of cryptocurrency coins on our
platform are held in cold storage, though some coins are held in hot wallets to support day-to-day
operations. Under blockchain protocol, in order to access or transfer cryptocurrency stored in a wallet, we
need to use a private key. To the extent any private keys are lost, destroyed, unable to be accessed by
us, or otherwise compromised and no backup of such private key is accessible, we will be unable to
access the assets held in the related hot or cold wallet. Further, we cannot provide assurance that any or
all of our wallets will not be hacked or compromised such that cryptocurrencies are sent to one or more
private addresses that we do not control, which could result in the loss of some or all of the
cryptocurrencies that we hold in custody on behalf of customers. Any such losses could be significant,
and we might not be able to obtain insurance coverage for some or all of those losses. Cryptocurrencies
and blockchain technologies have been, and may in the future be, subject to security breaches, hacking,

44
or other malicious activities. For example, in August 2021, hackers were able to momentarily take over
the Bitcoin SV network, allowing them to spend coins they did not have and prevent transactions from
going through. Any loss of private keys relating to, or hack or other compromise of, the hot wallets or cold
wallets we use to store our customers’ cryptocurrencies could result in total loss of customers’
cryptocurrencies (because customers’ cryptocurrency balances and cryptocurrency investments are not
protected by the Securities Investor Protection Corporation (the “SIPC”)) or adversely affect our
customers’ ability to sell their assets, and could result in our being required to reimburse customers for
their losses, subjecting us to significant financial losses. Our insurance coverage for such impropriety is
limited and might not cover the extent of loss nor the nature of such loss, in which case we might be liable
for the full amount of losses suffered, which could be greater than all of our assets. The total value of
cryptocurrencies under our control on behalf of customers is significantly greater than the total value of
insurance coverage that would compensate us in the event of theft or other loss of such assets.
Additionally, any such security compromises or any business continuity issues affecting our
cryptocurrency market makers may affect the ability of our customers to trade or hold cryptocurrencies on
our platform and could harm customer trust in us and our products.

The prices of cryptocurrencies are extremely volatile. Fluctuations in the price of various
cryptocurrencies may cause uncertainty in the market and could negatively impact trading
volumes of cryptocurrencies, which would adversely affect the success of our business, financial
condition and results of operations.

The price of each cryptocurrency is based in part on market adoption and future expectations, which
might or might not be realized. As a result, the prices of cryptocurrencies are highly speculative. The
prices of cryptocurrencies have been subject to dramatic fluctuations, which have impacted, and will
continue to impact, our trading volumes and operating results and may adversely impact our growth
strategy and business. Several factors could affect a cryptocurrency’s price, including, but not limited to:

• Global cryptocurrency supply, including various alternative currencies which exist, and global
cryptocurrency demand, which can be influenced by the growth or decline of retail merchants’
and commercial businesses’ acceptance of cryptocurrencies as payment for goods and services,
the security of online cryptocurrency exchanges and digital wallets that hold cryptocurrencies, the
perception that the use and holding of digital currencies is safe and secure, and regulatory
restrictions on their use.
• Changes in the software, software requirements or hardware requirements underlying a
blockchain network, such as a fork. Forks in the future are likely to occur and could result in a
sustained decline in the market price of cryptocurrencies.
• Changes in the rights, obligations, incentives, or rewards for the various participants in a
blockchain network.
• The maintenance and development of the software protocol of cryptocurrencies.
• Cryptocurrency exchanges’ deposit and withdrawal policies and practices, liquidity on such
exchanges and interruptions in service from or failures of such exchanges.
• Regulatory measures, if any, that affect the use and value of cryptocurrencies.
• Competition for and among various cryptocurrencies that exist and market preferences and
expectations with respect to adoption of individual currencies.
• Actual or perceived manipulation of the markets for cryptocurrencies.
• Actual or perceived connections between cryptocurrencies (and related activities such as mining)
and adverse environmental effects or illegal activities.

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 • Social media posts and other public communications by high-profile individuals relating to specific
cryptocurrencies, or listing or other business decisions by cryptocurrency companies relating to
specific cryptocurrencies.
• Expectations with respect to the rate of inflation in the economy, monetary policies of
governments, trade restrictions, and currency devaluations and revaluations.

While we have observed a positive trend in the total market capitalization of cryptocurrency assets
historically, driven by increased adoption of cryptocurrency trading by both retail and institutional investors
as well as continued growth of various non-investing use cases, historical trends are not indicative of
future adoption, and it is possible that the rate of adoption of cryptocurrencies may slow or decline, which
would negatively impact our business, financial condition, and results of operations.

While we currently support seven cryptocurrencies for trading, market interest in particular
cryptocurrencies can also be volatile and there are many cryptocurrencies in the market that we do not
support. For example we support trading in Dogecoin and we benefited from a surge in interest for
Dogecoin during the second quarter of 2021. For the first, second, and third quarters of 2021, transaction-
based revenue attributable to transactions in Dogecoin generated approximately 7%, 32%, and 8% of our
total net revenues, respectively. Our business could be adversely affected, and growth in our net revenue
earned from cryptocurrency transactions could slow or decline, if the markets for the cryptocurrencies we
support deteriorate or if demand moves to other cryptocurrencies not supported by our platform.

Volatility in the values of cryptocurrencies caused by the factors described above or other factors may
impact our regulatory net worth requirements as well as the demand for our services and therefore have
an adverse effect on our business, financial condition and results of operations.

Any particular cryptocurrency’s status as a “security” is subject to a high degree of uncertainty and
if we have not properly characterized one or more cryptocurrencies, we may be subject to
regulatory scrutiny, investigations, fines, and other penalties.

We currently facilitate customer trades for a limited number of cryptocurrencies that we have
analyzed under applicable internal policies and procedures and that we believe are not securities under
U.S. law. The legal test for determining whether any given cryptocurrency is a security is a highly
complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC Staff
has indicated that the determination of whether or not a cryptocurrency is a security depends on the
characteristics and use of that particular asset. The SEC generally does not provide advance guidance or
confirmation on the status of any particular cryptocurrency as a security. Occasionally though the SEC
and its staff have taken positions that certain cryptocurrencies are “securities” – often in the context of
enforcement actions – and we do not currently support any cryptocurrencies for which the SEC or its staff
has taken such a position. Prior public statements by senior officials at the SEC indicate that the SEC
does not intend to take the position that Bitcoin or Ethereum are securities (in their current forms). Bitcoin
and Ethereum are the only cryptocurrencies as to which senior officials at the SEC have publicly
expressed such a view. Moreover, such statements are not official policy statements by the SEC and
reflect only the speakers’ views, which are not binding on the SEC or any other agency or court, cannot
be generalized to any other cryptocurrency and may evolve. Similarly, although the SEC’s Strategic Hub
for Innovation and Financial Technology published a framework for analyzing whether any given
cryptocurrency is a security in April 2019, this framework is also not a rule, regulation, or statement of the
SEC and is not binding on the SEC. With respect to all other cryptocurrencies, there is currently no
certainty under the applicable legal test that such assets are not securities, and regulators have
expressed concerns about cryptocurrency platforms adding multiple new coins, some of which the
regulators question might be unregistered securities. Although our policies and procedures are intended
to enable us to make risk-based assessments regarding the likelihood that a particular cryptocurrency
could be deemed a security under applicable laws, including federal securities laws, our assessments are
not definitive legal determinations as to whether a particular digital asset is a security under such laws.
Accordingly, regardless of our conclusions, we could be subject to legal or regulatory action in the event

46
the SEC or a court were to determine that a cryptocurrency supported by our platform is a “security”
under U.S. law.

To the extent that the SEC or a court determines that any cryptocurrencies supported by our platform
are securities, that determination could prevent us from continuing to facilitate trading of those
cryptocurrencies (including delisting from our platform). It could also result in regulatory enforcement
penalties and financial losses in the event that we have liability to our customers and need to compensate
them for any losses or damages. We could be subject to judicial or administrative sanctions for failing to
offer or sell the cryptocurrency in compliance with securities registration requirements, or for acting as a
securities broker or dealer without appropriate registration. Such an action could result in injunctions and
cease and desist orders, as well as civil monetary penalties, fines, and disgorgement, criminal liability,
and reputational harm. Customers that traded such supported cryptocurrency through our platform and
suffered trading losses might also seek to rescind transactions that we facilitated on the basis that they
were conducted in violation of applicable law, which could subject us to significant liability and losses. We
might also be required to cease facilitating transactions in the supported cryptocurrency, which could
negatively impact our business, operating results, and financial condition. A determination by the SEC or
a court that a cryptocurrency supported by our platform constitutes a security could also result in our
determination that it is advisable to remove other cryptocurrencies from our platform that have similar
characteristics to the cryptocurrency that was determined to be a security. Further, if Bitcoin, Ethereum, or
any other supported cryptocurrency is deemed to be a security, it may have adverse consequences for
such supported cryptocurrency. For instance, all transactions in such supported cryptocurrency would
have to be registered with the SEC or other foreign authority, or conducted in accordance with an
exemption from registration, which could severely limit its liquidity, usability, and transactability. Moreover,
the networks on which such supported cryptocurrencies are used might be required to be regulated as
securities intermediaries, and subject to applicable rules, which could effectively render the network
impracticable for its existing purposes. Further, any determination that Bitcoin or Ethereum is a security
could draw negative publicity and cause a decline in the general acceptance of cryptocurrencies. Also, it
would make it more difficult for Bitcoin or Ethereum, as applicable, to be traded, cleared, and custodied as
compared to other cryptocurrencies that are not considered to be securities. In addition, our growth might
be adversely affected if we are not able to expand our platform to include additional cryptocurrencies that
the SEC has determined to be securities or that we believe are likely to be determined to be securities.

Cryptocurrency laws, regulations, and accounting standards are often difficult to interpret and are
rapidly evolving in ways that are difficult to predict. Changes in these laws and regulations, or our
failure to comply with them, could negatively impact cryptocurrency trading on our platform.

We provide users with the ability to buy, hold, and sell a limited number of cryptocurrencies, such as
Bitcoin, Ethereum, and Dogecoin. Domestic and foreign regulators and governments are increasingly
focused on the regulation of cryptocurrencies. In the United States, cryptocurrencies are regulated by
both federal and state authorities, depending on the context of their usage. Cryptocurrency market
disruptions and resulting governmental interventions are unpredictable, and may make cryptocurrencies,
or certain cryptocurrency business activities, illegal altogether. As regulation of cryptocurrencies
continues to evolve, there is a substantial risk of inconsistent regulatory guidance among federal and
state agencies and among state governments which, along with potential accounting and tax issues or
other requirements relating to cryptocurrencies, could impede the growth of our cryptocurrency
operations. Additionally, regulation in response to the climate impact of cryptocurrency mining could
negatively impact cryptocurrency trading on our platform.

The cryptocurrency accounting rules and regulations that we must comply with are complex and
subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various
bodies formed to promulgate and interpret accounting principles. A change in these rules and regulations
or interpretations could have a significant effect on our reported financial results and financial position,
and could even affect the reporting of transactions completed before the announcement or effectiveness
of a change. Further, there are a limited number of precedents for the financial accounting treatment of
cryptocurrency assets (including related issues of valuation and revenue recognition), and no official

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guidance has been provided by the FASB or the SEC. Accordingly, there remains significant uncertainty
as to the appropriate accounting for cryptocurrency asset transactions, cryptocurrency assets, and related
revenues. Uncertainties in or changes in regulatory or financial accounting standards could result in the
need to change our accounting methods and/or restate our financial statements, and could impair our
ability to provide timely and accurate financial information, which could adversely affect our financial
statements, and result in a loss of investor confidence.

In addition, future regulatory actions or policies could limit or restrict cryptocurrency usage, custody,
or trading, or the ability to convert cryptocurrencies to fiat currencies. For example, in August 2021,
September 2021, and October 2021, Chair Gensler remarked on the need for further regulatory oversight
of crypto trading and crypto lending platforms. Some lawmakers and regulators have also raised
questions about Transaction Rebates from cryptocurrency trading. Transaction Rebates from
cryptocurrency trading have historically, and may continue, to comprise a significant percentage of our
total net revenues. Any future regulatory actions or policies could reduce the demand for cryptocurrency
trading and might materially decrease our revenue derived from Transaction Rebates in absolute terms
and as a proportion of our total revenues.

Furthermore, the recently enacted Infrastructure Investment and Jobs Act significantly changes the
tax reporting requirements applicable to brokers and holders of cryptocurrency and digital assets. New
reporting requirements will apply to information returns filed in 2024 regarding transactions occurring in
calendar year 2023. The implementation of these requirements, and any further legislative changes or
related guidance from the Internal Revenue Service, might significantly impact our tax reporting and
withholding processes and result in increased compliance costs. Failure to comply with these new
information reporting and withholding requirements may subject us to significant tax liabilities and
penalties.

Our planned launch of the Crypto Wallets feature, which will allow customers to deposit and
withdraw cryptocurrencies to and from our platform, could result in loss of customer assets,
customer disputes, and other liabilities, which could harm our reputation and adversely impact
trading volumes and transaction-based revenues.

We recently announced plans to allow customers to deposit and withdraw cryptocurrencies to and
from our platform. User testing of this Crypto Wallets feature has been ramping up since the fourth
quarter of 2021. Crypto Wallets transfers are processed using Robinhood’s general custodial wallets in
which we hold cryptocurrencies on behalf of customers; when transactions are completed, coins are
allocated to and from individuals’ accounts in our customer records.

Crypto Wallets transfers initiated by users are subject to a heightened risk of user error. Under
blockchain protocol, recording a transfer of cryptocurrency on the blockchain involves both the private key
of the sending wallet and the unique public key of the receiving wallet. Such keys are strings of
alphanumeric characters. In order for a customer to receive cryptocurrency on our platform, the customer
will need to arrange for the owner of an external source wallet to “sign” a transaction with the private key
of that external wallet, directing a transfer of the cryptocurrency to our receiving Robinhood wallet by
inputting the public key (which we will provide to the customer) of our Robinhood wallet. Similarly, in order
to withdraw cryptocurrency from our platform, the customer will need to provide us with the public key of
the external wallet to which the cryptocurrency is to be transferred, and we will “sign” the transaction
using the private key of our Robinhood wallet. Some crypto networks might require additional information
to be provided in connection with any transfer of cryptocurrency to or from our platform. A number of
errors could occur in the process of depositing or withdrawing cryptocurrencies to or from our platform,
such as typos, mistakes, or the failure to include information required by the blockchain network. For
instance, a user might include typos when entering our wallet’s public key or the desired recipient’s public
key when depositing to and withdrawing from our platform, respectively. Alternatively, a user could
mistakenly transfer cryptocurrencies to a wallet address that he or she does not own or control, or for
which the user has lost the private key. In addition, each wallet address is compatible only with the

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underlying blockchain network on which it is created. For instance, a Bitcoin wallet address can be used
to send and receive Bitcoin only. If any Ethereum, Dogecoin, or other cryptocurrency is sent to a Bitcoin
wallet address, for example, or if any of the other foregoing errors occur, such cryptocurrencies could be
permanently and irretrievably lost with no means of recovery. Although our account agreement disclaims
responsibility for losses caused by customer errors, such incidents could result in customer disputes,
damage to our brand and reputation, legal claims against us, and financial liabilities.

Additionally, allowing customers to deposit and withdraw cryptocurrencies to and from our platform
increases the risk that our platform might be exploited to facilitate illegal activity such as fraud, gambling,
money laundering, tax evasion, and scams. Crypto Wallets transfers will also expose us to heightened
risks related to potential violations of trade sanctions, including OFAC regulations, and anti-money
laundering and counter-terrorist financing laws, which among other things impose strict liability for
transacting with prohibited persons. We engage blockchain analytics vendors to help determine whether
the external wallets involved in our transfers are controlled by persons on prohibited lists or involved in
fraudulent or illegal activity. However, fraudulent and illegal transactions and prohibited status could be
difficult or impossible for us and our vendors to detect in some circumstances. The use of our platform for
illegal or improper purposes could subject us to claims, individual and class action lawsuits, and
government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that
could result in significant liabilities and reputational harm for us and could cause cryptocurrency trading
volumes and transaction-based revenues to decline.

A temporary or permanent blockchain “fork” could adversely affect our business.

Most blockchain protocols, including Bitcoin and Ethereum, are open source. Any user can download
the software, modify it and then propose that users and miners of Bitcoin, Ethereum or other blockchain
protocols adopt the modification. When a modification is introduced and a substantial majority of miners
consent to the modification, the change is implemented and the Bitcoin, Ethereum or other blockchain
protocol networks, as applicable, remain uninterrupted. However, if less than a substantial majority of
users and miners consent to the proposed modification, and the modification is not compatible with the
software prior to its modification, the consequence would be what is known as a “fork” (i.e., “split”) of
impacted blockchain protocol network and respective blockchain with one prong running the pre-modified
software and the other running the modified software. The effect of such a fork would be the existence of
two versions of the Bitcoin, Ethereum or other blockchain protocol network, as applicable, running
simultaneously, but with each split network’s cryptocurrency lacking interchangeability.

Both Bitcoin and Ethereum protocols have been subject to “forks” recently that resulted in the creation
of new networks, including, among others, Bitcoin Cash, Bitcoin SV, Bitcoin Diamond, Bitcoin Gold and
Ethereum Classic. Some of these forks have caused fragmentation among platforms as to the correct
naming convention for forked cryptocurrencies. Due to the lack of a central registry or rulemaking body in
the cryptocurrency market, no single entity has the ability to dictate the nomenclature of forked
cryptocurrencies, causing disagreements and a lack of uniformity among platforms on the nomenclature
of forked cryptocurrencies, and which results in further confusion to customers as to the nature of
cryptocurrencies they hold on platforms. In addition, several of these forks were contentious and as a
result, participants in certain communities may harbor ill will towards other communities. As a result,
certain community members may take actions that adversely impact the use, adoption and price of
Bitcoin, Ethereum or any of their forked alternatives.

Furthermore, forks can lead to disruptions of networks and our information technology systems,
cybersecurity attacks, replay attacks, or security weaknesses, any of which can further lead to temporary
or even permanent loss of customer cryptocurrencies. For instance, when the Ethereum and Ethereum
Classic networks split in July 2016, replay attacks, in which transactions from one network were
rebroadcast on the other network to achieve “double-spending,” plagued platforms that traded Ethereum
through at least October 2016, resulting in significant losses to some cryptocurrency platforms. Another
possible result of a fork is an inherent decrease in the level of security due to the splitting of some mining

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power across networks, making it easier for a malicious actor to exceed 50% of the mining power of that
network. Such disruption and loss could cause our company to be exposed to liability, even in
circumstances where we have no intention of supporting a cryptocurrency compromised by a fork.

Moreover, we might not wish to or be able to support a cryptocurrency resulting from the fork of a
network which may cause our customers to lose confidence in us or reduce their engagement on our
platform. In assessing whether we will support a cryptocurrency resulting from the fork of a network,
among our top priorities is to safeguard our customer’s assets, and we spend extensive time designing,
building, testing, reviewing and auditing our systems to check whether the cryptocurrencies we support
remain safe and secure. There are several considerations that we consider as part of a general
cryptocurrency approval policy (including security or infrastructure concerns that may arise with the
integration of any new cryptocurrency into the technical infrastructure that allows us to secure customer
cryptocurrencies and to transact securely in corresponding blockchains), which may operate to limit our
ability to support forks. Further, we generally do not support a forked cryptocurrency that does not have
support from a majority of the affiliated third-party miner and developer community.

Whether we are obligated to provide services for a new and previously unsupported cryptocurrency is
a question of contract, as recognized in recent published rulings of the California appellate courts and
federal district courts. The user agreement each customer enters into in order to trade cryptocurrencies
on our platform clearly indicates that we have the sole discretion to determine whether we will support a
forked network and the approach to such forked cryptocurrencies and that we may temporarily suspend
trading for a cryptocurrency whose network is undergoing a fork without advanced notice to the customer.
Regardless of the foregoing, we may in the future be subject to claims by customers arguing that they are
entitled to receive certain forked cryptocurrencies by virtue of cryptocurrencies that they hold with us. If
any customers succeed on a claim that they are entitled to receive the benefits of a forked cryptocurrency
that we do not or are unable to support, we may be required to pay significant damages, fines or other
fees to compensate customers for their losses.

Any inability to maintain adequate relationships with affiliates, third-party banks and market
makers with respect to, and any inability to settle customer trades related to, our cryptocurrency
offerings, may adversely affect our business, financial condition and results of operations.

We rely on third-party banks and market makers to provide cryptocurrency products and services to
our customers. The cryptocurrency market operates 24 hours a day, seven days a week. The
cryptocurrency market does not have a centralized clearinghouse, and the transactions in
cryptocurrencies on our platform rely on direct settlements between us and our customers and direct
settlements between us and our market makers after customer trades are executed. Accordingly, we rely
on third-party banks to facilitate cash settlements with customers’ brokerage accounts and we rely on the
ability of market makers to complete cryptocurrency settlements with us to obtain cryptocurrency for
customer accounts. In addition, we must maintain cash assets in our bank accounts sufficient to meet the
working capital needs of our business, which includes deploying available working capital to facilitate
cash settlements with our customers and market makers (as well as maintaining the minimum capital
required by regulators). If we, third-party banks or market makers have operational failures and cannot
perform and facilitate our routine cash and cryptocurrency settlement transactions, we will be unable to
support normal trading operations on our cryptocurrency trading platform and these disruptions could
have an adverse impact on our business, financial condition and results of operations. Similarly, if we fail
to maintain cash assets in our bank accounts sufficient to meet the working capital needs of our business
and necessary to complete routine cash settlements related to customer trading activity, such failure
could impair our ability to support normal trading operations on our cryptocurrency platform, which could
cause cryptocurrency trading volumes and transaction-based revenues to decline significantly.

We may also be harmed by the loss of any of our banking partners and market makers. As a result of
the many regulations applicable to cryptocurrencies or the risks of cryptocurrencies generally, many
financial institutions have decided, and other financial institutions might in the future decide, not to provide

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bank accounts (or access to bank accounts), payments services, or other financial services to companies
providing cryptocurrency products, including us. If we or our market makers cannot maintain sufficient
relationships with the banks that provide these services, if banking regulators restrict or prohibit banking
of cryptocurrency businesses, or if these banks impose significant operational restrictions, it could be
difficult for us to find alternative business partners for our cryptocurrency offerings, which would disrupt
our business and could cause cryptocurrency trading volumes and transaction-based revenues to decline
significantly.

From time to time, we may encounter technical issues in connection with changes and upgrades to
the underlying networks of supported cryptocurrencies, which could adversely affect the success
of our business, financial condition and results of operations.

Any number of technical changes, software upgrades, soft or hard forks, cybersecurity incidents or
other changes to the underlying blockchain networks may occur from time to time, causing incompatibility,
technical issues, disruptions or security weaknesses to our platform. If we are unable to identify,
troubleshoot and resolve any such issues successfully, we might no longer be able to support such
cryptocurrency, our customers’ assets may be frozen or lost, the security of our hot or cold wallets may be
compromised and our platform and technical infrastructure may be affected, all of which could cause
trading volumes and transaction-based revenue to decline and expose us to potential liability for customer
losses.

Risks Related to Our Intellectual Property

Any failure to obtain, maintain, protect, defend or enforce our intellectual property rights could
adversely affect our business.

Our success and ability to compete depend in part upon our ability to obtain, maintain, protect, defend
and enforce our intellectual property rights and technology. The steps we take to protect our intellectual
property rights might not be sufficient to effectively prevent third parties from infringing, misappropriating,
diluting, or otherwise violating our intellectual property rights or to prevent unauthorized disclosure or
unauthorized use of our trade secrets or other confidential information. We make business decisions
about when to seek patent protection for a particular technology, obtain trademark protection and when to
rely upon trade secret protection, and the approach we select may ultimately prove to be inadequate. We
will not be able to protect our intellectual property rights, however, if we do not detect unauthorized use of
our intellectual property rights. We also might fail to maintain or be unable to obtain adequate protections
for some of our intellectual property rights in the United States and some non-U.S. countries, and our
intellectual property rights might not receive the same degree of protection in non-U.S. countries as they
would in the United States because of the differences in non-U.S. patent, trademark, copyright, and other
laws concerning intellectual property and proprietary rights. In addition, if we do not adequately protect
our rights in our trademarks from infringement and unauthorized use, any goodwill that we have
developed in those trademarks could be lost or impaired, which could harm our brand and our business.
Our trademarks may also be opposed, contested, circumvented or found to be unenforceable, weak or
invalid, and we may not be able to prevent third parties from infringing or otherwise violating them or
using similar marks in a manner that causes confusion or dilutes the value or strength of our brand.

In addition to registered intellectual property rights, we rely on non-registered proprietary information

and technology, such as trade secrets, confidential information and know-how. We attempt to protect our
intellectual property, technology, and confidential information by requiring our employees, contractors,
consultants, corporate collaborators, advisors and other third parties who develop intellectual property on
our behalf to enter into confidentiality and invention assignment agreements, and third parties we share
information with to enter into nondisclosure and confidentiality agreements. However, we might not have
any such agreements in place with some of the parties who have developed intellectual property on our
behalf and/or with some of the parties that have or may have had access to our confidential information,

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know-how, and trade secrets. Even where these agreements are in place, they might be insufficient or
breached, or might not effectively prevent unauthorized access to or unauthorized use, disclosure,
misappropriation, or reverse engineering of our confidential information, intellectual property, or
technology. Moreover, these agreements might not provide an adequate remedy for breaches or in the
event of unauthorized use or disclosure of our confidential information or technology, or infringement of
our intellectual property. If any of our trade secrets were to be lawfully obtained or independently
developed by a competitor or other third party, we would have no right to prevent them from using that
technology or information to compete with us, and our competitive position could be materially and
adversely harmed.

The loss of trade secret protection could make it easier for third parties to compete with our products
and services by copying functionality. Additionally, individuals not subject to invention assignment
agreements might make adverse ownership claims to our current and future intellectual property, and, to
the extent that our employees, independent contractors, or other third parties with whom we do business
use intellectual property owned by others in their work for us, disputes may arise as to the rights in related
or resulting know-how and inventions.

In addition, we might need to expend significant resources to apply for, maintain, enforce and monitor
our intellectual property rights and such efforts may be ineffective and could result in substantial costs
and diversion of resources. An adverse outcome in any such litigation or proceedings might expose us to
a loss of our competitive position, significant liabilities, and damage to our brand, or require us to seek
licenses that might not be available on commercially acceptable terms, if at all.

We have been, and may in the future be, subject to claims that we violated third-party intellectual
property rights, which, even where meritless, can be costly to defend and could materially
adversely affect our business, results of operations, and financial condition.

Our success depends, in part, on our ability to develop and commercialize our products and services
without infringing, misappropriating or otherwise violating the intellectual property rights of third parties.
However, we may not be aware that our products or services are infringing, misappropriating or otherwise
violating third-party intellectual property rights and such third parties may bring claims alleging such
infringement, misappropriation or violation. As we face increasing competition and become increasingly
high profile, the possibility of receiving a larger number of intellectual property claims against us grows. In
addition, various “non-practicing entities,” and other intellectual property rights holders have in the past
and may in the future attempt to assert intellectual property claims against us or seek to monetize the
intellectual property rights they own to extract value through licensing or other settlements.

Our use of third-party software and other intellectual property rights may be subject to claims of
infringement or misappropriation. The vendors who provide us with technology that we incorporate in our
product offerings also could become subject to various infringement claims.

From time to time, our competitors or other third parties may claim, and have in the past claimed, that
we are infringing upon, misappropriating or otherwise violating their intellectual property rights. We cannot
predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an
adverse effect on our business, financial condition, results of operations, cash flows or prospects. Any
claims or litigation, even those without merit and regardless of the outcome, could cause us to incur
significant expenses and, if successfully asserted against us, could require that we pay substantial costs
or damages, obtain a license, which may not be available on commercially reasonable terms or at all, pay
significant ongoing royalty payments, settlements or licensing fees, satisfy indemnification obligations,
prevent us from offering our products or services or using certain technologies, force us to implement
expensive and time-consuming work-arounds or re-designs, distract management from our business or
impose other unfavorable terms.

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 We expect that the occurrence of infringement claims is likely to grow as the market for financial
services grows and as we introduce new and updated products and services, and the outcome of any
allegation is often uncertain. Accordingly, our exposure to damages resulting from infringement claims
could increase and this could further exhaust our financial and management resources. Even if
intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the
time and resources necessary to resolve them, could divert the resources of our management and require
significant expenditures.

Some of our products and services contain open source software, which could pose particular
risks to our proprietary software, products, and services in a manner that could harm our business.

We use open source software in our products and services (as well as in some of our internally
developed systems) and we anticipate using open source software in the future. Some open source
software licenses require those who distribute open source software as part of their own software product
to publicly disclose all or part of the source code to such software product or to make available any
derivative works of the open source code on unfavorable terms or at no cost, and we may be subject to
such terms. The terms of many open source licenses to which we are subject have not been interpreted
by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a
manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our
products or services. We could face claims from third parties claiming ownership of, or demanding
release of, the open source software or derivative works that we developed using such software, which
could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable
open source license. These claims could result in litigation and could require us to make our proprietary
software source code freely available, purchase a costly license, or cease offering the implicated products
or services unless and until we can re-engineer them to avoid infringement, which may be a costly and
time-consuming process. While we monitor our use of open source software and try to ensure that none
is used in a manner that would require us to disclose our proprietary source code or that would otherwise
breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed
to have occurred, in part because open source license terms are often ambiguous. Any actual or claimed
requirement to disclose our proprietary source code or pay damages for breach of license terms could
harm our business and could help third parties, including our competitors, develop products and services
that are similar to or better than ours.

Risks Related to Finance, Accounting and Tax Matters

Covenants in our credit agreements could restrict our operations and if we do not effectively
manage our business to comply with these covenants, our financial condition could be adversely
impacted.

We have entered into two credit agreements and may enter into additional agreements for other
borrowing in the future. These agreements contain various restrictive covenants, including, among other
things, minimum liquidity and tangible net worth requirements, restrictions on our ability to dispose of
assets, make acquisitions or investments, incur debt or liens, make distributions to our stockholders, or
enter into certain types of related person transactions. These agreements also contain financial
covenants, including obligations to maintain certain capitalization amounts and other financial ratios.
These restrictions might restrict our current and future operations, including our ability to incur debt to
increase our liquidity position.

Our ability to meet these restrictive covenants can be impacted by events beyond our control that
could cause us to be unable to comply. The credit agreements provide that our breach or failure to satisfy
some of these covenants constitutes an event of default. Upon the occurrence of an event of default, our
lenders could elect to declare all amounts outstanding under our debt agreements to be immediately due
and payable. In addition, our lenders might have the right to proceed against the assets we provided as

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collateral pursuant to the agreements. If the debt under the credit agreements were to be accelerated,
and if we did not have sufficient cash on hand or be able to sell sufficient collateral to repay it, it would
have an immediate adverse effect on our business, financial condition and results of operations.

Our insurance coverage might be inadequate or expensive.

We are subject to claims in the ordinary course of business. These claims can involve substantial
amounts of money and involve significant defense costs. It is not possible to prevent or detect all activities
giving rise to claims and the precautions we take may not be effective in all cases. We maintain voluntary
and required insurance coverage, including, among others, general liability, property, director and officer,
excess-SIPC, business interruption, cyber and data breach, crime and fidelity bond insurance. Our
insurance coverage is expensive and maintaining or expanding our insurance coverage might have an
adverse effect on our results of operations and financial condition.

Our insurance coverage is subject to terms such as deductibles, coinsurance, limits and policy
exclusions, as well as risk of counterparty denial of coverage, default or insolvency, and might be
insufficient to protect us against all losses and costs stemming from operational and technological
failures. For example, we offer a guarantee to our customers to fully reimburse direct losses that occur
due to unauthorized activity that is not the fault of the customer, and any such losses we incur in
satisfaction of this guarantee might not be fully or even partially covered by insurance. Furthermore,
continued insurance coverage might not be available to us in the future on economically reasonable
terms, or at all. The successful assertion of one or more large claims against us that exceed available
insurance coverage, or the occurrence of changes in our insurance policies, including premium increases
or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our
business, financial condition, and results of operations.

Changes in U.S. tax laws and policies could adversely impact our financial condition and results of
operations.

We are subject to complex and evolving U.S. tax laws and regulations, which might in the future
make changes to corporate income tax rates, the treatment of foreign earnings, or other income tax laws
that could affect our future income tax provision and reduce our earnings while increasing the complexity,
burden and cost of tax compliance.

Our determination of our tax liability is subject to review by applicable tax authorities. Any adverse
outcome of such a review could harm our results of operations and financial condition. The determination
of our tax liabilities requires significant judgment and, in the ordinary course of business, there are many
transactions and calculations where the ultimate tax determination is complex and uncertain. In addition,
our future effective tax rates could be favorably or unfavorably affected by changes in tax rates, changes
in the valuation of our deferred tax assets or liabilities, the effectiveness of our tax planning strategies or
changes in tax laws or their interpretation. Such changes could have an adverse effect on our financial
condition.

Although we believe our estimates are reasonable, as a result of these and other factors, the ultimate
amount of our tax obligations owed might differ from the amounts recorded in our consolidated financial
statements and any such difference could harm our results of operations in future periods in which we
change our estimates of our tax obligations or in which the ultimate tax outcome is determined.

In addition, from time to time, proposals are introduced in the U.S. Congress and state legislatures to
impose new taxes on a broad range of financial transactions, including transactions that occur on our
platform, such as the buying and selling of stocks, derivative transactions, and cryptocurrencies. For
example, the Wall Street Tax Act of 2021, H.R. 328, which was introduced into the U.S. Congress in
January 2021, would impose a 0.1% excise tax on certain covered transactions. If enacted, such financial
transaction taxes could increase the cost to customers of investing or trading on our platform and reduce

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or adversely affect U.S. market conditions and liquidity, general levels of interest in investing, and the
volume of trades and other transactions from which we derive transaction-based revenues. While it is
difficult to assess the impact the proposed taxes could have on us, any financial transaction tax
implemented in any jurisdiction in which we operate could materially and adversely affect our business,
financial condition, or results of operations, and as a retail brokerage we could be impacted to a greater
degree than other market participants.

Our ability to use our net operating losses to offset future taxable income could be subject to
certain limitations.

As of December 31, 2021, we have net operating loss carryforwards (“NOLs”) available to reduce
future taxable income. However, under Sections 382 and 383 of the United States Internal Revenue Code
of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” (as defined by
the Code) may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes
such as research tax credits to offset future taxable income. If it is determined that we have in the past
experienced an ownership change, or if we undergo one or more ownership changes as a result of future
transactions in our stock, then our ability to utilize NOLs and other pre-change tax attributes could be
limited by Sections 382 and 383 of the Code, and similar state provisions. Future changes in our stock
ownership, many of which are outside of our control, could result in an ownership change under Section
382 or 383 of the Code. Furthermore, our ability to utilize NOLs of any companies that we acquire in the
future may be subject to limitations. For these reasons, we might not be able to utilize our NOLs, even if
we maintain profitability.

We track certain operational metrics, which are subject to inherent challenges in measurement,
and real or perceived inaccuracies in such metrics may harm our reputation and materially
adversely affect our stock price, business, results of operations, and financial condition.

We track certain operational metrics using internal company data gathered on an analytics platform
that we developed and operate, including metrics such as MAU, AUC and Net Cumulative Funded
Accounts, as well as cohorts of our customers, which have not been validated by any independent third
party and which may differ from estimates or similar metrics published by other parties due to differences
in sources, methodologies, or the assumptions on which we rely. Our internal systems and tools are
subject to a number of limitations and our methodologies for tracking these metrics have changed in the
past and may change further over time, which could result in unexpected changes to our metrics or
otherwise cause the comparability of such metrics from period to period to suffer, including the metrics we
publicly disclose. For example, prior to our becoming self-clearing in November 2018, we relied on a third-
party provider for our clearing operations, and used data collected by that third party to compute certain
metrics, such as Net Cumulative Funded Accounts, that, since November 2018, we have calculated
based on data sourced and processed internally. In addition, if the internal systems and tools we use to
track these metrics undercount or overcount performance or contain algorithmic or other technical errors,
the data we report may not be accurate. While these numbers are based on what we believe to be
reasonable estimates of our metrics for the applicable period of measurement, there are inherent
challenges in measuring how our platform is used across large populations globally. You should not place
undue reliance on such operational metrics when evaluating an investment in our Class A common stock.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key
Performance Metrics” for definitions of our key operational metrics.

If our operational metrics are not accurate representations of our business, or if investors do not
perceive these metrics to be accurate, or if we discover material inaccuracies with respect to these
figures, our reputation could be significantly harmed, the trading price of our Class A common stock could
decline and we might be subject to stockholder litigation, which could be costly.

55
We are directly and indirectly exposed to fluctuations in interest rates.

Fluctuations in interest rates could adversely impact our customers’ general spending levels and
ability and willingness to invest through our platform. Additionally, some of our products, such as our
Cash Management product and margin lending programs, are affected by interest rate changes. Higher
interest rates often lead to higher payment obligations by our customers to us and to their creditors under
mortgage, credit card, and other consumer and merchant loans, which might reduce our customers’ ability
to satisfy their obligations to us, including failing to pay for securities purchased, deliver securities sold, or
meet margin calls, and therefore lead to increased delinquencies, charge-offs, and allowances for loan
and interest receivables, which could have an adverse effect on our net income. Fluctuations in interest
rates may also adversely impact our Cash Management customers’ returns on their cash deposits. We
are also exposed to interest rate risk from our investment portfolio and from interest-rate sensitive assets,
including assets underlying the customer balances we hold on our balance sheet as customer accounts.
A low or negative interest rate environment or reductions in interest rates may negatively impact our net
income.

If we fail to maintain effective internal control over financial reporting, as well as required
disclosure controls and procedures, our ability to produce timely and accurate consolidated
financial statements or comply with applicable regulations could be impaired.

The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and related rules of the SEC require,
among other things, that we maintain effective disclosure controls and procedures and internal control
over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and
procedures and internal control over financial reporting, we have expended, and anticipate that we will
continue to expend, significant resources, including accounting-related costs and significant management
oversight.

Our current controls and any new controls that we develop could become inadequate because of
changes in conditions in our business. In addition, changes in accounting principles or interpretations
could also challenge our internal controls and require that we establish new business processes, systems
and controls to accommodate such changes. We have limited experience with implementing the systems
and controls that are necessary to operate as a public company, as well as adopting changes in
accounting principles or interpretations mandated by the relevant regulatory bodies. Additionally, if these
new systems, controls or standards and the associated process changes do not give rise to the benefits
that we expect or do not operate as intended, it could adversely affect our financial reporting systems and
processes, our ability to produce timely and accurate financial reports or the effectiveness of our internal
control over financial reporting. Moreover, our business may be harmed if we experience problems with
any new systems and controls that result in delays in their implementation or increased costs to correct
any post-implementation issues that may arise. Further, weaknesses in our disclosure controls and
internal control over financial reporting could be discovered in the future. Any failure to develop or
maintain effective controls or any difficulties encountered in their implementation or improvement could
harm our business or cause us to fail to meet our reporting obligations and could result in a restatement
of our consolidated financial statements for prior periods.

Any failure to implement and maintain effective internal control over financial reporting could also
adversely affect the results of periodic management evaluations and annual independent registered
public accounting firm attestation reports regarding the effectiveness of our internal control over financial
reporting that are required in our periodic reports filed with the SEC. As a newly public company,
however, we are not required to comply fully with the SEC’s rules that implement Section 404 of the
Sarbanes-Oxley Act until our second Annual Report on Form 10-K, which we expect to file in February
2023. In particular, we are not required to provide an annual management report on the effectiveness of
our internal control over financial reporting and our independent registered public accounting firm is not
required to formally attest to the effectiveness of our internal control over financial reporting until such
time. Ineffective disclosure controls and procedures or internal control over financial reporting could harm
our business, cause investors to lose confidence in the accuracy and completeness of our reported

56
financial and other information, and result in us becoming subject to investigations by the stock exchange
on which our securities are listed, the SEC or other regulatory authorities, any of which would likely have
a negative effect on the trading price of our Class A common stock and have a material and adverse
effect on our business, results of operations, financial condition and prospects. In addition, if we are
unable to continue to meet these requirements, we might not be able to remain listed on the Nasdaq.

Risks Related to Our Class A Common Stock

The trading price for our Class A common stock has been and may continue to be volatile and you
could lose all or part of your investment.

The trading price of our Class A common stock has been and may continue to be highly volatile and
could continue to be subject to fluctuations in response to one or more of the risk factors described in this
report, many of which are beyond our control. For example, on the day after our October 26, 2021
quarterly earnings release, the closing price of our Class A common stock fell by more than 10%. These
fluctuations could cause you to lose all or part of your investment in our Class A common stock since you
may be unable to sell your shares at or above the price you paid. From our IPO in July 2021 through
January 2022, the intra-day trading prices of our Class A common stock ranged from a low of $9.94 to a
high of $85.00 per share. Additional factors that could have a significant effect on the trading price of our
Class A common stock include:

• publication of research reports about us, our competitors, or our industry, or changes in, or failure
to meet, estimates made by securities analysts or ratings agencies of our financial and operating
performance, or lack of research reports by industry analysts or ceasing of analyst coverage;
• announcements by us or our competitors of new offerings or platform featuresꓼ
• the public’s perception of the quality and accuracy of our key metrics on our customer base and
engagementꓼ
• the public’s reaction to our media statements, other public announcements and filings with the
SEC;
• rumors and market speculation involving us or other companies in our industryꓼ and
• the extent to which retail and other individual investors (as distinguished from institutional
investors), including our customers, invest in our Class A common stock, which may result in
increased volatility.

In addition, in the past, following periods of volatility in the overall market and the trading price of a
particular company’s securities, securities class action litigation has often been instituted against these
companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our
management’s attention and resources.

Further, if the market price of our Class A common stock is above the level that investors determine is
reasonable for our Class A common stock, some investors may attempt to short our Class A common
stock, which would create additional downward pressure on the trading price of our Class A common
stock.

Substantial future issuances and sales of shares of our Class A common stock in the public market
could result in significant dilution to our stockholders and cause the trading price of our Class A
common stock to fall.

As of February 18 2022, our founders and their related entities hold approximately 15% of our
outstanding common stock (and, as described in the following risk factor, over 50% of the voting power of
our outstanding capital stock). If our founders or other significant stockholders sell, or indicate an intent to

57
sell, large amounts of stock in the public market, or the perception that these sales might occur, could
cause the trading price of our Class A common stock to decline substantially.

Also, as of February 18, 2022, there were significant numbers of shares subject to future issuance
including under outstanding warrants held by pre-IPO investors, outstanding stock options and restricted
stock units (“RSUs”) held by employees and other service providers as well as shares available for award
grant purposes under our 2021 Plan and for issuance under our Employee Share Purchase Plan. All of
these shares will become eligible for sale in the public market upon exercise, vesting, or settlement, as
applicable (and to the extent granted in the discretion of our board of directors, in the case of shares
available for grant). Moreover, to fund the tax withholding and remittance obligations arising in connection
with future vesting and settlement of RSUs, we currently intend to have most holders of such RSUs,
including our founders, sell a portion of such shares into the market on the applicable settlement date,
with the proceeds of such sales delivered to us for remittance to the relevant taxing authorities. These
and any future issuances of shares of our capital stock, or of securities convertible into or exercisable for
our capital stock could depress the market price of our Class A common stock and result in a significant
dilution for stockholders.

We have authorized more capital stock in recent years to provide additional stock options and RSUs
to our employees and to permit for the consummation of equity and equity-linked financings and may
continue to do so in the future. Our employee headcount has increased significantly in the past few years
and we expect our headcount to continue to grow, so the amount of dilution due to awards of equity-
based compensation to our employees could be substantial. Further, any sales of our Class A common
stock (including shares of Class A common stock issuable upon conversion of our Class B common
stock, as stock options are exercised, or as RSUs are settled) may make it more difficult for us to sell
equity securities in the future at a time and at a price that we deem appropriate. These sales could also
cause the trading price of our Class A common stock to fall and make it more difficult for you to sell
shares of our Class A common stock.

Further pursuant to the equity exchange right agreements entered into between us and each of our
founders in connection with our IPO, each of our founders has a right (but not an obligation) to require us
to exchange, for shares of Class B common stock, any shares of Class A common stock received by
them upon the vesting and settlement of pre-IPO RSUs (the “Equity Exchange Rights”). Any exercise by
our founders of these Equity Exchange Rights will dilute the voting power of holders of our Class A
common stock.

The multi-class structure of our common stock has the effect of concentrating voting power with
our founders, which limits your ability to influence the outcome of matters submitted to our
stockholders for approval. In addition, the Founder Voting Agreement and any future issuances of
our Class C common stock could prolong the duration of our founders’ voting control.

Our Class A common stock has one vote per share, our Class B common stock has 10 votes per
share and our Class C common stock has no voting rights, except as otherwise required by law. Our
founders and certain of their related entities together hold all of the issued and outstanding shares of our
Class B common stock. Accordingly, Mr. Tenev, who is also our CEO, President and a director, and Mr.
Bhatt, who is also our Chief Creative Officer and a director, collectively with their related entities hold over
50% of the voting power of our outstanding capital stock. As a result, our founders have the ability to
determine or significantly influence any action requiring the approval of our stockholders, including the
election of our board of directors, the adoption of amendments to our Amended and Restated Certificate
or Incorporation (our “Charter”) and our Amended and Restated Bylaws (our “Bylaws”) and the approval
of any merger, consolidation, sale of all or substantially all of our assets or other major corporate
transaction.

In addition, our founders and certain of their related entities (“Founder Affiliates”) have entered into a
voting agreement (the “Founder Voting Agreement”) in which they have agreed, among other things, (i) to
vote all of the shares of our common stock held by such founder or Founder Affiliate for the election of

58
each founder to, and against the removal of each founder from, our board of directors, (ii) to vote together
in the election of other directors generally, subject to deferring to the decision of the nominating and
corporate governance committee in the event of any disagreement between the founders, (iii) effective
upon a founder’s death or disability, to grant a voting proxy to the other founder with respect to shares of
our common stock held by the deceased or disabled founder or over which he was entitled to vote (or
direct the voting) immediately prior to his death or disability, and (iv) to grant each other rights of first offer
in the event of proposed transfers that would otherwise cause Class B shares to convert into Class A
shares under our Charter. The Founder Voting Agreement has the effect of concentrating voting power in
our founders (or either one of them).

Our founders may have interests that differ from yours and may vote in a way with which you
disagree and which may be adverse to your interests. Therefore, the founders’ concentrated voting
control may have the effect of delaying, preventing or deterring a change in control of our Company,
could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a
sale of our Company, and might ultimately affect the market price of our Class A common stock. Further,
the separation between voting power and economic interests could cause conflicts of interest between
our founders and our other stockholders, which may result in our founders undertaking, or causing us to
undertake, actions that would be desirable for our founders but would not be desirable for our other
stockholders.

We have no current plans to issue shares of our Class C common stock. Because the shares of our
Class C common stock have no voting rights, except as required by law, if we issue Class C common
stock in the future, the voting control of our founders could be maintained for a longer period of time than
would be the case if we issued Class A common stock rather than Class C common stock.

Our multi-class structure might depress the trading price of our Class A common stock.

In recent years some index providers have announced restrictions on including companies with multi-
class share structures in some of their indices. For example, in July 2017, FTSE Russell announced that
it plans to require new constituents of its indices to have greater than 5% of the company’s voting rights in
the hands of public stockholders, and S&P Dow Jones announced that it will no longer admit companies
with multi-class share structures to certain of its indices. Affected indices include the Russell 2000 and the
S&P Composite 1500, which is comprised of S&P 500, S&P MidCap 400 and S&P SmallCap 600. Also in
October 2018, MSCI (a leading stock index provider) announced its decision to reduce the weighting of
equity securities “with unequal voting structures” in some of its indices. Under such announced policies,
the multi-class structure of our common stock would make us ineligible for inclusion in some indices and,
as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively
track those indices would not invest in our Class A common stock. Such restrictive policies might depress
our valuation, as compared to similar companies that are included in the indices, particularly if such
policies become more widespread. Given the sustained flow of investment funds into passive strategies
that seek to track indices, exclusion from popular stock indices would likely preclude investment by many
of these funds and could make our Class A common stock less attractive to other investors. As a result,
the market price of our Class A common stock could be adversely affected.

Certain provisions in our Charter and our Bylaws and of Delaware law as well as certain FINRA
rules may prevent or delay an acquisition of Robinhood, which could decrease the trading price of
our Class A common stock.

Our Charter and our Bylaws contain, and Delaware law contains, provisions that may have the effect
of deterring takeovers by making such takeovers more expensive to the bidder and by encouraging
prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover,
such as a classified board, limitations on the ability of stockholders to take action by written consent, and
the ability of our board to designate the terms of preferred stock and authorize its issuance without
stockholder approval. We believe these provisions will protect our stockholders from coercive or
otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our board of directors

59
and by providing our board of directors with more time to assess any acquisition proposal. These
provisions are not intended to make Robinhood immune from takeovers. However, these provisions will
apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an
acquisition that our board of directors determines is not in the best interests of Robinhood and our
stockholders. Accordingly, if our board of directors determines that a potential acquisition is not in the best
interests of Robinhood and our stockholders, but certain stockholders believe that such a transaction
would be beneficial to Robinhood and our stockholders, such stockholders may elect to sell their shares
in Robinhood and the trading price of our Class A common stock could decrease. These and other
provisions of our Charter, our Bylaws and the Delaware General Corporation Law could have the effect of
delaying or deterring a change in control, which may limit the opportunity for our stockholders to receive a
premium for their shares of our Class A common stock and may also affect the price that some investors
are willing to pay for our Class A common stock.

In addition, a third party attempting to acquire us or a substantial position in our Class A common
stock may be delayed or ultimately prevented from doing so by change in ownership or control regulations
to which certain of our regulated subsidiaries are subject. For example, FINRA Rule 1017 generally
provides that FINRA approval must be obtained in connection with any transaction resulting in a single
person or entity owning, directly or indirectly, 25% or more of a FINRA member firm’s equity and would
include a change in control of a parent company and similar approval from the U.K. Financial Conduct
Authority, which regulates our U.K. authorized broker-dealer subsidiary (which does not currently do
business), must be obtained in connection with any transaction resulting in a person or entity holding,
directly or indirectly, 10% or more of the equity or voting power of a U.K. authorized person or the parent
of a U.K. authorized person. These and any other applicable regulations relating to changes in control of
us or our regulated subsidiaries could further have the effect of delaying or deterring a change in control
of us.

The exclusive forum provisions of our Charter could limit our stockholders’ ability to choose the
judicial forum for some types of lawsuits against us or our directors, officers, or employees.

Our Charter provides that, unless we consent in writing to the selection of an alternative forum, to the
fullest extent permitted by law, the sole and exclusive forum for a number of types of actions or
proceedings shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does
not have subject matter jurisdiction, another state court sitting in the State of Delaware) (or, if no state
court located within the State of Delaware has jurisdiction, the federal district court for the District of
Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as
defendants. Our Charter also provides that the federal district courts of the United States will be the
exclusive forum for resolving any complaint asserting a cause of action under the Securities Act. Nothing
in our Charter precludes stockholders that assert claims under the Exchange Act from bringing such
claims in any court, subject to applicable law.

Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities
shall be deemed to have notice of and consented to these provisions. These exclusive forum provisions
may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or
our directors, officers, or other employees, which may discourage lawsuits against us and our directors,
officers, and other employees. The enforceability of similar choice of forum provisions in other companies’
charter documents has been challenged in legal proceedings, and it is possible that a court could find
these types of provisions to be inapplicable or unenforceable. If a court were to find the exclusive forum
provisions in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs
associated with resolving the dispute in other jurisdictions, which could adversely affect our results of
operations.

60
ITEM 2. PROPERTIES
We lease facilities under operating leases with various expiration dates through 2033. Our corporate
headquarters are located in Menlo Park, California. We also lease office space in Charlotte, North
Carolina; Chicago, Illinois; Denver, Colorado; Kirkland, Washington; Lake Mary, Florida; New York, New
York; Tempe, Arizona; Washington, D.C.; Westlake, Texas; and London, United Kingdom.

We believe our facilities are suitable for their present and intended purposes and are operating at a
level consistent with the requirements of the industry in which we operate. We also believe that our leases
are at competitive or market rates and do not anticipate any difficulty in leasing suitable additional space
upon expiration of our current lease terms.

ITEM 3. LEGAL PROCEEDINGS

See Note 16 to our consolidated financial statements in this Annual Report.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

61
 PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Market Information for Common Stock

Our Class A common stock has been listed on the Nasdaq Global Select Market under the symbol
"HOOD" since July 29, 2021. Prior to that time, there was no public market for our stock.

Our Class B and Class C common stock are not listed on any stock exchange nor traded on any
public market.

Holders of Record

As of February 18, 2022, there were 107 stockholders of record of our Class A common stock.
Because many of our shares of Class A common stock are held by brokers and other institutions on
behalf of stockholders, we are unable to precisely estimate the total number of stockholders represented
by these record holders, but based on input from proxy service providers we believe our Class A common
stock is held by more than 850,000 separate accounts. As of February 18, 2022, there were eight
stockholders of record of our Class B common stock and zero stockholders of record of our Class C
common stock.

Dividend Policy

We have never declared or paid cash dividends on our capital stock. We intend to retain all available
funds and future earnings, if any, to fund the development and expansion of our business, and we do not
anticipate declaring or paying any cash dividends in the foreseeable future. Any future determination
regarding the declaration and payment of dividends, if any, will be at the discretion of our board of
directors and will depend on then-existing conditions, including our financial condition, results of
operations, contractual restrictions, capital requirements, business prospects, and other factors our board
of directors may deem relevant. In addition, the terms of our current credit facilities contain restrictions on
our ability to pay cash dividends.

Sales of Unregistered Securities

From January 1, 2021 through March 31, 2021, we granted to employees and consultants RSUs
covering an aggregate 7.3 million shares of our common stock under our 2020 Plan, and we issued
3.2 million shares of common stock upon exercise of employee stock options under our 2013 Plan and
our 2020 Plan. The foregoing transactions did not involve any underwriters, underwriting discounts or
commissions, or any public offering. We believe the offers, sales, and issuances of the above securities
were exempt from registration in reliance on Rule 701 under the Securities Act because the transactions
were pursuant to compensatory benefit plans or contracts relating to compensation as provided under
such rule.

In February 2021, we issued two tranches of convertible notes, consisting of $2.53 billion aggregate
principal amount of Tranche I convertible notes and $1.02 billion aggregate principal amount of Tranche II
convertible notes. We also granted to each purchaser of the Tranche I convertible notes a ten-year
warrant to purchase a number of shares of equity securities equal to 15% of the aggregate proceeds
invested by such purchaser in the Tranche I convertible notes, i.e., $379.8 million in aggregate maximum
purchase amount. (As a result of the IPO, the warrants became exercisable for an aggregate of 14.3
million shares of Class A common stock at an exercise price of $26.60 per share.) The foregoing

62
transactions did not involve any underwriters, underwriting discounts or commissions, or any public
offering. We believe the offers, sales, and issuances of the above securities were exempt from
registration under Section 4(a)(2) of the Securities Act (or Regulation D or Regulation S promulgated
thereunder) because they did not involve any public offering.

In August 2021, in connection with the completion of the IPO each outstanding share of common
stock was reclassified into a share of Class A common stock and:

• all of our outstanding convertible notes automatically converted into 137.3 million shares of Class
A common stock at a conversion price of $26.60 per share;

• all 412.7 million shares of our outstanding redeemable convertible preferred stock automatically
converted into an equivalent number of shares of common stock (which were then immediately
reclassified as Class A common stock); and

• a total of 130.2 million shares of our Class B common stock were issued to our founders and their
related entities in exchange for an equivalent number of shares of Class A common stock.

No additional consideration was paid in connection with these conversions and exchanges. We
believe the issuances of the above securities were exempt from registration pursuant to Section 3(a)(9)
of the Securities Act because our securities were converted or exchanged by us with our existing security
holders exclusively where no commission or other remuneration was paid or given directly or indirectly for
soliciting such conversion or exchange.

For a description of sales of unregistered securities during the second and third quarters of 2021,
refer to our reports on Form 10-Q for the three-month periods ended June 30, 2021 and September 30,
2021.

63
Stock Performance Graph

This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for
purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and
shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.

The graph below compares the cumulative total stockholder return on our Class A common stock with
the cumulative total return of the KBW NASDAQ Financial Technology Index and the Standard & Poor’s
500 Index. The graph assumes (i) that $100 was invested at the market close on July 29, 2021, the date
that our Class A common stock commenced trading on the Nasdaq Global Select Market, in each of our
Class A common stock, the KBW NASDAQ Financial Technology Index, and the Standard & Poor’s 500
Index and (ii) reinvestment of gross dividends. The graph uses the closing market price on July 29, 2021
of $34.82 per share as the initial value of our Class A common stock. The stock price performance shown
in the graph represents past performance and should not be considered an indication of future stock price
performance.

ITEM 6. [REMOVED AND RESERVED]

64
 ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This section presents management’s perspective on our financial condition and results of operations,
including performance metrics that management uses to assess company performance. The following
discussion and analysis is intended to highlight and supplement data and information presented
elsewhere in this Annual Report, and should be read in conjunction with our consolidated financial
statements and notes elsewhere in this Annual Report. It is also intended to provide you with information
that will assist you in understanding our consolidated financial statements, the changes in key items in
those consolidated financial statements from year to year, and the primary factors that accounted for
those changes. To the extent that this discussion describes prior performance, the descriptions relate only
to the periods listed, which might not be indicative of our future financial outcomes. In addition to historical
information, this discussion contains forward-looking statements that involve risks, uncertainties and
assumptions that could cause results to differ materially from management’s expectations. Factors that
could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-
Looking Statements” and “Risk Factors.”

We refer to our “users” and our “customers” interchangeably throughout this Annual Report to refer to
individuals who hold accounts on our platform. The FINRA definition of “customer” under Exchange Act
Rule 15c3-3 means any person from whom or on whose behalf a broker or dealer has received or
acquired or holds funds or securities for the account of that person. However, because we do not earn
consideration from users (other than Robinhood Gold Subscribers and debit card users), users are not
“customers” as defined in ASC 606, Revenue from Contracts with Customers. Accordingly, our users do
not meet the definition of “customer” for purposes of the accounting rules. See Note 1 to our consolidated
financial statements in this Annual Report.

65
Overview
With respect to the year ended December 31, 2021, as compared to the year ended December 31,
2020:

• we generated total net revenues of $1.82 billion compared to $959 million, for year-over-year
growth of 89%;

• we incurred a net loss of $3.69 billion, which included aggregate costs of $3.62 billion associated
with share-based compensation and the change in fair value of our convertible notes and
warrants, compared to net income of $7 million;

◦ Share-based compensation expense totaled $1.57 billion compared to $24 million. For
the year ended December 31, 2020, share-based compensation expense all related to
stock options (no expense relating to restricted stock units was recognized because a
vesting condition had not been met as our IPO had not yet occurred).

◦ The net loss for the year ended December 31, 2021 also included total expense of
$2.05 billion associated with the change in fair value of convertible notes and warrant
liability issued in February 2021.

• our Adjusted EBITDA (non-GAAP) was $34 million compared to $155 million;

• we had Net Cumulative Funded Accounts of 22.7 million compared to 12.5 million, for year-over-
year growth of 81%;

• we had Monthly Active Users (MAU) of 17.3 million in December 2021 compared to 11.7 million in
December 2020, for year-over-year growth of 48%;

• we had Assets Under Custody (AUC) of $98 billion compared to $63 billion, for year-over-year
growth of 56%; and

• we had Average Revenues Per User (ARPU) of $103 compared to $109, for a year-over-year
decrease of 5%.

For definitions of “Net Cumulative Funded Accounts”, “MAU”, “AUC” and “ARPU” please see “—Key
Performance Metrics.” Adjusted EBITDA is a non-GAAP financial measure. For more information about
Adjusted EBITDA, including the definition and limitations of such measure, and a reconciliation of net
income (loss) to Adjusted EBITDA, please see “—Non-GAAP Financial Measures.”

COVID-19 Update
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus referred
to as “COVID-19” to be a global pandemic. In response to the pandemic, we enabled nearly all of our
employees, to work remotely and restricted business travel. In the fourth quarter of 2021, we elected to
become a “Remote First” company, allowing a large segment of our employees to have no assigned
location or regular in-office requirement. When this program is fully implemented, following the cession of
COVID-19 exemptions, some teams will need to live within a commutable distance to an office location for
regulatory and business reasons, and a small segment of our workforce will still need to come into the
office. All employees will have access to our offices throughout the country and, as vaccination rates
among the population have increased, we have started to allow some employees to voluntarily return to
work in our corporate offices. The timing of any full return for those employees who will eventually be

66
required to come into the office has not been determined and will be impacted by developments related to
the pandemic, such as the severity and transmission rate of the virus and its variants.

At the onset of the COVID-19 pandemic, we saw substantial growth in our user base, retention,
engagement, and trading activity metrics, and over the course of the pandemic we saw periodic all-time
highs achieved by the equity markets generally. During this period, market volatility, stay-at-home orders,
and increased interest in investing and personal finance, coupled with low interest rates and a positive
market environment, especially in the U.S. equity and cryptocurrency markets, helped foster an
environment that encouraged an unprecedented number of first-time retail investors to become our users
and begin trading on our platform. However, we have seen the growth of our user base in recent periods
slow compared to the accelerated growth we experienced in 2020 and the first half of 2021. For example,
the pace of growth in new funded accounts slowed considerably in the second half of 2021 compared to
the first half of 2021. Additionally, to the extent that government stimulus measures enacted in response
to the pandemic contributed to an increase in customer engagement, that benefit may not have continued
as those stimulus measures have expired. For example, we saw Monthly Active Users decline from
21.3 million in June 2021 to 17.3 million in December 2021.

The COVID-19 pandemic also resulted, in part, in inefficiencies or delays in our business, operational
challenges, additional costs related to business continuity initiatives as our workforce had to transition
suddenly to working remotely, and increased vulnerability to cybersecurity attacks or other privacy or
data security incidents. The extent of the continuing impact of COVID-19 on our business, financial
condition, and results of operations will depend largely on future developments, including the duration of
the pandemic, actions taken to contain COVID-19 or address its impact, our ability to adapt to the long-
term distributed “Remote First” workforce model we have adopted, the impact on capital and financial
markets, and the related impact on the financial circumstances of our customers, all of which are highly
uncertain and difficult to predict.

Key Performance Metrics

In addition to the measures presented in our consolidated financial statements, we use the following
key performance metrics to help us evaluate our business, identify trends affecting our business,
formulate business plans, and make strategic decisions:

Year ended December 31,

(in millions except ARPU) 2019 2020 2021
Net Cumulative Funded Accounts(1) ............................................. 5.1 12.5 22.7
Monthly Active Users (MAU)(2) ..................................................... 4.3 11.7 17.3
Assets Under Custody (AUC)(3) .................................................... $ 14,135.6 $ 62,978.5 $ 98,006.9
Average Revenues Per User (ARPU)(4) ...................................... $ 65.7 $ 108.9 $ 103.3

________________
(1) A Robinhood account is designed to provide a user with access to any and all of the products offered on our platform. We
define “Net Cumulative Funded Accounts” as New Funded Accounts less Churned Accounts plus Resurrected Accounts (each
as defined below). A “New Funded Account” is a Robinhood account into which the account user makes an initial deposit or
money or asset transfer, of any amount, during the relevant period. An account is considered “Churned” if it was ever a New
Funded Account and its balance (measured as the fair value of assets in the account less any amount due from the user and
excluding certain Company-initiated credits) drops to or below zero for at least 45 consecutive calendar days. Negative
balances typically result from Fraudulent Deposit Transactions (as defined below) and, less often, from margin loans. An
account is considered “Resurrected” in a stated period if it was a Churned Account as of the end of the immediately preceding
period and its balance (excluding certain Company-initiated credits) rises above zero. Examples of credits excluded for
purposes of identifying Churned Accounts and Resurrected Accounts are price correction credits, related interest adjustments,
and fee adjustments.

“Fraudulent Deposit Transactions” occur when users initiate deposits into their accounts, make trades on our platform using a
short-term extension of credit from us, and then repatriate or reverse the deposits, resulting in a loss to us of the credited
amount. For more information about Fraudulent Deposit Transactions, see “—Key Components of our Results of Operations—
Operating Expenses—Operations” below.

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 The following table describes the annual changes within Net Cumulative Funded Accounts:
Year ended December 31,
(in millions) 2019 2020 2021
Beginning Net Cumulative Funded Accounts................................................. 3.3 5.1 12.5
New funded accounts......................................................................................... 2.3 8.0 12.2
Resurrected accounts ........................................................................................ 0.2 0.3 0.5
Churned accounts............................................................................................... (0.7) (0.9) (2.5)
Ending Net Cumulative Funded Accounts ...................................................... 5.1 12.5 22.7

(2) We define MAU as the number of Monthly Active Users during a specified calendar month. A “Monthly Active User” is a unique
user who makes a debit card transaction, or who transitions between two different screens on a mobile device or loads a page
in a web browser while logged into their account, at any point during the relevant month. A user need not satisfy these
conditions on a recurring monthly basis or have a Funded Account to be included in MAU. Figures in the table reflect MAU for
the last month of each period presented. We utilize MAU to measure how many customers interact with our products and
services during a given month. MAU does not measure the frequency or duration of the interaction, but we consider it a useful
indicator for engagement. Additionally, MAUs are positively correlated with, but are not indicative of, the performance of
revenue and other key performance indicators.
(3) We define AUC as the sum of the fair value of all equities, options, cryptocurrency and cash held by users in their accounts, net
of receivables from users, as of a stated date or period end on a trade date basis. The following table sets out the components
of AUC by type of asset:

Year ended December 31,

(in millions) 2019 2020 2021
Equities .......................................................................................................................... $ 11,721.8 $ 52,983.1 $ 72,113.3
Cryptocurrencies .......................................................................................................... 414.7 3,527.0 22,135.8
Options .......................................................................................................................... 244.6 2,117.0 1,530.8
Cash held by users ...................................................................................................... 2,413.8 7,947.3 8,760.2
Receivables from users .............................................................................................. (659.3) (3,595.9) (6,533.2)
Assets Under Custody ................................................................................................ $ 14,135.6 $ 62,978.5 $ 98,006.9

Net Deposits and net market gains drive the change in AUC in any given period. We define “Net Deposits” as all cash deposits
and asset transfers received from customers net of reversals, customer cash withdrawals, and other equity and cash amounts
transferred out of our platform (including in connection with debit card transactions and account transfers in or out of our
platform through the ACATS system) for a stated period. The following table describes the annual changes within Assets Under
Custody:
Year ended December 31,
(in millions) 2019 2020 2021
Beginning AUC ................................................................................................................ $ 8,359.5 $ 14,135.6 $ 62,978.5
Net Deposits..................................................................................................................... 4,295.7 31,034.4 27,405.9
Net market gains (losses) .............................................................................................. 1,480.3 17,808.5 7,622.5
Ending AUC ..................................................................................................................... $ 14,135.6 $ 62,978.5 $ 98,006.9

(4) We define ARPU as total revenue for a given period divided by the average of Net Cumulative Funded Accounts on the last
day of that period and the last day of the immediately preceding period.

Non-GAAP Financial Measures

Adjusted EBITDA
We collect and analyze operating and financial data to evaluate the health of our business, allocate
our resources and assess our performance. In addition to total net revenues, net income (loss), and other
results under GAAP, we utilize non-GAAP calculations of adjusted earnings before interest, taxes,
depreciation, and amortization (“Adjusted EBITDA”). Adjusted EBITDA is defined as net income (loss),
excluding (i) interest expenses related to credit facilities, (ii) provision for (benefit from) income taxes, (iii)
depreciation and amortization, (iv) share-based compensation, (v) change in fair value of convertible

68
notes and warrant liability, (vi) significant legal and tax settlements and reserves, and (vii) other significant
gains, losses, and expenses (such as impairments, restructuring charges, and business acquisition- or
disposition-related expenses) that we believe are not indicative of our ongoing results. This non-GAAP
financial information is presented for supplemental informational purposes only, should not be considered
a substitute for or superior to financial information presented in accordance with GAAP, and may be
different from similarly titled non-GAAP measures used by other companies.

The above items are excluded from our Adjusted EBITDA measure because these items are non-
cash in nature, or because the amount and timing of these items are unpredictable, are not driven by core
results of operations, and render comparisons with prior periods and competitors less meaningful. We
believe Adjusted EBITDA provides useful information to investors and others in understanding and
evaluating our results of operations, as well as providing a useful measure for period-to-period
comparisons of our business performance. Moreover, Adjusted EBITDA is a key measurement used by
our management internally to make operating decisions, including those related to operating expenses,
evaluate performance, and perform strategic planning and annual budgeting. The following table presents
a reconciliation of net income (loss), which is the most directly comparable GAAP measure, to Adjusted
EBITDA:

Year ended December 31,

(in thousands) 2019 2020 2021
Net income (loss) ......................................................................................................................... $ (106,569) $ 7,449 $ (3,686,432)
Add:
Interest expenses related to credit facilities ............................................................................ 991 4,882 20,218
Provision for (benefit from) income taxes ................................................................................ (1,018) 6,381 2,000
Depreciation and amortization ................................................................................................... 5,444 9,938 25,495
EBITDA (non-GAAP) ................................................................................................................... (101,152) 28,650 (3,638,719)
Share-based compensation ....................................................................................................... 26,667 24,330 1,572,253
Change in fair value of convertible notes and warrant liability.............................................. — — 2,045,657
Significant legal and tax settlements and reserves ................................................................ — 101,600 54,910
Adjusted EBITDA (non-GAAP) .................................................................................................. $ (74,485) $ 154,580 $ 34,101

Key Factors Driving Our Performance

Growing Our Customer Base
Sustaining our growth requires continued adoption of our platform by new customers. We will
continue to introduce products and features to attract new customers and we will seek to increase brand
awareness and customer adoption of our platform through broad-scale brand marketing and the
Robinhood Referral Program (defined below).

Expanding Our Relationship with Existing Customers

Our revenue has generally increased over time as we have introduced new products and features to
our customers and as our customers have increased their usage of our platform. We aim to grow with our
customers over time as they build and manage their wealth. Our ability to expand our relationship with our
customers will be an important contributor to our long-term growth. Additionally, we strive to strengthen
our relationships with our customers by responding to customer feedback not only through the
introduction of new products, but also through improvements to our existing products and services.

Investing in Our Platform

We intend to continue to invest in our platform capabilities and regulatory and compliance functions to
support new and existing customers and products that we believe will drive our growth. As our customer

69
base and platform functionalities expand, areas of investment priority will likely include product innovation,
educational content, and technology and infrastructure improvements. We believe these investments will
contribute to our long-term growth.

We expect to continue increasing headcount throughout 2022, though at a lesser rate than in 2021.
These additional employees will be staffed on projects to enhance platform capabilities, drive product
innovation, and further augment regulatory and compliance functions.

Customer Interest in Investing and Saving

Our results of operations are impacted by the overall health of the economy and retail investing and
saving behaviors, which include the following key drivers:

• Seasonality. Our business can be subject to seasonal fluctuations due to such factors as retail
interest in investing, overall number of market participants and trading volumes, varying numbers
of trading days from quarter-to-quarter, and declines in trading activity around holidays. Seasonal
trends may be superseded by market or macroeconomic events, which can have a significant
impact on equity and cryptocurrency valuations and trading activity.

• Consumer Behavior. Consumer behavior varies over time and is affected by numerous
conditions. For example, behavior might be impacted by social or economic factors such as
changes in disposable income levels, general interest in investing, and volatility in the stock and
cryptocurrency markets. There might also be high profile initial public offerings, or idiosyncratic
events impacting single companies, that impact consumer behavior.

• Market Trends. As financial markets grow and contract, our customers’ investing, saving, and
spending behaviors are affected. Our operating history has coincided with a period of general
macroeconomic growth in the United States, particularly in the U.S. equity and cryptocurrency
markets, which has previously stimulated growth in overall investment activity on our platform; we
could also be impacted by any slowdowns in growth or downturns in the U.S. equity and
cryptocurrency markets.

• Macroeconomic Events. Customer behavior is impacted by the overall macroeconomic

environment, which is influenced by elements beyond our control, including economic and
political conditions, inflation, tax rates, the ongoing COVID-19 pandemic, unemployment rates,
and natural disasters.

For more information about how market trends and macroeconomic events can adversely impact our
results of operations, see “Risk Factors—Risks Related to Our Business.”

Key Components of Our Results of Operations

Revenues
Transaction-Based Revenues

Transaction-based revenues consist of amounts earned from routing customer orders for options,
cryptocurrencies, and equities to market makers. When customers place orders for options,
cryptocurrencies, or equities on our platform, we route these orders to market makers and we receive
consideration from those market makers. With respect to equities and options trading, such fees are
known as payment for order flow (“PFOF”). With respect to cryptocurrency trading, we receive
“Transaction Rebates.” In the case of equities, the fees we receive are typically based on the size of the
publicly quoted bid-ask spread for the security being traded; that is, we receive a fixed percentage of the
difference between the publicly quoted bid and ask at the time the trade is executed. For options, our fee
is on a per contract basis based on the underlying security. In the case of cryptocurrencies, our rebate is

70
a fixed percentage of the notional order value. Within each asset class, whether equities, options or
cryptocurrencies, the transaction-based revenue we earn is calculated in an identical manner among all
participating market makers. We route equity and option orders in priority to participating market makers
that we believe are most likely to give our customers the best execution, based on historical performance
(according to order price, trading symbol, availability of the market maker and, if statistically significant,
order size), and, in the case of options, the likelihood of the order being filled is a factor as well. For
cryptocurrency orders, we route to market makers based on price and availability of the cryptocurrency
from the market maker.

Net Interest Revenues

Net interest revenues consist of interest revenues less interest expenses. We earn and incur interest
revenues and expenses on securities lending transactions by lending shares that we hold as collateral for
margin loans extended to our users. We also earn interest revenues on margin loans to users, as well as
on our segregated cash, cash and cash equivalents, and deposits with clearing organizations. We incur
interest expenses in connection with our revolving credit facilities.

Other Revenues

Other revenues primarily consist of Robinhood Gold subscription fees, proxy rebate revenues, and
ACATS fees for facilitating the transfer of part or all of their accounts to another broker-dealer.

Operating Expenses
Commencing with the filing of this Annual Report, we have revised sub-categories within our
operating expenses to better reflect the business as considered by management. Prior period amounts
have been reclassified to conform to the current presentation.

Brokerage and Transaction

Brokerage and transaction costs primarily consist of broker-dealer transaction expenses (such as
fees paid to centralized clearinghouses and regulatory fees), market data expenses, cash and share-
based compensation and benefits as well as allocated overhead for employees engaged in clearing and
brokerage functions, and cash management transactions expenses (such as network fees and card
processing fees). A large portion of our brokerage and transaction costs are variable and tied to trading
and transaction volumes on our platform.

Technology and Development

Technology and development costs primarily consist of cash and share-based compensation and
benefits as well as allocated overhead for engineering, data science, and design personnel who support
and improve our platform and develop new products, costs for cloud infrastructure services, and costs
associated with computer hardware and software, including amortization of internally developed software.

Operations

Operations costs consist of customer service related expenses, including cash and share-based
compensation and benefits as well as allocated overhead for employees engaged in customer support,
and costs incurred to support and improve customer experience (such as third-party customer service
vendors).

Operations costs also include our provision for credit losses and fraud in connection with
unrecoverable receivables due to Fraudulent Deposit Transactions and chargebacks for unauthorized
debit card use. The provision for credit loss is equal to the unsecured receivable balance owed by users,
i.e., the difference between the amount due from users and the fair value of the assets in the users’
accounts. We seek to reduce Fraudulent Deposit Transactions and unauthorized debit card usage by

71
deploying and iterating on machine learning models that identify high risk users and transactions on our
platform. In addition, upon identifying high risk users and transactions, we seek to prevent further losses
by introducing friction into the user experience (for example, by not offering the identified customer
access to instant funds) or implementing restrictions to mitigate the risk of these transactions (such as
temporarily restricting withdrawals). Due to the fraudulent nature of these transactions, recourse and
collection of the funds is limited. The provision for credit losses also includes losses related to our margin
lending and proxy rebate activities.

Marketing

Marketing costs primarily consist of marketing incentive expenses associated with the Robinhood
Referral Program, as well as digital marketing, brand marketing, and creative services costs for creation,
production, and placement of advertisements and marketing content. Other marketing costs include cash
credits we offer to customers, which primarily relate to remediation for losses experienced by our
customers due to service interruptions on our platform and reimbursement of direct losses incurred by our
customers from allegedly unauthorized account activity. Marketing costs also include cash and share-
based compensation and benefits as well as allocated overhead for employees engaged in the marketing
function.

Under the Robinhood Referral Program we credit referring and referred customers with a stock
reward, with the potential value of each share ranging from $3 to $225. Each stock reward is selected
randomly from our previously purchased inventory of settled shares held exclusively for this program. This
inventory is comprised of shares of stock of issuers that are widely held among our customers’ accounts
(i.e., held by at least 5,000 customers). Referring customers can earn more than one reward through the
Robinhood Referral Program by making multiple referrals, subject to a maximum of $500 in total rewards
earned annually per customer. From time to time, we offer multiple stock rewards per referral. Stock
rewards are also available to customers who sign up through paid marketing channels. In order for
rewards to be earned by the referring and referred customer, the referred customer must fulfill certain
conditions stated in their promotion, such as linking his or her bank account to our platform. After the
referred Robinhood account is approved, each customer must claim his or her stock reward in the
Robinhood app within 60 days of notification thereof, at which point the stock is deposited to such
customer’s Robinhood account. Customers do not provide any cash consideration for the stock reward.

General and Administrative

General and administrative costs primarily consist of cash and share-based compensation and
benefits as well as allocated overhead for certain executives and employees engaged in legal, finance,
human resources, risk, and compliance. General and administrative costs also include legal expenses,
settlements and penalties, business insurance, and other professional fees.

72
Results of Operations
The following table summarizes our consolidated statements of operations data:

Year ended December 31,

(in thousands) 2019 2020 2021
Revenues:
Transaction-based revenues ........................................................................ $ 170,831 $ 720,133 $ 1,402,350
Net interest revenues ..................................................................................... 70,639 177,437 256,962
Other revenues ............................................................................................... 36,063 61,263 155,831
Total net revenues .................................................................................... 277,533 958,833 1,815,143
Operating expenses:(1)
Brokerage and transaction ........................................................................... 45,459 111,083 152,343
Technology and development ...................................................................... 94,932 215,630 1,232,787
Operations ....................................................................................................... 33,869 137,905 373,129
Marketing ......................................................................................................... 124,699 185,741 327,369
General and administrative ........................................................................... 85,504 294,694 1,370,520
Total operating expenses......................................................................... 384,463 945,053 3,456,148
Change in fair value of convertible notes and warrant liability...................... — — 2,045,657
Other expense (income), net.............................................................................. 657 (50) (2,230)
Income (loss) before income tax ....................................................................... (107,587) 13,830 (3,684,432)
Provision for (benefit from) income taxes ........................................................ (1,018) 6,381 2,000
Net income (loss) ................................................................................................. $ (106,569) $ 7,449 $ (3,686,432)

_______________
(1) Includes share-based compensation expense as follows:
Year ended December 31,
(in thousands) 2019 2020 2021
Brokerage and transaction ........................................................................................... $ 427 $ 227 $ 7,527
Technology and development....................................................................................... 9,499 18,024 609,307
Operations ....................................................................................................................... 139 61 20,261
Marketing ......................................................................................................................... 85 613 49,731
General and administrative ........................................................................................... 16,517 5,405 885,427
Total share-based compensation expense........................................................... $ 26,667 $ 24,330 $ 1,572,253

The 2019 and 2020 amounts exclude the effect of share-based compensation for awards with performance-based conditions
because the qualifying event, our IPO, had not occurred and, therefore, could not be considered probable. Upon our IPO in
2021, we recognized $1.01 billion of share-based compensation. For more information, see “Share-based compensation” in
Note 1 to our consolidated financial statements in this Annual Report.

73
Comparison of the Years Ended December 31, 2021 and 2020
A discussion of our results for fiscal year 2020 compared to fiscal year 2019 can be found in our IPO
prospectus, filed with the SEC on July 30, 2021, under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations — Comparison of the Years Ended December
31, 2019 and 2020." We do not believe the reclassification of the sub-categories within operating
expenses has materially affected the continuing relevance of any of this discussion and any changes that
would be necessary to reflect the revised subcategories are not material to an understanding of our
business.

Revenues
Transaction-Based Revenues
Year ended December 31,

2019 to 2020 2020 to 2021

(in thousands, except for percentages) 2019 2020 2021 % Change % Change

Transaction-based revenues .......................

Options .......................................................... $ 110,656 $ 440,070 $ 688,899 298 % 57 %
Cryptocurrencies ......................................... 9,487 26,708 419,382 182 % 1,470 %
Equities ......................................................... 50,688 251,200 287,734 396 % 15 %
Other ............................................................. — 2,155 6,335 NM 194 %
Total transaction-based revenues...... $ 170,831 $ 720,133 $1,402,350 322 % 95 %
Percentage of total net revenues:
Options .......................................................... 40% 46% 38%
Cryptocurrencies ......................................... 4% 3% 23%
Equities ......................................................... 18% 26% 16%
Other ............................................................. —% —% —%
Total transaction-based revenues...... 62 % 75% 77%

Comparison of Years Ended December 31, 2021 and 2020

Transaction-based revenues increased by $682.2 million primarily driven by a 81% increase in Net
Cumulative Funded Accounts which resulted in higher daily average revenue trades in cryptocurrencies,
options, and equities.

We define “daily average revenue trades” as the total number of revenue generating trades executed
during a given period divided by the number of trading days in that period. Our daily average revenue
trades for cryptocurrencies increased significantly from 0.1 million to 1.2 million. The number of users
placing cryptocurrency trades increased 455% while the average notional volume traded per trader was
up 83%. In late December 2021, for the first time during the periods presented, we updated our pricing
agreements with crypto market makers. Our rebate, which is subject to change from time to time, slightly
more than doubled with these changes. We also added another venue to increase capacity and further
improve competition for customer orders.

Our daily average revenue trades for options increased by 34% from 0.6 million to 0.8 million. The
number of users placing option trades increased 43% while the number of options contracts traded per
trader was up 1%.

Our daily average revenue trades for equities increased by 38% from 2.2 million to 3.1 million. The
number of users placing equity trades increased 75% while the average notional volume traded per trader
was down 30%.

74
Net Interest Revenues

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands, except for percentages) 2019 2020 2021 % Change % Change

Net interest revenues:

Securities lending ............................................. $ 6,380 $ 98,165 $137,153 NM 40 %
Margin interest .................................................. 19,104 66,781 131,823 250 % 97 %
Interest on segregated cash and securities . 36,281 13,401 4,023 (63)% (70)%
Other interest revenue ..................................... 9,865 3,972 4,181 (60)% 5%
Interest expenses related to credit facilities . (991) (4,882) (20,218) 393 % 314 %
Total net interest revenues ....................... $ 70,639 $177,437 $256,962 151 % 45 %

Percentage of total net revenues:

Securities lending ............................................. 2% 10% 8%
Margin interest .................................................. 7% 7% 7%
Interest on segregated cash and securities.. 13% 2% —%
Other interest revenue ..................................... 4% 1% —%
Interest expenses related to credit facilities . (1)% (1)% (1)%
Total net interest revenues ...................... 25% 19% 14%

Comparison of Years Ended December 31, 2021 and 2020

Net interest revenues increased by $79.5 million primarily due to higher interest revenues earned on
margin loans to users and through securities lending activities, partially offset by increased interest
expense related to our revolving credit facilities and lower interest revenue earned on segregated cash
and securities.

Interest revenue earned on margin borrowings increased by $65.0 million due to an increase in both
the number of margin borrowers and the average per-user margin balance. Average margin receivables
outstanding increased from $1.99 billion due from 125 thousand average users to $4.91 billion due from
218 thousand average users. Robinhood users must be Robinhood Gold subscribers in order to enable
margin borrowing in their accounts. The first $1,000 in margin borrowed by each user is not charged
interest. Additional margin borrowed was charged at a 5% annual rate until December 2020 when we
lowered this rate to 2.5%, where it will remain until March 2022, at which point it will be increased to 3%.
Net interest revenues earned from securities lending transactions increased $39.0 million as we grew our
securities lending program, which benefited from growth in margin borrowings. These increases were
partially offset by an increase of $15.3 million in interest expenses, which includes commitment and
unused fees related to credit facilities in connection with the April 2021 Credit Facility (see Note 11 to our
consolidated financial statements in this Annual Report for further information) and a decrease of
$9.4 million in interest revenue earned on segregated cash and securities balances due to the decrease
in the Federal Reserve's benchmark target rate to near zero.

75
Other Revenues

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands, except for percentages) 2019 2020 2021 % Change % Change

Other revenues .................................................... $ 36,063 $ 61,263 $ 155,831 70 % 154 %

Percentage of total net revenues ..................... 13% 6% 9%

Comparison of Years Ended December 31, 2021 and 2020

Other revenues increased by $94.6 million primarily due to an increase in subscription revenue of
$43.9 million driven by an increase in paid subscribers to Robinhood Gold from 0.9 million to 1.3 million.
Additionally, ACATS fees charged to users for facilitating the transfer of their account to another broker-
dealer increased by $25.8 million and proxy rebate revenue increased by $22.9 million as a result of the
growth in our user base.

Operating Expenses

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands, except for percentages) 2019 2020 2021 % Change % Change

Operating expenses:
Brokerage and transaction ......................... $ 45,459 $111,083 $ 152,343 144 % 37 %
Technology and development..................... 94,932 215,630 1,232,787 127 % 472 %
Operations ..................................................... 33,869 137,905 373,129 307 % 171 %
Marketing ....................................................... 124,699 185,741 327,369 49 % 76 %
General and administrative ......................... 85,504 294,694 1,370,520 245 % 365 %
Total operating expenses ....................... $384,463 $945,053 $3,456,148
Percent of total net revenues:
Brokerage and transaction ......................... 16 % 12 % 8 %
Technology and development..................... 34 % 22 % 68 %
Operations ..................................................... 12 % 14 % 21 %
Marketing ....................................................... 45 % 19 % 18 %
General and administrative ......................... 31 % 31 % 76 %
Total operating expenses ........................ 138 % 98 % 191 %

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Brokerage and Transaction

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands) 2019 2020 2021 % Change % Change

Broker-dealer transaction expenses ................ $ 17,082 $ 54,505 $ 48,185 219% (12)%

Market data expenses ........................................ 11,697 21,327 32,962 82% 55 %
Employee compensation, benefits, and
overhead, excluding share-based
compensation ................................................. 4,879 6,993 14,309 43% 105 %
Cash management transaction expenses....... 815 3,942 11,574 384% 194 %
Share-based compensation .............................. 426 226 7,527 (47)% NM
Other .................................................................... 10,560 24,090 37,786 128% 57 %
Total.................................................................. $ 45,459 $111,083 $152,343 144% 37 %

Comparison of Years Ended December 31, 2021 and 2020

Brokerage and transaction costs increased by $41.3 million primarily due to an increase in market
data expenses of $11.6 million and an increase in cash management transaction expenses of
$7.6 million, which were in line with the growth in our user base. Share-based compensation expense
increased $7.3 million as vesting conditions were met upon our IPO and other employee compensation,
benefits, and overhead increased $7.3 million as we continued to grow our brokerage teams to support
the growth of our user base and platform. Other brokerage and transaction costs also increased due to
higher bank charges of $5.3 million and regulatory fees of $4.5 million. These increases were partially
offset by decreases in broker-dealer transaction expenses, primarily due to a $15.7 million decrease in
clearing fees as a result of a reduction of certain of these fees effective in June 2021 offset by a $8.5
million increase in losses attributable to the market price fluctuations that impacted fractional shares
transactions.

Technology and Development

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands) 2019 2020 2021 % Change % Change

Share-based compensation ........................ $ 9,499 $ 18,025 $ 609,306 90% NM

Employee compensation, benefits, and
overhead, excluding share-based
compensation .......................................... 51,625 103,998 282,915 101% 172 %
Cloud infrastructure services ...................... 23,574 67,372 266,834 186% 296 %
Software and tools........................................ 8,800 22,201 62,144 152% 180 %
Other .............................................................. 1,434 4,034 11,588 181% 187 %
Total ......................................................... $ 94,932 $215,630 $1,232,787 127% 472 %

Comparison of Years Ended December 31, 2021 and 2020

Technology and development costs increased by $1.02 billion primarily due to an increase in share-
based compensation expense of $591.3 million as vesting conditions were met upon our IPO and an
increase in other employee compensation, benefits, and overhead of $178.9 million as we also continued
to grow our engineering, data science, and design teams to support the growth of our user base and
develop new products. Additionally, we experienced increases in costs for cloud infrastructure service of
$199.5 million due to infrastructure expansion necessary to meet increased capacity requirements for our
platform, and costs for software and tools of $39.9 million to support the growth of our headcount.

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Operations

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands) 2019 2020 2021 % Change % Change

Employee compensation, benefits, and

overhead, excluding share-based
compensation ................................................. $ 11,461 $ 35,379 $126,017 209% 256 %
Provision for credit losses and fraud ................ 11,108 61,313 107,054 452% 75 %
Customer experience ......................................... 8,164 28,300 97,121 247% 243 %
Share-based compensation .............................. 138 61 20,261 (56)% NM
Other .................................................................... 2,998 12,852 22,676 329% 76 %
Total ................................................................ $ 33,869 $137,905 $373,129 307% 171 %

Comparison of Years Ended December 31, 2021 and 2020

Operations costs increased by $235.2 million primarily due to an increase in employee compensation,
benefits, and overhead of $90.6 million as we increased the number of our dedicated customer support
professionals. Costs related to third-party customer support vendors for customer experience increased
$68.8 million as we continued to make investments to support our growing user base. Provision for credit
losses and fraud increased $45.7 million mainly driven by increased unauthorized debit card usage and
an increase in loss incurred per account related to Fraudulent Deposit Transactions. Additionally, we
recognized an increase in share-based compensation expense of $20.2 million as vesting conditions were
met upon our IPO.

Marketing

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands) 2019 2020 2021 % Change % Change

Marketing incentives ........................................... $ 29,187 $ 80,826 $ 120,706 177% 49 %

Digital marketing.................................................. 55,744 35,398 50,576 (36)% 43 %
Share-based compensation .............................. 86 614 49,731 614% NM
Employee compensation, benefits, and
overhead, excluding share-based
compensation ................................................. 2,659 8,356 37,848 214% 353 %
Brand marketing .................................................. 20,717 28,992 24,224 40% (16)%
Creative services................................................. 13,603 12,075 22,416 (11)% 86 %
Other marketing................................................... 2,703 19,480 21,868 621% 12 %
Total ................................................................ $ 124,699 $ 185,741 $ 327,369 49% 76 %

Included in marketing incentives are costs associated with the Robinhood Referral Program, which
are comprised of the fair value of awards earned in the current period, changes in estimate of unclaimed
awards earned in the current and prior periods, fair value adjustments of shares held to support the
program, and reversals related to awards that expire unclaimed. The fair value adjustments of shares
held to support the program were immaterial for the periods presented. The following table summarizes
the Robinhood Referral Program liability activity for the periods indicated:

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 Years ended December 31,
(in thousands) 2019 2020 2021
Beginning balance, January 1 ................................................... $ 978 $ 303 $ 695
Fair value of current period awards .......................................... 37,893 85,849 126,513
Changes in estimate of unclaimed awards for current and
prior periods ............................................................................ (1,886) 927 333
Reversals related to unclaimed, expired awards .................... (7,256) (7,715) (9,816)
Claimed awards ........................................................................... (29,426) (78,669) (117,628)
Ending balance, December 31 .................................................. $ 303 $ 695 $ 97

Comparison of Years Ended December 31, 2021 and 2020

Marketing costs increased by $141.6 million partially due to an increase in share-based

compensation expense of $49.1 million as vesting conditions were met upon our IPO. Marketing
incentives increased $39.9 million and substantially all of which was due to higher costs associated with
the Robinhood Referral Program. Other employee compensation, benefits, and overhead increased $29.5
million as we continued to increase our marketing personnel headcount to support the growth of our
business. In addition, there were increases in digital marketing expenses of $15.2 million and creative
services costs of $10.3 million primarily related to advertising spend leading up to our IPO.

General and Administrative

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands) 2019 2020 2021 % Change % Change

Share-based compensation ..................... $ 16,518 $ 5,405 $ 885,427 (67)% NM

Employee compensation, benefits, and
overhead, excluding share-based
compensation ........................................ 34,049 79,206 196,086 133% 148 %
Legal expenses .......................................... 10,800 56,175 101,307 420% 80 %
Settlements and penalties ........................ 1,409 105,506 70,349 NM (33)%
Other professional fees ............................. 10,006 29,561 53,812 195% 82 %
Business insurance.................................... 1,982 4,340 24,970 119% 475 %
Other ............................................................ 10,740 14,501 38,569 35% 166 %
Total ........................................................ $ 85,504 $294,694 $1,370,520 245% 365 %

Comparison of Years Ended December 31, 2021 and 2020

General and administrative costs increased by $1.08 billion primarily due to an increase in share-
based compensation as vesting conditions were met upon our IPO including $501.2 million related to
executive compensation arrangements (see Note 12 to our consolidated financial statements in this
Annual Report for further information). Other employee compensation, benefits, and overhead increased
by $116.9 million as we continued to increase our general and administrative personnel to support the
growth of our business. Legal expenses increased $45.1 million primarily related to certain legal matters,
partially offset by a reduction in settlements and penalties of $35.2 million. See Note 16 to our
consolidated financial statements in this Annual Report for further information.

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Change in Fair Value of Convertible Notes and Warrant Liability
Year ended December 31,
2019 to 2020 2020 to 2021
(in thousands) 2019 2020 2021 % Change % Change

Change in fair value of convertible notes

and warrant liability .................................... — — $2,045,657 NM NM

Comparison of Years Ended December 31, 2021 and 2020

Change in fair value of convertible notes and warrant liability was due to the mark-to-market
adjustment of the convertible notes and warrants we issued in February 2021. Upon completion of our
IPO, the aggregate outstanding principal and accrued interest of the convertible notes converted into
137.3 million shares of Class A common stock and the warrants became equity-classified, which resulted
in the warrant liability being reclassified to additional paid-in capital. There will be no additional mark-to-
market adjustments related to the convertible notes or warrant liability. See Note 7 to our consolidated
financial statements in this Annual Report for further information.

Provision for (Benefit from) Income Taxes

Year ended December 31,

2019 to 2020 2020 to 2021
(in thousands) 2019 2020 2021 % Change % Change

Provision for (benefit from) income taxes . $ (1,018) $ 6,381 2,000 (727)% (69)%

Comparison of Years Ended December 31, 2021 and 2020

Provision for income taxes decreased by $4.4 million primarily due to the income tax benefit
recognized from the partial release of our valuation allowance resulting from the recognition of net
deferred tax liabilities in connection with the Say Technologies acquisition, and offset by the change in
valuation allowance on our remaining U.S. federal and state deferred tax assets and by our current
federal and state taxes payable.

Liquidity and Capital Resources

Source and Uses of Funds
We expect to use our available cash, cash equivalents, and investments, including potential future
borrowings under our revolving lines of credit and potential issuance of new debt or equity, to support and
invest in our core business, including investing in new ways to serve our customers, potentially seeking
strategic acquisitions to leverage existing capabilities and further build our business, and for general
capital needs (including capital requirements imposed by regulators and SROs and cash deposit and
collateral requirements under the rules of the DTC, NSCC, and OCC). Based on our current level of
operations, we believe our available cash, available lines of credit, and cash provided by operations will
be adequate to meet our current liquidity needs for the next 12 months.

Cash, Cash Equivalents, and Investments

Our cash, cash equivalents, and investments were $6.28 billion and $1.40 billion as of December 31,
2021 and 2020. Our investment portfolio comprises highly liquid available-for-sale securities, including
asset-backed securities, commercial paper, corporate bonds, and government bonds.

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Convertible Debt and IPO

In January and February 2021, we received gross proceeds of $3.55 billion from the issuance of two
tranches of convertible notes and related warrants. The convertible notes were converted into Class A
common stock upon the completion of our IPO.

On August 2, 2021, we closed our IPO of our Class A common stock and on August 31, 2021, we
sold additional shares of Class A common stock pursuant to the option granted to the underwriters. The
total net proceeds received were approximately $2.05 billion after deducting underwriting discounts,
commissions, and offering expenses payable by us. We used a portion of the net proceeds we received
in the IPO to repay borrowings made under our revolving lines of credit (which borrowings were utilized to
fund tax withholdings due prior to the IPO closing as a result of RSU settlements in connection with the
pricing of our IPO).

Revolving Lines of Credit

As of December 31, 2021, we had a total of $2.81 billion in committed revolving lines of credit. See
Note 11 to our consolidated financial statements in this Annual Report for further information.

The following table summarizes our short- and long-term material cash requirements as of December
31, 2021:

Payments Due by Period

(in thousands) Total 2022 2023-2024 2025-2026 Thereafter
Operating lease commitments .................. $ 258,982 $ 32,646 $ 68,176 $ 56,160 $ 102,000
Non-cancelable purchase
commitments(1) ....................................... 1,162,370 279,068 479,670 403,566 66
Total............................................................... $1,421,352 $ 311,714 $ 547,846 $ 459,726 $ 102,066

(1) Non-cancelable purchase commitments are determined based on the non-cancelable quantities or termination amounts to
which we are contractually obligated. They primarily relate to commitments for cloud infrastructure service and business
insurance.

In addition to lease and purchase commitments, we have a committed financing agreement with a
contractual term of 30 days and a daily minimum commitment of $25 million.

Regulatory Capital Requirements

Our broker-dealer subsidiaries (RHF and RHS) are subject to the SEC Uniform Net Capital Rule,
administered by the SEC and FINRA, which requires the maintenance of minimum net capital, as defined.
Net capital and the related net capital requirements may fluctuate on a daily basis. RHS and RHF
compute net capital under the alternative method as permitted by the SEC Uniform Net Capital Rule.

81
 The tables below summarize the net capital, capital requirements and excess net capital of RHS and
RHF as of periods presented:

December 31, 2021

Net Capital in
Excess of
Required Net Required Net
(in thousands) Net Capital Capital Capital
RHS .............................................................................................. $ 2,841,411 $ 134,568 $ 2,706,843
RHF .............................................................................................. 153,408 250 153,158

In January and February 2021, we received gross proceeds of $3.55 billion from the issuance of two
tranches of convertible notes and related warrants, of which an aggregate of $2.0 billion was contributed
to RHS in February 2021. Pursuant to the SEC Uniform Net Capital Rule, capital contributed to RHS is
included in its net capital calculation and may not be withdrawn for one year from the time of contribution.
This restriction lapsed in February 2022, however, no capital has been returned to the parent company as
of the date of filing of this Annual Report.

Cash Flows
The following table summarizes our cash flow activities:

Year ended December 31,

(in thousands) 2019 2020 2021
Cash provided by (used in):
Operating activities ...................................................................... $ 1,260,085 $ 1,876,254 $ (884,773)
Investing activities ........................................................................ (12,312) (32,330) (237,880)
Financing activities ...................................................................... 375,350 1,275,883 5,203,421

Cash provided by and used in operating activities consisted of net income (loss) adjusted for certain
non-cash items including change in fair value of convertible notes and warrant liability, share-based
compensation expense, provision for credit losses, depreciation and amortization, and the effect of
changes in operating assets and liabilities. Net operating assets and liabilities at any specific point in time
are subject to many variables, including variability in user activity, the timing of cash receipts and
payments, and vendor payment terms.

For the year ended December 31, 2021, cash flows used in operating activities was $884.8 million,
primarily due to a net loss of $3,686.4 million, adjusted for the add back of non-cash expenses of
$3,719.8 million, consisting primarily of change in fair value of convertible notes and warrant liability of
$2,045.7 million, share-based compensation expense of $1,570.4 million, provision for credit losses of
$78.3 million, and depreciation and amortization of $25.5 million. Additionally, there was a cash outflow
due to changes in operating assets and liabilities of $918.1 million, primarily due to an increase in
receivables from users, net, of $3,361.9 million, driven by an increase in margin receivables due to growth
in our user base offset by an increase in collateral received for securities loaned of $1,729.9 million and
an increase in payables to users of $578.5 million driven by an increase in customer cash held in line with
the growth in our user base.

For the year ended December 31, 2020, cash provided by operating activities was $1,876.3 million
partially due to a net income of $7.4 million, adjusted for the add back of non-cash expenses of
$95.5 million, consisting primarily of provision for credit losses of $59.1 million, share-based
compensation expense of $24.3 million, and depreciation and amortization of $9.9 million. Additionally,
the cash generated from operating activities increased due to a net inflow from changes in operating

82
assets and liabilities of $1,773.3 million, primarily due to increases in payables to users of $3,532.1 million
and securities loaned of $1,247.1 million, partially offset by an increase in receivables from users, net of
$2,772.0 million, driven by increases in customer cash held, securities loaned, and margin receivables in
line with the growth in our user base.

For the year ended December 31, 2019, cash provided by operating activities was $1,260.1 million,
primarily due to net loss of $106.6 million, adjusted for the add back of non-cash expenses of
$43.4 million consisting primarily of share-based compensation expense of $26.7 million, provision for
credit losses of $11.1 million and depreciation and amortization of $5.4 million. Additionally, the cash
generated from operating activities increased due to a net inflow from changes in operating assets and
liabilities of $1,323.3 million, primarily due to increases in payables to users of $802.8 million and
securities loaned of $674.0 million, driven by increases in customer cash held and securities loaned in
line with the growth in our user base.

For the year ended December 31, 2021, cash flows used in investing activities were $237.9 million,
which primarily consisted of $125.4 million used for business acquisitions, net of cash acquired.
Additionally, cash flows used in investing activities included $63.2 million in purchases of property,
software, and equipment, $27.2 million for the purchase of investments, and $20.5 million in capitalization
of internally developed software. For the years ended December 31, 2020 and 2019, cash flows used in
investing activities were $32.3 million and $12.3 million, which primarily consisted of $24.4 million and
$7.3 million in purchases of property, software, and equipment and $7.9 million and $5.2 million in
capitalization of internally developed software.

For the year ended December 31, 2021, cash flows provided by financing activities were
$5,203.4 million, which primarily consisted of proceeds from the issuance of convertible notes and
warrants of $3,552.0 million and proceeds of $2,052.4 million from issuance of common stock in
connection with our IPO, net of offering costs, partially offset by taxes paid related to net share settlement
of equity awards of $422.1 million. We also drew and repaid $1,968.3 million on our credit facilities. For
the years ended December 31, 2020 and 2019, cash flows provided by financing activities were
$1,275.9 million and $375.4 million, which primarily consisted of $1,267.3 million and $372.7 million in
proceeds from issuance of redeemable convertible preferred stock, net of issuance costs. We also drew
and repaid $937.7 million and $137.0 million on our credit facilities.

Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in
the United States (“GAAP”) requires estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the
consolidated financial statements and accompanying notes. The SEC has defined a company’s critical
accounting policies as the ones that are most important to the portrayal of the company’s financial
condition and results of operations, and which require the company to make its most difficult and
subjective judgments, often as a result of the need to make estimates of matters that are inherently
uncertain. Based on this definition, we have identified the critical accounting estimates addressed below.
We also have other key accounting policies, which involve the use of estimates, judgments, and
assumptions that are significant to understanding our results. For additional information, see Note 1 to our
consolidated financial statements in this Annual Report. Although we believe that our estimates,
assumptions, and judgments are reasonable, they are based upon information presently available. Actual
results might differ significantly from these estimates under different assumptions, judgments, or
conditions.

Business Combinations
We allocate the fair value of purchase price to the tangible assets acquired, liabilities assumed, and
intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase

83
price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such
valuations require management to make significant estimates and assumptions, especially with respect to
intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to,
future expected cash flows from acquired customer contracts, acquired technology, and trade names,
based on expected future growth rates and margins, attrition rates, future changes in technology and
royalty for similar brand licenses, useful lives, and discount rates. Management's estimates of fair value
are based upon assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable and, as a result, actual results might differ from estimates.

Goodwill
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a
business combination and is allocated to reporting units expected to benefit from the business
combination. We operate and report financial information in one operating segment. We test goodwill for
impairment at least annually, in the fourth quarter, or whenever events or changes in circumstances
indicate that goodwill might be impaired. We evaluate our reporting units when changes in our operating
structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach. In
testing for goodwill impairment, we first assess qualitative factors to determine whether the existence of
events or circumstances leads to a determination that it is more likely than not that the fair value of a
reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances,
we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying
amount, then additional impairment testing is not required. However, if we conclude otherwise, we
proceed to a quantitative assessment.

The quantitative assessment compares the estimated fair value of a reporting unit to its book value,
including goodwill. If the fair value exceeds book value, goodwill is considered not to be impaired and no
additional steps are necessary. However, if the book value of a reporting unit exceeds its fair value, an
impairment loss will be recognized in an amount equal to that excess, limited to the total amount of
goodwill allocated to that reporting unit.

Income Tax
We make significant judgments and estimates to determine any valuation allowance recorded against
deferred tax assets. Deferred tax assets are evaluated for future realization and reduced by a valuation
allowance to the extent we believe that they will not be realized. We consider many factors when
assessing the likelihood of future realization of our deferred tax assets including, but not limited to,
historical cumulative loss experience and expectations of future earnings, tax planning strategies, and the
carry-forward periods available for tax reporting purposes. Our judgment regarding future profitability may
change due to many factors, including future market conditions and the ability to successfully execute
business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred
tax assets, our tax provision would increase or decrease in the period in which the assessment is
changed.

We recognize a tax benefit from an uncertain tax position when it is more likely than not that the
position will be sustained upon examination, including resolutions of any related appeals or litigation,
based on the technical merits. Income tax positions must meet a more-likely-than-not recognition
threshold at the effective date to be recognized. We account for uncertain tax positions, including net
interest and penalties, as a component of income tax expense or benefit. We make adjustments to these
uncertain tax positions in accordance with applicable income tax guidance and based on changes in facts
and circumstances. To the extent that the final tax outcome of these matters is different from the amounts
recorded, such differences will affect the provision for income taxes in the period in which such
determination is made and could have a material impact to our consolidated financial statements and
operating results.

84
Share-based Compensation
Time-Based RSUs

We have granted RSUs that vest upon the satisfaction of a time-based service condition (“Time-
Based RSUs”). Prior to our IPO, our Time-Based RSUs vested based upon the satisfaction of both a time-
based service condition and a performance-based condition, namely the occurrence of a liquidity event
such as the IPO. The fair value of our RSUs is estimated based on the fair value of our common stock on
the date of grant. The time-based service condition for our awards is generally satisfied over four years.
We record share-based compensation expense for Time-Based RSUs on an accelerated attribution
method over the requisite service period. The performance-based condition for our pre-IPO grants was
satisfied upon the occurrence of the IPO in 2021, at which point we recorded a cumulative one-time
share-based compensation expense determined using the awards’ grant-date fair value. Share-based
compensation related to the remaining time-based service after the IPO is recorded over the remaining
requisite service period. No performance-based conditions exist for our post-IPO grants.

Market-Based RSUs

We have granted RSUs that vest upon the satisfaction of all the following conditions: time-based
service conditions, performance-based conditions, and market-based conditions. The time-based service
condition for these awards generally is satisfied over six years. The performance-based conditions are
satisfied upon the occurrence of a qualifying event, as described above. The market-based conditions are
satisfied upon our achievement of specified share prices.

For market-based awards, we determine the grant-date fair value utilizing a Monte Carlo valuation
model, which incorporates various assumptions including expected stock price volatility, expected term,
risk-free interest rates, expected date of a qualifying event, and expected capital raise percentage. We
estimate the expected term based on various exercise scenarios, as these awards are not considered
“plain vanilla.” We estimate the expected date of a qualifying event based on our expectation at the time
of measurement of the award’s value.

We record share-based compensation expense for market-based equity awards on an accelerated

attribution method over the requisite service period, and only if performance-based conditions are
considered probable to be satisfied. We determine the requisite service period by comparing the derived
service period to achieve the market-based condition and the explicit time-based service period, using the
longer of the two service periods as the requisite service period. Upon the occurrence of our IPO in 2021,
we recorded a cumulative one-time share-based compensation expense determined using the grant-date
fair values. Share-based compensation related to remaining time-based service and market-based
conditions to be met will be recorded over the remaining derived requisite service period.

Common Stock Valuations

Prior to our IPO, given the absence of a public trading market for our common stock and in
accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide,
Valuation of Privately-Held Company Equity Securities Issued as Compensation, our board of directors
exercised reasonable judgment and considered numerous objective and subjective factors to determine
the best estimate of fair value of our common stock.

These factors included:

• independent third-party valuations of our common stockꓼ

• the prices paid for common or convertible preferred stock sold to third-party investors by us and
prices paid in secondary transactions, including any tender offersꓼ

85
 • the rights, preferences and privileges of our redeemable convertible preferred stock relative to
those of our common stockꓼ

• our financial condition, results of operations, and capital resourcesꓼ

• the industry outlookꓼ

• the valuation of comparable companiesꓼ

• the lack of marketability of our common stockꓼ

• the likelihood of achieving a liquidity event, such as an IPO or a sale of our company, given
prevailing market conditionsꓼ

• the history and nature of our business, industry trends, and competitive environmentꓼ and

• general economic outlook including economic growth, inflation, unemployment, interest rate
environment, and global economic trends.

Our board of directors determined the fair value of our common stock by first determining the
enterprise value of our business, and then allocating the value among the various classes of our equity
securities to derive a per share value of our common stock. The enterprise value of our business was
primarily estimated by reference to the closest round of equity financing or tender transaction preceding
the date of the valuation. In a few cases, we also utilized the income or market approaches.

The income approach estimates enterprise value based on the estimated present value of future cash
flows the business is expected to generate over its remaining life. The estimated present value is
calculated using a discount rate reflective of the risks associated with an investment in a similar company
in a similar industry or having a similar history of revenue growth. The market approach estimates value
based on a comparison of the subject company to comparable public companies. From the comparable
companies, a representative market value multiple is determined and then applied to the subject
company’s financial forecasts to estimate the value of the subject company.

In allocating the enterprise value of our business among the various classes of stock prior, we
primarily used the option pricing method (“OPM”), which models each class of stock as a call option with a
unique claim on our assets. After the allocation to the various classes of stock, a discount for lack of
marketability (“DLOM”), is applied to arrive at a fair value of the common stock. A DLOM is meant to
account for the lack of marketability of a stock that is not traded on public exchanges.

In addition, we also considered any secondary transactions involving our capital stock. In our
evaluation of those transactions, we considered the facts and circumstances of each transaction to
determine the extent to which they represented a fair value exchange and assigned the transactions an
appropriate weighting in the valuation of our common stock. Factors considered include the number of
different buyers and sellers, transaction volume, timing relative to the valuation date, whether the
transactions occurred between willing and unrelated parties, and whether the transactions involved
investors with access to our financial information.

Application of these approaches involves the use of estimates, judgments, and assumptions that are
highly complex and subjective, such as those regarding our expected future revenue, expenses and
future cash flows, discount rates, market multiples, the selection of comparable companies, and the
probability of possible future events. Changes in any or all of these estimates and assumptions or the
relationships between those assumptions impact our valuations as of each valuation date and may have
a material impact on the valuation of our common stock.

Following the completion of our IPO, there is an active market for our Class A common stock, so we
no longer apply these valuation approaches.

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Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements in this Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

MARKET RISK
Market risk generally represents the risk of loss that may result from the potential change in the value
of a financial instrument as a result of fluctuations in interest rates and market prices. Information relating
to quantitative and qualitative disclosures about these market risks is described below.

Interest Rate Risk

Our exposure to changes in interest rates relates to interest earned on our cash and cash
equivalents, cash and securities segregated under federal and other regulations, deposits with clearing
organizations, restricted cash, investments in debt securities and margin loans. We use a net interest
sensitivity analysis to evaluate the effect that changes in interest rates might have on total net revenues.
The results of the analysis based on our financial position as of December 31, 2021 indicate that a
hypothetical 100 basis point increase or decrease in interest rates would have had a positively correlated
impact of approximately 9% on total net revenues.

We also have exposure to change in interest rates related to our variable-rate credit facilities, which
are described in Note 11 to our consolidated financial statements in this Annual Report. However, as
there were no outstanding borrowings under our credit facilities as of December 31, 2020 and 2021, we
had limited financial exposure associated with changes in interest rates as of such dates.

Our measurement of interest rate risk involves assumptions that are inherently uncertain and, as a
result, our analysis might not precisely estimate the actual impact of changes in interest rates on net
interest revenues. Actual results may differ from simulated results due to balance growth or decline and
the timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions
and management strategies, including changes in asset and liability mix.

Market-Related Credit Risk

We are indirectly exposed to equity securities risk in connection with securities collateralizing margin
receivables, as well as risk related to our securities lending activities. We manage risk on margin and
securities-based lending by requiring customers to maintain collateral in compliance with internal and, as
applicable, regulatory guidelines. We monitor required margin levels daily and require our customers to
deposit additional collateral, or to reduce positions, when necessary. We continuously monitor customer
accounts to detect excessive concentration, large orders or positions, and other activities that indicate
increased risk to us. We manage risks associated with our securities lending activities by requiring credit
approvals for counterparties, by monitoring the market value of securities loaned and collateral values for
securities borrowed on a daily basis, by requiring additional cash as collateral for securities loaned or
return of collateral for securities borrowed when necessary, and by participating in a risk-sharing program
offered through the OCC.

87
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

PAGE
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) .................................... 89
Consolidated Balance Sheets.................................................................................................................... 91
Consolidated Statements of Operations .................................................................................................. 92
Consolidated Statements of Comprehensive Income (Loss) ............................................................... 93
Consolidated Statements of Cash Flows ................................................................................................. 94
Consolidated Statements of Mezzanine Equity and Stockholders’ (Deficit) Equity .......................... 95
Notes to the Consolidated Financial Statements.................................................................................... 98

88
 Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Robinhood Markets, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Robinhood Markets, Inc. (the
Company) as of December 31, 2020 and 2021, the related consolidated statements of operations,
comprehensive income (loss), cash flows, and mezzanine equity and stockholders' (deficit) equity for
each of the three years in the period ended December 31, 2021, and the related notes (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31,
2020 and 2021, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the
financial statements that was communicated or required to be communicated to the audit committee and
that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective or complex judgments. The communication of the critical audit
matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.

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 Valuation of Market-Based Restricted Stock Units
Description of the Matter As described in Note 12 to the consolidated financial statements, the
Company granted market-based restricted stock units (“RSUs”) to its co-
founders in 2021 that vest upon achievement of specified share price
targets through May 25, 2029 and satisfaction of a service condition
(“2021 market-based RSUs”). The grant date fair value of the 2021
market-based RSUs was $805.5 million. In addition, during 2021, the
Company modified the market-based restricted stock units that were
granted to its co-founders in 2019 (“2019 market-based RSUs”). The
2019 market-based RSUs that vest upon achievement of specified share
price targets and satisfaction of a service condition were modified to
allow vesting on the same share price targets through December 31,
2025. The modification date fair value of the modified 2019 market-
based RSUs was $589.2 million, resulting in $581.1 million of
incremental stock-based compensation expense due to the modification.
The market conditions are included in the determination of the estimated
fair value of the market-based RSUs. With the assistance of valuation
specialists, the Company estimated the fair value of the market-based
RSUs using the Monte Carlo simulation model that utilizes various
assumptions, including volatility.
Auditing the valuation of the Company’s market-based RSUs is complex
due to the use of the Monte Carlo simulation model and involves the use
of our valuation specialists. Also, auditing the valuation of the market-
based RSUs is highly judgmental due to the significant estimation
required to determine the assumptions used in the valuation model,
including the volatility assumption.

How We Addressed the To test the fair value of the Company’s market-based RSUs, our audit
Matter in Our Audit procedures included, among others, assessing the appropriateness of
the use of the Monte Carlo simulation model and the underlying
calculations, as well as testing the assumptions used to calculate the fair
value of market-based RSUs. To test the volatility assumption, we
assessed the applicability of the guideline public companies used in the
determination of volatility based on the nature of their business,
compared the historical volatilities of the guideline public companies
used in the estimate to actual historical results, and developed an
independent range of volatility. We involved our valuation specialists to
assist us with evaluating the Monte Carlo simulation model and the
assumptions used in the model, as well as to perform comparative
calculations.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2017.

San Jose, California

February 24, 2022

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 ROBINHOOD MARKETS, INC.
CONSOLIDATED BALANCE SHEETS

December 31,
(in thousands, except share and per share data) 2020 2021
Assets
Current assets:
Cash and cash equivalents ................................................................................................................................................. $ 1,402,629 $ 6,253,477
Cash and securities segregated under federal and other regulations ......................................................................... 4,914,660 3,992,419
Receivables from brokers, dealers, and clearing organizations ................................................................................... 124,501 88,326
Receivables from users, net ............................................................................................................................................... 3,354,142 6,638,900
Deposits with clearing organizations ................................................................................................................................. 225,514 327,917
User-held fractional shares ................................................................................................................................................. 802,483 1,834,479
Investments ........................................................................................................................................................................... — 27,189
Other current assets ............................................................................................................................................................ 48,655 120,835
Total current assets........................................................................................................................................................ 10,872,584 19,283,542
Property, software, and equipment, net ............................................................................................................................ 45,834 146,419
Goodwill ................................................................................................................................................................................. — 100,521
Intangible assets, net ........................................................................................................................................................... 185 34,107
Restricted cash ..................................................................................................................................................................... 7,364 23,773
Other non-current assets .................................................................................................................................................... 62,507 180,817
Total assets ............................................................................................................................................................... $ 10,988,474 $ 19,769,179
Liabilities, mezzanine equity and stockholders’ (deficit) equity
Current liabilities:
Accounts payable and accrued expenses ........................................................................................................................ $ 104,649 $ 252,313
Payables to users ................................................................................................................................................................. 5,897,242 6,475,728
Securities loaned .................................................................................................................................................................. 1,921,118 3,651,035
Fractional shares repurchase obligation ........................................................................................................................... 802,483 1,834,479
Other current liabilities ......................................................................................................................................................... 90,553 133,787
Total current liabilities .................................................................................................................................................... 8,816,045 12,347,342
Other non-current liabilities ................................................................................................................................................. 48,012 128,745
Total liabilities............................................................................................................................................................ 8,864,057 12,476,087
Commitments and contingencies (Note 16)
Mezzanine equity
Redeemable convertible preferred stock, $0.0001 par value. 414,033,220 shares authorized, 412,742,897
shares issued and outstanding with a liquidation preference of $2,191,086 as of December 31, 2020. No
shares authorized, issued, and outstanding as of December 31, 2021. 2,179,739 —
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value. No shares authorized, issued and outstanding as of December 31,
2020; 210,000,000 shares authorized and no shares issued and outstanding as of December 31, 2021. — —
Common stock, $0.0001 par value. 777,354,000 shares authorized, 229,031,546 shares issued and
outstanding as of December 31, 2020; no shares authorized, issued, and outstanding as of December 31,
2021. 1 —
Class A common stock, $0.0001 par value. No shares authorized, issued and outstanding as of December
31, 2020; 21,000,000,000 shares authorized, 735,957,367 shares issued and outstanding as of
December 31, 2021. — 73
Class B common stock, par value $0.0001. No shares authorized, issued and outstanding as of December
31, 2020; 700,000,000 shares authorized, 127,955,246 shares issued and outstanding as of December
31, 2021. — 13
Class C common stock, par value $0.0001. No shares authorized, issued and outstanding as of December
31, 2020; 7,000,000,000 shares authorized, no shares issued and outstanding as of December 31, 2021. — —
Additional paid-in capital ..................................................................................................................................................... 134,307 11,169,136
Accumulated other comprehensive income ..................................................................................................................... 473 405
Accumulated deficit .............................................................................................................................................................. (190,103) (3,876,535)
Total stockholders’ (deficit) equity ......................................................................................................................... (55,322) 7,293,092
Total liabilities, mezzanine equity and stockholders’ (deficit) equity ................................................................ $ 10,988,474 $ 19,769,179

See Accompanying Notes to the Consolidated Financial Statements.

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 ROBINHOOD MARKETS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended December 31,

(in thousands, except share and per share data) 2019 2020 2021
Revenues:
Transaction-based revenues ............................................................................ $ 170,831 $ 720,133 $ 1,402,350
Net interest revenues ......................................................................................... 70,639 177,437 256,962
Other revenues ................................................................................................... 36,063 61,263 155,831
Total net revenues ......................................................................................... 277,533 958,833 1,815,143

Operating expenses:
Brokerage and transaction ............................................................................... 45,459 111,083 152,343
Technology and development .......................................................................... 94,932 215,630 1,232,787
Operations ........................................................................................................... 33,869 137,905 373,129
Marketing ............................................................................................................. 124,699 185,741 327,369
General and administrative ............................................................................... 85,504 294,694 1,370,520
Total operating expenses ............................................................................. 384,463 945,053 3,456,148

Change in fair value of convertible notes and warrant liability ......................... — — 2,045,657
Other expense (income), net ................................................................................. 657 (50) (2,230)
Income (loss) before income tax........................................................................... (107,587) 13,830 (3,684,432)
Provision for (benefit from) income taxes ............................................................ (1,018) 6,381 2,000
Net income (loss) .................................................................................................... $ (106,569) $ 7,449 $ (3,686,432)
Net income (loss) attributable to common stockholders: ..................................
Basic .......................................................................................................................... $ (106,569) $ 2,848 $ (3,686,432)
Diluted ....................................................................................................................... $ (106,569) $ 2,848 $ (3,686,432)
Net income (loss) per share attributable to common stockholders: ................
Basic $ (0.48) $ 0.01 $ (7.49)
Diluted $ (0.48) $ 0.01 $ (7.49)
Weighted-average shares used to compute net income (loss) per share
attributable to common stockholders: .............................................................
Basic .......................................................................................................................... 221,664,610 225,748,355 492,381,190
Diluted ....................................................................................................................... 221,664,610 244,997,388 492,381,190

See Accompanying Notes to the Consolidated Financial Statements.

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 ROBINHOOD MARKETS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year ended December 31,

(in thousands) 2019 2020 2021
Net income (loss) .................................................................................................... $ (106,569) $ 7,449 $ (3,686,432)
Other comprehensive income (loss), net of tax:
Foreign currency translation ............................................................................. 179 284 (68)
Total other comprehensive income (loss), net of tax .................................... 179 284 (68)
Total comprehensive income (loss) ..................................................................... $ (106,390) $ 7,733 $ (3,686,500)

See Accompanying Notes to the Consolidated Financial Statements.

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 ROBINHOOD MARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
(in thousands) 2019 2020 2021
Operating activities:
Net income (loss) ................................................................................................................................. $ (106,569) $ 7,449 $ (3,686,432)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:
Depreciation and amortization ..................................................................................................... 5,444 9,938 25,495
Provision for credit losses ............................................................................................................ 11,109 59,134 78,337
Share-based compensation ......................................................................................................... 26,667 24,330 1,570,386
Change in fair value of convertible notes and warrant liability ............................................... — — 2,045,657
Other ................................................................................................................................................ 169 2,139 (109)
Changes in operating assets and liabilities:
Segregated securities under federal and other regulations .................................................... — (134,994) 134,994
Receivables from brokers, dealers, and clearing organizations............................................. (9,081) (103,787) 36,175
Receivables from users, net ........................................................................................................ (64,711) (2,771,967) (3,361,872)
Deposits with clearing organizations .......................................................................................... (85,547) (103,037) (102,403)
Other current and non-current assets......................................................................................... (47,758) (46,055) (189,004)
Accounts payable and accrued expenses ................................................................................. 13,895 67,117 134,090
Payables to users .......................................................................................................................... 802,817 3,532,091 578,486
Securities loaned ........................................................................................................................... 674,029 1,247,089 1,729,917
Other current and non-current liabilities ..................................................................................... 39,621 86,807 121,510
Net cash provided by (used in) operating activities............................................................ 1,260,085 1,876,254 (884,773)
Investing activities:
Purchase of property, software, and equipment ....................................................................... (7,255) (24,443) (63,182)
Capitalization of internally developed software ......................................................................... (5,198) (7,887) (20,471)
Acquisitions of a business, net of cash acquired ...................................................................... — — (125,426)
Purchase of investments .............................................................................................................. — — (27,203)
Other ................................................................................................................................................ 141 — (1,598)
Net cash used in investing activities ..................................................................................... (12,312) (32,330) (237,880)
Financing activities:
Proceeds from issuance of common stock in connection with initial public offering, net of
offering costs ............................................................................................................................. — — 2,052,382
Proceeds from issuance of common stock under the Employee Stock Purchase Plan ..... — — 7,344
Taxes paid related to net share settlement of equity awards ................................................. — — (422,076)
Proceeds from issuance of convertible notes and warrants ................................................... — — 3,551,975
Draws on credit facilities ............................................................................................................... 137,000 937,700 1,968,276
Repayments on credit facilities .................................................................................................... (137,000) (937,700) (1,968,276)
Proceeds from issuance of redeemable convertible preferred stock, net of issuance
costs ................................................................................................................................................. 372,733 1,267,328 —
Proceeds from exercise of stock options, net of repurchases ................................................ 2,617 8,555 13,796
Net cash provided by financing activities ............................................................................. 375,350 1,275,883 5,203,421
Effect of foreign exchange rate changes on cash and cash equivalents.............................. 179 284 (68)
Net increase in cash, cash equivalents, segregated cash and restricted cash ............. 1,623,302 3,120,091 4,080,700
Cash, cash equivalents, segregated cash and restricted cash, beginning of the period ......... 1,446,266 3,069,568 6,189,659
Cash, cash equivalents, segregated cash and restricted cash, end of the period .................... $ 3,069,568 $ 6,189,659 $ 10,270,359
Cash and cash equivalents, end of the period ................................................................................ $ 644,050 $ 1,402,629 $ 6,253,477
Segregated cash, end of the period.................................................................................................. 2,420,354 4,779,666 3,992,419
Restricted cash, end of the period .................................................................................................... 5,164 7,364 24,463
Cash, cash equivalents, segregated cash and restricted cash, end of the period .................... $ 3,069,568 $ 6,189,659 $ 10,270,359
Supplemental disclosures:
Cash paid for interest .................................................................................................................... $ 621 $ 3,207 $ 11,902
Cash paid for income taxes, net of refund received ................................................................. $ 1,396 $ 5,689 $ 6,111

See Accompanying Notes to the Consolidated Financial Statements.

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 ROBINHOOD MARKETS, INC.
CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY

Redeemable convertible preferred Accumulated

stock Common stock Additional other Total
paid-in comprehensive Accumulated stockholders’
(in thousands, except for number of shares) Shares Amount Shares Amount capital income deficit (deficit) equity
Balance as of December 31, 2018 ............... 291,739,421 $ 539,678 220,339,931 $ 1 $ 68,615 $ 10 $ (90,108) $ (21,482)
Net loss ............................................................... — — — — — — (106,569) (106,569)
Shares issued in connection with stock
option exercise, net of repurchases ........... — — 4,462,614 — 2,291 — — 2,291
Issuance of Series E convertible preferred
stock, net of issuance costs......................... 29,887,357 372,733 — — — — — —
Vesting of early-exercised stock options ....... — — — — 1,205 — — 1,205
Change in other comprehensive income ....... — — — — — 179 — 179
Share-based compensation ............................. — — — — 27,328 — — 27,328
Balance as of December 31, 2019 ............... 321,626,778 $ 912,411 224,802,545 $ 1 $ 99,439 $ 189 $ (196,677) $ (97,048)

See Accompanying Notes to the Consolidated Financial Statements.

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 ROBINHOOD MARKETS, INC.
CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY

Redeemable convertible preferred Accumulated

stock Common stock Additional other Total
paid-in comprehensive Accumulated stockholders’
(in thousands, except for number of shares) Shares Amount Shares Amount capital income deficit (deficit) equity
Balance as of December 31, 2019 ............... 321,626,778 $ 912,411 224,802,545 $ 1 $ 99,439 $ 189 $ (196,677) $ (97,048)
Net income .......................................................... — — — — — — 7,449 7,449
Shares issued in connection with stock
option exercise, net of repurchases ........... — — 4,229,001 — 9,415 — (875) 8,540
Issuance of Series F convertible preferred
stock, net of issuance costs......................... 48,000,000 599,284 — — — — — —
Issuance of Series G convertible preferred
stock, net of issuance costs......................... 43,116,119 668,044 — — — — — —
Vesting of early-exercised stock options ....... — — — — 527 — — 527
Change in other comprehensive income ....... — — — — — 284 — 284
Share-based compensation ............................. — — — — 24,926 — — 24,926
Balance as of December 31, 2020 ............... 412,742,897 $ 2,179,739 229,031,546 $ 1 $ 134,307 $ 473 $ (190,103) $ (55,322)

See Accompanying Notes to the Consolidated Financial Statements.

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 ROBINHOOD MARKETS, INC.
CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY

Redeemable convertible preferred Accumulated

stock Common stock(1) Additional other Total
paid-in comprehensive Accumulated stockholders’
(in thousands, except for number of shares) Shares Amount Shares Amount capital income deficit (deficit) equity
Balance as of December 31, 2020 ............... 412,742,897 $ 2,179,739 229,031,546 $ 1 $ 134,307 $ 473 $ (190,103) $ (55,322)
Net loss ............................................................... — — — — — — (3,686,432) (3,686,432)
Shares issued in connection with stock
option exercise, net of repurchases ........... — — 6,832,725 24 13,657 — — 13,681
Issuance of common stock in connection
with Employee Stock Purchase Plan ......... — — 298,031 — 7,344 — — 7,344
Issuance of common stock in connection
with initial public offering, net of issuance
costs ................................................................ — — 56,729,194 6 2,052,325 — — 2,052,331
Issuance of common stock upon settlement
of restricted stock units................................. — — 32,133,589 — — — — —
Shares withheld related to net share
settlement ....................................................... — — (11,160,525) — (422,076) — — (422,076)
Conversion of preferred stock to common
stock ................................................................ (412,742,897) (2,179,739) 412,742,897 41 2,179,698 — — 2,179,739
Conversion of convertible notes to common
stock ................................................................ — — 137,305,156 14 5,217,583 — — 5,217,597
Reclassification of warrant liability to
stockholders' equity ...................................... — — — — 380,036 — — 380,036
Vesting of replacement awards issued in
connection with acquisition of a business . — — — — 639 — — 639
Vesting of early-exercised stock options ....... — — — — 406 — — 406
Change in other comprehensive income ....... — — — — — (68) — (68)
Share-based compensation ............................. — — — — 1,605,217 — — 1,605,217
Balance as of December 31, 2021 ............... — $ — 863,912,613 $ 86 $ 11,169,136 $ 405 $ (3,876,535) $ 7,293,092

________________
(1) The share amounts listed above combine common stock, Class A common stock and Class B common stock. In connection with the completion of our initial public offering, all
previously outstanding shares of common stock were reclassified into Class A common stock and Class B common stock. See Note 1 for further information.

See Accompanying Notes to the Consolidated Financial Statements.

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 ROBINHOOD MARKETS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF

SIGNIFICANT ACCOUNTING POLICIES
Robinhood Markets, Inc. (“RHM”, together with its subsidiaries, “Robinhood,” the “Company,” “we,” or
“us”) was incorporated in the State of Delaware on November 22, 2013. Our most significant, wholly-
owned subsidiaries are:

• RHF, a registered introducing broker-dealer;

• RHS, a registered clearing broker-dealer; and

• RHC, which provides users the ability to buy and sell cryptocurrencies.

Acting as the agent of the user, we facilitate the purchase and sale of options, cryptocurrencies, and
equities through our platform by routing transactions through market makers, who are responsible for
trade execution. Upon execution of a trade, users are legally required to purchase options,
cryptocurrencies, or equities for cash from the transaction counterparty or to sell options,
cryptocurrencies, or equities for cash to the transaction counterparty, depending on the transaction.
Acting as agent, we facilitate and confirm trades only when there are binding, matched legal obligations
from the user and the market maker on both sides of the trade. Our users have ownership of the
securities, including those that collateralize margin loans, and cryptocurrencies transacted on our platform
and, as a result, any such securities or cryptocurrencies owned by users are not presented in our
consolidated balance sheets. We do not allow users to purchase cryptocurrency on margin. We hold
cryptocurrency in custody for our users’ accounts in one or more omnibus cryptocurrency wallets.

Initial Public Offering

On August 2, 2021, we closed our IPO of 55.0 million shares of Class A common stock, including
2.6 million shares sold by selling shareholders, at a public offering price of $38.00 per share. On August
31, 2021, we sold an additional 4.4 million shares of Class A common stock pursuant to the option
granted to the underwriters to purchase additional shares. The total net proceeds we received in the IPO
were approximately $2.05 billion after deducting underwriting discounts and commissions of $90.8 million
and offering expenses of $12.6 million. In connection with the completion of the IPO: 1) the Company filed
its Amended and Restated Certificate of Incorporation (the “Charter”), which authorizes a total of 21 billion
shares of Class A common stock, 700 million shares of Class B common stock, 7 billion shares of Class
C common stock, and 210 million shares of preferred stock, 2) all shares of our outstanding redeemable
convertible preferred stock automatically converted into a total of 412.7 million shares of our common
stock, 3) all 233.3 million previously outstanding shares of the Company’s common stock, along with the
412.7 million shares of common stock mentioned above, were automatically reclassified into an
equivalent number of shares of the Company’s Class A common stock (the “Reclassification”), 4) a total
of 130.2 million shares of Class A common stock held by our founders and their related entities were
exchanged for an equivalent number of shares of Class B common stock pursuant to the terms of certain
exchange agreements, 5) all of our outstanding convertible notes automatically converted into
137.3 million shares of Class A common stock and 6) all warrants became exercisable at a strike price of
$26.60 per share for an aggregate of 14.3 million shares of Class A common stock. As a result, following
the completion of the IPO, we have three classes of authorized common stock: Class A common stock,
Class B common stock, and Class C common stock, of which only Class A common stock and Class B
common stock were outstanding as of December 31, 2021. See Note 12 for further information about the
terms of our various classes of common stock.

Upon completion of the IPO, approximately $12.6 million of capitalized deferred offering costs were
reclassified into stockholders’ equity as a reduction of the IPO proceeds. Additionally, upon our IPO, we

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recognized $1.01 billion of share-based compensation expense related to restricted stock units (“RSUs”)
for which the time-based vesting condition was satisfied or partially satisfied as the performance
condition, a liquidity event, was satisfied. Upon the IPO, 24.6 million RSUs vested and 10.8 million shares
of Class A common stock were withheld to meet the related tax withholding requirements.

Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States (“GAAP”). The consolidated financial
statements include the accounts of RHM and its wholly-owned subsidiaries. All intercompany balances
and transactions have been eliminated.

Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts in the consolidated financial
statements and accompanying notes. We base our estimates on historical experience, and other
assumptions we believe to be reasonable under the circumstances, which together form the basis for
making judgments about the carrying values of assets and liabilities. Assumptions and estimates used in
preparing our consolidated financial statements include those related to the determination of allowances
for credit losses, the capitalization and estimated useful life of internally developed software, contingent
liabilities, useful lives of property and equipment, the incremental borrowing rate used to determine the
present value of lease payments, the valuation and recognition of share-based compensation, the
valuation of the convertible notes and warrant liability, the valuation and estimated useful lives of acquired
intangible assets, uncertain tax positions, accrued liabilities, and the recognition and measurement of
current and deferred income tax assets and liabilities. Actual results could differ from these estimates and
could have a material adverse effect on our consolidated financial statements.

Segment Information
We operate and report financial information in one operating segment. Operating segments are
defined as components of an enterprise for which separate financial information is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and assess performance. All our
revenues and substantially all of our assets are attributed to or located in the United States.

Revenue Recognition
Transaction-Based Revenues

We primarily earn transaction-based revenues from routing user orders for options, equities and
cryptocurrencies to market makers when the performance obligation is satisfied, which is at the point in
time when a routed order is executed by the market maker. The transaction price for options is on a per
contract basis, while for equities it is primarily based on the bid-ask spread of the underlying trading
activity. For cryptocurrencies, the transaction price is a fixed percentage of the notional order value. For
each trade type, all market makers pay the same transaction price. Payments are collected monthly in
arrears from each market maker.

Net Interest Revenues

Net interest revenues consist of interest revenues less interest expenses.

We earn and incur interest revenues and expense on securities lending transactions. We also earn
interest on margin loans to users, which constitute the majority of receivables from users, net in the
consolidated balance sheets, and on our segregated cash, cash and cash equivalents, and deposits with
clearing organizations. We incur interest expenses in connection with our revolving credit facilities.

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Other Revenues

Other revenues primarily consists of Robinhood Gold subscription fees. Our contract with users are
for a term of 30 days and renew automatically each month. Subscription revenue is recognized ratably
over the subscription period as the performance obligation is satisfied.

Other revenues also consist of proxy rebates and ACATS fees charged to users. Proxy rebates are
revenues earned through our partnership with a third-party investor communications company. We
provide certain shareholder information to the third-party company, which is used to send investor
materials to shareholders, such as materials related to shareholder meetings and voting instruction forms.
We earn a share of the revenue the third-party company receives from issuers, and recognize the
revenue when the performance obligation of providing data is satisfied.

ACATS fees are charged to users for facilitating the transfer of part or all of their accounts to another
broker-dealer. We recognize revenue when our performance obligation of administering the transfer is
satisfied.

Concentrations of Revenue and Credit

Concentrations of Revenue

We derived transaction-based revenues from individual market makers in excess of 10% of total
revenues, as follows:

Year ended December 31,

2019 2020 2021
Market maker:
Citadel Securities, LLC............................................................ 29 % 34 % 22 %
Tai Mo Shan Limited(1) ............................................................ —% —% 15 %
Entities affiliated with Susquehanna International Group,
LLP(2) ...................................................................................... 13 % 18 % 12 %
Entities affiliated with Wolverine Holdings, L.P.(3) ............... 12 % 10 % 10 %
All others individually less than 10% ..................................... 8 % 13 % 18 %
Total as percentage of total revenue: ....................................... 62 % 75 % 77 %
________________
(1) Member of Jump Trading Group
(2) Consists of Global Execution Brokers, LP and G1X Execution Services, LLC
(3) Consists of Wolverine Execution Services, LLC and Wolverine Securities LLC

Concentrations of Credit

We are engaged in various trading and brokerage activities in which the counterparties primarily
include broker-dealers, banks, and other financial institutions. In the event our counterparties do not fulfill
their obligations, we may be exposed to risk. The risk of default depends on the creditworthiness of the
counterparty. Default of a counterparty in equities and options trades, which are facilitated through
clearinghouses, would generally be spread among the clearinghouse's members rather than falling
entirely on us. It is our policy to review, as necessary, the credit standing of each counterparty.

Operating Expenses
Brokerage and Transaction

Brokerage and transaction costs primarily consist of broker-dealer transaction expenses (such as
fees paid to centralized clearinghouses and regulatory fees), market data expenses, cash and share-

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based compensation and benefits as well as allocated overhead for employees engaged in clearing and
brokerage functions, and cash management transactions expenses (such as network fees and card
processing fees).

Technology and Development

Technology and development costs primarily consist of cash and share-based compensation and
benefits as well as allocated overhead for engineering, data science, and design personnel who support
and improve our platform and develop new products, costs for cloud infrastructure services, and costs
associated with computer hardware and software, including amortization of internally developed software.

Operations

Operations costs consist of customer service related expenses, including cash and share-based
compensation and benefits as well as allocated overhead for employees engaged in customer support,
and costs incurred to support and improve customer experience (such as third-party customer service
vendors). Operations costs also include our provision for credit losses and fraud in connection with
unrecoverable receivables due to Fraudulent Deposit Transactions and chargebacks for unauthorized
debit card use.

Marketing

Marketing costs primarily consist of marketing incentive expenses associated with the Robinhood
Referral Program, as well as digital marketing, brand marketing, and creative services costs for creation,
production, and placement of advertisements and marketing content. Other marketing costs include cash
credits we offer to users, which primarily relate to remediation for losses experienced by our users due to
service interruptions on our platform and reimbursement of direct losses incurred by our users from
allegedly unauthorized account activity. Marketing costs also include cash and share-based
compensation and benefits as well as allocated overhead for employees engaged in the marketing
function. Advertising costs are expensed as incurred and were $90.9 million, $78.2 million and
$100.5 million in the years ended December 31, 2019, 2020, and 2021.

General and Administrative

General and administrative costs primarily consist of cash and share-based compensation and
benefits as well as allocated overhead for certain executives and employees engaged in legal, finance,
human resources, risk, and compliance. General and administrative costs also include legal expenses,
settlements and penalties, business insurance, and other professional fees.

Employee Retirement Benefits

We offer a defined contribution 401(k) plan to full-time employees. Employees may elect to contribute
to a traditional 401(k) plan, which qualifies as a deferred compensation arrangement under Section 401 of
the Code. In this case, participating employees defer a portion of their pre-tax earnings. Employees may
also contribute to a Roth 401(k) plan using post-tax dollars. We match employee contributions up to 3%,
and have incurred $1.0 million, $3.5 million, and $9.5 million of expense related to matching for the years
ended December 31, 2019, 2020, and 2021.

Research and Development Costs

Research and development costs described in Accounting Standards Codification (“ASC”) 730,
Research and Development, are expensed as incurred. Our research and development costs consist
primarily of employee compensation and benefits for our engineering and research teams, including
share-based compensation. Research and development costs recorded in operating expenses under

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ASC 730 were $27.7 million, $52.2 million, and $437.6 million for the years ended December 31, 2019,
2020, and 2021.

Share-based Compensation
Common Stock Fair Value

The fair value of our common stock is determined on the grant date using the closing price of our
common stock, which is traded on the Nasdaq Global Select Market.

Prior to our IPO, the absence of an active market for our common stock required our board of directors to
determine the fair value of our common stock for each grant date with respect to which awards were
approved. Our board of directors considered numerous objective and subjective factors to determine the
fair value of our common stock including: contemporaneous third-party valuations of our common stock,
sales of our common and redeemable convertible preferred stock to third-party investors in arms-length
transactions, our operating and financial performance, the valuation of comparable companies, the lack of
marketability, and general and industry specific economic outlook, amongst other factors.

Stock Options

We estimate the fair value of stock options granted to employees using the Black-Scholes option-
pricing model. The fair value of stock options is recognized as compensation on a straight-line basis over
the requisite service period. Forfeitures are accounted for when they occur.

The Black-Scholes option-pricing model incorporates various assumptions in estimating the fair value
of stock-based awards. In addition to the fair value of our common stock, these variables include:

Expected volatility—As we do not have sufficient trading history of our common stock, we estimate
the volatility of our common stock on the date of grant based on the weighted-average historical stock
price volatility of comparable publicly-traded companies over a period equal to the expected term of
the award.

Expected term—We determine the expected term based on the average period the stock options are
expected to remain outstanding using the simplified method, generally calculated as the midpoint of
the stock options’ vesting term and contractual expiration period, as we do not have sufficient
historical information to develop reasonable expectations about future exercise patterns and post-
vesting employment termination behavior.

Risk-free interest rate—Based on the U.S. Treasury yield curve that corresponds with the expected
term at the time of grant.

Expected dividend yield—We utilize a dividend yield of 0% as we have not paid, and do not
anticipate paying, dividends on our common stock.

Assumptions used in valuing non-employee stock options are generally consistent with those used for
employee stock options with the exception that the expected term is over the contractual life.

Time-Based RSUs

We have granted Time-Based RSUs that vest upon the satisfaction of a time-based service condition.
Prior to our IPO, our Time-Based RSUs vested based upon the satisfaction of both a time-based service
condition and a performance-based condition, namely the occurrence of a liquidity event such as the IPO.
The fair value of our RSUs is estimated based on the fair value of our common stock on the date of grant.
The time-based service condition for our awards is generally satisfied over four years. We record share-
based compensation expense for Time-Based RSUs on an accelerated attribution method over the
requisite service period. The performance-based condition for our pre-IPO grants was satisfied upon the

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occurrence of the IPO in 2021, at which point we recorded a cumulative one-time share-based
compensation expense determined using the awards’ grant-date fair value. Share-based compensation
related to the remaining time-based service after the IPO is recorded over the remaining requisite service
period. As of December 31, 2019 and 2020, we had not recognized share-based compensation for
awards with performance-based conditions because the qualifying event described above had not
occurred and, therefore, could not be considered probable. No performance-based conditions exist for
our post-IPO grants.

Market-Based RSUs

We have granted RSUs that vest upon the satisfaction of all the following conditions: time-based
service conditions, performance-based conditions, and market-based conditions. The time-based service
condition for these awards generally is satisfied over six years. The performance-based conditions are
satisfied upon the occurrence of a qualifying event, as described above. The market-based conditions are
satisfied upon our achievement of specified share prices.

For market-based awards, we determine the grant-date fair value utilizing a Monte Carlo valuation
model, which incorporates various assumptions including expected stock price volatility, expected term,
risk-free interest rates, expected date of a qualifying event, and expected capital raise percentage. We
estimate the expected term based on various exercise scenarios, as these awards are not considered
“plain vanilla.” We estimate the expected date of a qualifying event based on our expectation at the time
of measurement of the award’s value.

We record share-based compensation expense for market-based equity awards on an accelerated

attribution method over the requisite service period, and only if performance-based conditions are
considered probable to be satisfied. We determine the requisite service period by comparing the derived
service period to achieve the market-based condition and the explicit time-based service period, using the
longer of the two service periods as the requisite service period. Upon the occurrence of our IPO in 2021,
we recorded a cumulative one-time share-based compensation expense determined using the grant-date
fair values. Share-based compensation related to remaining time-based service and market-based
conditions to be met will be recorded over the remaining derived requisite service period.

Net Income (Loss) per Share

Basic and diluted earnings per share are computed using the two-class method, which considers
participating securities as a separate class of shares. Our participating securities consist of all series of
our redeemable convertible preferred stock. Under the two-class method, net loss is not allocated to the
redeemable convertible preferred stock as the preferred stockholders do not have a contractual obligation
to share in our losses.

Basic earnings per share is computed by dividing net income available to our common stockholders,
adjusted to exclude earnings allocated to participating securities, by the weighted-average number of
shares of common stock outstanding during the period. Diluted earnings per share is computed on the
basis of the weighted-average number of shares of common stock plus the effect of dilutive potential
common shares outstanding during the period.

Cash and Cash Equivalents

Cash and cash equivalents include deposits with banks and money market funds or highly liquid
financial instruments with maturities of three months or less at the time of purchase. We maintain cash in
bank accounts at financial institutions that exceed federally insured limits. We also maintain cash in
money market funds which are not FDIC insured. We are subject to credit risk to the extent any financial
institution with which we conduct business is unable to fulfill contractual obligations on our behalf. As we
have not experienced any losses in such accounts and we believe that we have placed our cash on

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deposit with financial institutions which are financially stable, we do not have an expectation of credit
losses for these arrangements.

Cash and Securities Segregated Under Federal and Other Regulations

We are required to segregate cash and/or qualified securities for the exclusive benefit of customers
and proprietary accounts of brokers in accordance with the provision of Rule 15c3-3 under the Exchange
Act. We continually review the credit quality of our counterparties and have not experienced a default. As
a result, we do not have an expectation of credit losses for these arrangements.

Restricted Cash
We are required to maintain restricted cash deposits to back letters of credit for certain property
leases. We have no ability to draw on such funds as long as they remain restricted under the applicable
agreements. Cash subject to restrictions that expire within one year is included in other current assets in
our consolidated balance sheets. For the year ended December 31, 2020 and 2021, current restricted
cash balances were nil and $0.7 million.

Investments
We invest in marketable debt securities which are classified as available-for-sale and are initially
recorded at fair value. These securities are comprised of asset-backed securities, commercial paper,
corporate bonds and government bonds. We have elected the fair value option for our debt securities as
we believe carrying these investments at fair value and taking changes in fair value through earnings best
reflects their underlying economics. We elected to present interest earned on the debt securities as
interest income.

Fair Value of Financial Instruments

We apply fair value accounting for all financial assets and liabilities and non-financial assets and
liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a
recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. In
determining fair value, we may use various valuation approaches, including market, income and/or cost
approaches. The fair value hierarchy requires us to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. Fair value is a market-based measure
considered from the perspective of a market participant. Accordingly, even when market assumptions are
not readily available, our own assumptions reflect those that market participants would use in pricing the
asset or liability at the measurement date. The fair value measurement accounting guidance describes
the following three levels used to classify fair value measurements:

Level 1 Inputs: unadjusted quoted prices in active markets for identical assets or liabilities that are
accessible by us

Level 2 Inputs: quoted prices for similar assets and liabilities in an active market, quoted prices in
markets that are not active or for which all significant inputs are observable, either directly or indirectly

Level 3 Inputs: unobservable inputs that are significant to the fair value of the assets or liabilities

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input
that is significant to the fair value measurement. The carrying amounts of certain financial instruments
approximate their fair value due to the short-term nature, which include cash, cash and securities
segregated under federal and other regulations, receivables from brokers, dealers, and clearing
organizations, receivables from users, net, deposits with clearing organizations, other current assets,
accounts payable and accrued expenses, payable to users, securities loaned, and other current liabilities.

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Receivables From Brokers, Dealers, and Clearing Organizations
Receivables from brokers, dealers, and clearing organizations include receivables from market
makers for routing user orders for execution and other receivables from third-party brokers. These
receivables are short term and settle within 30 days. We continually review the credit quality of our
counterparties and have not experienced a default. As a result, we do not have an expectation of credit
losses for these arrangements.

Receivables From Users, Net

Receivable from users, net is primarily made up of margin receivables. Margin receivables are
adequately collateralized by users’ securities balances and are reported at their outstanding principal
balance, net of an allowance for credit losses. We monitor margin levels and require users to deposit
additional collateral, or reduce margin positions, to meet minimum collateral requirements and avoid
automatic liquidation of their positions.

We apply the practical expedient based on collateral maintenance provisions in estimating an

allowance for credit losses for receivables from users. We have no expectation of credit losses for
receivables from users that are fully secured, where the fair value of the collateral securing the balance is
equal to or in excess of the receivable amount. This is based on our assessment of the nature of the
collateral, potential future changes in collateral values, and historical credit loss information relating to
fully secured receivables. In cases where the fair value of the collateral is less than the outstanding
receivable balance from a user, we recognize an allowance for credit losses in the amount of the
difference, or unsecured balance, immediately.

The provision for credit losses is recorded as operations expense on the consolidated statement of
operations. We write-off unsecured balances when the balance becomes outstanding for over 180 days
or when we otherwise deem the balance to be uncollectible.

Deposits With Clearing Organizations

We are required to maintain collateral deposits with clearing organizations such as Depository Trust &
Clearing Corporation and Options Clearing Corporation which allow us to use their security transactions
services for trade comparison, clearance, and settlement. The clearing organizations establish financial
requirements, including deposit requirements, to reduce their risk. The required level of deposits may
fluctuate significantly from time to time based upon the nature and size of users’ trading activity and
market volatility. We earn interest on these deposits which is included as net interest revenues in the
consolidated statements of operations. As we have not experienced historic defaults, we do not have an
expectation of credit losses for these arrangements.

Fractional Share Program

We operate our fractional share program for the benefit of our users and maintain an inventory of
securities held exclusively for the fractional share program. This proprietary inventory is recorded within
other current assets on our consolidated balance sheets.

When a user purchases a fractional share, we record the cash received for the user-held
fractional share as pledged collateral and an offsetting liability to repurchase the shares as we concluded
that we did not meet the criteria for derecognition under the accounting guidance. We measure our
inventory of securities, user-held fractional shares and our repurchase obligation at fair value at each
reporting period via the election of the fair value option, with realized and unrealized gains and losses,
which totaled $3.0 million and $11.5 million for the years ended December 31, 2020 and 2021, recorded
in brokerage and transaction expenses in our consolidated statement of operations. We do not earn

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revenue from our users when they purchase or sell fractional shares from us. We earn transaction-based
revenue when shares are purchased from market makers to fulfill fractional share transactions.

Other Current Assets

Other current assets primarily includes prepaid expenses, securities owned by us for the Robinhood
Referral Program and fractional share program, and other receivables. We classify prepayments made
under contracts as prepaid expenses and expense them over the contract terms. These prepaid
expenses include items such as prepayments on insurance, cloud infrastructure service costs, and
software subscriptions. As of December 31, 2020 and 2021, prepaid expenses included in other current
assets were $28.6 million and $92.0 million.

Robinhood Referral Program

The stock rewarded under this program is a share or shares, selected randomly from our previously
purchased inventory of settled shares held exclusively for this program, which are included in other
current assets in our consolidated balance sheets. Each stock reward is assigned at the time the reward
is earned and each share cannot be associated with more than one reward at a time. Our inventory of
settled shares is initially recorded at cost and marked to fair market value at each reporting period. As the
inventory of shares are held specifically for the referral program and not as investments of the Company,
gains and losses from changes in the fair market value of the shares are recorded within marketing
expense in our consolidated statement of operations until the reward is claimed. Shares are derecognized
when they are claimed by the user and delivered to the users’ account.

We record an accrued liability within other current liabilities in our consolidated balance sheets at the
time the bank account is linked with the expense recorded within marketing expense in our consolidated
statement of operations. The liability is initially recorded at the fair market value of the assigned share or
shares upon the reward being earned by the referred user (i.e., upon bank linkage) and marked to fair
market value until claimed or reversed, with gains and losses also recorded within marketing expense.
The liability is derecognized when the share is claimed by the user and delivered to the users’ account. If
a user does not claim the stock reward within 60 days of being notified, such reward expires and the
liability is reversed. We estimate the amount of unclaimed rewards expected at each reporting period,
using historical trends and data, and adjust the accrued liability and marketing expense accordingly.

Property, Software, and Equipment

Property, software, and equipment are stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization is recorded on a straight-line basis over the useful life of the
asset, which is as follows:

Property, Software, and Equipment Useful Life

Computer equipment 3 years
Fixture and furniture 7 years
Tenant improvements Shorter of estimated useful life or lease term
Internally developed software 3 years

Repairs and maintenance that do not enhance or extend the asset’s function and/or useful life are
charged to expenses as incurred. When items are sold or retired, the related cost and accumulated
depreciation are removed from the accounts and any gains or losses arising from such transactions are
recognized.

Internally developed software is capitalized when preliminary development efforts are successfully
completed and it is probable that the project will be completed and the software will be used as intended.
Capitalized costs consist of salaries and payroll related costs for employees and fees paid to third-party

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consultants who are directly involved in development efforts. Capitalized costs are amortized over the
estimated useful life of the software on a straight-line basis and included in technology and development
in the consolidated statements of operations. We expense software development costs as they are
incurred during the preliminary project stage.

Other Non-Current Assets

Other non-current assets primarily includes right-of-use assets, net of accumulation of amortization,
and prepaid expenses, for contract terms longer than 12 months. As of December 31, 2020 and 2021,
non-current prepaid expenses included in other non-current assets were $8.2 million and $43.6 million.

Leases
We elected to apply the short-term lease measurement and recognition practical expedient to our
leases where applicable, thus leases with an initial term of 12 months or less are not recorded on the
balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.
Operating lease right-of-use assets and operating lease liabilities are recognized at the present value of
the future lease payments at the lease commencement date for each lease. The interest rate used to
determine the present value of the future lease payments is our incremental borrowing rate because the
interest rate implicit in most of our leases is not readily determinable. Our incremental borrowing rate is
estimated to approximate the interest rate that we would pay to borrow on a collateralized basis with
similar terms and payments as the lease. Operating lease right-of-use assets also include any prepaid
lease payments and lease incentives. Our lease agreements generally contain lease and non-lease
components. Non-lease components, which primarily include payments for maintenance and utilities, are
combined with lease payments and accounted for as a single lease component. We include the fixed non-
lease components in the determination of the right-of-use assets and operating lease liabilities. We record
the amortization of the right-of-use asset and the accretion of lease liability as rent expense and allocate it
as overhead in the consolidated statements of operations.

Business Combinations
We account for acquisitions of entities or asset groups that qualify as businesses in accordance with
ASC 805, “Business Combinations”. The purchase price of the acquisition is allocated to the tangible and
intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition
date. The excess of the purchase price over those fair values is recorded as goodwill. During the
measurement period, which may be up to one year from the acquisition date, we may record adjustments
to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the
conclusion of the measurement period or final determination of the values of assets acquired or liabilities
assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated
statements of operations. See Note 3 for further information.

Goodwill
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a
business combination and is allocated to reporting units expected to benefit from the business
combination. We test goodwill for impairment at least annually, in the fourth quarter, or whenever events
or changes in circumstances indicate that goodwill might be impaired. We evaluate our reporting units
when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair
value allocation approach. In testing for goodwill impairment, we first assess qualitative factors to
determine whether the existence of events or circumstances leads to a determination that it is more likely
than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the
totality of events or circumstances, we determine it is not more likely than not that the fair value of a
reporting unit is less than its carrying amount, then additional impairment testing is not required. However,
if we conclude otherwise, we proceed to a quantitative assessment.

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 The quantitative assessment compares the estimated fair value of a reporting unit to its book value,
including goodwill. If the fair value exceeds book value, goodwill is considered not to be impaired and no
additional steps are necessary. However, if the book value of a reporting unit exceeds its fair value, an
impairment loss will be recognized in an amount equal to that excess, limited to the total amount of
goodwill allocated to that reporting unit. See Note 4 for further information.

Intangible Assets, Net

Intangible assets are carried at cost and amortized on a straight-line basis over their estimated useful
lives. The Company evaluates the remaining estimated useful life of its intangible assets being amortized
on an ongoing basis to determine whether events and circumstances warrant a revision to the remaining
period of amortization. See Note 4 for further information.

Payables to Users
Payables to users represent users’ funds on deposit, and/or funds accruing to users as a result of
settled trades and other security related transactions.

Securities Borrowed and Loaned

Securities borrowed and loaned result from transactions with other brokers, dealers, or financial
institutions. Securities borrowing transactions require us to deposit cash with the lender whereas
securities lending transactions result in us receiving cash collateral, with both requiring cash in an amount
generally in excess of the market value of the securities. We earn interest revenue on cash collateral
deposited with us, and can earn or incur additional revenue or expense for lending certain securities
based on demand for that security. Substantially all of our securities borrowing and loan transactions
have an open contractual term and, upon notice by either party, may be terminated within three business
days. We manage risks associated with our securities lending and borrowing activities by requiring credit
approvals for counterparties, by monitoring the market value of securities loaned and collateral values for
securities borrowed on a daily basis and requiring additional cash as collateral for securities loaned or
return of collateral for securities borrowed when necessary, and by participating in a risk-sharing program
offered through the Options Clearing Corporation. Our securities lending transactions are subject to
enforceable master netting arrangements with other broker-dealers, however we do not net securities
lending transactions. We apply the practical expedient based on collateral maintenance provisions in
estimating an allowance for credit losses for securities borrowed receivables.

Loss Contingencies
We are subject to claims and lawsuits in the ordinary course of business, including arbitration, class
actions and other litigation, some of which include claims for substantial or unspecified damages. We are
also the subject of inquiries, investigations, and proceedings by regulatory and other governmental
agencies. We review our lawsuits, regulatory inquiries and other legal proceedings on an ongoing basis
and provide disclosures and record loss contingencies in accordance with the loss contingencies
accounting guidance. We establish an accrual for losses at management’s best estimate when we assess
that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.
If the reasonable estimate is a range and no amount within that range is considered a better estimate
than any other amount, an accrual is recorded based on the bottom amount of the range. Accrual for loss
contingencies are recorded in accounts payable and accrued expenses on the consolidated balance
sheets and expensed in general and administrative expenses in our consolidated statements of
operations. We monitor these matters for developments that would affect the likelihood of a loss and the
accrued amount, if any, and adjust the amount as appropriate.

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Cryptocurrencies
We act as an agent in the cryptocurrency transactions of our users. We have determined we are an
agent because we do not control the cryptocurrency before delivery to the user, we are not primarily
responsible for the delivery of cryptocurrency to our users, we are not exposed to risks arising from
fluctuations of the market price of cryptocurrency before delivery to the customer, and we do not set the
prices charged to users. After purchasing cryptocurrency on the platform, users are the legal owners of
cryptocurrency held under custody by us and users have all the rights and benefits of ownership,
including the rights to appreciation and depreciation of the cryptocurrency. Accordingly, the
cryptocurrency we hold in custody on behalf of our users is not reflected on our consolidated balance
sheets.

Income Taxes
Income tax expense is an estimate of current income taxes payable in the current fiscal year based
on reported income before income taxes. Deferred income taxes reflect the effect of temporary
differences and carryforwards that we recognize for financial reporting and income tax purposes at
enacted tax rates expected to be in effect when taxes are actually paid or recovered.

We account for income taxes under the asset and liability method, which requires recognition of
deferred income tax assets and liabilities for the expected future tax consequences of events that have
been recognized in our consolidated financial statements, but have not been reflected in our taxable
income. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to
the extent we believe that they will not be realized. We consider many factors when assessing the
likelihood of future realization of our deferred tax assets including, but not limited to, historical cumulative
loss experience and expectations of future earnings, tax planning strategies, and the carry-forward
periods available for tax reporting purposes. Our judgment regarding future profitability may change due
to many factors, including future market conditions and the ability to successfully execute business plans
and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our
tax provision would increase or decrease in the period in which the assessment is changed.

We recognize a tax benefit from an uncertain tax position when it is more likely than not that the
position will be sustained upon examination, including resolutions of any related appeals or litigation,
based on the technical merits. Income tax positions must meet a more-likely-than-not recognition
threshold at the effective date to be recognized. We account for uncertain tax positions, including net
interest and penalties, as a component of income tax expense or benefit. We make adjustments to these
uncertain tax positions in accordance with applicable income tax guidance and based on changes in facts
and circumstances. To the extent that the final tax outcome of these matters is different from the amounts
recorded, such differences will affect the provision for income taxes in the period in which such
determination is made and could have a material impact to our consolidated financial statements and
operating results.

Reclassifications
Certain prior-year amounts have been reclassified to conform to the current year’s presentation. The
impact of these reclassifications is immaterial to the presentation of the financials.

NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued Accounting Standard Update (“ASU”) 2020-06, Debt—Debt with
Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity. This
guidance simplifies the accounting for convertible instruments by reducing the number of accounting

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models available for convertible debt instruments, amends the accounting guidance for evaluating the
classification of certain contracts in an entity’s own equity, and modifies the diluted earnings per share
calculations for convertible instruments. The guidance is effective for fiscal years beginning after
December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We
adopted this guidance effective January 1, 2021 using the full retrospective method. The adoption of the
guidance did not have a material impact on our consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share, Debt—Modifications and
Extinguishments, Compensation—Stock Compensation, and Derivatives and Hedging—Contracts in
Entity’s Own Equity. The guidance clarifies modifications or exchanges of freestanding equity-classified
written call options (e.g. warrants). The guidance is effective for fiscal years beginning after December 15,
2021, including interim periods within those fiscal years. Early adoption is permitted. We adopted this
guidance effective July 1, 2021. The adoption of the guidance did not have a material impact on our
consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08, Business Combinations. This guidance requires
contract assets and contract liabilities from contracts with customers that are acquired in a business
combination to be recognized and measured as if the acquirer had originated the original contract. The
guidance is effective for fiscal years beginning after December 15, 2022 on a prospective basis, including
interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the
timing of adoption and impact of this new guidance on our consolidated financial statements.

NOTE 3: BUSINESS COMBINATIONS

On August 13, 2021, we acquired all outstanding stock of Say Technologies. New York-based Say
Technologies, founded in 2017, is an investor communications and shareholder engagement platform.
The acquisition of Say Technologies will allow us to empower retail investors to access their full
ownership rights by facilitating proxy and issuer materials delivery and making shareholder voting on
corporate matters easier.

The acquisition date fair value of the consideration transferred for Say Technologies was
$132.8 million, which consisted of the following:

(in thousands) Fair Value

Cash ..................................................................................................................................................... $ 132,168
Share-based compensation awards attributable to pre-combination services ......................... 639
Total consideration ............................................................................................................................. $ 132,807

We entered into holdback agreements with certain employees of Say Technologies for $11.1 million
in cash payments, which are contingent upon the continuous service of the employees and treated as
post-combination compensation expense over the required service period of three years. For employees
of Say Technologies with unvested Say Technologies equity awards, we issued replacement awards
whose aggregate estimated fair value was $6.3 million. See Note 12 for further information.

Transaction costs associated with the acquisition, which included legal, due diligence, and other
professional fees, were not material.

The purchase price allocation is based on a preliminary valuation and subject to revision as more
detailed analyses are completed and additional information about the fair value of assets acquired and
liabilities assumed becomes available, including certain tax matters, during the measurement period (up

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to one year from the acquisition date). The following table summarizes the preliminary fair value of assets
acquired and liabilities assumed as of the date of acquisition:

(in thousands) Fair Value

Cash and cash equivalents .............................................................................................................. $ 15,412
Accounts receivable ........................................................................................................................... 1,704
Goodwill ............................................................................................................................................... 92,951
Intangible assets ................................................................................................................................ 34,600
Other current assets .......................................................................................................................... 192
Accounts payable, accrued expenses and other current liabilities ............................................ (9,354)
Deferred tax liability (2,698)
Net assets acquired ........................................................................................................................... $ 132,807

The excess of purchase price over the fair value of net tangible and identifiable intangible assets
acquired was recorded as goodwill, which is not deductible for tax purposes. Goodwill is primarily
attributed to the assembled workforce of Say Technologies and anticipated operational synergies. The
fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are
based on management’s estimates and assumptions at the time of acquisition. The following table sets
forth the components of identifiable intangible assets acquired and their estimated useful lives as of the
date of acquisition:

(in thousands, except years) Fair Value Useful Life

Developed technology .......................................................................................... $ 22,000 3
Customer relationships ......................................................................................... 12,000 10
Trade names .......................................................................................................... 600 3
Total ......................................................................................................................... $ 34,600

The overall weighted average useful life of the identified amortizable intangible assets acquired is five
years. The estimated fair values of the intangible assets acquired approximate the amounts a market
participant would pay for these intangible assets as of August 13, 2021. We used the replacement cost
method to estimate the fair value of developed technology and the relief from royalty method to estimate
the fair value of trade names. A multi-period excess earnings method was used to estimate the fair value
of customer relationships.

Tangible net assets were valued at their respective carrying amounts as of the acquisition date, as
these amounts approximated fair value.

During the fourth quarter of 2021, we recorded an immaterial measurement period adjustment to
other non-current liabilities with a corresponding decrease to goodwill, based on facts and circumstances
in existence as of the effective date of the acquisition.

Results of operations of Say Technologies were included in our results since the date of acquisition
and were not material for the year ended December 31, 2021. Pro forma results of operations for Say
Technologies have not been presented as the effect of this acquisition was not material.

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NOTE 4: GOODWILL AND INTANGIBLE ASSETS
Goodwill
The carrying amount of goodwill for the period indicated was as follows:

Carrying
(in thousands) Amount
As of December 31, 2020 ................................................................................................................ $ —
Additions due to business combinations ....................................................................................... 100,521
As of December 31, 2021 ................................................................................................................ $ 100,521

Substantially all of the additions related to the Say Technologies acquisition as disclosed in Note 3
and the remainder related to other immaterial business acquisitions. There was no impairment of goodwill
during the year ended December 31, 2021. We had no goodwill as of December 31, 2020.

Intangible Assets
The components of intangible assets, net as of December 31, 2021 were as follows:

Weighted Average
Gross Carrying Accumulated Net Carrying Remaining Useful
(in thousands, except years) Value Amortization Value Life - Years
Finite-lived intangible assets
Developed technology .......................... $ 23,100 $ (2,829) $ 20,271 2.58
Customer relationships......................... 12,000 (460) 11,540 9.62
Trade names .......................................... 600 (76) 524 2.62
Domain names....................................... 163 (43) 120 11.63
Indefinite-lived intangible assets 1,652 — 1,652 N/A
Total ................................................................ $ 37,515 $ (3,408) $ 34,107

As of December 31, 2021, the estimated future amortization expense of finite-lived intangible assets
was as follows:

Intangible
(in thousands) Assets
2022 .................................................................................................................................................... $ 9,104
2023 .................................................................................................................................................... 9,104
2024 .................................................................................................................................................... 6,218
2025 .................................................................................................................................................... 1,210
2026 .................................................................................................................................................... 1,210
Thereafter ........................................................................................................................................... 5,609
Total................................................................................................................................................ $ 32,455

Amortization expense of intangible assets was $3.4 million for the year ended December 31, 2021.
There was no impairment of intangible assets during the year ended December 31, 2021.

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NOTE 5: REVENUES
Disaggregation of Revenues
The following table presents our revenue disaggregated by revenue source:

Year ended December 31,

(in thousands) 2019 2020 2021
Transaction-based revenues:
Options ................................................................................... $ 110,656 $ 440,070 $ 688,899
Cryptocurrencies .................................................................. 9,487 26,708 419,382
Equities .................................................................................. 50,688 251,200 287,734
Other ....................................................................................... — 2,155 6,335
Total transaction-based revenues 170,831 720,133 1,402,350

Net interest revenues:

Securities lending ................................................................. 6,380 98,165 137,153
Margin interest ...................................................................... 19,104 66,781 131,823
Interest on segregated cash and securities ..................... 36,281 13,401 4,023
Other interest revenue ......................................................... 9,865 3,972 4,181
Interest expenses related to credit facilities ..................... (991) (4,882) (20,218)
Total net interest revenues 70,639 177,437 256,962

Other revenues 36,063 61,263 155,831

Total net revenues $ 277,533 $ 958,833 $ 1,815,143

Contract Balances

Contract receivables are recognized when we have an unconditional right to invoice and receive
payment under a contract and are derecognized when cash is received. Transaction-based revenue
receivables due from market makers are reported in receivables from brokers, dealers, and clearing
organizations while other revenue receivables due from our relationship with a third-party investor
communications company are reported in other current assets on the consolidated balance sheets.

The table below sets forth contract receivables balances for the periods indicated:

December 31,
(in thousands) 2020 2021
Beginning of the period ......................................................................................... $ 20,577 $ 111,871
End of the period.................................................................................................... 111,871 83,207
Increase (decrease) in contract receivables during the period ...................... $ 91,294 $ (28,664)

The increase between the beginning and ending balance of our contract receivables for the year
ended December 31, 2020 primarily results from the growth of our business over the period. The
decrease for the year ended December 31, 2021 primarily results from lower transaction-based revenues
for equities and options for the month of December 2021 as compared to the month of December 2020.

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Timing differences between our performance and counterparties’ payments also contributed to the
change during the periods presented.

Contract liabilities consist of unearned subscription revenue, are recognized when users remit
contractual cash payments in advance of the time we satisfy our performance obligations under the
contract, and are recorded as other current liabilities on the consolidated balance sheets.

The table below sets forth contract liabilities balances for the period indicated:

December 31,
(in thousands) 2020 2021
Beginning of the period ......................................................................................... $ 954 $ 2,060
End of the period.................................................................................................... 2,060 3,211
Increase in contract liabilities during the period $ 1,106 $ 1,151

We recognized all revenue from amounts included in the opening contract liabilities balances in the
years ended December 31, 2020 and 2021. The difference between the beginning and ending balance of
our contract liability balances primarily results from the increase in subscription users and the timing
difference between our performance and payments from the users.

NOTE 6: ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the allowance for credit losses, which primarily relate to unsecured
balances of receivables from Fraudulent Deposit Transactions and losses on margin borrowings, for the
periods indicated:

Year ended December 31,

(in thousands) 2019 2020 2021
Beginning balance ....................................................................... $ 6,013 $ 17,122 $ 34,092
Provision for credit losses .......................................................... 11,109 59,134 78,337
Write-offs ....................................................................................... — (42,164) (72,213)
Ending balance ............................................................................ $ 17,122 $ 34,092 $ 40,216

During the years ended December 31, 2019, 2020, and 2021, the provision for credit losses related to
unsecured balances of receivables from users was $11.1 million, $58.0 million and $77.1 million while the
remaining balances were related to other receivables. As of December 31, 2019, 2020, and 2021, the
ending allowance for credit losses related to unsecured balances of receivables from users was
$17.1 million, $33.5 million, and $38.4 million while the remaining balances were related to other
receivables.

During the year ended December 31, 2020, we implemented our policy to write-off unsecured
balances when the balance becomes outstanding for over 180 days or when we otherwise deem the
balance to be uncollectible. Previously, we did not have sufficient historical information to provide a
reasonable basis upon which to write off balances.

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NOTE 7: INVESTMENTS AND FAIR VALUE MEASUREMENT
Investments
We invest in marketable debt securities which are classified as available-for-sale. We elected the fair
value option on our available-for-sale debt securities and carry them at fair value with adjustments to fair
value presented in other expense (income), net in our consolidated statements of operations. Investments
on the consolidated balance sheet consisted of the following:

December 31, 2021

Unrealized Unrealized
(in thousands) Amortized Cost Gains Losses Fair Value
Debt securities: .................................................
Asset-backed securities.............................. $ 5,082 $ — $ (4) $ 5,078
Commercial paper ....................................... 13,717 — — 13,717
Corporate bonds .......................................... 7,392 — (8) 7,384
Government bonds ...................................... 1,012 — (2) 1,010
Total investments .................................... $ 27,203 $ — $ (14) $ 27,189

We did not hold any investments as of December 31, 2020. All of our debt securities as of December
31, 2021 had a stated contractual maturity or redemption date within one year.

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis as of the date indicated
below were presented on our consolidated balance sheets as follows:

December 31, 2020

(in thousands) Level 1 Level 2 Level 3 Total
Assets
Cash equivalents:
Money market funds.................................... $ 1,026,034 $ — $ — $ 1,026,034
Cash and securities segregated under
federal and other regulations:
U.S. Treasury securities ............................. 134,994 — — 134,994
User-held fractional shares 802,483 — — 802,483
Other current assets:
Equity securities - securities owned ......... 3,222 — — 3,222
Total financial assets .............................. $ 1,966,733 $ — $ — $ 1,966,733

Liabilities
Accounts payable and accrued expenses:
Equity securities - referral program
liability ........................................................ $ 695 $ — $ — $ 695
Fractional share repurchase obligations 802,483 — — 802,483
Total financial liabilities ............................ $ 803,178 $ — $ — $ 803,178

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 December 31, 2021
(in thousands) Level 1 Level 2 Level 3 Total
Assets
Cash equivalents:
Money market funds.................................... $ 4,003,552 $ — $ — $ 4,003,552
Investments:
Asset-backed securities.............................. — 5,078 — 5,078
Commercial paper ....................................... — 13,717 — 13,717
Corporate bonds .......................................... — 7,384 — 7,384
Government bonds ...................................... 1,010 — — 1,010
User-held fractional shares 1,834,479 — — 1,834,479
Other current assets:
Equity securities - securities owned ......... 13,611 — — 13,611
Total financial assets .............................. $ 5,852,652 $ 26,179 $ — $ 5,878,831

Liabilities
Accounts payable and accrued expenses:
Equity securities - referral program
liability ........................................................ $ 97 $ — $ — $ 97
Fractional shares repurchase obligations 1,834,479 — — 1,834,479
Total financial liabilities ............................ $ 1,834,576 $ — $ — $ 1,834,576

During the year ended December 31, 2021, we did not have any transfers in or out of Level 3 assets
or liabilities.

Convertible Notes and Warrant Liability

In February 2021, we issued two tranches of convertible notes (the “convertible notes”) and granted
to each purchaser of the Tranche I convertible notes a warrant to purchase equity securities (the “warrant
liability”). We elected the fair value option for both tranches of the convertible notes as we believe it best
reflects their underlying economics. Under the fair value option, the convertible notes were initially
measured at their issuance date estimated fair value and subsequently remeasured at their estimated fair
value at the end of each reporting period. Upon the closing of the IPO, all of our outstanding convertible
notes and warrants were reclassified from liability to equity. See Note 11 for further information.

For the year ended December 31, 2021, we recorded expense due to changes in fair value of
$1.92 billion for the convertible notes in our consolidated statements of operations, none of which was
attributable to the change in the instrument-specific credit risk. We have elected to present the
component related to accrued interest in the change in fair value of convertible notes and warrant liability.

For the year ended December 31, 2021, due to changes in fair value, we recorded $127.1 million for
the warrant liability in our consolidated statements of operations.

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 The following table sets forth a summary of the changes in the estimated fair value of our convertible
notes and warrant liability:

Convertible
(in thousands) notes Warrant liability
Beginning of period, January 1, 2021................................................................. $ — $ —
Issued during the period ....................................................................................... 3,299,031 252,944
Change in fair value .............................................................................................. 1,918,565 127,092
Reclassifications to equity .................................................................................... (5,217,596) (380,036)
End of period, December 31, 2021 ..................................................................... $ — $ —

NOTE 8: INCOME TAXES

The components of income (loss) before income taxes were as follows:

Year ended December 31,

(in thousands) 2019 2020 2021
Domestic ..................................................................................... $ (104,690) $ 14,773 $ (3,685,936)
Foreign ........................................................................................ (2,897) (943) 1,504
Income (loss) before income taxes .................................... $ (107,587) $ 13,830 $ (3,684,432)

The components of the provision for (benefit from) income taxes were as follows:

Year ended December 31,

(in thousands) 2019 2020 2021
Current:
Federal .................................................................................... $ (58) $ 2,780 $ (249)
State ........................................................................................ (295) 3,801 4,990
Foreign .................................................................................... — — —
Total current tax expense (benefit) ......................................... (353) 6,581 4,741
Deferred:
Federal .................................................................................... — — (1,084)
State ........................................................................................ — — (1,525)
Foreign .................................................................................... (665) (200) (132)
Total deferred tax expense (benefit) ....................................... (665) (200) (2,741)
Total provision for (benefit from) income taxes ..................... $ (1,018) $ 6,381 $ 2,000

The reconciliation of federal statutory income tax to our provision for (benefit from) income taxes was
as follows:

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 Year ended December 31,
(in thousands) 2019 2020 2021
Federal tax benefit at statutory rate ................................. $ (22,593) $ 2,905 $ (773,731)
State tax benefit, net of federal benefit ........................... (5,491) (862) (131,494)
Foreign rate differential ...................................................... (57) (2) (448)
Share-based compensation .............................................. (1,221) (2,654) 17,338
Tender offer compensation ............................................... 4,229 3,607 1,640
Research and development credits ................................. (2,104) (10,489) (48,111)
Non-deductible regulatory settlements............................ — 21,000 10,920
Non-deductible change in convertible notes and
warrant.................................................................................. — — 429,588
Permanent differences ....................................................... — 526 322
Other ..................................................................................... 905 52 367
Change in valuation allowance ......................................... 25,314 (7,702) 495,609
Total provision for (benefit from) income taxes.............. $ (1,018) $ 6,381 $ 2,000

Significant components of our deferred tax assets and liabilities consist of the following:

Year ended December 31,

(in thousands) 2020 2021
Deferred tax assets:
Accruals and other liabilities ....................................................................... 14,849 $ 24,319
Lease liabilities ............................................................................................. 13,794 39,909
Tax credit carryforwards.............................................................................. 9,058 81,457
Net operating loss carryforwards ............................................................... 3,141 251,202
Share-based compensation ....................................................................... 3,123 134,723
Other .............................................................................................................. 3,386 21,411
Total deferred tax assets........................................................................ 47,351 553,021
Deferred tax liabilities:
Right of use assets ...................................................................................... (12,551) (34,182)
Depreciation and amortization ................................................................... (6,965) (22,977)
Total deferred tax liabilities .................................................................... (19,516) (57,159)
Valuation allowance.......................................................................................... (26,909) (494,902)
Net deferred tax assets .................................................................................... $ 926 $ 960

The following is a reconciliation of the beginning and ending amount of the deferred tax asset
valuation allowance:

Year ended December 31,

(in thousands) 2019 2020 2021
Balance at beginning of period $ 9,631 $ 35,207 $ 26,909
Charged/(credited) to net income 25,576 (8,298) 470,691
Charges utilized/(write-offs) — — (2,698)
Balance at end of period $ 35,207 $ 26,909 $ 494,902

The realization of tax benefits of net deferred assets is dependent upon future levels of taxable
income, of an appropriate character, in the periods the items are expected to be deductible or taxable.

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Based on all available evidence for the year ending December 31, 2021, we believe it is more likely than
not that the tax benefits of the remaining U.S. federal and state net deferred tax assets may not be
realized, and accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The
valuation allowance increased by approximately $468.0 million for the year ended December 31, 2021.

As of December 31, 2021, we have $944.3 million of U.S. federal, $823.9 million of state, and
$5.1 million of non-U.S. net operating loss carryforwards available to reduce future taxable income. Of the
U.S. federal net operating loss carryforwards, $1.0 million will begin to expire in 2037 and the
$943.3 million will carryforward indefinitely. Our state net operating losses begin to expire in 2022, while
our non-U.S. net operating losses do not expire. We have U.S. federal tax credit carryforwards of
$80.8 million that will begin to expire in 2040, if not utilized, and state tax credit carryforwards of
$2.2 million that will begin to expire in 2026 and $52.4 million that do not expire.

Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual
limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as
amended, and similar state provisions. The annual limitation may result in the expiration of net operating
losses and tax credits before utilization.

We had unrecognized tax benefits of approximately $7.4 million and $46.2 million as of December 31,
2020 and 2021. These unrecognized tax benefits, if recognized, would not affect the effective tax rate.
We record interest and penalties related to unrecognized tax benefits in income tax expenses. There
were no interest or penalties during the years ended December 31, 2020 and 2021.

The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in
thousands):

Year ended December 31,

2020 2021
Unrecognized benefit - beginning of period .................................................. $ 2,177 $ 7,420
Gross increases - current year tax positions ........................................... 4,395 37,879
Gross increases - prior year tax positions ................................................ 848 909
Unrecognized benefit - end of period ............................................................ $ 7,420 $ 46,208

We file in U.S. federal, various state, and foreign jurisdictions. The tax years from 2013 remain open
to examination by the U.S. federal and state authorities, due to carryover of unused net operating losses
and tax credits. The tax years from 2018 remain open for the most significant foreign jurisdiction.

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NOTE 9: PROPERTY, SOFTWARE, AND EQUIPMENT, NET
Property, software, and equipment are presented net of accumulated depreciation and amortization
and summarized as follows:

Year ended December 31,

(in thousands) 2020 2021
Tenant improvements............................................................................................. $ 18,945 $ 64,313
Internally developed software ............................................................................... 16,992 31,142
Computer equipment .............................................................................................. 9,203 23,731
Furniture and fixtures ............................................................................................. 8,024 21,927
Construction in progress ........................................................................................ 9,756 44,343
Total...................................................................................................................... 62,920 185,456
Less: accumulated depreciation and amortization ............................................ (17,086) (39,037)
Property, software, and equipment, net ......................................................... $ 45,834 $ 146,419

Depreciation expense of property and equipment was $2.1 million, $5.7 million, and $15.3 million for
the years ended December 31, 2019, 2020, and 2021.

Amortization expense of internally developed software was $3.3 million, $4.2 million, and $6.8 million
for the years ended December 31, 2019, 2020, and 2021.

NOTE 10: OFFSETTING ASSETS AND LIABILITIES

Certain financial instruments are eligible for offset on our consolidated balance sheets under GAAP.
Our securities borrowing and lending agreements are subject to master netting arrangements and
collateral arrangements and meet the GAAP guidance to qualify for offset. A master netting arrangement
with a counterparty creates a right of offset for amounts due to and from that same counterparty that is
enforceable in the event of a default or bankruptcy. Our policy is to recognize amounts subject to master
netting arrangements on a gross basis on the consolidated balance sheets. Substantially all securities
borrowing and lending agreements have an open contractual term and may be terminated upon notice by
either party except for one of these agreements, which has a contractual term of 30 days with a daily
minimum commitment of $25 million.

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 Our assets and liabilities subject to master netting arrangements are as follows:

December 31,
(in thousands) 2020 2021
Assets Securities borrowed
Gross amount of securities borrowed .................................................................. $ 372 $ 345
Gross amount offset on the consolidated balance sheets ............................... — —
Amounts of assets presented on the consolidated balance sheets(1) ............ 372 345
Gross amount of securities borrowed not offset on the consolidated
balance sheets:
Securities borrowed ........................................................................................... 372 345
Security collateral received............................................................................... (361) (329)
Net amount............................................................................................................... $ 11 $ 16

Liabilities Securities loaned

Gross amount of securities loaned....................................................................... $ 1,921,118 $ 3,651,035
Gross amount of securities loaned offset on the consolidated balance
sheets .................................................................................................................... — —
Amounts of liabilities presented on the consolidated balance sheets ............ 1,921,118 3,651,035
Gross amount of securities loaned not offset on the consolidated balance
sheets:
Securities loaned ................................................................................................ 1,921,118 3,651,035
Security collateral pledged ............................................................................... (1,787,819) (3,426,766)
Net amount............................................................................................................... $ 133,299 $ 224,269
________________
(1) Securities borrowed are included in receivables from brokers, dealers, and clearing organizations on the consolidated balance
sheets.

We also obtain securities under margin agreements on terms which permit us to pledge and/or
transfer securities to others. As of December 31, 2020 and 2021, we were permitted to re-pledge
securities with a fair value of $4.63 billion and $9.21 billion under the margin agreements and $0.4 million
and $0.3 million under the securities lending agreements. As of December 31, 2021, we re-pledged
$220.1 million of the permitted amount with clearing organizations to meet deposit requirements.

NOTE 11: FINANCING ACTIVITIES AND OFF-BALANCE SHEET RISK

Revolving Credit Facilities
In September 2019, we entered into a $400.0 million committed and secured line of credit with a
maturity date of September 25, 2020 (the “September 2019 Credit Facility”). In June 2020, we amended
the September 2019 Credit Facility and increased the aggregate committed and secured revolving line of
credit amount to $550.0 million with a maturity date of June 5, 2021. This line of credit was primarily
collateralized by users’ securities held as collateral for users’ margin loans. Interest for this line of credit
was determined at the time a loan was initiated and the applicable interest rate under this line of credit
was calculated as a per annum rate equal to 1.25% plus the federal funds rate at the applicable time.
There were no outstanding borrowings under the September 2019 Credit Facility at December 31, 2020.
We were obligated to pay a commitment fee calculated as a per annum rate equal to 0.35% on any
unused amount of the credit facility quarterly in arrears. The September 2019 Credit Facility was
terminated in April 2021.

In October 2019, we entered into a $200.0 million committed and unsecured revolving line of credit
with a syndicate of banks maturing in October 2023 (the “October 2019 Credit Facility”). In October 2020,

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we amended the October 2019 Credit Facility and, among other things, increased the aggregate
committed and unsecured revolving line of credit amount to $600.0 million with a maturity date of October
29, 2024. In April 2021, we further increased the aggregate credit amount available under the October
2019 Credit Facility to $625.0 million. Loans under the October 2019 Credit Facility bear interest, at our
option, at a per annum rate of either (a) the Eurodollar Rate plus 1.00% or (b) the Alternative Base Rate.
The Eurodollar Rate is equal to the Eurodollar Base Rate, which is derived from London Interbank
Offered Rate (“LIBOR”), multiplied by the Statutory Reserve Rate at the applicable time. The Alternative
Base Rate is the greatest of (i) the prime rate then in effect, (ii) the Federal Reserve Bank of New York
rate then in effect plus 0.50% and (iii) the Eurodollar Rate at such time for a one month interest period
plus 1.00%. If LIBOR is unavailable or if we and the administrative agent elect, the Eurodollar Rate will be
replaced by a rate calculated with reference to the Secured Overnight Financing Rate as set forth in the
October 2019 Credit Facility agreement or an alternate benchmark rate selected by us and the
administrative agent. There were no outstanding borrowings under the October 2019 Credit Facility at
December 31, 2020 and 2021. We are obligated to pay a commitment fee calculated as a per annum rate
equal to 0.10% on any unused amount of the October 2019 Credit Facility quarterly in arrears.

In April 2021, we entered into a $2.18 billion committed and secured revolving line of credit, subject to
certain borrowing base limitations, with a maturity date of April 15, 2022 (the “April 2021 Credit Facility”).
Borrowings from the April 2021 Credit Facility must be specified to be Tranche A, Tranche B, Tranche C,
or a combination thereof. Tranche A loans are secured by users’ securities purchased on margin and are
used primarily to finance margin loans. Tranche B loans are secured by the right to the return from NSCC
Margin Deposits and cash and property in a designated collateral account and used for the purpose of
satisfying NSCC Deposit Requirements. Tranche C loans are secured by the right to the return of eligible
funds from any reserve account of Robinhood and cash and property in a designated collateral account
and used for the purpose of satisfying reserve requirements under Rule 15c3-3 of the Exchange Act.
Interest for this line of credit is determined at the time a loan is initiated and the applicable interest rate is
calculated as a per annum rate equal to 1.25% for Tranche A loans and 2.50% for Tranche B and
Tranche C loans, plus the Short-Term Funding Rate at the applicable time. The Short-Term Funding Rate
is equal to the greatest of (i) the Eurodollar Rate for a one month interest period on such day, which
equals to the Eurodollar Base Rate that is derived from LIBOR, multiplied by the Statutory Reserve Rate
at the applicable time, (ii) the Federal Funds Effective Rate, and (iii) the Overnight Bank Funding Rate in
effect on such day. There were no outstanding borrowings under the April 2021 Credit Facility at
December 31, 2021. We are obligated to pay a commitment fee calculated as a per annum rate equal to
0.50% on any unused amount of the April 2021 Credit Facility quarterly in arrears.

All of the agreements for the September 2019 Credit Facility, October 2019 Credit Facility, and April
2021 Credit Facility contain customary covenants restricting our ability to incur debt, incur liens, and
undergo certain fundamental changes. We were in compliance with all covenants under these facilities as
of December 31, 2020 and 2021, as applicable.

Convertible Notes and Warrant Liability

Convertible Notes

In February 2021, we issued two tranches of convertible notes, consisting of $2.53 billion aggregate
principal amount of Tranche I convertible notes and $1.02 billion aggregate principal amount of Tranche II
convertible notes. Interest on the convertible notes accrued at 6% per annum, compounding semi-
annually in arrears, and was payable in kind. The convertible notes did not have a maturity date.

In the event of a public offering of our common stock to the public in an IPO on a nationally-
recognized exchange in the United States, resulting in at least $500 million of gross proceeds to us (a
“Qualifying IPO”) before the 12 month anniversary of the convertible notes issuance date, the convertible
notes were to automatically convert into shares of our Class A common stock at a conversion price equal

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to the lower of (i) 70% of the cash price per share paid by investors in the Qualifying IPO and (ii) $38.29
(in the case of the Tranche I convertible notes) or $42.12 (in the case of the Tranche II convertible notes).

As our IPO was a Qualifying IPO, upon completion, the aggregate outstanding principal and accrued
interest of the convertible notes converted into 137.3 million shares of Class A common stock at a
conversion price of $26.60 per share.

Warrant Liability

We granted to each purchaser of the Tranche I convertible notes a warrant, equal to 15% of the
aggregate proceeds invested by such purchaser, to purchase a variable number of equity securities. In
aggregate, the maximum purchase amount of all warrants is $379.8 million with a strike price that was to
equal the lower of (i) 70% of the price per share in the Qualifying IPO and (ii) $38.29.

As our IPO was a Qualified IPO, upon completion, the warrants became exercisable for 14.3 million
shares of Class A common stock at a strike price of $26.60. As a result, the warrant liability was
reclassified to additional paid-in capital, as the warrants are now exercisable for a fixed number of shares.

Off-Balance Sheet Risk

In the normal course of business, we engage in activities involving settlement and financing of
securities transactions. User securities transactions are recorded on a settlement date basis, which is
generally two business days after the trade date for equities and one business day after the trade date for
options. These activities may expose us to off-balance sheet risk in the event that the other party to the
transaction is unable to fulfill its contractual obligations. In such events, we may be required to purchase
financial instruments at prevailing market prices in order to fulfill our obligations.

NOTE 12: MEZZANINE EQUITY, COMMON STOCK AND

STOCKHOLDERS' (DEFICIT) EQUITY
Redeemable Convertible Preferred Stock
The following table is a summary of redeemable convertible preferred stock as of December 31,
2020:

(in thousands, except share data and per share amounts)

Carrying
Per Share Value of
Shares Issued Per Share Initial Stock, Net of
Shares and Liquidation Liquidation Conversion Issuance
Series Authorized Outstanding Preference Amount Price Costs
A ........................................ 131,913,460 131,913,460 $ 0.1954 $ 25,777 $ 0.1954 $ 16,139
B ........................................ 80,263,020 80,263,020 0.6354 50,999 0.6354 50,999
C ........................................ 43,788,180 43,788,180 2.5121 110,000 2.5121 109,870
D ........................................ 35,774,761 35,774,761 10.1450 362,935 10.1450 362,670
E ........................................ 29,887,357 29,887,357 12.4827 373,075 12.4827 372,733
F ......................................... 48,000,000 48,000,000 12.5000 600,000 12.5000 599,284
G ........................................ 44,406,442 43,116,119 15.5000 668,300 15.5000 668,044
414,033,220 412,742,897 $ 2,191,086 $ 2,179,739

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 In February 2021, we authorized 244.3 million shares of Series G-1 redeemable convertible preferred
stock in connection with our convertible notes. No shares of Series G-1 were issued or outstanding
immediately prior to our IPO.

Immediately prior to our IPO, all outstanding shares of redeemable convertible preferred stock were
converted into shares of our Class A common stock on a one-to-one basis and their carrying value of
$2.18 billion was reclassified into stockholders' equity. As such, there were no shares of redeemable
convertible preferred stock authorized or issued and outstanding as of December 31, 2021.

Preferred Stock
Pursuant to our Charter, our board of directors may issue shares of our preferred stock in one or
more series and, subject to the applicable law of the State of Delaware, our board of directors may set the
powers, rights, preferences, qualifications, limitations and restrictions of such preferred stock. As of
December 31, 2021, no terms of the preferred stock were designated, and no shares of preferred stock
were outstanding.

Common Stock
Voting Rights

We have three classes of common stock: Class A, Class B, and Class C. Holders of our Class A
common stock are entitled to one vote per share on all matters to be voted upon by our stockholders,
holders of our Class B common stock are entitled to 10 votes per share on all matters to be voted upon
by our stockholders and, except as otherwise required by applicable law, holders of our Class C common
stock are not entitled to vote on any matter to be voted upon by our stockholders. The holders of our
Class A common stock and Class B common stock vote together as a single class, unless otherwise
required by our Charter or applicable law.

Conversion of Class B Common Stock

Each share of Class B common stock is convertible at any time at the option of the holder into one
share of Class A common stock. All Class B common stock will automatically convert (as a class) into
Class A common stock upon the earliest of (i) the date and time specified by the affirmative vote of the
holders of at least 80% of the then-outstanding shares of Class B common stock, voting separately as a
class, (ii) the date fixed by our board of directors that is no less than 61 days and no more than 180 days
following the date on which the number of then-outstanding shares of Class B common stock represents
less than 5% of the aggregate number of shares of Class A common stock and Class B common stock
then outstanding, (iii) the date fixed by our board of directors that is no less than 61 days and no more
than 180 days following the date that (A) each founder is no longer providing services to our Company as
an officer, employee, or consultant and (B) each founder is not a director of our Company as a result of a
voluntary resignation by such founder from our board of directors or as a result of a written request or
agreement by such founder not to be renominated as a director of our Company at an annual or special
meeting of stockholders, (iv) nine months after the death or total disability of both founders (subject to a
delay of up to 18 months as may be approved by a majority of our independent directors), or (v) August 2,
2036, the date that is 15 years from the completion of our IPO (the “Final Conversion Date”).

Shares of Class B common stock will also automatically convert into shares of Class A common stock
upon sale or transfer except for certain permitted transfers described in our Charter. In addition, each
share of Class B common stock held by a stockholder who is a natural person, or held by permitted
transferees or permitted entities of such natural person (each as described in our Charter) will
automatically convert into shares of Class A common stock nine months following the death or total
disability of such natural person (subject to a delay of up to 18 months as may be approved by a majority
of our independent directors). Notwithstanding the foregoing, in the event such natural person is a
founder, to the extent (i) a person designated by such founder and approved by a majority of the

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independent directors then in office or (ii) the other founder, in each case, has or shares voting control
over the shares of Class B common stock held by the deceased or disabled founder, such shares will be
treated as being held of record by such person or other founder and will not convert into shares of Class
A common stock as a result of such founder’s death or total disability.

Conversion of Class C Common Stock

Upon the conversion or exchange of all outstanding shares of our Class B common stock into shares
of Class A common stock, each outstanding share of Class C common stock will convert automatically
into one share of Class A common stock on the date or time fixed by our board of directors.

Dividend Rights

Subject to the rights of any holders of our preferred stock, the holders of our common stock will be
entitled to receive ratable dividends, if any, as may be declared from time to time by our board of directors
out of funds legally available for the payment of dividends.

Right to Receive Liquidation Distributions

If we liquidate, dissolve or wind up, after all liabilities and, if applicable, the holders of each series of
our preferred stock have been paid in full, the holders of our common stock will be entitled to share
ratably in all remaining assets.

No Preemptive or Similar Rights

Our common stock has no preemptive or conversion rights or other subscription rights. No
redemption or sinking fund provisions are applicable to our common stock. The rights, preferences and
privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights
of the holders of shares of any series of our preferred stock that we may designate and issue in the
future.

Warrants
As of December 31, 2021, warrants outstanding consisted of warrants to purchase 14.3 million
shares of Class A common stock with a strike price of $26.60 per share. The warrants expire on February
12, 2031. The warrants can be exercised with cash or net shares settled at the holder’s option. In
aggregate, the maximum purchase amount of all warrants is $379.8 million. No warrants were exercised
during 2021.

Equity Incentive Plans

Amended and Restated 2013 Stock Plan and 2020 Equity Incentive Plan

Our Amended and Restated 2013 Stock Plan, as amended (the “2013 Plan”), and our 2020 Equity
Incentive Plan, as amended (the “2020 Plan”), provided for share-based awards to eligible participants,
granted as incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), restricted stock units
("RSUs"), stock appreciation rights (“SARs”) or restricted stock awards (“RSAs”). Options could be
granted with an exercise price per share not less than the fair market value at the date of grant. Options
granted generally vest over a four-year term from the date of grant, at a rate of 25% after one year, then
monthly on a straight-line basis thereafter. Generally, options granted are exercisable for up to ten years
from the date of grant. RSUs granted generally vest quarterly on a straight-line basis and expire seven
years from the date of grant. Our 2013 Plan was terminated in connection with adoption of our 2020 Plan,
and our 2020 Plan was terminated in connection with the adoption of our 2021 Plan (defined below) but
any awards outstanding under our 2013 Plan and 2020 Plan remain in effect in accordance with their
terms. Any shares that were or otherwise would become available for grant under the 2013 Plan or 2020

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Plan will be available for grant under the 2021 Plan. No new awards may be granted under our 2013 Plan
or 2020 Plan.

2021 Omnibus Incentive Plan

In June 2021, our board of directors and our stockholders approved and adopted our 2021 Omnibus
Incentive Plan (the “2021 Plan”). Our 2021 Plan became effective on July 27, 2021, immediately prior to
the date on which the SEC declared effective our IPO registration statement, for which the final
prospectus was dated July 28, 2021 and filed with the SEC pursuant to Rule 424(b)(4) under the
Securities Act of 1933 on July 30, 2021 (the “IPO Prospectus”). Our 2021 Plan provides for the grant of
share-based awards (such as options, including ISOs and NSOs, SARs, RSAs, RSUs, performance units,
and other equity-based awards) and cash-based awards.

The aggregate number of shares available for grant under the 2021 Plan was equal to approximately
14% of the number of shares of our common stock (of all classes) outstanding immediately upon the
closing of the IPO. Thereafter, any shares subject to awards under the 2013 Plan, the 2020 Plan, or the
2021 Plan that expire or terminate or are forfeited to or repurchased or withheld for taxes by the Company
will again become available under the 2021 Plan. In addition, the number of shares available under the
2021 Plan will automatically increase on the first day of each calendar year beginning on January 1, 2022
and ending with (and including) January 1, 2031. Such annual increase will be equal to the lesser of (i)
5% of the outstanding shares of all classes of our common stock on the last day of the immediately
preceding calendar year and (ii) such number of shares determined by our board of directors.

As of December 31, 2021, an aggregate of 316.7 million shares had been authorized for issuance
under the 2013 Plan, 2020 Plan, and 2021 Plan since inception, of which 71.0 million shares had been
issued under the plans since inception, 122.9 million shares were reserved for issuance upon the
exercise or settlement of outstanding equity awards under the plans, and 122.8 million shares remained
available for new grants under the 2021 Plan. On January 1, 2022, an additional 43.2 million shares
became available for grant under the 2021 Plan pursuant to its annual evergreen feature.

Stock Option Activity

A summary of stock option activity for the year ended December 31, 2021 is as follows:

Weighted- Weighted- Total Intrinsic

Number of Average Average Value
Shares Exercise Price Remaining Life (in thousands)
Balance at December 31, 2020 ..................... 21,543,828 $ 2.19 6.52 $ 304,590
Granted during the period .......................... — —
Exercised during the period ....................... (6,706,616) 2.06
Cancelled and forfeited during the period (309,744) 4.52
Balance at December 31, 2021 ..................... 14,527,468 $ 2.20 5.37 $ 226,000
Options vested and expected to vest at
December 31, 2021 ...................................... 14,527,468 $ 2.20 5.37 $ 226,000
Options exercisable at December 31, 2021 . 13,521,686 $ 1.87 5.23 $ 214,813

The weighted-average grant date fair value of options granted during the years ended December 31,
2019 and 2020 was $2.31 and $3.64. No options were granted during 2021. The fair value of each stock

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option was estimated on the grant date using the Black-Scholes option pricing model with the following
weighted-average assumptions:

Year ended December 31,

2019 2020 2021
Dividend yield 0% 0% N/A
Risk-free interest rate 2.29 % 0.61 % N/A
Expected volatility 31.20 % 36.69 % N/A
Expected term (years) 6.03 6.04 N/A

The total intrinsic value of options exercised during 2019, 2020, and 2021 was $29.0 million,
$45.0 million, and $178.7 million. The total grant-date fair value of options that vested for each of the
periods presented was immaterial.

Time-Based RSUs

We have granted Time-Based RSUs that vest upon the satisfaction of a time-based service condition.
The awards become eligible to vest based on continuous employment by each recipient through the
vesting date, which is considered a service condition. Prior to our IPO, our outstanding Time-Based RSUs
vested based upon the satisfaction of both a time-based service condition and a performance-based
condition, namely the occurrence of a liquidity event, such as the IPO. The following table summarizes
the activity related to our Time-Based RSUs for the year ended December 31, 2021:

Weighted-
Number of average grant
RSUs date fair value
Unvested at December 31, 2020 ......................................................................... 47,711,649 $ 10.84
Granted in acquisitions (1) ................................................................................. 124,934 50.63
Granted (other than in acquisitions)................................................................ 33,044,671 38.26
Vested .................................................................................................................. (27,881,049) 19.57
Forfeited .............................................................................................................. (3,572,135) 23.36
Unvested at December 31, 2021 ......................................................................... 49,428,070 $ 31.78
_______________

(1) Represents replacement RSUs granted in connection with our acquisition of Say Technologies. Per the terms of the merger
agreement with Say Technologies, certain unvested outstanding RSUs held by Say Technologies employees were canceled
and replaced with RSUs under our 2021 Plan.

The fair value of Time-Based RSUs that vested on the IPO date was $780.7 million. The fair value of
all other Time-Based RSUs that vested during 2021 was $273.5 million as of the respective vesting dates.
No Time-Based RSUs vested during 2020 or 2019.

Market-Based RSUs

We granted 27.7 million market-based RSUs to our co-founders, Mr. Tenev and Mr. Bhatt, during the
year ended December 31, 2019 that were modified in May 2021 (the “2019 Market-Based RSUs”). The
awards become eligible to vest based on (i) achievement of share price targets considered market vesting
conditions (approximately 5.6 million, 8.3 million, and 13.8 million RSUs vest upon achievement of share
price targets of $30.45, $50.75, and $101.50, respectively, with the stock price targets initially measured
based on our IPO price and, for all RSUs that did not vest upon IPO, measured based on the average of
our Class A common stock’s volume weighted average trading price for each trading day during any 60
consecutive trading days), and (ii) continuous employment by each recipient through the vesting date,
which is considered a service condition. Once the number of 2019 Market-Based RSUs eligible to vest
has been determined based on the satisfaction of the 2019 Market-Based RSU share price target (the

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“Eligible 2019 Market-Based RSUs”), half of those Eligible 2019 Market-Based RSUs will immediately
vest and be settled and the remaining half vest according to a quarterly time-based vesting condition,
which is satisfied based on three-month service periods retroactive to August 1, 2018 through August 1,
2024, subject to continued service on each such vesting date during that period.

A total of approximately 5.6 million of the 2019 Market-Based RSUs became Eligible 2019 Market-
Based RSUs in connection with our IPO. Of these, a total of 4.0 million vested immediately upon our IPO
and the remainder will be subject to vesting in equal installments on each August 1, November 1,
February 1, and May 1 through August 1, 2024.

Prior to the modification, any tranche of 2019 Market-Based RSUs that had not achieved its share
price target upon IPO would have been forfeited. The modification allows the awards to continue to be
measured against the same price targets as were outlined in the original 2019 grant though December
31, 2025. The amendment to the 2019 Market-Based RSUs was determined to be a modification of a
market condition, therefore, we estimated the pre-modification and post-modification fair value of the
awards to determine the incremental fair value generated by the modification. To value the awards, we
used a model based on multiple stock price paths developed through the use of a Monte Carlo simulation
that incorporates into the valuation the possibility that the price targets might not be satisfied. If the price
targets are met sooner than the derived service period, we will adjust our share-based compensation
expense to reflect the cumulative expense associated with the vested award. The 2019 Market-Based
RSUs had a weighted-average grant date fair value of $0.29 per RSU. Upon modification, the weighted-
average incremental fair value of the 2019 Market-Based RSUs was $21.01 per RSU.

In May 2021, we granted 35.5 million additional market-based RSUs to Mr. Tenev and Mr. Bhatt (the
“2021 Market-Based RSUs” and together with the 2019 Market-Based RSUs, “Market-Based RSUs”) with
a weighted-average grant date fair value of $22.68 per RSU. These awards vest based on (i)
achievement of share price targets, considered a market condition, over a period of 8 years from issuance
(4.5 million will vest upon achievement of each of the $120 and $150 share price targets, and 5.3 million
will vest upon achievement of each of the $180, $210, $240, $270, and $300 share price targets, in each
case, measured using the average of the volume weighted average trading price for each trading day
during any 60 consecutive trading days), and (ii) continuous employment by each recipient through the
vesting date, which is considered a service condition. We estimated the grant date fair value of the 2021
Market-Based RSUs using a model based on multiple stock price paths developed through the use of a
Monte Carlo simulation that incorporates into the valuation the possibility that the price targets might not
be satisfied. If the price targets are met sooner than the derived service period, we will adjust our share-
based compensation expense to reflect the cumulative expense associated with the vested award. As of
December 31, 2021, none of the 2021 Market-Based RSUs had vested based on share price targets.

The following table summarizes the activity related to our Market-Based RSUs for the year ended
December 31, 2021:

Weighted-
Number of average grant
RSUs date fair value
Unvested at December 31, 2020 ......................................................................... 27,663,658 $ 0.29
Granted ................................................................................................................ 35,520,000 22.68
Vested .................................................................................................................. (4,264,814) 2.34
Forfeited .............................................................................................................. — —
Unvested at December 31, 2021 ......................................................................... 58,918,844 $ 23.50

The fair value of Market-Based RSUs that vested on the IPO date was $153.3 million. The fair value
of all other Market-Based RSUs that vested during 2021 was $8.1 million as of the respective vesting
dates. No Market-Based RSUs vested during 2020 or 2019.

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2021 Employee Share Purchase Plan
In June 2021, our board of directors and our stockholders approved and adopted the 2021 Employee
Share Purchase Plan (the “ESPP”). Our ESPP became effective on July 27, 2021, immediately prior to
the effective date of the IPO Prospectus. The purpose of the ESPP is to enable eligible employees to
purchase shares of our common stock at a discount through payroll deductions of up to 15% of their
eligible compensation up to the statutory maximum. The first ESPP purchase occurred in November
2021, and subsequent purchases will occur in May and November each year. The purchase price is equal
to 85% of the fair market value of a share of our common stock on the first date of an offering or the date
of purchase, whichever is lower. The ESPP has an automatic rollover feature, whereby employees begin
a new 12-month offering period if the fair value of the Company’s common stock on a purchase date is
less than that on the original offering date.

The aggregate number of shares reserved for issuance under the ESPP was equal to approximately
2% of the number of shares of our common stock (of all classes) outstanding upon the closing of the IPO.
The number of shares available under our ESPP will automatically increase on the first day of each
calendar year beginning on January 1, 2022 and ending with (and including) January 1, 2031. Such
annual increase will be equal to the lesser of (i) 1% of the outstanding shares of all classes of our
common stock on the last day of the immediately preceding calendar year and (ii) such number of shares
determined by the board of directors. No more than 200.0 million shares of common stock may be issued
under our ESPP.

In November 2021, 0.3 million shares were purchased under the ESPP at a weighted-average price
of $24.64. The fair value of each stock option was estimated on the grant date using the Black-Scholes
option pricing model. As of December 31, 2021, approximately 16.7 million shares remained available for
issuance under the ESPP. On January 1, 2022, an additional 8.6 million shares became authorized for
issuance under the ESPP pursuant to its annual evergreen feature.

Share-Based Compensation
The following table presents share-based compensation in our consolidated statements of operations
for the periods indicated:

Year ended December 31,

(in thousands) 2019 2020 2021
Brokerage and transaction ......................................................... $ 427 $ 227 $ 7,527
Technology and development .................................................. 9,499 18,024 609,307
Operations ................................................................................... 139 61 20,261
Marketing ...................................................................................... 85 613 49,731
General and administrative ........................................................ 16,517 5,405 885,427
Total .......................................................................................... $ 26,667 $ 24,330 $ 1,572,253

Included in the table above, we recorded share-based compensation expense of $1.05 billion related
to Time-Based RSUs, $501.2 million related to Market-Based RSUs, and $5.9 million related to the ESPP
for the year ended December 31, 2021. No share-based compensation was recorded in 2019 or 2020
related to Time-Based RSUs, Market-Based RSUs, or the ESPP. The tax benefits recognized in the

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consolidated statements of operations for share-based compensation were not material during the years
ended December 31, 2019, 2020, and 2021.

We capitalized share-based compensation expense related to internally developed software of

$0.7 million, $0.6 million, and $34.8 million for years 2019, 2020, and 2021.

In the year ended December 31, 2019, subsequent to the sale of our Series E redeemable
convertible preferred stock, certain employees sold shares of common stock to new and existing
stockholders in a tender offer (the “2019 Tender Offer”). The 2019 Tender closed on September 9, 2019,
when existing employees sold 5.4 million shares of our common stock for an aggregate purchase price of
$67.6 million. As the share price paid in the 2019 Tender was in excess of fair value and a portion of the
purchasers were existing stockholders, we recorded share-based compensation expense of $18.7 million
for the year ended December 31, 2019.

In the year ended December 31, 2020, subsequent to the sale of our Series G redeemable
convertible preferred stock, certain employees sold shares of common stock to new and existing
stockholders in a tender offer (the “2020 Tender Offer”). The 2020 Tender closed on November 13, 2020,
when existing employees sold 1.4 million shares of our common stock for an aggregate purchase price of
$21.5 million. With the 2020 Tender Offer, we believe that we had established a pattern of cash
settlement of immature shares and stock options only during a very discrete set of circumstances in which
we opened a tender offer in conjunction with a preferred stock financing. As such, during the 2020 Tender
Offer period, we recorded a liability equal to the fair value of the maximum number of options representing
immature shares that could have been redeemed in the tender offer. To the extent that this liability
exceeded amounts previously recognized in equity, the excess was recognized as additional share-based
compensation expense. Following the closing of the 2020 Tender Offer, the remaining liability of
$18.6 million was reclassified to additional paid-in capital. We recorded share-based compensation
expense of $17.2 million in connection with this tender offer in the year ended December 31, 2020.

In March 2021, we modified certain Time-Based RSUs of approximately 500 employees to remove
the one-year vesting cliff, considered to be an improbable to improbable modification. The modified RSUs
were revalued at the modification date, and the modified grant date fair value of the awards of $39.75 per
share was used to calculate share-based compensation expense.

As of December 31, 2021, there was $1.91 billion of unrecognized share-based compensation
expense that is expected to be recognized over a weighted-average period of 2.49 years. Scheduled
vesting for awards outstanding as of December 31, 2021, is as follows:

(in thousands, except for number of shares)

Number of
Shares(1) Expense
2022........................................................................................................................... 19,332,903 $ 861,709
2023........................................................................................................................... 15,860,370 537,829
2024........................................................................................................................... 11,864,093 324,060
2025........................................................................................................................... 3,880,099 166,052
2026........................................................................................................................... — 20,675
Total........................................................................................................................... 50,937,465 $ 1,910,325
(1) Excludes future ESPP shares and Market-Based RSUs for which the share price target has not been met as we cannot forecast
the vesting of these shares.

The above schedule excludes an estimate for forfeitures, which are recognized as they occur, and
future equity grants.

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NOTE 13: NET INCOME (LOSS) PER SHARE
We present net income (loss) per share using the two-class method required for multiple classes of
common stock. The rights, including the liquidation and dividend rights, of the holders of Class A common
stock and Class B common stock are identical, except with respect to voting. As the liquidation and
dividend rights are identical for Class A common stock and Class B common stock, the undistributed
earnings are allocated on a proportionate basis and the resulting income (loss) per share will, therefore,
be the same for both Class A common stock and Class B common stock on an individual or combined
basis.

The following table presents the calculation of basic and diluted income (loss) per share:

Year ended December 31,

(in thousands, except per share data) 2019 2020 2021
Net income (loss) ......................................................................... $ (106,569) $ 7,449 $ (3,686,432)
Less: allocation of earnings to participating securities .......... — 4,601 —
Net income (loss) attributable to common stockholders ....... $ (106,569) $ 2,848 $ (3,686,432)

Weighted-average common stock outstanding - basic .......... 221,664,610 225,748,355 492,381,190

Dilutive effect of stock options and unvested shares ............. — 19,249,033 —
Weighted-average common stock outstanding - diluted ....... 221,664,610 244,997,388 492,381,190

Net income (loss) per share attributable to common

stockholders:
Basic .............................................................................................. $ (0.48) $ 0.01 $ (7.49)
Diluted ........................................................................................... $ (0.48) $ 0.01 $ (7.49)

The following potential common shares were excluded from the calculation of diluted net income
(loss) per share because their effect would have been anti-dilutive or issuance of such shares is
contingent upon the satisfaction of certain conditions that were not satisfied by the end of the period:

Year ended December 31,

2019 2020 2021
Redeemable convertible preferred stock ................................. 321,626,778 412,742,897 —
RSUs ............................................................................................. 51,687,872 75,375,307 108,359,188
Stock options ................................................................................ 27,613,830 60,082 14,527,468
Unvested shares .......................................................................... 749,943 8,423 15,126
Warrants ........................................................................................ — — 14,278,034
ESPP shares ................................................................................ — — 246,179
Total anti-dilutive securities ........................................................ 401,678,423 488,186,709 137,425,995

NOTE 14: RELATED PARTY TRANSACTIONS

Related party transactions may include any transaction between entities under common control or
with a related party. We have defined related parties as members of our board of directors, executive
officers, principal owners of our outstanding stock, and any immediate family members of each such
related party, as well as any other person or entity with significant influence over our management or
operations and any other affiliates.

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 In February 2021, we issued two tranches of convertible notes and granted to each purchaser of the
Tranche I convertible notes a warrant to purchase equity securities, see Note 11 for further information.
Two of the Tranche I investors were related parties prior to the completion of our IPO. Their respective
aggregate outstanding principal and accrued interest of their convertible notes automatically converted
into shares of Class A common stock upon the closing of our IPO. $2.0 billion of the gross proceeds
received from the issuance was contributed to RHS in February 2021. Pursuant to the SEC Uniform Net
Capital Rule, capital contributed to RHS is included in its net capital calculation and may not be withdrawn
for one year from the time of contribution. This restriction lapsed in February 2022, however, no capital
has been returned to the parent company as of the date of filing this Annual Report.

NOTE 15: LEASES

Our operating leases are comprised of office facilities, with the most significant leases relating to our
corporate headquarters in Menlo Park and our office in New York City. Our leases have remaining terms
of 1 to 11 years, and many leases include one or more options to renew. We do not assume renewals in
our determination of the lease term unless the renewals are deemed to be reasonably assured at lease
commencement. We do not have any finance leases.

As of December 31, 2020 and 2021, we had $49.2 million and $129.4 million of operating right-of-use
assets included as non-current assets and $54.1 million and $151.1 million of operating lease liabilities:
$6.1 million and $22.4 million included as other current liabilities and $48.0 million and $128.7 million as
other non-current liabilities on the consolidated balance sheets.

As of December 31, 2021, we have an executed operating lease that had not yet commenced for
office facilities that is expected to be commenced in the first quarter of 2022. Under the terms of the
lease, we will have the right to construct tenant improvements to the underlying asset upon
commencement.

The components of lease expense were as follows:

Year ended December 31,

(in thousands) 2019 2020 2021
Fixed operating lease expenses ............................................... $ 5,422 $ 11,420 $ 23,750
Variable operating lease expenses........................................... 1,078 3,009 5,376
Short-term lease expenses ........................................................ 1,188 1,222 1,428
Total lease expenses ............................................................. $ 7,688 $ 15,651 $ 30,554

Fixed operating lease expenses primarily consist of monthly base rent amounts due. Variable
operating lease expenses are primarily related to payments made to our landlords for common area
maintenance, property taxes, insurance, and other operating expenses.

Other information related to our operating leases was as follows:

December 31,
2020 2021
Weighted-average remaining lease term ........................................................... 5.41 years 7.29 years
Weighted-average discount rate ......................................................................... 7.02 % 6.27 %

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 Cash flows related to leases were as follows:

Year ended December 31,

(in thousands) 2019 2020 2021
Operating cash flows:
Payments for operating lease liabilities ............................... $ 4,755 $ 12,781 $ 6,047
Supplemental cash flow data:
Lease liabilities arising from obtaining right-of-use
assets ........................................................................................ $ 14,816 $ 25,958 $ 96,555

Future minimum lease payments under non-cancellable operating leases (with initial lease terms in
excess of one year) as of December 31, 2021 are as follows:

(in thousands)
2022...................................................................................................................................................... $ 32,646
2023...................................................................................................................................................... 34,821
2024...................................................................................................................................................... 33,355
2025...................................................................................................................................................... 32,436
2026...................................................................................................................................................... 23,724
Thereafter ............................................................................................................................................ 102,000
Total undiscounted lease payments ........................................................................................... 258,982
Less: imputed interest ....................................................................................................................... (42,046)
Less: lease incentives ....................................................................................................................... (12,682)
Less: leases executed but not yet commenced ............................................................................ (53,185)
Total lease liabilities ...................................................................................................................... $ 151,069

NOTE 16: COMMITMENTS & CONTINGENCIES

We are subject to contingencies arising in the ordinary course of our business, including
contingencies related to legal, regulatory, non-income tax and other matters. We record an accrual for
loss contingencies at management’s best estimate when we determine that it is probable that a loss has
been incurred and the amount of the loss can be reasonably estimated. If the reasonable estimate is a
range and no amount within that range is considered a better estimate than any other amount, an accrual
is recorded based on the bottom amount of the range. Amounts accrued for contingencies in the
aggregate were $57.6 million and $84.8 million as of December 31, 2020 and 2021. In our opinion, an
adequate accrual had been made as of December 31, 2021 to provide for the probable losses of which
we are aware and for which we can reasonably estimate an amount.

Legal and Regulatory Matters

The securities industry is highly regulated and many aspects of our business involve substantial risk
of liability. In past years, there has been an increasing incidence of litigation involving the brokerage
industry, including class action suits that generally seek substantial damages. Damages may include, in
some cases, punitive damages. Compliance and trading problems that are reported to federal and state
regulators, exchanges, or other SROs by dissatisfied users are investigated by such regulatory bodies,
and, if pursued by such regulatory bodies or such users, may rise to the level of arbitration or disciplinary
action. We are also subject to periodic regulatory audits and inspections.

Like other brokerage firms, we have been named as a defendant in lawsuits and from time to time we
have been threatened with, or named as a defendant in arbitrations and administrative proceedings. The
outcomes of these matters are inherently uncertain and some may result in adverse judgments or awards,

133
including penalties, injunctions, or other relief, and we may also determine to settle a matter because of
the uncertainty and risks of litigation.

With respect to matters discussed below for which no accrual has been made or which have a
potential loss in excess of amounts accrued, we believe, based on current knowledge, that any losses or
ranges of losses (in excess of amounts accrued, if applicable) as of December 31, 2021 that are
reasonably possible and can be reasonably estimated will not, in the aggregate, have a material adverse
effect on our business, financial position, operating results, or cash flows. However, for many of the
matters disclosed below, particularly those in early stages, we cannot reasonably estimate the reasonably
possible loss (or range of loss), if any. In addition, the ultimate outcome of legal proceedings involves
judgments, estimates, and inherent uncertainties and cannot be predicted with certainty. Any judgment
entered against us, or any adverse settlement, could materially and adversely impact our business,
financial condition, operating results, and cash flows. We might also incur substantial legal fees, which
are expensed as incurred, in defending against legal and regulatory claims.

Described below are certain pending matters in which there is at least a reasonable possibility that a
material loss could be incurred. We intend to continue to defend these matters vigorously.

Best Execution, Payment for Order Flow, and Sources of Revenue Matters

Beginning in December 2020, multiple putative securities fraud class action lawsuits were filed
against RHM, RHF, and RHS. Five cases were consolidated in the United States District Court for the
Northern District of California. An amended consolidated complaint was filed in May 2021, alleging
violations of Section 10(b) of the Exchange Act and various state law causes of action based on claims
that we violated the duty of best execution and misled putative class members by publishing misleading
statements and omissions in customer communications relating to the execution of trades and revenue
sources (including PFOF). Plaintiffs seek damages, restitution, disgorgement, and other relief. In
February 2022, the court granted Robinhood’s motion to dismiss the amended consolidated complaint
without prejudice.

March 2020 Outages

A consolidated putative class action lawsuit relating to service outages on our stock trading platform
on March 2-3, 2020 and March 9, 2020 (the “March 2020 Outages”) is pending in the United States
District Court for the Northern District of California. The lawsuit generally alleges that putative class
members were unable to execute trades during the March 2020 Outages because our platform was
inadequately designed to handle customer demand and we failed to implement appropriate backup
systems. The lawsuit includes, among other things, claims for breach of contract, negligence, gross
negligence, breach of fiduciary duty, unjust enrichment and violations of certain California consumer
protection statutes. The lawsuit generally seeks damages, restitution, and/or disgorgement, as well as
declaratory and injunctive relief. Plaintiffs’ motion for class certification, which we oppose, and our motion
for summary judgment in favor of Robinhood are currently pending.

In September 2021, approximately 400 jointly-represented customers initiated an arbitration of

individual claims against us arising out of the March 2020 Outages and other alleged system outages.
Robinhood is contesting the claims, and a hearing has been scheduled for September 2022.

Options Trading and Related Customer Communications and Displays

The SEC’s Examinations Division conducted an examination and identified deficiencies, to which
RHF responded, with respect to account takeovers, identity theft in connection with new account opening,
processes for approving or rejecting certain accounts for options trading, and customer support response
times. Certain state regulatory authorities are conducting investigations regarding RHF’s options trading
and related customer communications and displays and options trading approval process. RHF is

134
cooperating with the regulators’ requests. FINRA also conducted an investigation and reached a
settlement, described below, with RHF regarding the same options trading issues.

FINRA Multi-Matter Settlement

On June 30, 2021, RHF resolved with FINRA, on a no admit, no deny basis, certain investigations
and examinations, including investigations into systems outages, RHF’s options product offering, and
margin-related communications with customers, among others. The resolution did not address all the
matters FINRA is investigating, including those relating to the Early 2021 Trading Restrictions (as defined
below), account takeovers and anti-money laundering issues, RHS’s fractional share trade reporting,
customer support procedures, or customer arbitration agreements. RHF and RHS have continued to
cooperate with FINRA on these matters. The resolution involved the following components: (i) charges of
violations of FINRA rules; (ii) a fine of $57.0 million; (iii) customer restitution of approximately
$12.6 million; (iv) a censure; and (v) engagement of an independent consultant. In July 2021, we paid the
$57.0 million penalty in cash. As of December 31, 2021, we had paid all of the customer restitution.

RHC Anti-Money Laundering, Cybersecurity, and Other Issues

In July 2020, the NYDFS issued a report of its examination of RHC citing a number of “matters
requiring attention” focused primarily on anti-money laundering and cybersecurity-related issues. The
matter was subsequently referred to the NYDFS’s Consumer Protection and Financial Enforcement
Division for investigation. In March 2021, the NYDFS informed RHC of alleged violations of applicable (i)
anti-money laundering and New York Banking Law requirements, including the failure to maintain and
certify a compliant anti-money laundering program, (ii) notification provisions under RHC’s Supervisory
Agreement with the NYDFS, and (iii) cybersecurity and virtual currency requirements, including
deficiencies in our policies and procedures regarding risk assessment, lack of an adequate incident
response and business continuity plan, and deficiencies in our application development security. RHC
and the NYDFS have reached a settlement in principle with respect to these allegations, subject to final
documentation, in connection with which, among other things, RHC expects to pay a monetary penalty
and engage a monitor.

Additionally, in April 2021, the California Attorney General’s Office issued an investigative subpoena
to RHC, seeking documents and answers to interrogatories about RHC’s trading platform, business and
operations, application of California’s commodities regulations to RHC, and other matters. RHC is
cooperating with this investigation. We cannot predict the outcome of this investigation or any
consequences that might result from it.

Account Takeovers

In November 2020, FINRA Enforcement commenced an investigation into RHF concerning account
takeovers, or circumstances under which an unauthorized actor successfully logs into a customer
account, as well as anti-money laundering and cybersecurity issues. Since February 2021, RHF has
received requests for documents and information from the SEC’s Enforcement Division in connection with
its investigation into account takeovers and, more recently, suspicious activity report filings and issues
related to the Electronic Funds Transfer Act. Additionally, state regulators, including the New York
Attorney General’s Office, have opened inquiries into RHM, RHF, and RHC related to account takeovers.
We are cooperating with these investigations and inquiries. The SEC’s Examinations Division also
conducted an examination and identified deficiencies, to which RHF responded, with respect to, among
other things, account takeovers and identity theft in connection with new account opening.

In January 2021, Siddharth Mehta filed a putative class action in California state court against RHF
and RHS, purportedly on behalf of approximately 2,000 Robinhood customers whose accounts were
allegedly accessed by unauthorized users. RHF and RHS removed this action to the United States
District Court for the Northern District of California. Plaintiff generally alleges that RHF and RHS breached

135
commitments made and duties owed to customers to safeguard customer data and assets and seek
monetary damages and injunctive relief. The matter is currently in the discovery stage.

Massachusetts Securities Division Matter

In December 2020, the Enforcement Section of the Massachusetts Securities Division (“MSD”) filed
an administrative complaint against RHF, which stems from an investigation initiated by the MSD in July
2020. The complaint alleges three counts of Massachusetts securities law violations regarding alleged
unethical and dishonest conduct or practices, failure to supervise, and failure to act in accordance with
the Massachusetts fiduciary duty standard, which became effective on March 6, 2020 and had an
effective enforcement date beginning September 1, 2020. Among other things, the MSD alleges that our
product features and marketing strategies, outages, and options trading approval process constitute
violations of Massachusetts securities laws. MSD subsequently filed an amended complaint that seeks,
among other things, injunctive relief (a permanent cease and desist order), censure, restitution,
disgorgement, appointment of an independent consultant, an administrative fine, and revocation of RHF's
license to operate in Massachusetts. If RHF were to lose its license to operate in Massachusetts, we
would not be able to acquire any new customers in Massachusetts, and we expect that our current
customers in Massachusetts would be unable to continue utilizing any of the services or products offered
on our platform (other than closing their positions) and that we may be forced to transfer such customers’
accounts to other broker-dealers. Additionally, revocation of RHF’s Massachusetts license could trigger
similar disqualification or proceedings to restrict or condition RHF’s registration by other state regulators.
A revocation of RHF’s license to operate in Massachusetts would result in RHF and RHS being subject to
statutory disqualification by FINRA and the SEC, which would then result in RHF needing to obtain relief
from FINRA subject to SEC review in order to remain a FINRA member and RHS possibly needing relief
from FINRA or other SROs.

In April 2021, RHF filed a complaint and motion for preliminary injunction and declaratory relief in
Massachusetts state court seeking to enjoin the MSD administrative proceeding and challenging the
legality of the Massachusetts fiduciary duty standard. In May 2021, the state court denied RHF’s motion
for a preliminary injunction, finding that RHF would not suffer irreparable harm if MSD proceeded with the
pending administrative action, but determined that RHF may seek a declaration that the disputed
regulation is unlawful without first exhausting its remedies in the administrative action. In September
2021, the parties filed cross-motions for partial judgment on the pleadings and a hearing was held on
those motions in December 2021.

Text Message Litigation

In August 2021, Cooper Moore filed a putative class action against RHF alleging that RHF initiated or
assisted in the transmission of commercial electronic text messages to Washington State residents
without their consent in violation of Washington state law. The complaint seeks statutory and treble
damages, injunctive relief, and attorneys’ fees and costs. The case is currently pending in the U.S. District
Court for the Western District of Washington. RHF has filed a motion to dismiss the complaint.

Early 2021 Trading Restrictions Matters

Beginning on January 28, 2021, due to increased deposit requirements imposed on RHS by the
NSCC in response to unprecedented market volatility, particularly in certain securities, RHS temporarily
restricted or limited its customers’ purchase of certain securities, including GameStop Corp. and AMC
Entertainment Holdings, Inc., on our platform (the “Early 2021 Trading Restrictions”).

A number of individual and putative class actions related to the Early 2021 Trading Restrictions were
filed against RHM, RHF, and RHS, among others, in various federal and state courts. In April 2021, the
Judicial Panel on Multidistrict Litigation entered an order centralizing the federal cases identified in a
motion to transfer and coordinate or consolidate the actions filed in connection with the Early 2021
Trading Restrictions in the United States District Court for the Southern District of Florida (the “MDL”).
The court subsequently divided plaintiffs’ claims against Robinhood into three tranches: federal antitrust

136
claims, federal securities law claims, and state law claims. In July 2021, plaintiffs filed consolidated
complaints seeking monetary damages in connection with the federal antitrust and state law tranches.
The federal antitrust complaint asserted one violation of Section 1 of the Sherman Act; the state law
complaint asserted negligence and breach of fiduciary duty claims. In August 2021, we moved to dismiss
both of these complaints. In September 2021, plaintiffs filed an amended complaint asserting state law
claims of negligence, breach of fiduciary duty, tortious interference with contract and business
relationship, civil conspiracy, and breaches of the covenant of good faith and fair dealing and implied duty
of care. In November 2021, the court dismissed the federal antitrust complaint without prejudice, and
plaintiffs for the federal securities tranche filed a complaint alleging violations of Sections 9(a) and 10(b)
of the Exchange Act. In January 2022, we moved to dismiss the federal securities law complaint, and
plaintiffs filed an amended complaint in connection with the federal antitrust tranche. In January 2022, the
court dismissed the state law complaint with prejudice. In February 2022, Robinhood moved to dismiss
the amended complaint filed in connection with the federal antitrust tranche.

RHM, RHF, RHS, and our Co-Founder and CEO, Vladimir Tenev, among others, have received
requests for information, and in some cases, subpoenas and requests for testimony, related to
investigations and examinations of the Early 2021 Trading Restrictions from the United States Attorney’s
Office for the Northern District of California (“USAO”), the U.S. Department of Justice, Antitrust Division,
the SEC’s Division of Enforcement, FINRA, the New York Attorney General’s Office, other state attorneys
general offices, and a number of state securities regulators. Also, a related search warrant was executed
by the USAO to obtain Mr. Tenev’s cell phone. There have been several inquiries based on specific
customer complaints. We have also received requests from the SEC’s Division of Examinations and
Division of Enforcement and FINRA related to employee trading in certain securities that were subject to
the Early 2021 Trading Restrictions, including GameStop Corp. and AMC Entertainment Holdings, Inc.,
during the week of January 25, 2021. These matters include requests related to whether any employee
trading in these securities may have occurred after the decision to impose the Early 2021 Trading
Restrictions and before the public announcement of the Early 2021 Trading Restrictions on January 28,
2021. The SEC’s Division of Examinations concluded their examinations related to the Early 2021 Trading
Restrictions. In February 2021, SEC staff notified us of their findings to which we are in the process of
responding. FINRA has also requested information about policies, procedures, and supervision related to
employee trading generally. In addition, we have received information and testimony requests from
certain committees and members of the U.S. Congress and Mr. Tenev, among others, has provided
testimony with respect to the Early 2021 Trading Restrictions. We are cooperating with these
investigations and examinations.

Registration Requirements for Member Personnel

In July 2021, RHF received a FINRA investigative request seeking documents and information related
to its compliance with FINRA registration requirements for member personnel, including related to the
FINRA non-registration status of Mr. Tenev and Co-Founder and Chief Creative Officer Mr. Bhatt.
Robinhood is cooperating with the investigation.

IPO Litigation

In December 2021, Philip Golubowski filed a putative class action in the U.S. District Court for the
Northern District of California against RHM, the officers and directors who signed Robinhood’s IPO
offering documents, and Robinhood’s IPO underwriters. Plaintiff’s claims are based on alleged false or
misleading statements in Robinhood’s IPO offering documents allegedly in violation of Sections 11 and
12(a) of the Securities Act. Plaintiff seek compensatory damages, rescission of shareholders’ share
purchases, and an award for attorneys’ fees and costs. In February 2022, certain alleged Robinhood
stockholders submitted applications seeking appointment by the court to be the lead plaintiff to represent
the putative class in this matter. Pursuant to the Private Securities Litigation Reform Act of 1995, the
deadline for the court to appoint a lead putative class plaintiff is March 17, 2022.

137
 In January 2022, Robert Zito filed a complaint derivatively on behalf of Robinhood against
Robinhood’s directors at the time of its IPO in the U.S. District Court for the District of Delaware. Plaintiff
alleges claims for breach of fiduciary duties, waste of corporate assets, unjust enrichment, and violations
of Section 10(b) of the Exchange Act. Plaintiff’s claims are based on allegations of false or misleading
statements in Robinhood’s IPO offering documents, and plaintiff seeks an award of damages and
restitution to the Company, injunctive relief, and an award for attorney’s fees and costs.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer,
has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period
covered by this Annual Report. The term “disclosure controls and procedures,” as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company
that are designed to ensure that information required to be disclosed by a company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the
time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is accumulated and communicated
to our management, including our principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving their objectives and management necessarily applies
its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on
such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the
end of the period covered by this Annual Report, our disclosure controls and procedures were effective at
the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f)
and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2021 that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

The Annual Report on Form 10-K does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of our independent registered public
accounting firm due to a transition period established by the rules of the SEC for newly public companies.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our
disclosure controls and procedures and internal control over financial reporting are designed to provide
reasonable assurance of achieving their objectives and are effective at the reasonable assurance level.
However, management does not expect that our disclosure controls and procedures or our internal
control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute, assurance that the

138
objectives of the control system are met. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if
any, within the company have been detected. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions. Over time, controls
may become inadequate because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud might occur without being detected.

ITEM 9B. OTHER INFORMATION

On February 24, 2022, our board of directors amended and restated our Bylaws, effective
immediately, to clarify the calculation of “majority of votes cast” by stockholders set forth in Section 1.6 of
the Bylaws.

A copy of the amended and restated Bylaws is filed as an exhibit to this Annual Report.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT

PREVENT INSPECTIONS
Not applicable.

139
 PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
The information required by this item is incorporated by reference to our Proxy Statement for the
2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended
December 31, 2021.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to our Proxy Statement for the
2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended
December 31, 2021.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to our Proxy Statement for the
2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended
December 31, 2021.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference to our Proxy Statement for the
2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended
December 31, 2021.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated by reference to our Proxy Statement for the
2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended
December 31, 2021.

140
 PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Annual Report on Form 10-K:

1. The following consolidated financial statements of Robinhood Markets Inc. and subsidiaries are
filed as part of this Annual Report on Form 10-K under Part II, Item 8:

• Reports of Independent Registered Public Accounting Firm on Consolidated Financial Statements

• Consolidated Balance Sheets as of December 31, 2021 and 2020
• Consolidated Statements of Income for the Years Ended December 31, 2021, 2020 and 2019
• Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021,
2020, and 2019
• Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and
2019
• Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31,
2021, 2020 and 2019
• Notes to Consolidated Financial Statements

2. Financial Statement Schedules:

All schedules are omitted because of the absence of conditions under which they are required or
because information called for is shown in the consolidated financial statements and notes thereto in Part
II, Item 8 of this Annual Report on Form 10-K.

3. Exhibits:
The information required by this Item is set forth in the Exhibit Index that precedes the signature
page of this Annual Report.

ITEM 16. FORM 10-K SUMMARY

None.

141
 EXHIBIT INDEX
The documents listed below are filed (or furnished, as noted) as exhibits to this Annual Report on
Form 10-K:
Incorporated by Reference
Exhibit Filed
Number Description Form* Filing Date Exhibit Herewith
3.1 Amended and Restated Certificate of 8-K 2021-08-02 3.1
Incorporation of Robinhood Markets, Inc.,
dated August 2, 2021 (our “Charter”)
3.2 Amended and Restated Bylaws of Robinhood X
Markets, Inc., dated February 24, 2022 (our
“Bylaws”)
4.1 Form of Class A Common Stock Certificate of S-1/A 2021-07-19 4.1
Robinhood Markets, Inc.
4.2 Form of ten-year Warrant to Purchase Stock S-1 2021-07-01 4.2
of Robinhood Markets, Inc., issued to multiple
investors on February 12, 2021
4.3 Description of Robinhood Securities X
Registered Under Section 12 of the Exchange
Act
10.1 Form of Indemnification Agreement between S-1/A 2021-07-19 10.1
Robinhood Markets, Inc. and, separately,
each of its directors and executive officers
(other than Jan Hammer and Scott Sandell)
10.2 Form of Indemnification Agreement between S-1/A 2021-07-19 10.2
Robinhood Markets, Inc. and, separately,
each of Jan Hammer and Scott Sandell
10.3† Underwriting Agreement, dated July 28, 2021, 10-Q 2021-08-18 10.3
between Robinhood Markets, Inc., as the
issuer, and Goldman Sachs & Co. LLC and
J.P. Morgan Securities LLC, as
representatives of the several underwriters
named therein
10.4† Credit Agreement, dated as of April 16, 2021, S-1 2021-07-01 10.14
by and among Robinhood Securities, LLC, the
lenders thereto, JPMorgan Chase Bank N.A.
as administrative agent, joint bookrunner and
joint lead arranger, BMO Harris Bank N.A., as
syndication agent, and BMO Capital Markets
Corp. as joint bookrunner and joint lead
arranger
10.5+ Offer Letter between Robinhood Markets, Inc. S-1 2021-07-01 10.6
and Jason Warnick, dated November 8, 2018
10.6†+ Offer Letter between Robinhood Markets, Inc. S-1 2021-07-01 10.7
and Daniel Gallagher, as amended and
restated on December 15, 2020
10.7†+ Offer Letter between Robinhood Markets, Inc. S-1 2021-07-01 10.8
and Paula Loop, dated May 14, 2021
10.8†+ Offer Letter between Robinhood Markets, Inc. S-1 2021-07-01 10.9
and Jonathan Rubinstein, dated May 14, 2021
10.9†+ Offer Letter between Robinhood Markets, Inc. S-1 2021-07-01 10.10
and Robert Zoellick, dated May 14, 2021

142
 Incorporated by Reference
Exhibit Filed
Number Description Form* Filing Date Exhibit Herewith
10.10 Exchange Agreement, dated July 26, 2021 10-Q 2021-08-18 10.8
between Robinhood Markets, Inc. Baiju Bhatt,
Vladimir Tenev, and certain of his related
entities
10.11 Form of Equity Exchange Right Agreement, S-1/A 2021-07-19 10.13
entered into on July 26, 2021 between
Robinhood Markets, Inc. and, separately, (a)
Baiju Bhatt and (b) Vladimir Tenev
10.12 Voting Agreement, dated July 26, 2021, 10-Q 2021-08-18 10.10
among Robinhood Markets, Inc., Baiju Bhatt,
Vladimir Tenev, and certain related entities
10.13(a)†+ Robinhood Markets, Inc. 2020 Equity S-1 2021-07-01 10.2
Incentive Plan, as amended on June 18, 2020
and form grant notices and award agreements
thereunder
10.13(b)+ Second Amendment to the Robinhood S-1 2021-07-01 10.4
Markets, Inc. 2020 Equity Incentive Plan,
dated March 10, 2021
10.13(c)+ Third Amendment to the Robinhood Markets, S-1 2021-07-01 10.5
Inc. 2020 Equity Incentive Plan, dated May
26, 2021
10.13(d)+ Form of 2021 Market-Based RSU Award, S-1 2021-07-01 10.17
dated May 26, 2021, between Robinhood
Markets, Inc. and, separately (a) Baiju Bhatt
and (b) Vladimir Tenev
10.13(e)+ Form of RSU Agreement for Non-Employee S-1 2021-07-01 10.18
Directors (including the Notice of Grant) under
the 2020 Plan
10.14(a)†+ Robinhood Markets, Inc. Amended and S-1 2021-07-01 10.3
Restated 2013 Stock Plan and form grant
notices and award agreements thereunder
10.14(b)+ Form of Notice of Time-Based Restricted S-1 2021-07-01 10.15
Stock Unit Award and Restricted Stock Unit
Agreement under the Robinhood Markets,
Inc. Amended and Restated 2013 Stock Plan
for Vladimir Tenev and Baiju Bhatt
10.14(c)+ Form of 2019 Market-Based RSU Award, as S-1 2021-07-01 10.16
amended and restated on May 26, 2021,
between Robinhood Markets, Inc. and,
separately (a) Baiju Bhatt and (b) Vladimir
Tenev
10.15(a)+ Robinhood Markets, Inc. 2021 Omnibus S-8 2021-07-29 99.1
Incentive Plan (the “2021 Plan”)
10.15(b)+ Form of Restricted Stock Unit Agreement for 10-Q 2021-08-18 10.16
Employees and Non-Employee Directors
(including the Notices of Grant) under the
2021 Plan
10.15(c)+ Form of Fully Vested Stock Award Agreement 10-Q 2021-08-18 10.17
for Non-Employee Directors (including the
Notice of Grant) under the 2021 Plan

143
 Incorporated by Reference
Exhibit Filed
Number Description Form* Filing Date Exhibit Herewith
10.15(d)+ Form of Option Agreement for Employees and X
Non-Employee Directors (including the
Notices of Grant) under the 2021 Plan
10.16(a)+ Robinhood Markets, Inc. 2021 Employee S-8 2021-07-29 99.2
Share Purchase Plan (the “ESPP”)
10.16(b)+ Forms of ESPP Subscription Agreement and 10-Q 2021-08-18 10.19
Notice of Withdrawal
10.17+ Robinhood Markets, Inc. Change in Control S-1/A 2021-07-19 10.22
and Severance Plan for Key Employees
21.1 Subsidiaries of Robinhood Markets, Inc. X
23.1 Consent of Ernst & Young LLP X
24.1 Power of Attorney (included in signature X
pages hereto)
31.1 CEO Certification pursuant to Section 302 of X
the Sarbanes-Oxley Act
31.2 CFO Certification pursuant to Section 302 of X
the Sarbanes-Oxley Act
32.1‡ CEO Certification pursuant to Section 906 of X
the Sarbanes-Oxley Act
32.2‡ CFO Certification pursuant to Section 906 of X
the Sarbanes-Oxley Act
101.INS iXBRL (Inline eXtensible Business Reporting X
Language) Instance Document - the instance
document does not appear in the Interactive
Data File because its XBRL tags are
embedded within the Inline XBRL document
101.SCH iXBRL Taxonomy Extension Schema X
Document
101.CAL iXBRL Taxonomy Extension Calculation X
Linkbase Document
101.DEF iXBRL Taxonomy Extension Definition X
Linkbase Document
101.LAB iXBRL Taxonomy Extension Label Linkbase X
Document.
101.PRE iXBRL Taxonomy Extension Presentation X
Linkbase Document.
104 Cover Page Interactive Data File (contained in X
Exhibit 101)
_________________
* File number is 001-40691 except that the S-1 (and S-1/A) file number is 333-257602 and the S-8 file number is 333-258250.
+ Indicates a management contract or compensatory plan.
† Certain schedules and exhibits have been omitted pursuant to Rule 601(a)(5) of Regulation S-K under the Securities Act. A copy
of any omitted schedule or exhibit will be furnished to the SEC upon request.
‡ The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and
not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Robinhood
Markets, Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report on Form
10-K, irrespective of any general incorporation language contained in such filing.

144
 SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly signed
this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Menlo Park,
California, on February 24, 2022.

Robinhood Markets, Inc.

By: /s/ Vladimir Tenev

Name: Vladimir Tenev
Co-Founder, Chief Executive
Title: Officer and President

By: /s/ Jason Warnick

Name: Jason Warnick

Chief Financial Officer
(Principal Financial Officer and
Title: Principal Accounting Officer)

145
 POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Vladimir Tenev and Jason Warnick, jointly and severally, his or her attorney-in-
fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to
this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-
K has been signed below by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.

Signature Title Date

Co-Founder, Chief Executive Officer and President February 24,
By: /s/ Vladimir Tenev and Director 2022

Vladimir Tenev
February 24,
By: /s/ Jason Warnick Chief Financial Officer 2022
(Principal Financial Officer and Principal Accounting
Jason Warnick Officer)
February 24,
By: /s/ Baiju Bhatt Director 2022

Baiju Bhatt
February 24,
By: /s/ Paula Loop Director 2022

Paula Loop
February 24,
By: /s/ Jonathan Rubinstein Director 2022

Jonathan Rubinstein
February 24,
By: /s/ Scott Sandell Director 2022

Scott Sandell
February 24,
By: /s/ Robert Zoellick Director 2022

Robert Zoellick
February 24,
By: /s/ Dara Treseder Director 2022

Dara Treseder
February 24,
By: /s/ Frances Frei Director 2022

Frances Frei

146
Stockholder Information
INDEPENDENT LEADERSHIP HEADQUARTERS
85 Willow Road
DIRECTORS TEAM Menlo Park, California 94025 USA

Frances Frei Vladimir Tenev

Professor and Author Chief Executive Officer, INDEPENDENT
Harvard Business School Co-Founder, and REGISTERED PUBLIC
Chairman of the Board
Paula Loop ACCOUNTING FIRM
Retired Partner Baiju Bhatt
Ernst & Young LLP
PricewaterhouseCoopers LLP Chief Creative Officer,
303 Almaden Boulevard
Co-Founder, and Director
Meyer Malka San Jose, California 95110 USA
Founder and Managing Partner Aparna Chennapragada
Ribbit Capital Chief Product Officer
STOCK
Jonathan Rubinstein Daniel Gallagher EXCHANGE LISTING
Lead Director Chief Legal, Compliance, and
Amazon.com, Inc. Corporate Affairs Officer Nasdaq Global Select Market
Ticker Symbol: HOOD
Scott Sandell Surabhi Gupta Class A CUSIP: 770700102
Managing General Partner SVP of Engineering
New Enterprise Associates
Gretchen Howard STOCK
Dara Treseder Chief Operating Officer
SVP, Marketing & TRANSFER AGENT
Communications Steven Quirk American Stock Transfer and
Peloton Interactive, Inc. Chief Brokerage Officer Trust Company, LLC (“AST”)
Shareholder Services Department
Robert Zoellick Caleb Sima 6201 15th Avenue
Former Chairman of the Board Chief Security Officer Brooklyn, New York 11219 USA
AllianceBernstein Holding L.P.
Jason Warnick Toll Free: +1 (800) 937-5449
Chief Financial Officer
Email: [email protected]
Website: www.astfinancial.com

ROBINHOOD
INVESTOR RELATIONS
Email: [email protected]
Website: investors.robinhood.com

This report can be found online at

www.proxydocs.com/HOOD

©2022 Robinhood Markets, Inc.

All rights reserved. “Robinhood”
and the Robinhood feather logo are
registered trademarks of Robinhood
Markets, Inc.