Elizabeth Taylor
Good morning. I'm Mary Elizabeth Taylor.
Robinhood's VP of External Affairs and Community, and I'm here in the courtyard of Robinhood's headquarters in Menlo Park, California. We're thrilled to welcome all of you to the 2022 annual meeting of stockholders of Robinhood Markets, Inc. It's our first annual meeting following our IPO, and we wanna thank you for joining us today and for being a part of this journey that we're all on together. We're especially excited that we can live out our mission to democratize finance for all by enabling you to participate in our inaugural annual meeting virtually and to submit and upvote questions from around the world on the Say platform. While we have several matters of formal business to cover today, we also look forward to letting you hear directly from our CEO and from your fellow stockholders later in the meeting.
Before we dive into things, I wanted to give you an overview of what we're gonna cover today. First up, our Co-Founder, CEO, and Chair of our Board, Vlad Tenev, will call the meeting to order. Next, Christina Lai, our Corporate Secretary, Vice President, and Deputy General Counsel will introduce our Board of Directors and will lead us through the formal business of the meeting, including the proposals to be voted on as described in our 2022 proxy statement. Then Vlad will join me for a conversation about our company and business. Finally, we will hear from our stockholders by addressing a selection of the most upvoted questions submitted through the Say Q&A platform. I am super excited to introduce Vlad Tenev, the Chair of our Board.
Thank you, Mary Elizabeth, for the introduction. It's good to be here with both of you and with all of our stockholders. I'm pleased to welcome all of you to the 2022 annual meeting of stockholders. It is now 9:00 A.M., and the meeting will please come to order. I'd like to turn it over to Christina for introductions and to take us through the formal portion of the meeting.
Thanks, Vlad. I'd like to introduce the members of our board of directors. Vlad Tenev, the Chair of our Board, and Baiju Bhatt, the Co-Founders of Robinhood, Jon Rubinstein, our Lead Independent Director, Frances Frei, Paula Loop, Micky Malka, Dara Treseder, and Robert Zoellick. Thank you to those Directors who have joined us today. Each of our Directors, other than our Co-Founders, Vlad Tenev and Baiju Bhatt, is an Independent Director. We are proud of the depth and breadth of experience and diversity of perspectives and expertise represented among our board members, and we are extremely grateful for their service and dedication as we continue our journey as a new public company. I'd like to also introduce our outside representatives who have joined us today.
Scott Kindle from Mediant, who will serve as the inspector of elections for today's meeting and will tabulate voting results. Mr. Kindle has taken an oath of office to faithfully execute his duties with strict impartiality and according to the best of his ability. Brian Outland and Jonathan Tomback, our audit partners at Ernst & Young LLP, Robinhood's independent registered public accounting firm. Thank you everyone for being here. In addition, a list of stockholders entitled to vote at the annual meeting has been available for examination by any stockholder during ordinary business hours at Robinhood's offices for the last 10 days.
During this meeting, the list will also be open to examination by any logged in stockholder who has pre-registered for the meeting. Lastly, I'd like to remind everyone that only stockholders as of the close of business on April 25th, the record date for this meeting, are entitled to vote today.
In addition, in order to vote, you need to be attending the meeting as a registered attendee and not through the guest option. This annual meeting is held pursuant to Delaware law and our Bylaws. We have affidavits from Mediant stating that commencing on May 2nd, 2022, each stockholder of record at the close of business on April 25th was sent a notice of this meeting, along with instructions on how to access the materials. Our inspector of elections has examined the proxies received and reports that holders of stock representing a majority of the voting power of all shares of stock issued and outstanding and entitled to vote at this meeting are present at the meeting or represented by proxy. Therefore, a quorum is present, and we may proceed with the business portion of our meeting.
Voting is available via virtual meeting platform for those of you joining the meeting. The polls are currently open and will remain open for the duration of this portion of the meeting. If you already submitted a proxy using the company's proxy card or by phone or via the Internet, or if you submitted voting instructions to your broker, bank, or other nominees and do not intend to change your vote, then you do not need to vote now. If you have not voted yet or wish to revoke your proxy and change your vote, then please feel free to click the Vote button on the virtual meeting platform to submit your vote. As part of the login process, you should now have two tabs open in your browser, one for watching and one for voting.
You can click to the other tab to vote while the meeting continues to play here. I want to let you know that voting is going to close right after we present Proposal 3. If you want to vote and have not done so yet, you should start voting now while the proposals are being presented. There are three items of business to be brought before our stockholders today. Each proposal is presented in the company's proxy statement that we filed with the Securities and Exchange Commission on May 2nd, 2022, and I will provide a brief overview of each now. The first proposal is the election of three Class I Director nominees to serve until the 2024 annual meeting and until their respective successors are elected and qualified.
Our Board of Directors has nominated and recommends the election of the following Class I nominees: Paula Loop, Dara Treseder, and Robert Zoellick. There were no nominees under our advance notice bylaw, and therefore, the nominations are now closed, and this proposal is properly before the meeting. The second proposal is a non-binding advisory vote to approve the frequency of future say-on-pay votes. As further described in the proxy statement, stockholders are being asked to vote on whether future say-on-pay votes will be conducted annually, every two years, or every three years. Our Board of Directors recommends this vote occur on an annual basis. This proposal is now properly before the meeting. The third proposal is to ratify the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for our fifth 2022 fiscal year, which is the fiscal year ending December 31, 2022.
Although EY does not have a wish to make a statement, Mr. Outland and Mr. Tomback are available to respond to appropriate questions. As further described in the proxy statement, Robinhood's audit committee, which is composed entirely of independent directors within the meaning of the SEC rules and Nasdaq listing standards, is directly responsible for appointing the accounting firm for the company and has appointed EY to serve in that capacity for 2022. Our board recommends that the stockholders ratify the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for our 2022 fiscal year. There being no other proposals, we will provide a few moments for those attending the meeting to submit their votes via the virtual meeting platform. If anyone is still voting, please submit your ballots now. It is 9:09 A.M., and the polls are now closed.
Thank you, everyone, for your participation. The Inspector of Elections has provided the preliminary voting results to share with stockholders at the meeting. We will file a Form 8-K with the SEC within four business days to report the final results and the board's decision on the frequency of future say-on-pay votes. The preliminary voting results are as follows. The three Class I Director nominees for election to the company's Board of Directors have been elected. Stockholders have voted on an advisory basis for future say-on-pay votes to occur on an annual basis. The appointment of Ernst & Young LLP as the company's independent accounting firm for our 2022 fiscal year has been ratified. On behalf of the Chair, I now declare the business portion of the 2022 annual meeting of stockholders adjourned. I'm happy to turn things back over to Mary Elizabeth.
Thank you so much, Christina. I'd like to remind everyone that today's meeting will contain forward-looking statements about our strategic and operational plans. Actual results could differ materially from our expectations. Potential risk factors that could cause differences are described in our quarterly report on Form 10-Q for the quarter ended March 31st, 2022, and in our other SEC filings. Today's discussion might also include non-GAAP financial measures. Reconciliations to the GAAP results we consider most comparable can be found in the earnings presentation on our investor relations website at investors.robinhood.com. Now I have the privilege of welcoming back our Co-Founder, CEO, and President, Vlad Tenev, for a conversation about our company and business.
Thank you. It's good to be back.
Yeah. We're really excited to be here today. I think, you know, it's safe to say that most people are familiar with the public story of Robinhood in 2021, the meme stock phenomenon in January, the DOGE rally, and our IPO in July. Could you share with us a behind-the-scenes look at your main takeaways from 2021? Like, what did Robinhood accomplish?
Yeah. If I look at 2021, I could kind of break it down into three distinct time periods. As you mentioned, there was early 2021, which was us dealing with the meme stock events and the DOGE rally. Then in the middle of the year, we went public, so preparing for operating like a public company and going through that transition. The latter half, which was really getting the product engine humming and building upon the foundation of being a public company and resilient company to prepare us for what we're doing this year. A lot of learnings. I think the first part of the year when we went through GameStop, and we dealt with unprecedented scale.
Mm-hmm.
It really, for me, crystallized the values of the company. I spent a lot of time actually with the leadership team, putting them on paper, putting them on our website, making sure we clearly communicate to customers what they are, and we clarified that there were four of them. Robinhood's a safety-first company. We care about the reliability of our systems and the safety of our customers' money. We care about letting everyone participate in the stock market and being available to as many people as possible. We have radical customer focus, so listening to our customers, spending time with them, understanding their needs, and building for them. Then what we call first principles thinking, our fourth value, which means that we have to innovate for our customers.
We have to push the industry forward, and you've seen that with our calls to improve the settlement process and earlier this year when we announced that we wanna make the markets 24/7 around the clock and untether the markets from East Coast American working hours. That was the first part of the year. Going through the transition as a public company in the middle of the year was another foundation-building moment for us. You know, we had to continue to raise the standards with which we operate and make sure that we actually improve and get better through that transition.
I'd say one of the things that I kept hearing when we were going through that was, you know, going through an IPO is going to distract you from your business and from your customers, so you better actually go through it as quickly as possible so you can get back to running your business. That wasn't good enough for us. We wanted to actually go public in a way that brought our customers along and share the journey with them. We built a product called IPO Access, which we launched a few months before our own IPO, and that allowed retail shareholders to actually participate on a level playing field with institutions and get in on IPO companies at the IPO price. Of course, we made that available for our company as well.
We also did a retail roadshow, so we took questions from customers and spoke directly to customers. I'd like to think it was the most customer-focused IPO or one of the ones that I've seen that brought customers along. The latter half of the year, it's really when we started accelerating our product velocity. You saw 24/7 phone support being rolled out across all issues. You saw ACATS in and crypto wallets, so just features that are beyond scalability and performance, but things that customers had been asking us for a very, very long time, so we were proud to start getting those out and making them available to our customers.
Yeah. Yeah. Wonderful. This has been a difficult market for customers. With high inflation and rising interest rates and a down market have dampened some of the enthusiasm that we saw last year. How is the business responding to this change in reality, and how has it changed your how you operate?
Yeah. Well, I think about it from two perspectives. The first perspective being from how it affects customers, the second being how Robinhood has responded and how it is responding. I think from the first one, it's interesting because what we're seeing is kind of a complete reversal from the environment in, say, mid-2020. I don't know if any of us could have predicted that there'd be such a sharp policy reversal. We're seeing inflation at a 40-year high. We're seeing gas prices very high. You know, people are straining to pay for their gas, and that's exacerbated by the conflict in Eastern Europe, of course.
You're seeing the Fed actually reversing the course from 2020 and 2021, and rather than keeping interest rates low and providing stimulus directly to the people, increasing interest rates and trying to stabilize inflation. It's been a volatile environment with people's finances, and it's led to them having just less money available to invest. More of their money is tied up in kind of their basic needs. The way that we've responded to that is trying to roll out more products that help them generate more yield.
We have a great product that gives customers high yield on their uninvested cash and other products in addition to making the trading platform better and higher quality for them, like Stock Lending, which gives them yield on the stocks that they're holding without having to trade them. We think there's an opportunity to help people not just when they're investing, but also earlier on with their most basic needs. Cash Card, the Robinhood Cash Card with rewards, another example there. As a business, it's really an opportunity for us to be even more resilient. We've shown that the business can be incredibly successful during times when the market is going up and interest rates are low.
This is a new environment for us, but I firmly believe that if we actually demonstrate excellence in this environment as well as in bull markets, that's a necessary step to building a generational company. We focused on things that, you know, perhaps were less important to us back in 2020. We're focusing on cost discipline and making sure that we scrutinize all the ways that we're spending money to make sure that they're on the most important things that help our customers and that we're really prioritizing key initiatives. We're becoming more efficient. Robinhood, from the very beginning, has emphasized efficiency and doing more with less. Now it's a big area of focus.
Of course, spending time investing in the core of the business and making sure that customer support, service reliability, and the functionality that our most active, engaged customers are expecting for us is available to them. You know, coming through this, we want the experience for our core customers to be flawless. That's something that I've been very excited to work on.
Wonderful. All right. Well, looking forward to 2023 and beyond, what are some of the things that you're most excited about?
Yeah, there's a lot of things that I'm excited about, but if I can pick three things.
Yep
One of them would be expanding the brokerage business beyond self-directed into more passive long-term investing. We're starting that this year with retirement accounts, but we see an opportunity to go beyond retirement and actually serve customers ranging from self-directed all the way to customers who need a little bit more hand-holding with their investments. We've planted some seeds there. We have the ability for customers to do recurring investments and dollar cost averaging across crypto and stocks. We've built a system for first trade recommendations so that people can, if they want to answer a set of questions, we can suggest a set of ETFs for them to invest in, and then IRA accounts and tax-advantaged accounts. Building upon that, we think we have the ingredients for a great mobile first passive offering.
We can actually take what we're really good at, which is great design, low costs, and great accessibility to newcomers and help people not just who are self-directed, but who would like a little bit more help. That's on the brokerage side. International, we see a lot of potential there. We've talked a lot about how, you know, despite the growth in net funded accounts and how important Robinhood has become in the past couple of years, Robinhood's still available only in the U.S. There's people all over the world that could use our help in managing their finances and investing their money. Our service, since it is low cost and mobile first, is perhaps even more useful to people around the world.
We announced that we had signed an agreement to acquire Ziglu, which is a British company that focuses on kind of neo banking and crypto features. You know, we're excited to work with that team upon approval of the acquisition to make our services available in the UK and Europe and the rest of the world and beyond. The third area obviously is crypto. I know crypto markets have been volatile recently. They haven't been spared by the overall sell-off. What's interesting about the technology is we actually see it permeating and kind of integrating with traditional finance more.
Mm-hmm.
I've said this a lot before that, it's like a new operating system for financial services. There's the potential to make the things that everyday finance requires more efficient and easier and replace people with technology and software. That's what we're all about. If we can lower costs and we can leverage new technology to provide better pricing and more value to customers, we think that that's where the future is, and we'd like to do our part to accelerate that.
Yeah. All right. Well, thank you so much, Vlad. Now I'd like to take some questions submitted and upvoted through the Say Technologies prior to the meeting. We're excited to address what's on our stockholders' minds. Let's dive right in. Our first question is from Stuart L., who asks, "I have 3,000 shares of HOOD and down about $50,000. I'm sure many others are down. Will you and can you avoid bankruptcy and how?
Oh, thanks for the question, Stuart. We appreciate your support of the company. I think it's important to note that there's a big difference between the stock price and the financial health of the company. Now, I'm not gonna sugarcoat it. The environment has been tough. A lot of companies have been hit by the broader sell-off, and certainly we're not an exception. Now the important thing is we should share that we have a healthy balance sheet. We have a great position to weather the near- term with a clear focus on actually continuing to innovate and invest in the long- term as well.
Mm-hmm.
Balance sheet has over $6 billion in cash. Moreover, I've challenged the team to achieve EBITDA-adjusted positive profitability by the end of the year. We're not just focusing on long-term initiatives, we're also not relying on that $6 billion of cash, but we wanna make sure that we improve the company, control our costs, and increase revenue to the point where we're in a position to be sustainable in this environment. We're very confident in our ability to get there.
Great. Our next question comes from Cody C., who asks, "Can you talk about how the CEO took home $796.12 million in 2021 when the stock is now down over 80% year to date? Are shareholders really in the best interest?
Yeah. Thank you for the question, Cody. The intention of my compensation, as decided by the board, is to align as closely as possible with the long-term interests of the company and shareholders. I think a lot of times the numbers and the headlines can be sensationalized in the press. If you look at how that grant is actually structured, the awards vest upon achievement of aggressive share price targets. The vast majority of that compensation is only achieved when Robinhood gets to the $100 per share. The top price target, I think, is $300 per share over the next seven years. The goal is actually to incentivize me to very, very strongly deliver results for the company and for shareholders.
All right. Hello to Moosa M ., who asks, "What's the plans of increasing profitability?
Sure. Yeah, thank you for the question. I touched on this a little bit earlier. I challenged the team to get us to adjusted EBITDA profitability by the end of the year. It's gonna really take two things. One is, of course, a leaner operating model and making sure we control costs and get more efficient wherever possible. It's also gonna involve improving our products and services. That's both, as I mentioned a little bit earlier, making the experience as awesome as possible and solving the pain points of our most engaged core customers, but also delivering new products that will aid in giving customers value while also diversifying our revenues over time. Cash Card is one example, Stock Lending is another example, and making investments in sort of more passive services like retirement as well.
We've got a question from Paul W. who asks: Will there be any incentives for holding a certain amount of HOOD, such as Gold access with no charge?
Yeah, that's an interesting question. I think it's important to note that Robinhood is a regulated company, and I think the rules around that specifically, rewarding customers, for holding HOOD stock, there's a lot of restrictions around that. But we're certainly looking at making Robinhood an even better place for our best customers, our Gold customers, and improving the product experience. We'll actually look into it. I'm not exactly sure if it's come up before, but maybe there is something to do there.
Next up, Sean M . Who asks: Can you tell us anything regarding acquisition rumors?
Yeah. The goal when Baiju and I started the company was to build a category defining large independent company, which is now public. As I look ahead, there's so much more to do. We're still only in the U.S., we have a great investing product, but it's predominantly serving newcomers and more active investors, and we just released our Cash Card with the ability to earn rewards on your spend. There's a lot to do. We're excited by the opportunity. We've never been more confident in our ability to deliver, and we believe that we can do that best as a strong independent company.
Now, of course, on the other side of the spectrum, we're gonna continue to look at opportunities, especially in this environment, to leverage our balance sheet and see if there are other companies that could join us in accelerating our mission.
Wonderful. All right. Next up, question from Giovany T. Giovany asks: Can you give us an update on Robinhood's global expansion?
Sure. Global expansion is very important for us, Giovany. Last quarter, we announced our intention to acquire Ziglu. There's a regulatory process to go through before we can close the deal, which is still planned for the end of the year. We look forward to that. We're excited about delivering on our mission to democratize finance for all, not just those in the U.S., and I think there's a huge opportunity, and you'll see us do more and more in the coming years for this.
Wonderful. Our next question comes from Jonathan G., who asks two questions. One, what is Robinhood working on to keep current users and/or bring new ones into the brokerage? Two, what is Robinhood's plan on stock buyback?
Sure. Thanks, Jonathan. First question, retaining our customers and growing our platform are key areas of focus. One of the new things that I touched upon a little bit, but we have an even stronger focus given the current market environment, is making sure that our core customers, in particular, the most engaged advanced ones, have an awesome experience with the product. And we think that helps other customers as well, not just the most advanced ones, but the customers that are trying it out and maybe running into the same sorts of issues, but less frequently. On the new product side, I've talked a little bit about the Cash Card and going international.
We think that both of these things, along with several other products, have the potential to increase our market and bring more new customers to Robinhood.
Jose B. asks: Can we expect some kind of dividend tracker?
Thanks for the interest. You know, while I won't comment on the roadmap beyond what we've outlined, I'll say that, as I mentioned before, one of our values is radical customer focus, and what that really means is we listen to customers, and we try to improve the experience for them. We're keenly aware of all the pain points that customers have, and we wanna solve them one by one and do that in a delightful way. For dividend tracker, I'm not sure. We haven't heard a ton of customers request that specifically, but we'll keep on the lookout and see if we can solve your needs as time goes on.
Wonderful. Anirudh G. asks: User growth has been significantly declining. What are Robinhood's plans for sustained user growth? Overall marketing strategy?
Yeah, absolutely. I touched on user growth a little bit earlier. It really comes down to the same two things. One is improving our products so that our customers are happier with them, happier with the service they're receiving from Robinhood, and they're telling all their friends about it. The second really being rolling out new products and services that open up the door for new types of customers to engage with us in different ways. In terms of how we think about marketing, we wanna balance cost efficiency with making sure our new products and our platform are properly supported. The best type of marketing that we've found in the past is driven really by love of the products and satisfaction with our products.
That's where we wanna start, making sure that our products serve the needs of their customers better than anything else on the market.
Yeah. Andre G. asks: When will you start accepting IRA accounts?
Well, this is something that we're very, very excited about. We've shared in the past that allowing customers to invest in a tax-advantaged way have been a key focus for us this year. The teams have been hard at work. They've been making great progress. We're excited to roll this out later this year, and we think customers will really love it.
Wonderful. Well, we're really excited about this. Any last words, Vlad?
I just wanna thank you all for participating in the annual meeting and for being a Robinhood stockholder. There's a lot more that Robinhood has in store throughout 2022, and we're excited to share it with you. Have a great rest of your day.
Thank you.
Thank you.