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United States securities and exchange commission logo
February 1, 2024
Vladimir Tenev
Chief Executive Officer
Robinhood Markets, Inc.
85 Willow Rd
Menlo Park, CA 94025
Re: Robinhood Markets,
Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2022
Form 10-Q for the
Quarterly Period Ended September 30, 2023
File No. 001-40691
Dear Vladimir Tenev:
We have reviewed your October 19, 2023 response to our comment
letter and have the
following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your response to this letter, we may have
additional comments. Unless
we note otherwise, any references to prior comments are to comments in
our September 21, 2023
letter.
Form 10-K for the Fiscal Year Ended December 31, 2022
Robinhood Crypto, page 7
1. We note your response
to comment 2 and reissue the comment in part. Please provide a
materially complete
description of custodial solutions in future filings.
Describe the
geographic location of the facilities where the crypto assets are held in
cold wallets.
Additionally, describe the security precautions you take in controlling
access to crypto
assets you custody in cold wallets. Your disclosure need not identify
specific places or
individuals but should provide investors a sufficient basis to assess
the potential risks
associated with your custodial services;
Disclose the crypto
asset, custody, transfer, and settlement operations managed by
your third-party
provider and describe the technology used by the vendor. In your
revisions to
disclosure related to your third-party vendor, describe the industry
standard for
maintaining private keys and any deviations thereto in your agreement
Vladimir Tenev
FirstName
RobinhoodLastNameVladimir Tenev
Markets, Inc.
Comapany1,NameRobinhood
February 2024 Markets, Inc.
February
Page 2 1, 2024 Page 2
FirstName LastName
with the vendor;
If true, disclose that only your internal audit and compliance
teams are responsible
for verifying the Company s crypto asset holdings and that no
independent entity,
including your auditor or insurance provider, has the right or
responsibility to inspect
or otherwise verify the accuracy or existence of the crypto
assets you custody;
Describe how the omnibus wallets function, how records of
customer accounts are
maintained and how disputes among customers to the assets in the
wallets are
resolved. Refer to your disclosure on the top of page 116 that
"[b]ased on the terms of
[y]our user agreement and applicable law, [you] believe the
cryptocurrency
[you] hold in custody for users of [y]our platform...should not
be available to satisfy
the claims of [y]our general creditors." Disclose whether you
have obtained an
opinion from counsel in this regard and include related risk
factor disclosure; and
Describe any circumstances where a customer's crypto assets may
be comingled in a
hot or cold wallet with the crypto assets of another customer, of
yours or of any other
party.
Item 1A. Risk Factors, page 19
2. We note your response to comment 12. Please disclose how your
Enterprise Risk
Committee and management assess the Company s risk profile and
identify and analyze
material risks with respect to Robinhood Crypto's business and
describe any changes you
have taken to address identified risks, gaps or weaknesses.
The loss, destruction or unauthorized use or access of a private key..., page
48
3. We note your response to comment 14 and reissue in part. Please revise
to quantify your
insurance coverage in order to provide appropriate context for the
disclosure that your
insurance coverage for such events is limited and might not cover the
extent of loss.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Factors Driving Our Performance, page 76
4. We acknowledge your response to comment 5. Please confirm for us that
all your users
pay you fees. In this regard, it is clear from disclosure on page 8
that Robinhood Gold
users pay you a flat monthly rate but from disclosure on pages 84 and
74, Robinhood Gold
users in 2022 were only 1.1 million of your 23.0 million net
cumulative funded accounts
and 11.4 million monthly active users. If so, represent to us that you
will revise your
disclosure of users of your products in your Business section of
future filings to clarify
that all users pay fees and describe those fees. If not, tell us the
number of users in each of
the periods presented in your Form 10-K and latest Form 10-Q that pay
you fees or other
consideration versus those users that do not pay fees and explain to
us why the number of
users who pay no consideration and are not customers under ASC 606
does not necessitate
the disclosure previously identified on pages 1 and 126 of your
initial public offering
prospectus.
Vladimir Tenev
FirstName
RobinhoodLastNameVladimir Tenev
Markets, Inc.
Comapany1,NameRobinhood
February 2024 Markets, Inc.
February
Page 3 1, 2024 Page 3
FirstName LastName
Comparison of the Years Ended December 31, 2022 and 2021
Revenues
Net Interest Revenues, page 82
5. We acknowledge your response to comment 6. As indicated in our
previous comment,
simple averages assume straight-line increases or decreases in
balances which rarely
occurs. It is evident from your filings and response that the yields
based on simple average
can be significantly different than the yields presented on the more
granular averages of
month-end and quarter-end balances. As a result, please represent to
us that in future
Forms 10-K and 10-Q, you will calculate the average balances (and thus
yields) based on
the month-end balances in the relevant periods presented in those
filings and revise the
equivalent of footnote 4 to your yield table to clarify that the
average balances are based
on month-end balances. We note that month-end balances are readily
available without
unwarranted or undue burden or expense.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk, page 94
6. We acknowledge your response to comment 7. Please address the
following additional
comments:
It is unclear from your proposed revised disclosure how a
hypothetical 100 basis
point change in market interest rates applied to only your period
end balances could
have a 10% impact at December 31, 2022 on total net revenues,
income and cash
flows "over the prior annual period." Tell us, in the context of
your proposed revised
disclosure at December 31, 2022:
o Whether the "prior annual period" refers to the year 2022 or
2021;
o How a unilateral change at a point in time (i.e., December
31, 2022) can have an
impact on historical total net revenues, income and cash
flows, accounts that
reflect activity over time;
o Whether your 10% impact in 2022 relates to a hypothetical
unilateral 100 basis
point change in interest rates over the entire year of 2022;
and
o Whether you are projecting 2023 activity based on December
31, 2022 balances
at the 100 basis point hypothetically changed rate and
comparing those future
2023 results to those in 2022.
Explain to us how any hypothetical 10% change in total net
revenues can also have a
10% change on both income (presumably net income) and cash flows
(presumably
operating cash flows) if the starting point is different. For
example, using information
for the year ended December 31, 2022, a 10% increase in total net
revenues of $1,358
million would be about $136 million. Such an increase in total net
revenues would
represent about 13.2% of reported net loss of $1,028 million and
about 16.0% of
reported net cash used in operating activities of $852 million. In
your response, tell us
whether there are incremental expenses (like perhaps income taxes)
that impact
income and cash flows and, if so, identify and quantify those
expenses for us.
Vladimir Tenev
Robinhood Markets, Inc.
February 1, 2024
Page 4
Further, tell us how your response aligns with your net interest
revenue activity and
year-over-year changes as disclosed on page 83 of your 2022 10-K and
your response
to prior comment 6. Refer to Item 305(a)(1)(ii) and (a)(3) of
Regulation S-K.
Notes to the Consolidated Financial Statements
Note 1: Description of Business and Summary of Significant Accounting Policies
Segment Information, page 109
7. We acknowledge your response to comment 8. Please represent to us that in
future filings,
you will revise your disclosure here or elsewhere, as appropriate, to:
Describe the process you are undertaking to restructure to a general
manager business
unit structure;
Indicate that you currently have only a single operating segment
because your chief
operating decision maker (CODM) currently reviews only consolidated
information
to allocate resources and assess performance; and
The potential impact on segment reporting of finalized financial
reporting for each
business unit and related reporting to the CODM.
Legal and Regulatory Matters, page 145
8. We note your response to comment 11 and reissue the comment. To the
extent a specific
amount of damages is sought from the Company, please revise to quantify
that amount in
your disclosure. Refer to Item 103(a) of Regulation S-K.
Please contact Mark Brunhofer at 202-551-3638 or Michelle Miller at
202-551-3368 if
you have questions regarding comments on the financial statements and related
matters. Please
contact David Gessert at 202-551-2326 or Sandra Hunter Berkheimer at
202-551-3758 with any
other questions.
Sincerely,
FirstName LastNameVladimir Tenev
Division of
Corporation Finance
Comapany NameRobinhood Markets, Inc.
Office of Crypto
Assets
February 1, 2024 Page 4
cc: John Markle
FirstName LastName