Robinhood Markets (HOOD) risk factors, 2025 10-K

Risks Related to Our Business

1. 01We might not grow in line with historical rates
2. 02We have expanded and continue to expand our operations rapidly, including continuing to introduce new products and services on our platforms as well as geographic expansion, which subjects us to a number of uncertainties, risks, and difficulties that could adversely affect our business
3. 03Our results of operations and other operating metrics fluctuate from quarter to quarter, which makes these metrics difficult to predict
4. 04In most full year periods since our inception, we have incurred operating losses and might not be profitable in the future

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

1. 05We are directly and indirectly exposed to fluctuations in interest rates, and rapidly changing interest rate environments have in the past and could in the future reduce our net interest revenues and otherwise result in reduced profitability
2. 06As 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
3. 07We 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
4. 08Unfavorable 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
5. 09brand and reputation, such as public complaints and unfavorable media coverage about us, our platforms, and our customers, even if factually incorrect or based on isolated incidents
6. 10We could incur substantial losses from our cash and investment accounts if one or more of the financial institutions that we use fails or is taken over by the FDIC
7. 11Our business has been and might continue to be harmed by changes in business, economic, or political conditions that impact global financial markets, or by a systemic market event
8. 12Our 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
9. 13Future 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
10. 14We currently operate in certain international markets and plan to further expand our international operations, which exposes us to significant new risks, and our international expansion efforts might not succeed
11. 15We are exposed to funding transaction losses due to reversals or insufficient funds
12. 16Our working model, which allows a subset of our employees to work remotely, subjects us to heightened operational risks

Risks Related to Regulation and Litigation

1. 17Our 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
2. 18Broker-Dealer and FCM Regulations
3. 19Money-Transmitter Regulation
4. 20We 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
5. 21Previous 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
6. 22We 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
7. 23We 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

Risks Related to Attracting, Retaining, and Engaging Customers

1. 24We 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
2. 25If 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
3. 26If 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

Risks Related to Our Platforms, Systems, and Technology

1. 27Our products and services rely on software and systems that are highly technical and have been, and may in the future be, subject to interruption, instability, and other potential flaws due to software errors, design defects, and other processing, operational, and technological failures, whether internal or external
2. 28Our 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
3. 29We 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
4. 30We are incorporating AI technologies into some of our products and processes. These technologies may present business, compliance, and reputational risks
5. 31to expand our business. For example, EU’s AI Act, which became effective on August 1, 2024, governs the development, marketing and use of AI in the EU and could impose significant additional costs on us to comply or significant fines for failing to comply

Risks Related to Cybersecurity and Data Privacy

1. 32Our 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 or fourth-party service providers

Risks Related to Our Brokerage Products and Services

1. 33If 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
2. 34Our 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
3. 35We are subject to potential losses as a result of our clearing and execution activities
4. 36Our exposure to credit risk with customers, market makers, and other counterparties could result in losses
5. 37investment education tools could subject us to additional risks if such tools are construed to be investment advice or recommendations

Risks Related to Cryptocurrency Products and Services

1. 38unable to trade their cryptocurrency, our reputation and business could be harmed, and we might be liable for losses in excess of our ability to pay
2. 39investors 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 might slow or decline, which would negatively impact our business, financial condition, and results of operations
3. 40Volatility in the values of cryptocurrencies caused by the factors described above or other factors might 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
4. 41In the United States, 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 might be subject to regulatory scrutiny, investigations, fines, and other penalties
5. 42Cryptocurrency 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 platforms
6. 43Our Crypto Transfers, crypto staking, Robinhood Wallet, and Robinhood Connect features 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
7. 44A temporary or permanent blockchain “fork” could adversely affect our business
8. 45certain community members might take actions that adversely impact the use, adoption and price of Bitcoin, Ethereum or any of their forked alternatives
9. 46Any inability to maintain adequate relationships with third-party banks, market makers, exchanges, and liquidity providers with respect to, and any inability to settle customer trades related to, our cryptocurrency offerings would disrupt our ability to offer cryptocurrency trading to customers
10. 47From time to time, we might encounter technical issues in connection with changes and upgrades to the underlying networks of supported cryptocurrencies, which could cause revenues to decline and expose us to potential liability for customer losses

Risks Related to Our Spending and Payments Products and Services

1. 48Our spending and payments products and services subject us to risks related to bank partnerships, FDIC pass-through insurance and other regulatory obligations
2. 49The offering of consumer credit cards through Robinhood Credit increases our exposure to customer defaults and credit risk and could result in losses
3. 50Use of our spending and payments services for illegal activities or improper purposes could harm our business

Risks Related to Our Intellectual Property

1. 51Any failure to obtain, maintain, protect, defend or enforce our intellectual property rights could adversely affect our business
2. 52We have been, and might 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
3. 53Our use of third-party software and other intellectual property rights might 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
4. 54Some 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

Risks Related to Finance, Accounting and Tax Matters

1. 55Covenants 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
2. 56Our insurance coverage might be inadequate or expensive
3. 57Changes in U.S. and foreign tax laws and policies could adversely impact our tax liabilities
4. 58Our ability to use our net operating losses to offset future taxable income could be subject to certain limitations
5. 59Our tax information reporting obligations are subject to change
6. 60We track certain operational metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics could harm our reputation, adversely affect our stock price, and result in litigation
7. 61If 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

Risks Related to Our Class A Common Stock

1. 62The trading price for our Class A common stock has been and might continue to be volatile and you could lose all or part of your investment
2. 63Substantial future issuances or sales of shares of our Class A common stock in the public market could result in significant dilution to our stockholders and such issuances or sales, or the perception that they may occur, could cause the trading price of our Class A common stock to fall
3. 64Certain provisions in our Charter and our Bylaws and of Delaware law as well as certain FINRA rules might prevent or delay an acquisition of Robinhood, which could decrease the trading price of our Class A common stock
4. 65a premium for their shares of our Class A common stock and might also affect the price that some investors are willing to pay for our Class A common stock
5. 66The 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