Jason Warnick: Fully paid is 1.5 million. Cash card, offhand, it’s a couple hundred thousand, I think, that are funded and about a million that have signed up. And I think the X1 acquisition really doubles down on the spending strategy. We want Robinhood to be a place to handle all of our customers’ critical financial needs. And we want them to be able to spend with debit cards or credit cards really at their choice. And so, X1 and the cash card I think are a nice complement to each other.
Operator: Our next question comes from the line of Ben Budish from Barclays.
Ben Budish: I wanted to follow up on actually Mike’s question from earlier on X1. Jason, you mentioned in the prepared remarks that I think there’s some credit – some interest income expected to come. And that’s related to X1. Can you maybe talk about the revenue profile you’re expecting for Robinhood between interest income and interchange revenues? And how much credit exposure does Robinhood sort of take on with the acquisition?
Jason Warnick: The comments I made in the prepared remarks is that we expect interest income kind of, all in, including X1, to increase sequentially in the zone of about $15 million. So, X1 was a part of that. When I think about the geography for revenues for X1, you’ve got the interest income that you earn on revolving credit. That’s offset by the cost of funding and presented net for interest income. You’ll have some interchange revenue, but our accounting conclusion on that looks to be – that it’ll be netted with the rewards costs. So, that’ll be in transaction based revenue, but presented net. So, that’s kind of the accounting overlay for X1. In terms of the possibility, X1 has 80,000 cardholders at the time of the acquisition.
We have 23 million customers that have a very nice credit profile. And I think, over time, we can make some strategy decisions that will make credit really broadly available to our customer set, regardless of their background. So I think there’s a big opportunity, and I’m excited to see the team work against that.
Vlad Tenev: I would just add that one of the reasons we got excited about acquiring this company and this team versus pursuing kind of the traditional partnership credit card model is that if you think about X1, we do have access to both transaction based interchange revenue and also the kind of more recurrent sticky lending revenue. And this gives us an opportunity to build a diversified business and offer differentiated value to customers because we have access to a much greater percentage of the overall profit pool than we would under a kind of your typical co-brand partnership model, which tends to be more one time bounty based, coupled with the interchange revenue share.
Operator: Our next question comes from the line of Craig Siegenthaler from Bank of America.
Craig Siegenthaler: My question is on the UK brokerage launch. So I’m curious how you’re going to monetize this effort as the PFOF rules are different in the UK than in the US with payment for order flow ban.
Jason Warnick: We’re mindful of the regulatory environment in all the geographies that we operate in. What I’d say is there’s a number of revenue streams that are available for us. The team is still working out the details there, but certainly sec lending and interest income. So there’s a number of ways. We do in the US have a Gold offering. I think there’s a good potential for this to be an attractive business on a unit economic perspective with or without payment for order flow.
Vlad Tenev: And a big focus for us has been, since we are a technology company, expanding internationally in a capital efficient manner without sort of excessive investments in headcount.
Craig Siegenthaler: I know you don’t reported exactly this, just curious also on the high level trends in both cash equities and equity options on the revenue per trade trend in the second quarter of 2023 versus the same period last year.
Jason Warnick: On options, we are seeing kind of across the industry that the take rate on options trading has been coming down. This is really reflective of the overall lower volatility in the market, and also a shift that’s been seen kind of industrywide on a greater share towards ETF options. And so, for the quarter in Q2, the take rate was $0.45. That was the average for the quarter. It did come down as we progress through the quarter. And it’s bounced back up in July slightly versus June to about $0.42 per contract. So, that’s what we’ve been seeing there. And we’ve been keeping an eye on it.
Operator: At this time, I would now like to turn the conference back over to Vlad Tenev for closing remarks.
Vlad Tenev: Thank you, everyone, for joining us today. And we’re very excited to continue innovating, delivering for customers. Thank you again for all the questions.
Jason Warnick: Thanks, everyone.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
