All right. Hello everybody. Welcome back to another episode of Tech Bros. We are live. We got a lot to talk about. We just had Robin Hood earnings last week and uh it was quite the earnings and it's going to give us a lot to kind of analyze as we get through the numbers. We'll also talk some AI stuff, what's going on with Nvidia. But excited to be here again. Tanner Roy, how you doing?

>> Great, brother.

>> Doing awesome. Okay, I mean I think let's not waste any time. Let's just get right into Hood earnings. We got a lot to dive into. Got the presentation up before we get into the nitty-gritty numbers. Obviously, Hood did beat on the top of the bottom 1.27 billion. Big beat uh on revenue against the already elevated expectction expectations EPS. They beat by about 5%. Royal, I'll give it to you first. What was your raw reaction when you saw those numbers?

>> Um constant amazement. uh honestly like we go in knowing most of the numbers. Uh we go in having high expectations despite that and we go in usually being wrong on the low side and time and time again they just execute at an incredibly high level. Uh some of the numbers are just shocking. Like I won't get into the nitty-gritty but that was a very impressive report. uh despite us knowing almost everything about it. And of course they tease October numbers which were uh preliminary but look absolutely ridiculous.

>> Tanner, your thoughts?

>> Same sort of thoughts. I mean this is such an incredible business. I I think honestly I think of it this earnings similarly to Palunteers where expectations were set high but somehow they still come above expectations every time. Um, and if you're betting on a 10-year business, it's hard to not pay the premium now for the exceptional culture and growth going forward. So, for the long-term investors, Hood is really making sure people understand that they are the uh, you know, the company of choice going forward.

>> Yeah, I agree. And, um, I mean, we were trying to figure out could they get to 1.2 two billion and they somehow beat that which was just remarkable. And then they beat on EPS, they bought back their stock. I mean, there's a lot of things to get into, but overall I I think the the larger takeaway to me at least. Um I don't know, not everyone sees this, but does feel like a trillion's going to happen. I don't know when. I don't know how. I know JP Morgan's only at 800 billion, but I do think as they attack different verticals and you give them enough time to let the thesis play out, they're having another event in December around AI. like the product philosophy is getting to a point where yes, there will be bare markets. Yes, Hood will probably suffer during that time. But I think they're building the business to be able to withstand any macro, which is why it's also very exciting. It's why people that are trying to short it, you know, keep coming to these conclusions that like, wait a second, maybe Hood is is becoming more of a generational play, not just a cyclical play. And as a result, I think that one day is, you know, probably going to be closer to a trillion, but time will tell.

>> Yeah. I mean like this is one you know Tanner mentioned it you know uh generational betting over the long term you you mentioned one trillion as well you know I' I've seen since most of the the um fintech companies reported earnings there was a pull out that was today between three fints that I own including Robin Hood and one other that I don't all good companies is like which one would you bet on for here some people were making the argument from valuations like shortterm that that can make sense longterm bet on the generational companies And this is a generational company that just I mean if somebody doubts that don't look at the share price. I'm not saying you know that's not always the best judge although in this case it does match up. But look at what they've rolled out and how much they've evolved over the last two years. It is insane impressive. And then go look at their expenses. That's like it's just shocking. Uh

>> yeah it can I pose you guys a question? Um cash just went up quarter over quarter for the first time in uh many quarters. I don't know the amount. Um you know at least eight or nine quarters it's gone down. Do you guys think that they are going to make another acquisition here soon? They do say that they're going to continuously uh spend on organic growth M&A and shareholder returns. um what do you think that next M&A or or uh acquisition is going to be in like what what are they going to target for that next acquisition?

>> It's a good question. Do you have a guess? I don't.

>> Uh dude, they surp I mean did we really think they were going to get Bitstamp and then like I don't know. Uh what was the other one? um the AI name that I'm foretting

>> Wonderfy.

>> Oh, wonderfy.

>> Pluto.

>> Like I don't know. They find different verticals to get into. I I think the next acquisition I would like to see is obviously a new vertical and it's a vertical that would allow them to expand a new line of business. I I don't think they have to, you know, acquire a prediction markets because they already built one. But I have no idea. Yeah, it's a good question though, Tanner, because there is a lot of cash and you know, even if they buy back another 100 million of stock every quarter, there's going to be more than enough cash to do something with.

>> Yeah, my my guess and you you probably have something better is uh I think they will do acquisitions. It's it's always been part of their strategy. They have a very good understanding of exactly what they they can build. I mean, they can build pretty much anything, but what is a lot more creative to just go out and buy it or partner with somebody? So and they assimilate those really rapidly too. But um is something international uh international is you know that next question mark. Uh you know they did roll out and mentioned some more international in the breakout uh of the numbers this time but it's uh that's really I think what the market needs to see next year. So it makes sense. I know I know they have wonderfy uh but yeah maybe something in Europe or the UK um or possibly in Singapore that helps them you know even gain more traction there.

Yeah, I wouldn't have thought that they were going to do something like that until the acquisition of um Wonderfy, which they've already had some pretty good inroads with with crypto, but this actually put them in the certain licenses uh for Canada. So, honestly, what you said is probably the most likely outcome that it's some sort of international expansion play for licenses, just getting regulatory approval through purchase. But I do think they're going to make a uh prediction market uh M&A eventually. They're going to make an acquisition in prediction markets because 50% of their cost for predictions is going to to another player. That doesn't seem like Robin Hood. Like they just don't pay that high of fees for for a tech stack. They usually build it in house and they want to offer I think eventually they want to go headto-head with KHI and try to win. You don't see them partnering with Coinbase for crypto and like they want to do things themsel and and offer the best pricing and tech. I uh I don't know if they'll be a partner of call she's forever.

>> Yeah. And it might be with the way that call she's running. You never know. But that I don't know that they want to be bought out and it might be too late at this point. Poly market likewise as well. I I did a breakdown. It's been a few maybe like two months but as far as predictions market there are some other players there but you can see it's mostly just poly market and cowshi limitless is more of short-term type of trading myriad looked interesting but it was really small and so I don't know it it tends to be that Robin Hood will buy out something that's much smaller um at at a pretty reasonable price and then they'll actually scale it effectively which not every company can do. So we'll have to see if it's one of these others. There's a lot of private ones as well.

>> The thing about prediction markets is, you know, I don't know if you guys have noticed this, but they've never acknowledged Khi publicly as in they've talked about them when asked, but they've never put out a post. They've never done an interview with them. Khi has tweeted at them. They've never like retweeted that. Like, they've never made it a big deal to tell people that they're working with Khi. And I I think that goes to your point, Tanner. I don't know if they're going to try to replicate or do their own thing. I don't, you know, if I was the call she founder, I would have set up some serious non-competes when we got into the partnership. But then again, maybe the guy didn't have leverage. Maybe he just wanted the distribution. But they haven't fully expressed a lot of amicable words with Koshi, not because I don't think they like them, but I think to your point, they they might be trying to undercut them eventually.

>> okay so let's get into some deeper numbers. Uh there was a lot of slides to go through but I think we'll get started with this. Um Roy 20 billion in net deposits, highest net deposit rate ever. kind of your thoughts on the overall asset accumulation of the platform.

>> I mean the cool thing is this isn't just assets under custody that are growing which are substantial but are still dwarfed by you know somebody like a Charles Schwab. But like seeing the assets actually increase that's really really impressive. One of the things that I think that they'll target a lot of too when when the bank fully launches so a lot of people have access to it is going after people's direct deposit. Now that sounds negative but I mean they they will incentivize it. They'll be like hey we want you here. what here's all the benefits that comes from that and uh yeah the more deposits they can get on a regular basis I mean that just grows the platform over time gives it stability helps uh especially too when uh you do go through a cyclical time but yeah really really incredible um I didn't expect that much

>> yeah we um we talked about this before but I'm curious uh your thoughts emit because I think me and Roy talked about this on page Uh, it talks about their Yeah, this one the hundred million businesses that they have and Bitstamp is listed on there, but Bitstamp made them $16 million this quarter. So, how does that ramp to a hundred million and how are they calling this $100 million business if it's essentially a $60 million business for them right now?

>> Why are you saying it's 60 million? because they made $16 million this quarter.

>> But are they doing this on a trailing 12 months and that's why you know

>> Yeah, but they only acquired it since June and and

>> like I mean maybe they're looking just in the numbers that Bitstamp did in general and counting that and maybe there were some huge quarters. I guess that happened in Q4 but um

>> yeah. Well, I think I think the reason they're separating Bitstamp right here is because Bitstamp to them, I think, is going to be heavily rooted in institutional volumes and that is where they can offer a lot more services. I I think there was this interview of Vlad basically talking about everything they're doing for retail. They know they can offer it to institutions. The institutions have been asking for it, but they haven't really focused on it because they've been so focused on retail. So, maybe Bitstamp is where they start having more of a Coinbased institutional offering, not just for like trading volumes, but for other services. And that's why they're kind of saying that this deserves to be not just part of the crypto element of the business but rather you know a individualized 100 million annualized revenue business in and of itself.

>> Yeah. My my guess there was since it's institutional facing that they may know something about the next I mean I'm sure they do about the next couple of quarters it gets them over that uh to where they're not just saying well we might accelerate to that like that's not what this chart usually indicates for Robin Hood. So they they know something um is on the way and the typical modus operandi for Robin Hood is acquisition at a good value incorporate in the ecosystem and then you scale it and they've done that time and time again. They're going to do that with Bitstamp and it already looks like they are.

>> The other uh that you mentioned a bit on that interview, I'm not sure if it was the same interview or another one, Vlad mentioned that he foresaw a point where Robin Hood would actually have half of its revenue coming from international. That's that's a ways out. But I mean they have none right now. So that's pretty easy to value and chart like if you believe him. And looking at their execution, I'm not sure who doesn't.

>> Who who when did he say this?

>> Yeah, I think it was Bloomberg. Yeah. Yeah.

>> Wow. Wow.

>> And is that total revenue like that would include banking and credit cards and everything like just double this revenue going forward? That was before the bank uh launched, I believe. So, I don't know. That's a good question for Vlad.

>> Yeah, that's really cool.

>> I'm gonna see if I can find that clip as well. But, but yeah, I mean, look, if the institutional part of the business along with the international part of the business starts to become a much bigger issue than just retail in the States, I mean, that's where I think the verticals are really there for them to be able to expand. What what did you guys think of these transaction volumes? I mean, obviously they were pretty massive. 730 I think was the most they've ever done in transaction based revenues. Um options crypto was a little bit light. Equity was 86 million. I think that's the highest they've had in years. Options at 304. Like do we do we like it? Do we think it's sustainable? I mean do we think the higher net worth accounts are coming over and trading more or how are you guys thinking of all this volume right now?

I I think it'll grow slowly over time. U but it's going to be very lumpy and so we're going to see a lot of quarters like that where it's a super heated bull quarter and then some that where it's a little bit lighter especially in the crypto side too. Um but yeah over time I mean more people trading more assets under custody makes sense. Um the I think the net interest income is actually a lot more sustainable and less cyclical than expected despite the rate cuts which um there's a couple analysts that are pointing that direction too.

>> Yeah. You you look to Schwab their average assets per customer is like $35,000 versus Hood's 12,000 and they only have I think 10 million more members. So the room for um I think datadriven investing pointed this out to me where he said like you know why is per user uh assets under management growing so much faster than user but I actually think that's going to be the case going forward like there is just so much more room for assets per customer to grow than per user and um I'm just like realizing whenever you look at hood although the the the the valuation is kind of you know expecting a lot of that growth. There still is so much future growth to come and wait like like that's even on the active trader side like like where they make a lot of their money. Imagine if they start going after like really high frequency traders and and options players and really try to go after the the Tasty Trade users. That's where a lot of the money is going to be. and and Tasty Trade is still winning users away from Hood and I just don't think Vlad will continue to put up with that and clearly I think they have an A+ engineering team and I think they'll go up against any single person that they set their uh you know sort of focus on in fintech.

uh opex not too crazy compared to their revenue growth gap net income I mean this is just crazy 556 million on 1.2 2 billion in revenue. The operating I I I guess Tanner, can you speak to a little bit of their operating leverage and where do you think that's going over the next year as well?

>> Well, I don't think it's going anywhere but up. Uh because none of this is really uh one-time benefits. I mean, you're going to see the tax rate go up uh over time as they, you know, continue to scale. But aside from that, this is just because their tech stack is not based on a bunch of subscriptions from other tech companies that they're paying, you know, high SAS margins on. They built it in-house and so they don't have to pay other uh, you know, tech providers. In fact, they probably have just recently stepped away from Galileo. They're probably going to end up building their own payment processor as they realize that payments is becoming a larger part of their business. So, I don't know. They have the tech talent and that allows them to build in-house. You're going to constantly see them be at the top of the rung for margins and that's what allows them to have by far the best pricing and no one can even compete. By the way, SoFi, it just came out today that uh SoFi is going to have the uh um crypto trading uh fees at 1%. So they are coming out of the gate swinging more expensive than Robin Hood.

>> If you're paying 12% of Schwab for margin and Robinet's giving it to you for five or 4.75, dude, I think that's why they're bring they did 153 million in revenue off margin. They did like 114 last quart. I mean, it's just crazy. But it's like bigger accounts are choosing to save a lot of money by going to Hood. I I saw that you pulled up the rule of 40 uh chart which continues to climb up to the right. This is originally of course Palanteer's graphic uh mentioning that because I know you wouldn't know what it is but some might not and Nvidia's right over here. Palanteer's right over here. I believe that this was uh of the um I think it's the top 40 businesses that are uh weighted over a certain amount. I don't remember what it is exactly, but Palanteer is ridiculous. Robin Hood like 131%. not like the best comp and everything, but I mean fintech is increasingly going after the rule of 40 and Robin Hood just dominates that. So that's uh Joshua's graphic by the way. He updated

>> by the way I mean it in the nicest terms whenever I say that Vlad's a sicko. What I mean is like I feel like he he shows a lot of these Jeff Bezosesque qualities where he will just fight, you know, with everything he has to make sure that he has the best product. And if there's any company that wants to compare one to one on pricing versus Hood, Hood will end up just lowering their prices. Not so like like even in deposit, Hood always says they want to be in the top 10 or sorry, SoFi says they want to be in the top 10 15%. Hood wants to be in the top 1%. And in across all of their products, I just feel like they always want to be in the top 1% where SoFi always wants to be in the top 20%. And usually if you're doing what Robin Hood does, you don't get very good margins, but somehow they still are. Um,

yeah, I was going to play this clip right here. I mean, he's going after everything. He is going after everything. Here was Vlad on TBPN discussing more about what direction they're going in when it comes to

>> And you know, like many people, I go on YouTube and I see, let's see, who's talking about our earnings and there were actually groups of influencers that watch our earnings live and kind of talk about it. And I sat through the experience and they were looking at for a long time just a slide deck with our logo in there. It wasn't even the new brand of our logo. It was the old one and then it's just like you know we were on a polycom the analysts were on the call nobody knew whose turn it was to talk it was a bad experience and we started just by wanting to clean that up. So, we did our first video earnings call three quarters ago, and every quarter we've been thinking about how can we do a little bit more. And if if you view it from the perspective of a retail shareholder, it can't just be we're reading scripts of information. It has to be engaging. And so, it's video. It's getting more stakeholders that can ask good questions live on video if possible, asking those questions in real time. And you know, you guys have figured it out in your forum. I think that what earnings is is a community event and you should think about it as such. And I think the best CEOs, the best companies who really care about engaging retail have to move from thinking about it as a chore to actually one more event where you can get your brand and what you stand for out to as many of your stakeholders and community members as possible. like thinking about it like a thinking about it like a product.

Uh, do you have that other clip of Vlad Tennov? Because I I don't think I've seen that other one that you were going to show. >> Yeah, this is him talking about uh the ability for people to invest in pretty much anything they want, which I guess gets us into the tokenization conversation as well.

>> You know, for a while the the trend was really toward indexing and ETFs as a as a new product got adoption. and they started getting tons of assets. When we were first starting Robin Hood, we were kind of moving in a different direction and there was some skepticism from investors who thought that everything was just going to be indexed and indirect and it would just be people investing in broad market indices and diversified funds and and we we made a bet in the other direction that in fact no uh people want to move away from indexes. They actually want to uh express their viewpoints more precisely. And so you're seeing more granular investments, individual equities, but not just individual equities, you're seeing options trading, the rise of zero day options, same day expiry. And I think prediction markets are a continuation of that because you're starting to see markets uh for stocks and whether they're going to outperform earnings, for example. Uh a lot of a lot of people used to play the presidential election and have a thesis there that they would play by trading stocks or crypto, but now you can do that directly. So I think I think it's getting even more granular. people will have very specific thesis that they understand and they have conviction on and and we're giving products for them to express that and and on the land side uh that's super interesting because I would bucket that under alternatives right like people want access to alternatives the only way to have access to alternatives right now is through REITs or these diversified indices but what people really want is to invest in an individual private company as easily as they can invest in a public stock and maybe they want an individual piece of land or a property in a neighborhood hood that they think is going to do well rather than just some like commercial real estate fund that has that has a portfolio everywhere because they can they can better understand whether that's going to go up or down. I think we're moving in that direction. Tokenization is uh is is solving a lot of the technical problems with that and of course there's regulatory hurdles that once we get through I think we'll will open up lots of alternative assets to retail investors.

>> Okay, let's let's transition to Nvidia. So, your boy Bur is short, bro. Did you not convince him enough that you don't go short Nvidia or what's going on here?

>> Yeah. No, I just said that there's there's two companies that I think are uh the biggest frauds. They don't make any money. Um they're sort of like a AI rappers. They don't really sell a real product. And that's Palunteer and Nvidia. Um

>> dude, you know, this was the best day for Nvidia since April.

>> Yeah.

>> Like people are overlooking I when I heard that stat I was like really it was the best day in seven months. It was the best month.

>> Good feeling to be an investor in them. Yeah. It's I so this like I think we talked about it last time but him being well technically it's not a short it's puts but he effectively it's shorting um him doing that on Palunteer it's like it's it's I wouldn't do it based on valuation I think amazing company and all that but Nvidia it's like what world does this actually make sense and and Chris uh you know he highlighted part of the the argumentation of Michael Bur there was AI chip demand is built when it lies apparently according to to Michael Bur and that seems

While you're talking, I'm going to pull it up. And Tanner, I don't know if you saw this, but he's basically saying all the hyperscalers are frauding their investors by overstating earnings because they're not accounting for depreciation in the GPUs.

>> It is true. I won't even uh say that he's 100% wrong. If there is a place where you can have the biggest amount of accounting fraud, it is or in this space, it is saying that the depreciation is going to take much longer than before. However, I was talking with somebody that's actually in the space and they said the reason is is that because the difference between training and inference, it's much less uh stress on the actual GPUs, so they last much longer. Uh he was actually talking about how uh some of the inference that's being done today is still on like 8-year-old GPUs. I had no idea. So, um, if that is the case, that could be a reason why they're saying that they're the life the the um the life cycle of those GPUs is going to be much longer over time. But even I think Amazon even uh brought theirs down from six last year to five this year. Um, I don't remember what Nebius's is. It's it's extremely low though. They are being very conservative.

Yeah, that that last line though, more detail coming November 25th. Stay tuned. Is this and you you posited this a bit. I like the question on X of like is this Bur's next big short.

>> I I dude everything he's been tweeting has been making it very obvious he is not a fan of this AI capex cycle. So, the Nvidia paler thing, I don't even know if he's still in the position, but whatever is coming November 25th, unless it's a book launch, I would imagine it's a further explanation of his positioning. Um, I just don't know if it makes sense because going short Nvidia means you're short the market

>> No, but then but then but then Roy, how do you make sense of Bur saying that Palanteer doesn't understand how to read a 13F?

>> I think he's just salty and he took Alex Garp's comments personally. He doesn't like to be challenged and I think he rar rarely is other than people teasing him that he predicted uh one of like 500 bare markets accurately or whatever it is. But um yeah, what does this even mean? How do they not know how to read a 13F? The 13F says you have a put position. If you don't, that's fine, but legally no one freaking knows. So, how is it Palantra's fault that like what is he even saying? I I don't know if he's saying like he he maybe got out like really quickly or

>> Well, dude, it's funny you bring it up because just now I got a notification I'll talk about this tomorrow on the market open guys, but this story is getting juicy. Soft Bank is trying to get rid of the Goto CEO. Goto is their biggest competitor in Indonesia. There's been rumors over the past week that Grabs looking to actually complete an acquisition of them. SoftBank has a stake in both of them. And Bloomberg, this came out at 10:16 30 minutes ago. Bloomberg is saying Masasan's trying to get rid of this guy.

Interesting.

>> Kind of wild. That's kind of wild.

>> So, does Soft Bank also have a position in Grab or only in Goto?

>> Both. And Goto has been a disaster for them for the past five year. I mean, Grab's also not been good share price-wise, but Grab is growing even if the stock is like that. Go to kind of growing and the stock is just like that. So, I think they and and one of the reasons is because they're so hyper competitive because of the margin profile. So if you were to just combine both of them, even if you got rid of the fintech part of Goto, I mean that could really accelerate margins and overall growth. And they filed for an extraordinary general meeting on December 17th.

>> So that looks like where potentially you could see some action.

>> All right. I think that's it for us, folks. Um, we'll be back next week. Uh the biggest market catalyst now is Nvidia and that's next week. So until then, you know, the shutdown should be over and hopefully that continues to allow the markets to get some room to go higher.

>> Thank you everybody.

>> All right, that's it. Thank everybody. We'll see you guys next week. Have a good night. Bye everyone.