Applovin is in the business of assisting app owners and publishers in building and monetizing their audiences. It also connects ad buyers and publishers via advertising auctions mainly via mobile settings.

APP trades for 64× 2025 EPS (chart below is the forward EPS multiple for Q4-24 - Q3-25). Estimate revisions should bring that down closer to 60x. EPS is expected to grow by 40% this year and by 22% next year.

Reddit trades for 65× 2025 EPS. EPS is expected to grow by 22% this year and by 33% next year. It trades for 73× 2025 FCF. FCF is expected to double this year and then compound at a 35% clip for the following two years.

Palo Alto is a cybersecurity company competing across endpoint, cloud and network use cases. It’s aggressively bundling next-gen products into larger deals to differentiate vs. firewall-based competitors like Fortinet and beat next-gen disruptors. It calls this process “platformization,” which will again be a key piece of this review. There are 3 major pieces of their initiative:.

Cortex: Its endpoint security segment is called Cortex. Extended Security Information and Event Management (XSIAM) is the centerpiece for platformizing this section. XSIAM brings together Extended Security Orchestration, Automation and Response (XSOAR), Extended Detection and Response (XDR) and integrates Security Information Event Management (SIEM). XSOAR helps automate and guide best practices for incident response while ranking severity of threats. It relies on SIEM for its scaled, complete data ingestion to instruct optimal workflows. SIEM is a key piece of XDR, as XDR infuses non-endpoint data sources into breach protection to extend coverage beyond strictly that endpoint. Adding more data without sacrificing cost and latency performance is where SIEM shines.

Strata: The network security suite is called Strata. This is where Palo Alto is supplanting legacy firewall vendors by offering (what it views as) superior, software-enabled firewalls alongside a suite of network security software. It deploys software-defined wide area networks (SD-WANs) within firewall environments. SD-WANs serve as virtual network securers using a software-based approach to protection. Palo Alto protects networks using a “zero trust” architecture. Zero trust means a bad actor cannot penetrate the most vulnerable part of a digital ecosystem and move freely within it thereafter. Zero trust ensures consistent and complex validation of these permissions at every level. It ends the game of “everyone within a firewall environment getting perpetual, unconditional access” and greatly limits the potential damage of network breaches.

PANW provides “next-gen firewalls” (hardware-based & software-based) with tools like contextual app inspection (more malleable access rules), intrusion prevention, URL filtering, data loss prevention (DLP) and more. Secure Access Service Edge (SASE) is the overarching software product that ties its network platformization approach together. It is built on the aforementioned zero trust foundation. SASE integrates tools that help prevent unauthorized access to data, abuse of networks (like phishing attacks to overwhelm networks with traffic) and broad visibility into health and performance of a network. It includes Software-Defined Wide Area Network (SD-WAN) for traffic routing, a Secure Web Gateway (SWG) and a Cloud Access Security Broker (CASB) to decide who gets access to which apps.

Cortex Cloud: The cloud security suite is now called Cortex Cloud. Like XSIAM and SASE are the platformization pillars in endpoint and network, in cloud it’s the Cloud Native Application Protection Platform (CNAPP). CNAPP includes Cloud Security Posture Management (CSPM), which organizes access compliance, provides cloud ecosystem visibility, and proactively blocks misconfigurations. Beyond that, Cloud Workload Protection Platform (CWPP) is its cloud workload protection tool. Most recently, Palo Alto debuted (CDEM) to “evaluate internet exposure risks and discover unknown internet-exposed cloud assets.” Finally, it added cloud detection and response (CDR) and integrated its newer DSPM product (from purchasing Dig Security) into the CNAPP suite.

While these three product groups are technically separate, they routinely pull context, service and data from each other to uplift overall value creation.

Growth was called “broad across the entire portfolio.” Large international deals, SASE, software firewalls and XSIAM (all already defined above) were cited as the standouts. On the international note specifically, it signed its largest deals ever (both over $50 million) in both Europe, Middle East and Africa (EMEA) and Japan-Asia Pacific (JAPAC). Excluding M&A, net new ARR declined Y/Y for the second straight quarter. This is mainly due to tough comps and abnormally strong quarters last year from advanced subscriptions. 

“From our vantage point, the outlook for cybersecurity seems to have been robust in Q2, and is likely to stay so over the rest of this year.”

CEO Nikesh Arora

Gross margin was pressured by growth in newer offerings and some one-time inventory write-offs on the hardware side of things worth 40 basis points (bps; 1 bps = 0.01%) of margin. This is related to moving its main manufacturing and fulfillment center to Texas. Over time, it expects this to provide modest cost benefits.

“We remain optimistic about sustaining this momentum as our sales teams leverage our ecosystem, continue to become more adept at aligning our many capabilities into a unique platformization journey for each customer. We remain confident in our long-term and NGS ARR forecast.”

CEO Nikesh Arora

“Enterprise companies should operate at a much higher operating margin in the future from now. I'm not gonna put a forecast just yet, but think the trend is our friend.”

CEO Nikesh Arora

EPS is expected to compound at a 14% clip for the next two years. FCF is expected to compound at a 13% clip for the next two years. I don’t expect much more upward movement in estimates.

Platformization Progress & Deals:

As a reminder, when Palo Alto says “platformization” it means a customer standardizing on one of its 3 product pillars – Strata, Cortex or Cortex Cloud. This is how PANW is separating itself from a slew of network and other security vendors that cannot cross-sell valuable SASE tools with firewall hardware as impactfully as it can. As a result, this platform-based go-to-market strategy allows it to more effectively demonstrate its differentiated value proposition. And while this change has meant more deferred revenue, bundling discounts and slower top-line growth today, it should mean stickier customers with longer growth runways as comps normalize. It called the partner ecosystem “solidly behind the benefits of this approach” and is enjoying desired uplift to deal size and cross-selling momentum. For example:

While platformizations provide durable growth, they also help customers. Per IBM, undergoing this process leads to clients detecting and containing threats 72 and 84 days faster, respectively.

Most of these transformations have been with PANW’s bread-and-butter network suite. More recently, it has started to enjoy more multi-platform customer demand. Two platform customers rose 50% Y/Y and three platform customers rose 200% Y/Y. This momentum keeps them fully on track to reach their goal of 3,000 platformizations by FY 2030.

Because this evolution in go-to-market strategy means more deferred revenue and fewer up front payments, there was significant concern over near-term FCF margins. The company remains fully confident in maintaining its robust 37% FCF margin for the next few years and even sees more upside beyond that. While deferred revenue does mean less immediate cash collections, it also means more visible cash collections over the course of multiple years. So? As PANW gets through the initial shock of prioritizing this type of deal, FCF visibility should improve over time. It said exactly this on the call. Specifically, scheduled payments from these deferred revenue contracts are expected to rise from 32% of FCF last year to 41% this year. Leadership also reminded us that while the pivot to larger deals accelerated over the last year, it actually began in 2022. Deferred revenue had been growing for them for the last three years, and FCF margin fared very well due to other offsets like operational efficiency gains.

Leadership is clearly happy with this decision and eager to make the financial trade-offs that it entails. It has also spent the last year learning from initial go-to-market approaches and thinks there’s some optimizing to do there to improve momentum here further.

“As you can tell from both the tone and some of the details that we provided, we are very happy with our progress here.”

CFO Dipak Golechha

Cortex Cloud & Security Operations Center (SOC) Support:

Beyond bundling more products into single contracts, the other way PANW can become a better platform, drive more vendor consolidation and lower total cost of ownership is by integrating the three pillars with one another. This quarter, Palo Alto rebranded Prisma to Cortex Cloud. And this wasn’t just a name change for fun; it was to convey to the world how tightly these two suites are now integrated and how well they work together.

PANW calls this the “future of real-time security” with similar cloud posture management tools that pretty much every vendor now offers. Where this should stand out is with CDR and Cloud Runtime Protection included as part of the overarching Cortex Cloud CNAPP suite. This goes beyond cloud hygiene and configuration analysis, to proactively stop breaches in cloud environments. Next, Cortex Cloud handles end-to-end app security from build to deployment to uncover issues with software before runtime. It’s also closely integrated with Cortex XSIAM and Cortex XDR to, per leadership, make it the “preferred security operations center” (SOC) for end-to-end protection. Bookings growth for XSIAM is already great at 50% Y/Y; this should be an accelerant. Together, XDR + XSIAM should greatly improve the efficacy of its already rock-solid cloud offering.

“As cloud adoption and AI usage grow, Cortex Cloud unifies data, automates workflows, and applies AI-driven insights to reduce risk, prevent threats, and stop attacks in real time.”

Press release

“Several software companies signed significant cloud security deals with us in Q2.”

CEO Nikesh Arora

Palo Alto has a unique ability to provide broad product suites across endpoint, network and cloud security. Most of its competition is in one or two of those areas. With slick integrations, PANW can offer unique bundling value with better interoperability than point solution vendors. It can stand out even more vs. firewall hardware vendors and can offer more use cases than an endpoint security company like SentinelOne. It may not have the absolute best tech on the planet, but it has very good tech and this differentiator to help it stand out. This is why it’s working so hard to fully unify these three pillars.

Cortex:

Network Security:

The SASE portion of its Firewall as a Platform business is now the convincing majority of that bucket and driving basically all of the 21% Y/Y growth. SASE customers rose 20% Y/Y for the 2nd straight quarter to 5,600, while $1 million deals rose 150% Y/Y. This is rapidly turning into another centerpiece of financial growth for PANW, and “drivers of this momentum are broadening.” Demand is proliferating for newer offerings like its Cloud Access Security Broker (CASB) and Autonomous Digital Experience Manager (ADEM). Its AI Access business, which secures usage of GenAI apps and models leveraging a combination of software firewall and SASE tools, enjoyed 300% Y/Y growth (small base but still). It added new user controls, guardrails for safe usage, and visibility into 1,300 new apps since the end of its last fiscal year. It now has 300 customers and landed its first 7-figure deal with this product. The pipeline for 8-figure AI Access deals was called healthy.

Perhaps the most exciting new growth driver for its SASE business is Prisma Access Browser (PAB). As a reminder, it bought Talon in 2023 to provide the eventual building blocks for this product. It encrypts and secures remote network connections and data across remote, siloed workforces. Leadership saw this use case becoming increasingly popular as a piece of its virtual desktop infrastructure (VDI) and thinks this is a real differentiator for its network security business. This quarter, 33% of all eligible Prisma access seats sold were for PAB as this product builds immediate traction. It just debuted it for mobile phones and tablets to keep fueling the momentum.

In other network security news, PANW infused new AI runtime APIs into existing application security products to extend its protection reach to GenAI apps and agents. “Securing Agentic AI” will be the next focus area for its AI runtime products. More converging between two of its product platforms.

Finally, it continues to find hardware appliance growth amid stable market demand. This is due to market share gains, which it expects will serve it very well amid an upcoming refresh cycle.

AI Work for Internal Efficiency & Demand

Palo Alto is leaning into AI to make its own internal operations better. It’s on track for a 50% reduction in contract labor for IT support by the end of this year. It’s now being used in 85% of network security customer support cases with 50% lower mean time to respond (MTTR). Finally, 80% of its developers are already using its co-pilot offerings to write code.

On the demand side of things, leadership spoke about the GenAI explosion leading to an acceleration in cloud migrations for enterprises. Many are realizing they need to be running on modern data and infrastructure products to fully embrace the power of this budding technology. That means GenAI is directly supporting demand for its network, data and cloud security products.

“To fully harness the power of AI, customers must unshackle their data from disparate legacy systems and providers and open up broader access and lean into the cloud.”

CEO Nikesh Arora

Federal Business:

There was some concern around federal contract disruption amid administration changes for Palo Alto’s business. It called this segment stable for the quarter and doesn’t seem overly concerned about contract renewals. PANW also secured FedRAMP high authorization for its network, cloud and security operations platforms this quarter.

“We now have the most comprehensive suite of AI-powered cybersecurity solutions authorized for use in federal networks at the high impact level.”

CEO Nikesh Arora

I thought this was a rock-solid quarter for one of the highest-quality names in cybersecurity. It clearly continues to find more cross-selling momentum and its platform-first shift in go-to-market is working as planned. The company’s growth should accelerate as comps normalize following this change, and that should happen as margins remain stellar and its runway remains long. I’m interested to see how continued integration of its three product sets will accelerate its platform push, and am impressed by strong growth for 2 and 3 platform customers. Another strong showing for Palo Alto.

Part 1 of this review can be found in section 3 of this article.

On Slower Industry-Wide Handle Growth in Q4:

DraftKings was asked about deceleration in online sports betting volume growth last quarter. Co-Founder/CEO Jason Robbins reminded us that seasonal factors like NFL game timing can have an impact, as there was one fewer game this Q4 vs. in 2023. Most of the impact, however, was likely from attention moving to the political cycle and away from everything else. Encouragingly, it has seen a “pretty rapid acceleration in handle growth, which meshes well with NBA TV ratings rebounding since the election. As discussed in Part One of the review, between this and the outperforming hold rate, DraftKings has significantly surpassed assumptions embedded in its annual guidance year-to-date.

Still, it wasn’t ready to raise things for EBITDA. It does not want to rely on good luck for meeting its targets, as Q4 reminded all of us how terrible luck can occasionally surface and throw off results (see image below). Still, it does see “some upside” potential for EBITDA.

“This was about making sure we put out a prudent guide, with a number of initiatives lined up to hopefully help us beat it.”

Co-Founder/CEO Jason Robbins

How the USA Gets to Europe-Level Live Betting Mix:

The UK collects more than 70% of its total revenue from live betting. Volume proportions in the USA are far lower, and that’s a real opportunity for DraftKings. We already worked through the acquisitions it made to provide assets needed to lead here and how it will invest in the opportunity in 2025. On the call, Robbins added that they’ll look to work with broadcasters to offer lower latency streams, which is currently a large hindrance for live betting (not doable when you are on a minute delay).

As that’s resolved, DKNG should be poised to capitalize with what it views as a best-in-class live offering and a clear product differentiator. It leads the industry in uptime, and that’s the byproduct of obsessive work on the backend to ensure seamless scalability. Pushing USA live betting volumes to UK levels should be doable based on the sports people watch here. Furthermore, older betting cohorts tend to bet more on live lines as they get more comfortable with the product. So? As U.S. state-level markets mature, live proportions should naturally rise. This will be a big piece of ARPU and bet frequency expansion.

On Prediction Markets & Event Contracts:

For event contracts, DKNG is waiting for the Commodity Futures Trading Commission (CFTC) ruling sometime in the next two months to comment. It seems very open to entering different bet types outside of sports as markets permit that.

In terms of companies like Robinhood being able to offer sports bets through this events contract loophole, I don’t really see how that could be allowed. This contracts are identical to the concept of sports gambling, which is highly regulated at the state level, with a fragmented landscape across borders. Still, regulators are often unpredictable, so we shall see what happens. If I am wrong and this is allowed, a few things:

Promotional Intensity:

Customer acquisition momentum remains stellar and promotional intensity continues to decline. That’s true for both sports and online casinos, although the declines are sharper in sports.

The implied rise in Y/Y sales & marketing (S&M) spend for 2025 is solely from Jackpocket. It expects online casino and sports gambling (S&M) to be stable Y/Y to power significant leverage.

“I think we're expecting a pretty meaningful decline in promotional intensity in 2025.”

Co-Founder/CEO Jason Robbins

State Regulatory Process Thus Far:

Robbins called this the “sausage-making period” of regulatory cycles. There are a ton of headlines surfacing, but most of those headlines will be purely sizzle and no steak. Still, it remains hard at work with its lobbyists and does think this will be a better year for legalization than 2024. That has a lot to do with distancing ourselves from the election cycle, where politicians shy away from “any issue they deem mildly controversial.”

He’s somewhat optimistic about more iGaming legalization as well. That’s because the black market is absolutely exploding in size, just like sports gambling did before that legalization wave began.

More Notes:

DKNG split out sportsbook revenue and iGaming revenue. Sportsbook revenue was $825M 8% Y/Y (historically bad outcome luck directly impacts revenue). iGaming revenue, which is much higher margin, rose by 21% Y/Y to $426M.

Customer growth in older states like New Jersey remains strong. It still doesn’t know where the population saturation ceiling is, which is a very good thing. Newer states are getting to older state penetration levels more quickly.

It’s very early days for the subscription pilot program in New York. It could “potentially have some real interest” but they need to learn a lot more first. This will remain a very small test for the time being, as DKNG doesn’t have a good feel for unit economics and impact on bet frequency, as this is a brand new concept for the industry.

The response to product improvements and better merchandising for parlays was called “better than expected” for the NFL and NBA seasons. This is delivering structural hold rate gains well beyond forecasted. Again, structural hold rate means expected hold rate, so while actual hold rate declined via terrible luck, this tells us what things would look like in normal times. A higher ceiling is very positive.

There’s no schedule for international expansion, as the domestic growth runway remains massive. It will likely be opportunistic with international expansion when the right situation arises.

It now thinks its NBA product is on par with FanDuel. It has been inferior in recent years, and as a result, basketball is the sport where FanDuel enjoys its best market share dynamics. This is an opportunity to close the gap.

DKNG has been able to offset some of the Illinois tax hike via promotional and marketing cuts.

I continue to view this as one of the best quality company bargains in markets. Even after Friday’s move, it still trades for 25x 2025 EBITDA targets and 29x FCF targets that were almost raised this quarter. Even when ignoring exponential FCF and EBITDA growth this year as the company explosively inflects, it is expected to compound both EBITDA and FCF at a 47% clip during 2026 and 2027.

This is one of two market share leaders despite consistent cuts to sales and marketing intensity and is delivering one of the most aggressive margin ramps in public markets as we speak. Opportunities for margin-accretive growth are bountiful and my confidence in this team capturing those opportunities grows by the quarter.

Some may worry about taxation headwinds, but it seamlessly overcame an aggressive tax hike in Illinois that explicitly penalized larger players. I expect it to do the same in other states and I also expect more legalization to come to greatly raise its total addressable market. It’s not just risks coming from politicians… but also clear & somewhat inevitable potential for far more growth. 2025 guidance has me excited, especially considering they refrained from including good luck to start the year in those targets. I have zero interest in selling any shares.

Adjusted Operating expenses (OpEx) + stock-based compensation for 2024 as a whole rose by just 7% Y/Y.

Robinhood expects double-digit revenue growth for 2025. That compares to 25% growth estimates. As double-digit growth could mean 11% or 99%, I’m not sure if this is a beat or a miss. Robinhood expects operating expenses (OpEx) to be $2.05 billion in 2025 and for OpEx + stock comp to rise by about 10% Y/Y. This includes $100 million in incremental marketing spend and should pave the way for more leverage. So far this quarter, January represented its 2nd best month ever for deposits. Volumes for all asset classes were up “double or triple-digit growth rates.” Finally, the tax benefit this quarter was from rising confidence in durable profitability and so releasing its remaining valuation allowance. Tax rate will now rise to about 25% for 2025.

Note that expense guidance now excludes provision for credit losses starting in Q1. I found that interesting as they prepare to ramp the credit card. I’d love for that to still be in expense guidance as it is a structural operating cost of running a credit card, but it did add that its $20 million in quarterly loss provisions will modestly rise over time. That’s inevitable if they want to grow the credit card business. High absolute losses amid volume growth aren’t worrisome; high loss rates would be.

HOOD trades for 40x 2025 EPS (chart below is the forward EPS multiple for Q4-24 - Q3-25) and probably closer to 37x or 38x as revisions continue. After triple-digit EPS compounding for the last two years, EPS is expected to fall by 11% this year and rise by 4% next year. Again… cyclical business. Either that didn’t change exactly when the hawkish pivot began, or? Through product launches like the stickier Robinhood Gold offering, it is changing and there should be upside to those forecasts. Transaction volumes will always violently chop around across cycles, but its other offerings may fare better whenever macro sours again. We shall see. For now, the backdrop is quite favorable, which is excellent news for HOOD.

Demand:

Wherever you look, Robinhood is finding excellent demand growth. This is a cyclical business, and they are admirably taking advantage of the fun part of their cycle. Transaction, options and equity revenue all rose faster than 80% Y/Y (transaction revenue +200% Y/Y); net interest revenue rose 25% Y/Y despite rate cut headwinds and stellar Robinhood Gold growth powered 31% Y/Y other revenue growth.  And how do you ensure your peaks and valleys are higher than the last cycle? By taking structural market share of a growing, cyclical industry. Robinhood grew market share by 30% Y/Y (so if it hypothetically had 10% share then it moved to 13%). Really good. Equity volumes rose by 154%; options volume rose by 61%; crypto volume rose by 455% Y/Y. Again, this company experiences violent year-to-year fluctuations in trading volumes, and those volumes are currently fluctuating higher at this point in time.

AUC growth continues to be powered by more net deposits and rising crypto and equity valuations.

Specifically, crypto AUC rose 139% Y/Y as that asset class enjoyed a wonderful quarter of price appreciation. Cash and equity AUC rose by 41% and 88% Y/Y respectively. Wallet share momentum has a lot to do with this as AUC per funded account rose by 75% Y/Y, reaching $7.7K. Whether it’s more account types, modest credit card expansion or all of the perks Robinhood Gold provides, this trend looks very good. While asset valuations will fluctuate, the more structural piece of this progress is deposit momentum, which looks quite good. More customers depositing more money is a promising combination. Going back to more account types helping AUC for a moment, its retirement accounts rose by 100% Y/Y to 1.15 million, with AUC per account of $11.4K vs. $3.5K Y/Y; AUC for retirement accounts overall rose by 600% Y/Y. The IRA matches are working as planned.

The company “enters 2025 with strong momentum” to continue driving the same recent trend of profitable expansion.

Robinhood Gold & The Gold Credit Card:

Robinhood Gold continues to deliver 6x AUC vs. non-Gold accounts, 50% more deposit growth and 4x retirement account adoption. While the company crossed 2.6 million users this past quarter, as of now it’s just over 3 million as momentum remains strong. It’s now experimenting with savings account APY boosts and other more personalized rewards to keep membership growth rocking and rolling. While attach rate crossed 10% this quarter, there’s reason to believe that it can go much higher. Its newest customer cohort opted into Gold at a 30% clip, showing rapidly increasing interest.

This will be the year of proving Robinhood Gold Credit Card proof of concept. The company has rightfully gone very slowly with rolling this out to season underwriting algorithms and to make sure unit economics worked. They seem to be confident in this being ready for scale, as they’ll grow from 100,000 holders to 200,000 in the next few months and add a few hundred thousand more cardholders by 2025. Demand levels are “extreme,” the waitlist is long and it’s ready for more scaling.

2025 Plans:

One of Robinhood’s top priorities remains “winning active traders.” Several Robinhood Legend enhancements are coming, and it will look to nurture event contracts and other recently successful launches. It’s unclear if Robinhood will be allowed to add sports to its roster of event contracts, but we should know more there in the coming months. It will continue to push for geographic expansion for its crypto business, hopefully with the help of closed Bitstamp M&A at some point in the coming months. That closure will give Robinhood presence in 50 countries, footprint and an ability for crypto traders to access and route trades directly to the exchange. It plans to introduce more of its product suite in the UK and pursue 3 more licenses in APAC for more global expansion.

Robinhood Derivatives:

Robinhood Derivatives entails the company’s events contracts/prediction markets product (like trading on the presidential election) and its futures trading product. The company plans to be as aggressive here as regulation allows. In its journey to offer every financial asset and transaction in one platform, this is now an important piece. It expects to make significant progress here in 2025, although it did acknowledge the regulatory landscape for sports betting is highly uncertain.

Crypto and Tokenization:

In the realm of crypto, it added 7 new assets and debuted Ethereum staking across the pond to match its U.S. offering. European customers also can now access 1% matches on crypto deposits. It will keep working with regulators to expand its crypto footprint both in terms of coins and countries, but sees the real opportunity here in tokenization.

Tokenization refers to “bringing real assets onto blockchain technology to give people access to real-world productive assets using crypto rails where they benefit from the liquidity of that technology.” It has its sights set on tokenizing private companies to create access and liquidity, and I’m sure fine art and other collectibles are in the roadmap too (again – wants to offer everything). It needs a lot more regulatory clarity but it is determined to be the company that moves most aggressively and blazes the trail.

Registered Investment Advisors:

A few months ago, HOOD announced its intent to buy TradePMR. TradePMR services Registered Investment Advisors (RIAs) with portfolio management and custodial services. HOOD wants to provide deep value by matching its roster of RIAs with its 25 million users, while deepening customer value by giving them access to a human advisor. It can play an intermediary role here and, in turn, create a compelling-win-win. That’s the plan.

More on Q4 and 2024 Product Developments in Review:

2024 was a year of rapid product launches for Robinhood. It debuted its Robinhood Legend product for active desktop traders and has quickly worked to improve that offering since launching. This follows Robinhood’s typical approach to product launches: Get it shipped and worry about perfecting it over time through constant iterations. It also made index options available for all of its customers. Impressively, in just a few months, Robinhood Legend is already a $50 million business (annualizing a very good Q4), with great incrementality; index options is a $15 million business. As announced previously, it’s also rolling out active future trading on the app. 

“We see a huge opportunity ahead of us as we work toward enabling anyone, anywhere, to buy, sell, or hold any financial asset and conduct any financial transaction through Robinhood.”

Founder/CEO Vlad Tenev

“I'm really proud of the product velocity in 2024. So the team executed unbelievably well.”

Founder/CEO Vlad Tenev

Great quarter and great execution. I continue to think this is a cyclical business model and, to their credit, management is fully capitalizing on this opportunity. They’ve aggressively and masterfully oriented their product suite to take advantage of immensely strong crypto and transaction volumes that markets are currently enjoying. Its Gold subscription is absolutely killing it and 2025 should be another year of margin-accretive growth.

This business remains too tied to highly volatile trading volumes for me to want to own a piece. While it’s tempting to see how good things look today and want to extrapolate that growth for the next few years, I don’t think that’s wise. This is not an enterprise software business with multi-year contracts, structural tailwinds and macro insulation. It is a brokerage executing at an extremely high level that will still not be immune to Mr. Macro. For now that doesn’t matter. When will that matter? I don’t know, which is why I can’t own this. Still, CEO Vlad Tenev should be taking a bow. Well done.

Berkshire sold half of their stake in Nu.

The hotel chain SoFi announced as a new customer for Galileo on its earnings call is Wyndham Hotels. They have 110 million rewards members and will be releasing a co-branded debit card with Galileo. It’s unclear what adoption rates will be, but this could potentially be needle-moving. BTIG came out with the most positive note I’ve seen on the company this week, talking up the co-branded debit push as a productive and exciting move.

Meta is gearing up for a large investment in humanoid robots.

Like many other companies, Disney is cutting several existing DEI programs.

PayPal was added by Norwegian Cruise Line as a payment option for U.S.-based reservations.

Inflation Data:

Output Data:

Employment & Consumer Data: