Robinhood reported a notable shortfall in its first-quarter earnings and revenue projections, primarily attributed to a sharp downturn in cryptocurrency trading revenue. However, the company's growth in other business segments drove overall revenue higher. The trading platform posted adjusted earnings per share of $0.38, falling short of Wall Street's estimate of $0.39.
Total revenue experienced a 15% year-over-year increase to $1.07 billion, yet failed to meet analysts' expectations of $1.14 billion. As a result, shares declined by approximately 8% in post-market trading.
The significant decline in crypto-related revenue, a substantial driver of the company's transactions, dropped 47% to $134 million from $252 million in the previous year. This downturn coincides with Robinhood's efforts to shift its focus away from cryptocurrency price cycles.
CEO Vlad Tenev emphasized the company's focus on utilizing crypto technology as 'infrastructure' for financial services, stating his desire to move beyond discussions of bitcoin prices. The decline in cryptocurrency trading revenue was offset by stronger activity in other areas, with transaction-based revenue increasing to $623 million from $583 million in the previous year.
A key contributor to this growth was the surge in event contracts, which propelled 'other transaction revenue' up 320% year over year to $147 million. Robinhood reported a record 8.8 billion contracts tied to prediction markets traded during the quarter, highlighting a shift in customer usage of the platform. The company has been expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading. This strategic move aims to smooth out revenue fluctuations, similar to Coinbase's efforts.
The results underscore a more consistent engagement across asset classes, with Tenev noting that 'if you build great products... they'll be there throughout the cycle.' Tenev also framed cryptocurrency as a long-term investment beyond trading, referencing the 'tokenization super cycle' and efforts to bring assets like stocks onto blockchain rails. The company experienced gains in net interest revenue and subscriptions, including its Gold tier, as it develops a broader financial services platform.