Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a significant decline in crypto trading revenue. However, growth in other sectors of the business helped push overall revenue higher. The company reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39.
Total revenue increased 15% year-over-year to $1.07 billion, but failed to meet analysts' expectations of $1.14 billion. As a result, shares dropped approximately 8% in post-market trading.
Crypto-related revenue, a major driver of transactions for Robinhood, plummeted 47% to $134 million from $252 million in the previous year. This decline occurs as the company attempts to shift its focus away from crypto price fluctuations. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, emphasizing Robinhood's focus on utilizing crypto technology as 'infrastructure' for financial services. The decline in crypto trading revenue was offset by stronger activity in other areas, with transaction-based revenue rising to $623 million from $583 million in the previous year.
A key contributor to this growth was the significant increase in event contracts, which drove 'other transaction revenue' up 320% year-over-year to $147 million. Robinhood reported that users traded a record 8.8 billion contracts tied to prediction markets during the quarter.
The results underscore a shift in how customers are using the platform, with Tenev noting that 'if you build great products... they'll be there throughout the cycle.' Robinhood has been expanding into areas like prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading. The company is working to smooth out revenue fluctuations, similar to Coinbase, which reports earnings on May 7.
Tenev framed crypto as a long-term investment beyond trading, stating that 'we're at the very beginning of what's going to be a tokenization super cycle.' The company also saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds a broader financial services platform.