Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a sharp decline in cryptocurrency trading revenue. However, growth in other sectors helped drive overall revenue higher.
The company reported adjusted earnings per share of $0.38, missing the estimated $0.39, and total revenue of $1.07 billion, which was below the expected $1.14 billion. As a result, shares dropped approximately 8% in post-market trading.
Cryptocurrency-related revenue, a significant contributor to the company's transactions, decreased by 47% to $134 million from $252 million in the previous year. This decline occurs as Robinhood attempts to shift its focus away from cryptocurrency price fluctuations.
CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, emphasizing the company's focus on utilizing cryptocurrency technology as the foundation for financial services. The decrease in cryptocurrency trading revenue was offset by increased activity in other areas, with transaction-based revenue rising to $623 million from $583 million in the previous year. This growth was driven by newer products, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, largely attributed to event contracts. During the quarter, users traded a record 8.8 billion contracts tied to prediction markets.
The results highlight a change in how customers are utilizing the platform, with Tenev stating that 'if you build great products... they'll be there throughout the cycle,' pointing to more consistent engagement across asset classes. Robinhood has been expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading. The company is also working to smooth out revenue fluctuations, similar to Coinbase, which is scheduled to report its earnings on May 7.
Tenev views cryptocurrency 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,' referring to efforts to integrate assets like stocks onto blockchain technology. The company also experienced gains in net interest revenue and subscriptions, including its Gold tier, as it develops a more comprehensive financial services platform.