Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a significant decline in cryptocurrency trading revenue. However, growth in other sectors pushed 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, yet fell short of the $1.14 billion analysts had expected.
As a result, shares dropped approximately 8% in post-market trading. The decline in crypto-related revenue, a key driver of transactions, was 47% to $134 million from $252 million in the previous year. This decrease comes as the company attempts to shift its focus away from cryptocurrency price cycles. 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 decrease in crypto trading revenue was countered by stronger activity in other areas, with transaction-based revenue rising to $623 million from $583 million in the previous year. This was largely driven by growth in newer products, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, primarily due to event contracts. Users traded a record 8.8 billion contracts tied to prediction markets during the quarter, highlighting a shift in how customers are using the platform. Tenev noted that building great products leads to consistent engagement across asset classes.
Robinhood is expanding into areas like prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading. The company is trying to smooth out revenue fluctuations, similar to Coinbase, which reports earnings on May 7.
Tenev views crypto as a long-term bet beyond trading, referring to the 'tokenization super cycle' and efforts to bring assets like stocks onto blockchain rails. The company also saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds a broader financial services platform.