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 areas of the business led to a 15% year-over-year increase in total revenue to $1.07 billion.
The company reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39. Following the report, shares declined by approximately 8% in post-market trading. Cryptocurrency-related revenue dropped 47% to $134 million from $252 million in the previous year, as the company attempts to shift its focus away from cryptocurrency price fluctuations. CEO Vlad Tenev emphasized the company's focus on utilizing cryptocurrency technology as infrastructure for financial services, rather than relying on cryptocurrency price cycles.
The decline in cryptocurrency trading revenue was offset by stronger activity in other areas, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, driven by record-breaking prediction market bets. The company's expansion into areas like prediction markets, derivatives, and advisory tools aims to reduce its dependence on cryptocurrency trading.
Robinhood also saw gains in net interest revenue and subscriptions, as it builds a more comprehensive financial services platform. According to Tenev, the company is at the beginning of a 'tokenization super cycle,' where assets like stocks will be brought onto blockchain rails.