Robinhood's first-quarter earnings report revealed a shortfall in both earnings and revenue, primarily due to a substantial 47% drop in cryptocurrency trading revenue to $134 million. The company's adjusted earnings per share of $0.38 fell short of Wall Street's estimate of $0.39, according to FactSet data. Although total revenue rose 15% year-over-year to $1.07 billion, it missed analysts' expectations of $1.14 billion.
As a result, shares declined by approximately 8% in post-market trading. The decline in crypto-related revenue, a significant contributor to Robinhood's transactions, has prompted the company to shift its focus towards utilizing crypto technology as 'infrastructure' for financial services. CEO Vlad Tenev emphasized the company's efforts to move away from the volatility of cryptocurrency price cycles.
In contrast, other areas of the business demonstrated stronger activity, with transaction-based revenue increasing to $623 million from $583 million a year earlier. The growth was driven by newer products, including 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.
The results underscore a change in how customers are using the platform, with more consistent engagement across asset classes. Tenev attributed this to the company's focus on building great products that will attract users throughout market cycles. As Robinhood expands into areas such as prediction markets, derivatives, and advisory tools, it aims to reduce its dependence on cryptocurrency trading. The company is also exploring the potential of tokenization, with Tenev believing that it is at the beginning of a 'tokenization super cycle' that will bring assets like stocks onto blockchain rails.
Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.