Robinhood reported a significant miss in its first-quarter earnings and revenue, primarily due to a sharp decline in crypto trading revenue. However, growth in other areas of its business helped push overall revenue higher.
The company's adjusted earnings per share were $0.38, falling short of Wall Street's estimate of $0.39. Total revenue increased by 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, instead emphasizing the use of crypto technology as 'infrastructure' for financial services. The decrease in crypto 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 growth in newer products such as event contracts.
Users traded a record 8.8 billion contracts tied to prediction markets during the quarter. The results highlight a shift in how customers are utilizing the platform, with Tenev noting that 'if you build great products... they'll be there throughout the cycle.' Robinhood is expanding into areas like prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading.
The company is also exploring the potential of tokenization, with Tenev believing that 'we're at the very beginning of what's going to be a tokenization super cycle.' Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.