Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a significant decline in crypto trading revenue. However, the company's overall revenue saw a 15% year-over-year increase to $1.07 billion, driven by growth in other areas of its business. The trading platform reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39, according to FactSet data. As a result, shares dropped approximately 8% in post-market trading.
The company's crypto-related revenue, a major driver of transactions, plummeted 47% to $134 million from $252 million in the previous year. This decline occurred as Robinhood 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, with transaction-based revenue rising to $623 million from $583 million in the previous year. This growth was largely driven by the increase in newer products, including a 320% year-over-year surge in 'other transaction revenue' to $147 million, attributed to the record 8.8 billion contracts traded in prediction markets during the quarter. The earnings report highlights 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,' pointing to more consistent engagement across asset classes.
As Robinhood expands into areas such as prediction markets, derivatives, and advisory tools, the company aims to reduce its reliance on crypto trading. The results also demonstrate a long-term vision for crypto, with Tenev stating that 'we're at the very beginning of what's going to be a tokenization super cycle,' referring to efforts to bring assets like stocks onto blockchain rails.
Additionally, the company saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.