Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a substantial decline in crypto trading revenue. However, growth in other sectors 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 Wall Street's estimate of $0.39, according to FactSet data.
As a result, shares declined by approximately 8% in post-market trading. The 47% drop in crypto-related revenue to $134 million from $252 million in the previous year was a significant factor, but the company is attempting to shift its focus away from crypto price cycles. Instead, Robinhood is emphasizing the use of crypto technology as 'infrastructure' for financial services.
Transaction-based revenue rose to $623 million from $583 million in the previous year, driven by growth in newer products, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, largely due to a record 8.8 billion contracts traded in prediction markets. The company is expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading and smooth out revenue fluctuations. Net interest revenue and subscription services, including the Gold tier, also saw gains as Robinhood builds out its financial services platform.