Robinhood experienced a notable miss in its first-quarter earnings and revenue projections, primarily due to a sharp decline in cryptocurrency trading revenue. However, growth in other areas of its business drove overall revenue higher. The company reported adjusted earnings per share of $0.38, falling short of Wall Street's estimate of $0.39. Total revenue increased by 15% year-over-year to $1.07 billion, yet failed to meet analysts' expectations of $1.14 billion.
As a result, shares declined by approximately 8% in post-market trading. Cryptocurrency-related revenue, a significant 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 cryptocurrency price cycles. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, instead emphasizing the use of cryptocurrency technology as 'infrastructure' for financial services.
The decrease in cryptocurrency 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 driven by newer products, including event contracts, which led to a 320% year-over-year increase in 'other transaction revenue' to $147 million. Robinhood reported that 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 more consistent engagement across various asset classes.
As the company expands into areas like prediction markets, derivatives, and advisory tools, it aims to reduce its dependence on cryptocurrency trading. The efforts to smooth out revenue fluctuations are also being undertaken by Coinbase, which is set to report its earnings on May 7.
Tenev framed cryptocurrency as a long-term investment beyond trading, referencing the impending 'tokenization super cycle' that will bring assets like stocks onto blockchain rails. The company also saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.