Robinhood's first-quarter earnings and revenue fell short of expectations, primarily due to a significant decline in cryptocurrency trading revenue. The company reported adjusted earnings per share of $0.38, missing the estimated $0.39, and total revenue of $1.07 billion, which was below the anticipated $1.14 billion.
As a result, shares dropped by approximately 8% in post-market trading. The decline in crypto-related revenue, which decreased by 47% to $134 million, was offset by growth in other areas, including a 320% increase in 'other transaction revenue' to $147 million, driven by a record 8.8 billion contracts traded in prediction markets. Robinhood's CEO, Vlad Tenev, emphasized the company's focus on utilizing crypto technology as 'infrastructure' for financial services, rather than relying on crypto price cycles.
The company is shifting its narrative and expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading. This strategic move is also being undertaken by other companies, like Coinbase, which is set to report its earnings on May 7. Tenev expressed his optimism about the potential of a 'tokenization super cycle' and the long-term benefits of bringing assets like stocks onto blockchain rails. The company also reported gains in net interest revenue and subscriptions, including its Gold tier, as it continues to build a more comprehensive financial services platform.