Robinhood's first-quarter earnings report fell short of expectations, with the company missing its estimated earnings and revenue targets due to a significant decline in cryptocurrency trading revenue. However, growth in other areas, such as prediction market bets, helped push overall revenue higher.
The company reported adjusted earnings per share of $0.38, below the estimated $0.39, and total revenue of $1.07 billion, which was lower than the expected $1.14 billion. As a result, shares dropped approximately 8% in post-market trading.
Cryptocurrency-related revenue, a major driver of the company's transactions, decreased by 47% to $134 million from $252 million in the previous year. Meanwhile, transaction-based revenue increased to $623 million from $583 million, driven by growth in newer products.
The company's CEO, Vlad Tenev, emphasized the need to shift focus away from cryptocurrency price fluctuations and towards using crypto technology as infrastructure for financial services. A key contributor to the company's revenue was event contracts, which led to a 320% year-over-year increase in 'other transaction revenue' to $147 million. The company reported a record 8.8 billion contracts tied to prediction markets during the quarter. The results highlight a change in how customers are using the platform, with more consistent engagement across asset classes.
Robinhood is expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading. The company's efforts to build a broader financial services platform also led to gains in net interest revenue and subscriptions, including its Gold tier. Tenev views cryptocurrency as a long-term investment beyond trading, citing the potential for a 'tokenization super cycle' that could bring assets like stocks onto blockchain rails.