Robinhood (HOOD) failed to meet its first-quarter earnings and revenue expectations, primarily due to a substantial decline in crypto trading revenue, although growth in other areas pushed overall revenue higher. The company reported adjusted earnings per share of $0.38, falling short of the estimated $0.39, and total revenue of $1.07 billion, which was below the expected $1.14 billion. As a result, shares declined by approximately 8% in post-market trading. The significant drop in crypto-related revenue, which decreased by 47% to $134 million from $252 million in the previous year, was somewhat offset by stronger activity in other areas, such as transaction-based revenue and 'other transaction revenue', which rose by 320% year over year to $147 million.
The surge in 'other transaction revenue' was driven by a record 8.8 billion contracts traded in prediction markets during the quarter. According to CEO Vlad Tenev, the company is shifting its focus towards utilizing crypto technology as infrastructure for financial services, rather than relying on crypto price cycles. The results highlight a change in how customers are using the platform, with more consistent engagement across asset classes.
To reduce its dependence on crypto trading, Robinhood is expanding into areas like prediction markets, derivatives, and advisory tools. The company also reported gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.