Robinhood's first-quarter earnings report fell short of expectations, with a notable decline in cryptocurrency trading revenue, although growth in other areas helped drive overall revenue higher. 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 approximately 8% in post-market trading. Cryptocurrency-related revenue, a significant contributor to the company's transactions, plummeted 47% to $134 million from $252 million in the previous year.
This decline occurs as Robinhood attempts to shift its focus away from cryptocurrency price fluctuations. According to CEO Vlad Tenev, the company is concentrating on utilizing cryptocurrency technology as the foundation for its financial services. Meanwhile, transaction-based revenue increased to $623 million from $583 million in the previous year, driven by growth in newer products. A key factor was the rise in 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 indicate a change in how customers are utilizing the platform, with Tenev stating that 'if you build great products, they'll be there throughout the cycle.' Robinhood has been expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading. The company is also working to develop a broader financial services platform, with gains in net interest revenue and subscriptions, including its Gold tier.
Tenev views cryptocurrency as a long-term investment beyond trading, referring to the 'tokenization super cycle' and efforts to bring assets like stocks onto blockchain technology.