Robinhood reported a significant decline in its first-quarter earnings and revenue, missing Wall Street's expectations, due to a substantial drop in crypto trading revenue. However, growth in other areas of its business helped push overall revenue higher. The company's adjusted earnings per share were $0.38, falling short of the estimated $0.39, while total revenue rose 15% year-over-year to $1.07 billion, but missed the expected $1.14 billion. As a result, shares declined by approximately 8% in post-market trading.
Crypto-related revenue, a major driver of the company's transactions, plummeted 47% to $134 million from $252 million in the previous year. This decline occurred as Robinhood attempts to shift its focus away from crypto price fluctuations.
CEO Vlad Tenev emphasized the company's focus on utilizing crypto technology as a foundation for financial services, rather than concentrating on bitcoin prices. The decrease in crypto trading revenue was offset by stronger activity in other areas, with transaction-based revenue increasing to $623 million from $583 million in the previous year, driven by growth in newer products.
A key contributor to this growth was 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 underscore a shift in how customers are utilizing the platform, with Tenev noting 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 crypto trading.
The company is attempting to smooth out revenue fluctuations, similar to Coinbase, which is scheduled to report its earnings on May 7. Tenev also views crypto as a long-term investment beyond trading, stating that 'we're at the very beginning of what's going to be a tokenization super cycle,' referring to efforts to bring assets like stocks onto blockchain platforms. Additionally, the company saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.