Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a significant decline in cryptocurrency trading revenue, although growth in other areas propelled overall revenue upwards. The company reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39. Total revenue rose 15% year-over-year to $1.07 billion but failed to meet analysts' expectations of $1.14 billion, resulting in an 8% drop in shares during post-market trading. Crypto-related revenue plummeted 47% to $134 million from $252 million in the previous year, as the company attempts to reduce its reliance on crypto price fluctuations.
CEO Vlad Tenev emphasized the focus on utilizing crypto technology as 'infrastructure' for financial services, rather than focusing on bitcoin prices. The decline in crypto trading revenue was offset by stronger activity in other areas, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, driven by record-breaking prediction market bets.
The results underscore a shift in customer usage, with Tenev highlighting the importance of building great products that will attract users throughout market cycles. As Robinhood expands into areas like prediction markets, derivatives, and advisory tools, it aims to reduce its dependence on crypto trading, similar to Coinbase. The company is also exploring the potential of tokenization, with Tenev predicting a 'tokenization super cycle' in the long term. Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it develops a more comprehensive financial services platform.