Robinhood's first-quarter earnings and revenue fell short of estimates, primarily due to a significant decline in crypto trading revenue. The company reported adjusted earnings per share of $0.38, missing the expected $0.39, and total revenue of $1.07 billion, which was below the anticipated $1.14 billion. As a result, shares declined by approximately 8% in post-market trading.
The crypto-related revenue, a major driver of transactions for Robinhood, plummeted 47% to $134 million from $252 million in the previous year. This decrease occurred as the company attempts to shift its focus away from crypto price fluctuations. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, instead emphasizing the use of crypto technology as 'infrastructure' for financial services.
The decline 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. A key contributor to this growth was the rise of 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 demonstrate 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 reliance on crypto trading. The company is working to create a more stable revenue stream, and Tenev views crypto as a long-term opportunity beyond trading, referring to the 'tokenization super cycle' that will bring assets like stocks onto blockchain rails. Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it develops a more comprehensive financial services platform.