Robinhood's first-quarter earnings and revenue fell short of expectations, primarily due to a significant decline in cryptocurrency trading revenue. However, growth in other areas helped boost overall revenue. The company reported adjusted earnings per share of $0.38, below the estimated $0.39, and total revenue of $1.07 billion, which was 15% higher than the previous year but short of the anticipated $1.14 billion.
As a result, shares dropped approximately 8% in post-market trading. Cryptocurrency-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 cryptocurrency price fluctuations. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, emphasizing Robinhood's focus on utilizing cryptocurrency technology as 'infrastructure' for financial services.
The decline in cryptocurrency 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 notable contributor 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 stating, 'If you build great products... they'll be there throughout the cycle,' highlighting more consistent engagement across asset classes. As Robinhood expands into areas like prediction markets, derivatives, and advisory tools, it aims to reduce its dependence on cryptocurrency trading.
The company is working to develop a more comprehensive financial services platform, with gains in net interest revenue and subscriptions, including its Gold tier. Tenev also views cryptocurrency as a long-term investment opportunity beyond trading, referring to the 'tokenization super cycle' and efforts to bring assets like stocks onto blockchain rails.