Robinhood's first-quarter earnings fell short of expectations, with a significant decline in cryptocurrency trading revenue offset by growth in other areas of the business. 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 expected $1.14 billion. As a result, shares dropped approximately 8% in post-market trading.
The 47% decline in crypto-related revenue to $134 million was a major contributor to the earnings miss. However, the company saw a significant increase in transaction-based revenue, which rose to $623 million, driven by growth in newer products.
A notable driver of this growth was the surge in event contracts, which led to a 320% year-over-year increase in 'other transaction revenue' to $147 million. The company reported a record 8.8 billion contracts traded in prediction markets during the quarter.
CEO Vlad Tenev emphasized the company's focus on using cryptocurrency technology as infrastructure for financial services, rather than relying on crypto price cycles. The shift in customer engagement is evident, with more consistent activity across asset classes. Robinhood is expanding into areas like prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading.
The company also saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform. Tenev expressed his optimism about the long-term potential of cryptocurrency, citing the beginning of a 'tokenization super cycle' that will bring assets like stocks onto blockchain rails.