Robinhood's first-quarter earnings report fell short of expectations, with the company missing both earnings and revenue estimates due to a substantial decline in crypto trading revenue. The trading platform reported adjusted earnings per share of $0.38, below the estimated $0.39, and total revenue of $1.07 billion, which was lower than the anticipated $1.14 billion.
As a result, shares declined by approximately 8% in post-market trading. The significant drop in crypto-related revenue, which decreased by 47% to $134 million from $252 million in the previous year, was offset by growth in other areas, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, driven by record-breaking activity in prediction markets. CEO Vlad Tenev emphasized the company's focus on utilizing crypto technology as infrastructure for financial services, rather than relying on crypto price cycles. The shift in customer engagement, with a record 8.8 billion contracts traded in prediction markets, highlights the platform's efforts to diversify its revenue streams.
Robinhood is expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading, a strategy also being pursued by Coinbase. The company reported gains in net interest revenue and subscriptions, including its Gold tier, as it builds a more comprehensive financial services platform. Tenev expressed his optimism about the long-term potential of crypto, stating that the company is at the beginning of a 'tokenization super cycle,' which involves bringing assets like stocks onto blockchain rails.