Robinhood experienced a shortfall in its first-quarter earnings and revenue projections, primarily due to a substantial decline in cryptocurrency trading revenue. However, growth in other areas of the business led to a 15% year-over-year increase in total revenue, amounting to $1.07 billion.
The company reported adjusted earnings per share of $0.38, falling short of Wall Street's estimate of $0.39. As a result, shares declined by approximately 8% in post-market trading.
Cryptocurrency-related revenue, a significant driver of transactions for Robinhood, decreased by 47% to $134 million from $252 million in the previous year. This decline occurred as the company attempts to shift its focus away from cryptocurrency price cycles. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, instead emphasizing the use of cryptocurrency technology as 'infrastructure' for financial services.
The decrease in cryptocurrency trading revenue was offset by stronger activity in other areas, with transaction-based revenue rising to $623 million from $583 million in the previous year. A key contributor to this growth was the significant increase in event contracts, which led to a 320% year-over-year rise in 'other transaction revenue' to $147 million.
During the quarter, users traded a record 8.8 billion contracts tied to prediction markets. The results highlight a shift in how customers are utilizing the platform, with more consistent engagement across various asset classes. Tenev noted 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 dependence on cryptocurrency trading.
The company is attempting to smooth out revenue fluctuations, similar to Coinbase, which is scheduled to report its earnings on May 7. Tenev also views cryptocurrency as a long-term investment opportunity beyond trading, stating that 'we're at the very beginning of what's going to be a tokenization super cycle.' This refers to efforts to bring assets like stocks onto blockchain rails.
Additionally, the company saw gains in net interest revenue and subscriptions, including its Gold tier, as it develops a more comprehensive financial services platform.