Robinhood's first-quarter earnings report fell short of expectations, with the company reporting a significant decline in crypto trading revenue. However, growth in other areas of the business contributed to a 15% year-over-year increase in total revenue to $1.07 billion. The company's adjusted earnings per share of $0.38 missed Wall Street's estimate of $0.39. As a result, shares dropped approximately 8% in post-market trading.
Crypto-related revenue, a major driver of transactions for Robinhood, decreased by 47% to $134 million from $252 million in the previous year. The decline comes as the company attempts to shift its focus away from crypto price cycles. In an effort to reduce its dependence on crypto trading, Robinhood has been expanding into areas such as prediction markets, derivatives, and advisory tools.
The company saw a significant increase in transaction-based revenue, rising to $623 million from $583 million in the previous year, driven by growth in newer products. A key contributor to this growth 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, highlighting a shift in how customers are utilizing the platform. The company's CEO, Vlad Tenev, emphasized the importance of building great products that will attract users throughout market cycles.
Robinhood has been working to smooth out revenue fluctuations by diversifying its offerings. The company's net interest revenue and subscriptions, including its Gold tier, also saw gains as it continues to build a broader financial services platform. Tenev expressed his optimism about the potential for crypto, framing it as a long-term bet beyond trading and referencing the beginning of a 'tokenization super cycle' that will bring assets like stocks onto blockchain rails.