Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a sharp decline in cryptocurrency trading revenue. However, growth in other areas of the business led to a 15% year-over-year increase in total revenue to $1.07 billion. The company's adjusted earnings per share were $0.38, missing the Wall Street estimate of $0.39.
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 a major contributor to the earnings miss. In an effort to shift focus away from cryptocurrency price fluctuations, CEO Vlad Tenev emphasized the company's intent to utilize crypto technology as the foundation for its financial services. Meanwhile, transaction-based revenue rose to $623 million from $583 million in the previous year, driven by growth in newer products.
The surge in event contracts led to a 320% year-over-year increase in 'other transaction revenue' to $147 million, with users trading a record 8.8 billion contracts tied to prediction markets during the quarter. These results highlight a change in how customers are utilizing the platform, with Tenev noting that 'if you build great products... they'll be there throughout the cycle.' As Robinhood expands into areas such as prediction markets, derivatives, and advisory tools, it aims to reduce its reliance on cryptocurrency trading. The company is also exploring the potential of tokenization, with Tenev stating that 'we're at the very beginning of what's going to be a tokenization super cycle.' Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it continues to build a comprehensive financial services platform.