Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, largely due to a significant decline in cryptocurrency trading revenue. However, growth in other areas of the business helped push overall revenue higher. The company reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39.
Total revenue increased by 15% year-over-year to $1.07 billion but failed to meet analysts' expectations of $1.14 billion. As a result, shares dropped approximately 8% in post-market trading. The decline in cryptocurrency-related revenue, which is one of Robinhood's primary transaction drivers, was 47% to $134 million from $252 million in the previous year.
This decrease comes as the company attempts to shift its focus away from cryptocurrency price cycles. According to CEO Vlad Tenev, Robinhood is concentrating on utilizing cryptocurrency technology as 'infrastructure' for financial services.
The drop in cryptocurrency trading revenue was offset by increased activity in other areas, with transaction-based revenue rising to $623 million from $583 million in the previous year. This growth was driven by newer products, including 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. The results demonstrate a shift in how customers are using the platform, with more consistent engagement across asset classes.
As the company expands into areas like prediction markets, derivatives, and advisory tools, it aims to reduce its dependence on cryptocurrency trading. Like Coinbase, which will report earnings on May 7, Robinhood is working to diversify its revenue streams.
Tenev views cryptocurrency as a long-term investment beyond trading, stating that 'we're at the very beginning of what's going to be a tokenization super cycle.' The company also experienced gains in net interest revenue and subscriptions, including its Gold tier, as it develops a more comprehensive financial services platform.