Robinhood's first-quarter earnings report fell short of expectations, with the company posting adjusted earnings per share of $0.38, below the estimated $0.39. Total revenue rose 15% year-over-year to $1.07 billion, missing the predicted $1.14 billion.
The company's stock price subsequently dropped 8% in post-market trading. Crypto-related revenue, a significant contributor to Robinhood's transactional income, plummeted 47% to $134 million from $252 million in the previous year.
This decline occurred as the company attempts to shift its focus away from crypto price fluctuations. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, instead emphasizing the use of crypto technology as a foundation for financial services. The decrease in crypto trading revenue was offset by growth in other areas, including transaction-based revenue, which rose to $623 million from $583 million in the previous year.
A notable driver of this growth was the increase in event contracts, which led to a 320% year-over-year surge 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.
These results highlight a change in how customers are utilizing the platform, with Tenev stating that 'if you build great products, they'll be there throughout the cycle.' The company is expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its reliance on crypto trading. Like Coinbase, which is set to report earnings on May 7, Robinhood is working to diversify its revenue streams. Tenev views crypto as a long-term investment opportunity beyond trading, citing the potential for a 'tokenization super cycle' that could bring assets like stocks onto blockchain platforms.
The company also saw gains in net interest revenue and subscriptions, including its Gold tier, as it develops a more comprehensive financial services platform.