Robinhood's first-quarter earnings report fell short of expectations, with the company missing its estimated earnings and revenue targets due to a substantial decline in crypto trading revenue. The trading platform reported adjusted earnings per share of $0.38, below the estimated $0.39, and total revenue of $1.07 billion, which was lower than the anticipated $1.14 billion.
As a result, shares dropped approximately 8% in post-market trading. The company's crypto-related revenue, a significant contributor to its transactions, decreased by 47% to $134 million from $252 million in the previous year. However, other areas of the business showed resilience, with transaction-based revenue increasing to $623 million from $583 million, driven by growth in newer products. A notable contributor to this growth was event contracts, which propelled 'other transaction revenue' up 320% year-over-year to $147 million, with users trading a record 8.8 billion contracts tied to prediction markets during the quarter.
The CEO, Vlad Tenev, emphasized the company's focus on utilizing crypto technology as 'infrastructure' for financial services, rather than relying on crypto price cycles. The results underscore a shift in customer usage, with more consistent engagement across asset classes.
To reduce dependence on crypto trading, Robinhood has been expanding into areas such as prediction markets, derivatives, and advisory tools. The company is working to create a more diversified revenue stream, with gains in net interest revenue and subscriptions, including its Gold tier, as it builds a broader financial services platform.
Tenev also highlighted the potential for a 'tokenization super cycle,' where assets like stocks are brought onto blockchain rails, representing a long-term bet beyond trading.