Robinhood's first-quarter earnings report revealed a significant shortfall in both earnings and revenue projections, primarily attributed to a substantial decline in cryptocurrency trading revenue. However, growth in other segments of the business propelled overall revenue upward. The company reported adjusted earnings per share of $0.38, falling short of Wall Street's estimate of $0.39.
Total revenue increased by 15% year-over-year to $1.07 billion but missed analysts' expectations of $1.14 billion. As a result, shares declined by approximately 8% in post-market trading. The drop in crypto-related revenue, a significant driver of transactions for Robinhood, was 47% to $134 million from $252 million in the previous year.
This decline occurred as the company attempts to shift its focus away from cryptocurrency price fluctuations. In the earnings call, CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, emphasizing the use of crypto technology as 'infrastructure' for financial services.
Meanwhile, transaction-based revenue rose to $623 million from $583 million in the previous year, driven by growth in newer products. A notable contributor was event contracts, which increased 'other transaction revenue' by 320% year-over-year to $147 million. During the quarter, Robinhood reported a record 8.8 billion contracts traded in prediction markets.
The results underscore a change in how customers utilize the platform, with Tenev stating, 'If you build great products... they'll be there throughout the cycle,' highlighting consistent engagement across asset classes.
Robinhood has been expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading. Similar to Coinbase, which will report earnings on May 7, the company aims to mitigate revenue fluctuations.
Tenev also framed cryptocurrency as a long-term investment beyond trading, referencing the 'tokenization super cycle' and efforts to bring assets like stocks onto blockchain rails. The company experienced gains in net interest revenue and subscriptions, including its Gold tier, as it develops a broader financial services platform.