Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a significant decline in crypto 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 reported adjusted earnings per share of $0.38, missing the estimated $0.39, and total revenue fell short of the expected $1.14 billion. As a result, shares dropped approximately 8% in post-market trading. The decline in crypto-related revenue, a key driver of transactions, was 47% to $134 million from $252 million in the previous year.
This decrease occurred as the company attempts to shift its focus away from crypto price cycles. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, emphasizing the use of crypto technology as infrastructure for financial services.
The drop in crypto trading revenue was offset by stronger activity in other areas, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, driven by record-breaking prediction market bets. The company's expansion into areas like prediction markets, derivatives, and advisory tools aims to reduce its reliance on crypto trading. Tenev views crypto as a long-term investment opportunity, 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.