Robinhood's first-quarter earnings report revealed a notable shortfall in both earnings and revenue estimates, primarily attributed to a substantial decline in crypto trading revenue. However, growth in other areas of the business helped drive overall revenue up by 15% to $1.07 billion.
The company's adjusted earnings per share were $0.38, falling short of Wall Street's estimated $0.39. As a result, shares dropped approximately 8% in post-market trading. The significant decline in crypto-related revenue, which decreased by 47% to $134 million, was somewhat offset by the strong performance of other transaction-based revenue streams, such as event contracts, which saw a 320% year-over-year increase to $147 million. This shift in revenue highlights the company's efforts to diversify its services and reduce dependence on crypto trading.
According to CEO Vlad Tenev, the focus is on utilizing crypto technology as a foundation for financial services, rather than relying on crypto price cycles. The company's expansion into areas like prediction markets, derivatives, and advisory tools aims to stabilize revenue fluctuations. With a record 8.8 billion contracts traded in prediction markets during the quarter, Robinhood is working towards building a more comprehensive financial services platform, with gains in net interest revenue and subscriptions, including its Gold tier.