Robinhood's first-quarter earnings report fell short of expectations, with the company missing its estimated earnings and revenue targets due to a sharp 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, short of the expected $1.14 billion.
As a result, shares dropped approximately 8% in post-market trading. Crypto-related revenue, a significant contributor to the company's transactions, 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 cycles. According to CEO Vlad Tenev, Robinhood is concentrating on utilizing crypto technology as 'infrastructure' for financial services, rather than relying on crypto price fluctuations. The decrease in crypto trading revenue was offset by stronger activity in other areas, with transaction-based revenue increasing to $623 million from $583 million in the previous year.
A key driver of this growth was the surge in event contracts, which led to a 320% year-over-year increase in 'other transaction revenue' to $147 million. The company reported that users traded a record 8.8 billion contracts tied to prediction markets during the quarter. These results highlight a shift in how customers are using the platform, with more consistent engagement across asset classes.
Tenev emphasized that 'if you build great products... they'll be there throughout the cycle.' Robinhood has been expanding into areas like prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading. The company is also working to smooth out revenue fluctuations, similar to Coinbase, which is set to report its earnings on May 7. Tenev views crypto as a long-term bet beyond trading, stating that 'we're at the very beginning of what's going to be a tokenization super cycle,' referring to efforts to bring assets like stocks onto blockchain rails.
Additionally, the company saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.