Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a substantial decline in crypto trading revenue. However, growth in other areas of the business led to a 15% year-over-year increase in total revenue, amounting to $1.07 billion. The trading platform reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39. As a result, shares dropped approximately 8% in post-market trading.
Crypto-related revenue, a significant driver of transactions for Robinhood, plummeted 47% to $134 million from $252 million in the previous year. This decline occurs as the company attempts to shift its focus away from crypto price fluctuations.
CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, emphasizing the use of crypto technology as 'infrastructure' for financial services. The decrease in crypto trading revenue was offset by increased activity in other areas, with transaction-based revenue rising to $623 million from $583 million in the previous year. A notable contributor was the growth in event contracts, which led to a 320% year-over-year increase in 'other transaction revenue' to $147 million. Robinhood reported that users traded a record 8.8 billion contracts tied to prediction markets during the quarter.
The results underscore a shift in how customers utilize the platform, with Tenev stating that 'if you build great products... they'll be there throughout the cycle.' This highlights more consistent engagement across various asset classes. As Robinhood expands into areas like prediction markets, derivatives, and advisory tools, it aims to reduce its dependence on crypto trading.
The company is trying to smooth out revenue fluctuations, similar to Coinbase, which is scheduled to report its earnings on May 7. Tenev views crypto as a long-term investment beyond trading, referring to the 'tokenization super cycle' and 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 a more comprehensive financial services platform.