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 contributed 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 Wall Street estimate of $0.39. As a result, shares dropped approximately 8% in post-market trading.
The decline in crypto-related revenue, which decreased by 47% to $134 million from $252 million in the previous year, was a major contributor to the earnings miss. In an effort to diversify its revenue streams, Robinhood is shifting its focus towards utilizing crypto technology as a foundation for financial services, rather than relying on cryptocurrency price fluctuations. 'I want to move away from discussing the price of bitcoin,' stated CEO Vlad Tenev during the earnings call, emphasizing the company's commitment to leveraging crypto technology as 'infrastructure' for financial services. The decrease 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 growth in event contracts and prediction markets.
Users traded a record 8.8 billion contracts tied to prediction markets during the quarter, highlighting a shift in how customers are utilizing the platform. According to Tenev, 'If you build great products...
they'll be there throughout the cycle,' pointing to more consistent engagement across asset classes. As Robinhood expands into areas like prediction markets, derivatives, and advisory tools, it aims to reduce its dependence on crypto trading and create a more stable revenue stream. The company's efforts to decrease its reliance on cryptocurrency trading are similar to those of Coinbase, which reports earnings on May 7.
Tenev also emphasized the long-term potential of crypto, stating, 'We're at the very beginning of what's going to be a tokenization super cycle,' referring to the process of bringing assets like stocks onto blockchain rails. Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it continues to build a comprehensive financial services platform.