Robinhood's first-quarter earnings report revealed a substantial miss in both earnings and revenue estimates, primarily due to a sharp decline in crypto trading revenue. However, growth in other areas of the business helped drive overall revenue up 15% to $1.07 billion.
The company's adjusted earnings per share of $0.38 fell short of Wall Street's estimate of $0.39. As a result, shares dropped approximately 8% in post-market trading. The decline in crypto-related revenue, a significant contributor to the company's transactions, was 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 fluctuations. According to CEO Vlad Tenev, the company is focused on utilizing crypto technology as 'infrastructure' for financial services, rather than being driven by crypto price cycles. 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 event contracts and a record 8.8 billion contracts traded in prediction markets.
The results highlight a shift in customer usage of the platform, with more consistent engagement across asset classes. As the company expands into areas such as prediction markets, derivatives, and advisory tools, it aims to reduce its reliance on crypto trading. The company also saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.
Tenev views crypto as a long-term opportunity beyond trading, citing the potential for a 'tokenization super cycle' that could bring assets like stocks onto blockchain technology.