Robinhood's first-quarter earnings report fell short of expectations, with the company missing its revenue and earnings targets due to a significant decline in cryptocurrency 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, which was lower than the anticipated $1.14 billion.
As a result, shares declined by approximately 8% in post-market trading. The company's cryptocurrency-related revenue dropped 47% to $134 million from $252 million in the previous year, prompting CEO Vlad Tenev to shift the focus away from cryptocurrency price fluctuations. Instead, Tenev emphasized the use of cryptocurrency technology as 'infrastructure' for financial services. The decline in cryptocurrency trading revenue was offset by growth in other areas, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, driven by a record 8.8 billion contracts traded in prediction markets.
The company's results highlight a shift in user behavior, with more consistent engagement across different asset classes. Robinhood is expanding its services to include areas like prediction markets, derivatives, and advisory tools to reduce its dependence on cryptocurrency trading.
The company is also exploring the tokenization of assets like stocks on blockchain platforms, which Tenev believes will drive long-term growth. Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds a more comprehensive financial services platform.