Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a significant decline in cryptocurrency trading revenue. However, growth in other areas of the business led to a 15% year-over-year increase in total revenue, reaching $1.07 billion. The company reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39, according to FactSet data.
The revenue also fell short of analysts' expectations of $1.14 billion. As a result, shares dropped approximately 8% in post-market trading. The decline in crypto-related revenue, a major driver of transactions for Robinhood, was 47% to $134 million from $252 million in the previous year. This drop occurred as the company attempts to shift its focus away from cryptocurrency price fluctuations.
CEO Vlad Tenev stated on the earnings call that he wants to move away from discussing bitcoin prices, instead focusing on utilizing crypto technology as 'infrastructure' for financial services. 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. This growth was driven by newer products, including 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 indicate a shift in how customers are utilizing the platform, with more consistent engagement across various asset classes. Tenev noted that 'if you build great products... they'll be there throughout the cycle,' highlighting the company's efforts to reduce its dependence on cryptocurrency trading. Like Coinbase, which reports earnings on May 7, Robinhood is expanding into areas such as prediction markets, derivatives, and advisory tools to smooth out revenue fluctuations.
Tenev also views cryptocurrency as a long-term investment 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. The company also saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.