Robinhood reported a substantial miss in its first-quarter earnings and revenue projections, largely attributed to a sharp decline in cryptocurrency trading revenue. However, growth in other areas of the business helped drive overall revenue up by 15% to $1.07 billion. The company's adjusted earnings per share stood at $0.38, falling short of Wall Street's estimate of $0.39. As a result, shares plummeted approximately 8% in post-market trading.
The significant decline in crypto-related revenue, which dropped 47% to $134 million, was offset by increased activity in other areas, including a 320% year-over-year surge in 'other transaction revenue' to $147 million. This was largely driven by the growth of event contracts, with users trading a record 8.8 billion contracts tied to prediction markets during the quarter. CEO Vlad Tenev emphasized the company's focus on utilizing crypto technology as 'infrastructure' for financial services, rather than relying on crypto price cycles. The results underscore a shift in how customers are utilizing the platform, with 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 cryptocurrency trading and create a more diversified revenue stream.