Robinhood (HOOD) fell short of its first-quarter earnings and revenue projections, primarily due to a substantial decline in crypto trading revenue. However, growth in other areas of the business helped drive overall revenue higher. The company reported adjusted earnings per share of $0.38, missing the Wall Street estimate of $0.39, according to FactSet data. Total revenue increased by 15% year-over-year to $1.07 billion, but failed to meet analysts' expectations of $1.14 billion.
As a result, shares dropped approximately 8% in post-market trading. Crypto-related revenue, a significant driver of transactions for Robinhood, decreased by 47% to $134 million from $252 million in the previous year.
This decline occurs as the company attempts to shift its focus away from crypto price fluctuations. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, instead emphasizing Robinhood's focus 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 rising to $623 million from $583 million in the previous year.
This growth was driven by newer products, including a 320% year-over-year increase in 'other transaction revenue' to $147 million, primarily due to event contracts. Robinhood reported a record 8.8 billion contracts tied to prediction markets traded during the quarter. The results highlight a change in how customers are utilizing the platform, with Tenev noting that 'if you build great products... they'll be there throughout the cycle.' Robinhood is expanding into areas such as prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading.
The company is also exploring the potential of tokenization, with Tenev stating that 'we're at the very beginning of what's going to be a tokenization super cycle.' Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it develops a more comprehensive financial services platform.