Robinhood's first-quarter earnings and revenue fell short of expectations, primarily due to a substantial decline in crypto trading revenue. The company reported adjusted earnings per share of $0.38, missing the estimated $0.39, and total revenue of $1.07 billion, which was below the anticipated $1.14 billion. As a result, shares dropped approximately 8% in post-market trading.
The significant decline in crypto-related revenue, which decreased by 47% to $134 million, was offset by growth in other areas, including a 15% increase in overall revenue. According to CEO Vlad Tenev, the company is shifting its focus away from crypto price cycles and towards utilizing crypto technology as infrastructure for financial services. The drop in crypto trading revenue was accompanied by increased activity in other areas, such as transaction-based revenue, which rose to $623 million, driven by growth in newer products. A notable driver was event contracts, which led to a 320% year-over-year increase in 'other transaction revenue' to $147 million, with users trading a record 8.8 billion contracts tied to prediction markets during the quarter.
The results highlight a change in how customers are using the platform, with Tenev stating that 'if you build great products... they'll be there throughout the cycle.' Robinhood is expanding into areas like prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading.
The company is also exploring the tokenization of assets like stocks onto blockchain rails, with Tenev referring to it as a 'tokenization super cycle.' Additionally, Robinhood saw gains in net interest revenue and subscriptions, including its Gold tier, as it builds out a broader financial services platform.