Robinhood reported a disappointing first-quarter earnings result, missing both earnings and revenue estimates due to a substantial decline in crypto trading revenue. However, growth in other areas of the business helped drive overall revenue higher. The company posted adjusted earnings per share of $0.38, falling short of the estimated $0.39, and total revenue of $1.07 billion, which was below the expected $1.14 billion.
As a result, shares dropped approximately 8% in post-market trading. Crypto-related revenue, a significant contributor to the company's transactions, plummeted 47% to $134 million from $252 million in the previous year.
This decline occurred as Robinhood attempts to shift its focus away from crypto price fluctuations. CEO Vlad Tenev expressed his desire to move beyond discussing bitcoin prices, emphasizing the company's focus on utilizing crypto technology as the foundation 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, driven by growth in newer products. A key factor was the rise of 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,' pointing to more consistent engagement across asset classes.
Robinhood has been expanding into areas like prediction markets, derivatives, and advisory tools to reduce its dependence on crypto trading. The company is trying to smooth out revenue fluctuations, similar to Coinbase, which is also working to decrease its reliance on crypto trading.
Tenev views crypto 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.