Robinhood Stock Drops After Q1 Profit Miss Despite Revenue Gain

(AsiaGameHub) –   Robinhood announced an increase in both first-quarter profit and revenue; however, the trading platform failed to meet Wall Street’s earnings forecasts, resulting in a roughly 6% decline in its stock during after-hours trading.

---

Key Highlights

• Robinhood’s net income increased by 3% to $346 million, equating to 38 cents per share.
• Revenue grew by 15% to $1.07 billion, bolstered by prediction markets and subscription services.
• The number of traded event contracts reached a quarterly record of 8.8 billion.

---

Prediction Markets Offset Weakness in Crypto Trading

During the first quarter, Robinhood experienced growth in its user base and platform assets, alongside record activity in prediction markets, yet investors prioritized the company’s failure to meet earnings targets.

The company recorded a net income of $346 million, an increase from the previous year’s $336 million. Earnings per share came in at 38 cents, slightly missing the 39 cents anticipated by analysts. Following the announcement, shares fell in late trading by approximately 6%.

The revenue figures painted a more positive picture. Overall revenue surged 15% to $1.07 billion, and revenue from transactions increased 7% year-over-year to $623 million. Conversely, transaction-based revenue saw a 20% dip from the prior quarter, with cryptocurrency acting as a hindrance. As prices for digital assets softened, crypto trading revenue plummeted 47% to $134 million.

Some of this pressure was alleviated by prediction markets. The trading of event contracts reached a record 8.8 billion for the quarter, providing Robinhood with an additional growth avenue distinct from stocks, options, and crypto. Additionally, the firm is expanding into areas such as credit cards, banking, and access to venture capital.

Subscriptions provided a further boost. Revenue from Robinhood Gold jumped 32%, while the subscriber count for Gold rose 36% to 4.3 million. Other revenue streams grew by 57% to $85 million, primarily driven by subscriptions. Furthermore, net interest revenue climbed 24% to $359 million.

Operating expenses increased by 18% to $656 million, largely due to elevated spending on marketing and growth initiatives. Despite this, adjusted EBITDA grew by 14% to $534 million.

Metrics for users also showed improvement. The number of funded customers increased by 6% to 27.4 million, investment accounts grew by 8% to 29.1 million, and total assets on the platform soared 39% to $307 billion. Net deposits for the quarter totaled $17.7 billion, and average revenue per user rose 8% to $157.

Chief Financial Officer Shiv Verma stated that the diversification of the business has reduced Robinhood’s vulnerability to specific product cycles. He remarked: “It’s a much more durable business relative to 2022.”

Nevertheless, demand for prediction markets has displayed inconsistency. Following the conclusion of the football season, volumes dropped by 29% month-over-month. Meanwhile, analysts have expressed concerns regarding diminished retail trading activity amidst macroeconomic uncertainty.

Chief Executive Officer Vlad Tenev noted that Robinhood continues to develop its broader role in personal finance. He commented: “Driven by our relentless product velocity and innovation, Robinhood is increasingly positioned at the center of our customers’ financial lives, just as we enter the early innings of the Great Wealth Transfer.”

Verma further added: “In Q1, customers remained engaged and rapidly adopted new products, leading to a 20 percent-plus annualized net deposit growth rate, double digit growth across equities and options, and record volumes for prediction markets, futures, and index options.”

He also stated: “And Q2 is off to a good start in April, as equity and option trading volumes are on track to be the highest month of the year, and even with tax season, net deposits are approximately $5 billion month-to-date.”

Robinhood has also updated its 2026 outlook for adjusted operating expenses, raising it to a range of $2.7 billion to $2.825 billion to fund investments in artificial intelligence, tokenization infrastructure, and new account offerings.