Robinhood Markets (HOOD) experienced a sharp decline in after-hours trading Tuesday, with shares falling approximately 6% after the online brokerage reported first-quarter earnings that fell short of Wall Street expectations. The primary drag was a significant downturn in cryptocurrency trading revenue, which overshadowed growth in other segments such as options, equities, and event contracts.
The company posted net revenue of $1.07 billion for the first quarter, a 15% increase year-over-year. Net income rose 3% to $346 million, while diluted earnings per share came in at $0.38, also up 3%. However, transaction-based revenue totaled $623 million, a 7% rise but well below the $728.2 million analysts had forecast, according to LSEG data cited by Reuters.
Revenue from crypto transactions was hit hardest, dropping 47% to $134 million. In contrast, options revenue grew 8% to $260 million, equities revenue surged 46% to $82 million, and other transaction revenue—driven largely by event contracts—soared 320% to $147 million. These gains were not enough to offset the crypto slump, leading to the earnings miss.
Robinhood's premium Gold service continued to expand, reaching a record 4.3 million subscribers, up 36% year-over-year. Revenue from Gold subscriptions increased 32% to $50 million. Additionally, net interest revenue climbed 24% to $359 million, supported by growth in interest-earning assets, though lower short-term rates and reduced securities lending tempered the gain.
Chief Financial Officer Shiv Verma noted that customers "remained engaged and rapidly adopted new products," highlighting double-digit gains in equities and options, as well as record volumes in prediction markets, futures, and index options. He added that April was shaping up to be even stronger, with equity and option trading volumes on pace for their highest monthly totals this year.
Despite these positive indicators, the company faces headwinds. Operating expenses rose 18% to $656 million, and Robinhood raised its 2026 adjusted operating expense and share-based compensation forecast to a range of $2.7 billion to $2.825 billion, adding $100 million for initiatives related to Trump Accounts. Regulatory challenges are also mounting, with Robinhood involved in legal disputes alongside other firms after the U.S. Commodity Futures Trading Commission filed suit against Wisconsin over actions targeting companies like Kalshi, Polymarket, Crypto.com, and Coinbase.
The stock has declined over 27% year-to-date, reflecting investor concerns about the sustainability of growth amid a crypto slowdown and regulatory uncertainties. CEO Vlad Tenev emphasized that the platform is playing an increasingly central role in users' finances, but the near-term mismatch between growth areas and investor expectations remains a key issue. The company's reliance on crypto revenue continues to be a focal point, and the ability to diversify into new revenue streams will be critical for future performance.
