Author: Claude, Deep Tide TechFlow

Deep Tide Guide: Robinhood's Q1 revenue was $1.07 billion, with earnings per share of $0.38, both below Wall Street expectations. The main culprit was a staggering 47% year-on-year drop in crypto trading revenue to $134 million, but the prediction market contract trading volume hit a record 8.8 billion contracts with revenue soaring by 320%, becoming the new engine of growth. The company raised its full-year operating expense guidance by $100 million to build the "Trump Accounts," leading to a post-market drop of more than 8% in its stock price.

Robinhood delivered a "mixed but skewed" Q1 report card.

According to the financial report released by Robinhood after the market on April 28, the company's total net revenue for Q1 was $1.07 billion, a 15% year-on-year growth, but below the analyst expectation of $1.14 billion (Bloomberg consensus); diluted earnings per share were $0.38, a 3% year-on-year increase, also lower than the market expectation of $0.42. Net profit was $346 million, with just a 3% year-on-year growth, the lowest quarterly profit in the past year.

After the announcement, HOOD's stock price fell as much as 8% in after-hours trading, then the decline slightly narrowed, with after-hours trading price around $81.35. Before the release of the financial report, HOOD had accumulated a decline of about 27% this year, far below the 52-week high of $153.86 last year.

Crypto revenue nearly halved, becoming the biggest drag

Crypto trading revenue plunged 47% year-on-year to $134 million, down from $252 million in the same period last year. The nominal crypto trading volume decreased by 48% year-on-year to $24 billion. This was the most significant decline among all trading categories at Robinhood and the core reason for the disappointing performance this quarter.

This downturn did not emerge suddenly. In Q4 of last year, the company’s crypto trading revenue had already decreased by 38% year-on-year to $221 million, further worsening in Q1, reflecting the overall sluggishness of the crypto market starting at the end of 2025 and continuing into early 2026. The global cryptocurrency total market cap in Q1 fell by about 20.4% year-on-year, with falling prices and shrinking trading volumes creating a double whammy.

CEO Vlad Tenev attempted to shift the narrative away from price fluctuations in the earnings call. According to CoinDesk, he stated, "I don’t want to talk about the price of Bitcoin anymore," emphasizing that Robinhood is more focused on using crypto technology as the "infrastructure" for financial services. He further introduced the concept of a "tokenization supercycle," claiming the company is in the early stages of moving assets such as stocks onto the blockchain.

Explosive growth in prediction markets, 'other trading revenue' skyrockets by 320%

The collapse of crypto revenue contrasts sharply with the explosion in prediction markets.

'Other trading revenue' (mainly from event contracts) surged by 320% year-on-year to $147 million, with the Q1 event contract trading volume reaching a record 8.8 billion contracts. This revenue category has now surpassed crypto trading revenue, becoming Robinhood's fastest-growing trading line.

According to DeFi Rate, CFO Shiv Verma noted in the earnings call that the April prediction market trading volume "is expected to reach about 3 billion contracts, possibly the second-highest month ever."

Robinhood is accelerating the vertical integration of this sector. The company has partnered with market maker Susquehanna International Group to establish the Rothera exchange, which is planned to launch in Q2. At that time, Robinhood will be able to independently list and clear event contracts without relying on third-party exchanges like Kalshi. Tenev described this as a key step in "end-to-end control of customer experience," including product selection and pricing power.

In traditional trading categories, stock trading revenue was $82 million, a 46% year-on-year increase; options trading revenue was $260 million, an 8% year-on-year increase. Total trading revenue was $623 million, a 7% year-on-year increase, with growth significantly slowed down due to crypto's drag.

User and asset numbers continue to hit new highs, Gold subscription shines

The financial report highlighted many positive points, particularly in user and asset metrics.

In Q1, net deposits were $17.7 billion, with an annualized growth rate of 22%; total assets on the platform were $307 billion, a 39% year-on-year increase. Gold subscription users reached a record 4.3 million, up 36% year-on-year, adding 1.2 million. Gold's penetration rate among paid users rose from 7% at the beginning of 2024 to 15.8%. The total number of paying customers was 27.4 million, a year-on-year increase of 6%; the number of investment accounts was 29.1 million, a year-on-year increase of 8%.

The revenue structure is also undergoing a transformation. Net interest income rose by 24% year-on-year, and subscription-driven 'other revenue' grew by 57% year-on-year. Annualized revenue from Gold subscriptions reached $200 million. This indicates that Robinhood's dependence on trading revenue is decreasing, but whether this decline can offset the volatility of the crypto cycle remains a focal point for the market.

'Trump Accounts' driving up operating expenses, full-year expense guidance raised by $100 million

The biggest new variable for Robinhood this quarter is the 'Trump Accounts.' The company has adjusted its full-year adjusted operating expense and equity incentive guidance from $2.6 billion to $2.725 billion, raising it to $2.7 billion to $2.825 billion, with the additional $100 million allocated to building and supporting the user interface for the Trump Accounts.

According to Yahoo Finance, CFO Verma stated in the earnings call that about half of this will occur in Q2. The project is contracted under a "cost-plus" model, with the company expecting revenues to exceed costs. Tenev positioned this as an entry to reach the "next generation of investors, 60 million of them."

Total operating expenses for Q1 were $656 million, an 18% year-on-year increase, primarily driven by marketing and growth investments as well as acquisition-related costs. Adjusted EBITDA was $534 million, a 14% year-on-year increase.

Additionally, the company repurchased $250 million in stock in Q1 at an average price of about $81 per share, and the board refreshed the repurchase authorization limit to $1.5 billion in March.

Strong start to Q2, but the shift in crypto narrative remains to be validated

Management provided an optimistic signal for the start of Q2. According to Robinhood's official press release, Verma stated that April stock and options trading volume is expected to become the highest month this year, despite the tax season, with net deposits reaching about $5 billion.

In terms of product lines, Robinhood is pushing forward on multiple fronts. Besides the Rothera exchange, the company is launching crypto services in Canada, brokerage business in Singapore, and continuously expanding its AI tool Cortex. The Robinhood Social beta has been opened to 10,000 customers, providing verified trade sharing and community interaction. Additionally, in February this year, the company launched a testnet based on the Arbitrum Ethereum L2 blockchain called "Robinhood Chain," aimed at supporting around-the-clock trading of tokenized stocks and ETFs.

But the core concern of the market remains: Will the growth rate of prediction market and subscription revenue continue to fill the gap left by declining crypto revenue? From the "Rule of 40" (the sum of revenue growth rate and profit margin) perspective, the score over the past twelve months was 98%, well above the healthy line of 40%, but has dropped from the peak of 131% in Q3 of last year. According to analysis by Sherwood News, the correlation of HOOD's stock price to the BlackRock iShares Bitcoin Trust (IBIT) in 2026 is even higher than its correlation with the S&P 500 ETF, indicating that as long as the crypto market continues to remain sluggish, Robinhood's valuation recovery will face resistance.