eToro Earnings Preview (August 11): $2.15bn Of Crypto Revenue, And Almost None Of The Profit

Updated August 11 with reported results. The preview said net contribution and funded accounts were the operating lines to check, not the crypto headline; net contribution fell sequentially and the stock sold off hard despite the EPS beat.

TL;DR

• eToro reported adjusted diluted EPS of $0.68, beating the $0.61 consensus this preview logged (GAAP diluted EPS was $0.58). GAAP net income was $53 million, up 77% year over year, though one Street estimate had looked for closer to $55 million.
• Net contribution was $229 million, up 9% year over year but down from Q1's $258 million. That sequential decline, in the metric this preview identified as the one that "pays the bills," is the more important number than the EPS beat.
• Adjusted EBITDA was $78 million, up 9%, at a 34% margin, decelerating from Q1's 35% growth. Funded accounts grew 18% to 4.28 million (accelerating from Q1's 12%), and assets under administration rose 10% to $19.2 billion (decelerating from Q1's 15%).
• Crypto revenue was $1.35 billion against $1.35 billion of cost, continuing the shrink from Q1's $2.15 billion, and management flagged July crypto trades down 73% year over year. eToro also announced a deal to acquire US brokerage TradeZero for up to $231 million in cash and stock, expected to close in H1 2027.
• Shares sold off sharply on the print; reported session moves ranged from about 8% to 14% lower, with an intraday low near $30.11 against a $34.00 prior close. Sources have not converged on a single closing figure, so treat any specific percentage as directional rather than final.

When Does eToro Report Earnings?

Tuesday, August 11, before the US market opens, with the webcast at 8:30am ET. The full week, including July CPI on Wednesday, is in the earnings calendar.

The Board

The EPS line beat. The metric that pays the bills fell sequentially, and the market picked the second story.

Percentage Of What? The Crypto Line Is A Trap

eToro's crypto business is reported gross. When a customer buys $10,000 of bitcoin on the platform, roughly $10,000 flows through the revenue line and roughly $10,000 flows through cost of revenue, and eToro keeps the spread. That is why Q1 showed $2.15 billion of crypto revenue against $2.17 billion of cost.

Two consequences follow, and both matter for how Tuesday gets reported.

First, the year-on-year crypto decline is nearly meaningless as a profit signal. Crypto revenue fell from $3.5 billion to $2.15 billion, roughly 38%. On a gross-reported line with a near-zero net margin, a 38% fall in notional turnover is a fall in a number that was not producing much profit in the first place. It matters for engagement and for the direction of retail risk appetite; it does not, by itself, cost eToro $1.35 billion of anything.

Second, "revenue" is the wrong denominator for this company entirely. The line that pays the bills is net contribution: $258 million in Q1, which is what remains after the direct costs of executing customer trades. That is the number to hold Tuesday's print against, and it is roughly one percent of the gross revenue figure. Anyone comparing a $224.7 million consensus against a company that reported $258 million of net contribution and billions of gross revenue is comparing three different things.

We have flagged this class of error before, and it is the same discipline that applies to any share count, price and total that appear together: ask what the base is before you quote the percentage.

What Actually Drives The Quarter

Strip out the gross-up and eToro is a retail brokerage with three levers.

Funded accounts. 4.02 million at the end of Q1, up 12% from 3.58 million. This is the cleanest growth metric the company publishes, and it compounds slowly. A step down here is the signal that the marketing spend has stopped working.

Assets under administration. $17.0 billion, up 15%. AUA growth is part net inflows and part market appreciation, and with global equities at records through the June quarter, some of Q2's growth will be the market doing the work rather than customers arriving. Management should be asked to split it; the market rarely insists.

Mix. Q1's profit came disproportionately from capital markets activity rather than crypto, with adjusted EBITDA up 35% and GAAP net income up to a record $82 million. That is the structural bull case: a business that was once a leveraged bet on crypto turnover is converting into a diversified brokerage with equities, commodities and interest income doing the lifting.

The bear case is the mirror image. Retail brokerages are cyclical and their best quarters arrive when markets are at highs, which is precisely where the June quarter sat. eToro is being valued on numbers produced at the friendly end of the cycle, and the July payrolls print has already reminded everyone that the cycle exists.

The Basis Problem, Stated Plainly

The published revenue consensus of about $224.7 million sits below Q1's reported $258 million of net contribution and several orders of magnitude below gross revenue. That does not make it wrong, but it does mean nobody should grade the print against it without knowing which definition it is built on.

My read: the EPS consensus of $0.61, with a whisper at $0.64, is the usable number, because EPS is unambiguous however the top line is presented. Net contribution and funded accounts are the operating lines to check. The revenue headline is best ignored until eToro's own release defines it.

Update, August 11: EPS cleared both the consensus and the whisper, at $0.68. Net contribution did not clear its own prior quarter, falling to $229 million from Q1's $258 million even as it grew 9% year over year, and that sequential drop, not the EPS beat, is what the stock traded on. Funded accounts kept compounding at an accelerating 18% clip, the one clean positive in the release; crypto kept shrinking, with July trade counts down 73% year over year, a sharper deceleration than the quarterly revenue figures alone show.

The Options Angle

The 9.4% implied move set breakevens at $31.93 and $38.55 against the $35.24 spot. The stock fell straight through the lower breakeven; reported closes and intraday lows put it anywhere from about $32.35 down to $29.12, all of them below $31.93.

• The straddle pass cost real upside, and it is the loss worth naming first. A straddle bought into this print would have paid off, since the realized decline cleared the 9.4% breakeven on the downside alone within hours of the print.
• The long-shares position is a loss. Entered at $35.24, marked against a close reported anywhere from roughly $30 to $32, this position is down somewhere between 9% and 15%, depending on which session close is used. The mechanism: a broker priced for a cyclical high-water quarter got exactly that quarter's sequel, sequential deceleration, and an equity long into an unresolved crypto-shrink story is where this book's risk actually lives.
• The conditional triggered on a technicality. Net contribution did grow year over year (+9%), and crypto turnover fell again, so the letter of the condition was met. But the sequential drop from Q1's $258 million and the 73% July crypto-trade decline are a materially weaker setup than "net contribution grows" implied when this was written, so no fresh post-print long was struck; the deteriorating trend argues for standing down rather than mechanically following the rule into a falling knife.

Trade log

#	Stance	Structure	Strikes and expiry	Cost or credit	Spot at writing	Implied move	Result
1	Pass	Long straddle	$35 straddle, Aug 21	~9.4% of spot; live price not sourced	$35.24, Aug 7 close	±9.4%	Loss (foregone). The realized decline (roughly 8-14%) cleared the 9.4% breakeven; a straddle buyer would have profited.
2	Pass, but logged as a long	Long shares into the print	n/a	n/a	$35.24, Aug 7 close	±9.4%	Loss. Marks down roughly 9-15% depending on the reported close.
3	Conditional	Post-print long (shares) if net contribution grows while crypto turnover falls again	Struck off the Aug 11 close	Struck off the Aug 11 close	To be struck Aug 11	n/a	Not triggered by judgment, despite meeting the letter of the condition; sequential deceleration in net contribution and a 73% crypto-trade decline argued against a fresh long.

The One-Line Read

eToro beat EPS and still fell double digits, because the metric this preview said actually pays the bills, net contribution, shrank from the prior quarter even as crypto kept its multi-quarter decline going, and a market that had been rewarding this name for diversifying away from crypto just found out the diversification has not been enough to offset the shrink.