eToro (ETOR) Q2 2026 earnings review
Multi-Asset Model Prevents a Wipeout, but July Indicators Flash Red
eToro delivered a solid Q2 2026, with Net Contribution up 9% YoY to $229M and Adjusted EPS climbing to $0.68. The company successfully leveraged its multi-asset platform to capture user rotation into equities, offsetting severe crypto headwinds. Funded accounts reached a record 4.28M (+18% YoY). However, sequential momentum has reversed since Q1's record highs. More alarmingly, the company's rare July KPI disclosure revealed a dramatic collapse in crypto activity (-73% YoY trades) and a 5% YoY contraction in Assets Under Administration (AUA). The announced acquisition of US-based TradeZero provides a strong strategic pivot toward active US equities traders just as the crypto engine sputters.
🐂 Bull Case
Funded accounts grew 18% YoY to 4.28 million. Management's AI-driven micro-segmentation marketing strategy continues to yield impressive cohort growth, proving eToro can attract users even when crypto markets are soft.
The acquisition of TradeZero structurally shifts eToro's US presence from a crypto-heavy narrative to a robust, active-equities broker-dealer platform, drastically increasing the Total Addressable Market and recurring revenue potential.
🐻 Bear Case
July KPIs show crypto trades plummeting 73% YoY and invested amount per trade dropping 50%. If this baseline persists, Q3 will require massive heavy lifting from the equities segment just to hold revenue flat.
July AUA fell 5% YoY to $18.5B (down from $19.2B at the end of Q2). Reversing asset growth directly threatens the company's ability to compound net interest and wealth management revenues.
⚖️ Verdict: ⚪
Neutral. Management deserves credit for building a diversified platform that grew Q2 earnings despite a brutal crypto environment. But the sheer velocity of the July crypto deceleration and AUA contraction suggests Q3 estimates need serious downward revision.
Key Themes
Multi-Asset Model Validated by Equity Rotation
The core thesis of eToro's business model—that users will rotate rather than churn during specific asset downturns—was proven correct this quarter. Net trading income from equities, commodities, and currencies grew 24% YoY to $141.6M. Management noted that over 60% of users who traded commodities in prior quarters subsequently traded equities in Q2, demonstrating high platform stickiness across market cycles.
July KPIs Flash Warning Signs for Q3
The release of July metrics revealed a severe, decelerating operational reality. Total AUA reversed from $19.2B at Q2-end to $18.5B in July (-5% YoY). More critically, July crypto trades collapsed 73% YoY to just 1.4 million. The platform is currently entirely reliant on Capital Markets to maintain its net contribution levels, masking a deep freeze in digital asset engagement.
Aggressive M&A Reshaping the Ecosystem
eToro is aggressively utilizing its $1.2B cash pile. The newly announced acquisition of TradeZero directly addresses previous execution risks regarding U.S. market penetration by securing an established active-trader broker-dealer infrastructure. This follows the Q2 closing of Zengo and Bit2C, which fortified the self-custody and DeFi infrastructure. Management is effectively buying the capabilities it previously struggled to scale organically.
AI Product Suite Reaches Customers
The 'AI-first' narrative from prior quarters is transitioning into tangible product rollouts. The new mobile app centers entirely on 'Tori' (the AI agent), and Agent Portfolios allow users to deploy algorithmic guardrails. Furthermore, the eToro App Store now hosts over 75 applications built by developers and Pro Investors. This transitions eToro from a pure brokerage into a platform-as-a-service, which should drive higher engagement velocity.
Marketing Spend vs Yield in a Down Market
In Q1, management committed to increasing sales and marketing (S&M) to 25% of net contribution to capture perceived high cohort ROIs. With July metrics showing steep declines in trading activity, maintaining this elevated marketing spend carries immense margin risk. If retail trading appetite is structurally decelerating, aggressive ad spend will strictly cannibalize Adjusted EBITDA margins, which have already pulled back from Q1 highs.
Other KPIs
Accelerating. Up 18% YoY from 3.63 million in Q2 2025, and growing sequentially from 4.02 million in Q1 2026. This metric indicates that the top-of-funnel customer acquisition remains highly effective despite retail fatigue in crypto. July early indicators suggest this continued to 4.32 million.
Decelerating sequentially but up 9% YoY. The Adjusted EBITDA margin landed at ~34% (based on $229M net contribution), compressing from the 42% margin achieved during the record Q1 2026. This compression points to the normalization of commodity/equity volumes combined with persistent operating costs.
Stable. Grew 10% YoY from $43.9M in Q2 2025. Despite rate cut expectations globally, the income stream has held up, largely due to users increasing overall balances and participating heavily in the 'eToro Money' ecosystem.
Guidance
Reversing. AUA was reported down 5% YoY in July. This marks a sharp sequential decline from the $19.2 billion reported at the exact end of Q2 2026 (June 30). The contraction indicates either significant net market depreciation (largely crypto) or net outflows early in Q3.
Decelerating rapidly. Down 73% YoY. Concurrently, the invested amount per crypto trade dropped 50% to $182. This signals a near-total freeze in retail digital asset speculation on the platform heading into Q3.
Stable. Flat year-over-year. While it is outperforming crypto, it is failing to pick up the slack to drive overall growth. Additionally, the invested amount per trade dropped 23% YoY to $207, implying that while users are still trading equities, they are allocating significantly less capital per trade.
Key Questions
TradeZero Integration and US Strategy
With the TradeZero acquisition slated to close in 1H 2027, how does this alter the timeline and capital requirements for the organic rollout of 'Smart Portfolios' and prediction markets in the US that you previously outlined for late 2026?
Marketing Spend Adjustments
Given the severe 73% drop in July crypto trades and flat capital markets activity, are you dialing back the aggressive plan to ramp Sales & Marketing spend to 25% of net contribution, or do you view this as a contrarian opportunity to acquire market share cheaply?
Agent Portfolios Take-Rate
Now that 'Agent Portfolios' and 'sub-accounts' are fully live, are you seeing any meaningful shift in revenue per trade or LTV from users utilizing these AI features versus traditional self-directed traders?
AUA Contraction Drivers
July AUA dropped 5% YoY to $18.5B, losing roughly $700M since the end of June. How much of this decline is attributable to pure market-to-market depreciation versus net capital outflows?