eToro (ETOR) Q3 2026 earnings review
eToro adds users fast, but trading drops and profits fall
eToro, the online trading and investing platform, added users at a steady clip, but customer trading slumped across both stocks and crypto. Net contribution — revenue after direct crypto and margin costs — fell 13% from a year ago to $186 million, while operating profit excluding one-offs dropped 56% to $34 million because marketing spend jumped. Finance chief Meron Shani pointed to 21% annual growth in stock and commodity trading, yet that segment dropped 38% from the second quarter.
| Net contribution (revenue after direct crypto and margin costs) | $186M -13% from a year ago |
|---|---|
| Operating profit, excluding one-offs (Adjusted EBITDA) | $34M -56% from a year ago |
| Funded customer accounts | 4.39M +18% from a year ago |
| Forward financial outlook | None given October trades down 22% in stocks and 62% in crypto |
⚖️ Verdict: 🔴 Bearish
The story got worse because trading in stocks and commodities no longer offsets the crypto slump, and October activity dropped even further. Three months ago, management suggested a slow July might be a seasonal low, but October capital-markets dollar volume fell 60% from a year ago by our math. On the positive side, funded accounts still grew 18%, and the board approved a fresh $250 million share buyback programme.
The question now is whether the 18% surge in funded accounts builds earnings power for the next market rally or just brings in small accounts through heavy marketing spend. If the new cohorts hold substantial funds, revenue per account will rebound from this quarter's $42 low once market swings return; if they are low-balance accounts, marketing costs at 37% of net contribution will keep squeezing profits. Fourth-quarter trading income and marketing spend will tell.
🐂 Bull Case
US Portfolios Launch Alongside Fourth Deal
eToro has spent 2026 buying smaller firms and securing licences to expand outside Europe, where 72% of its funded accounts sit. After receiving its US investment adviser licence last quarter, the company launched 26 Smart Portfolios, which are pre-built investment baskets, for American users in the third quarter.
Management also signed its fourth acquisition of the year, agreeing to buy LB Finanzas, "a leading digital investment and payments platform in Argentina". Meanwhile, its pending deal for US broker TradeZero, worth up to $231 million and scheduled to close in the first half of 2027, received no update in the release and still awaits regulatory approval.
What to watch: assets held in US Smart Portfolios and the closing of the TradeZero purchase in early 2027. Disclosed asset figures will show whether American customers adopt the new portfolios before TradeZero arrives.
Board Reloads Buyback With $250 Million Plan
The online broker exhausted its previous $250 million share buyback programme in the first half of 2026, spending $189 million across the first two quarters. Because that allowance ran out, the cash flow statement shows zero share repurchases during the third quarter.
Alongside the results, the board approved a fresh $250 million buyback plan. Prior repurchases reduced the diluted share count by 8.4% from a year ago to 91.9 million shares, and the company noted the new shares can also sit in treasury "to support potential future strategic initiatives, including mergers and acquisitions, where etoro shares could serve as an effective transaction currency".
What to watch: treasury share purchases on the fourth-quarter cash flow statement. Resumed buying will show how much of its $1.2 billion cash pile management keeps in reserve for the TradeZero closing.
🐻 Bear Case
Trading Slump Deepens Into October Across Assets
"Capital markets net contribution increased 21% year over year, while crypto activity sequentially recovered," finance chief Meron Shani said. Net contribution is eToro's main top-line measure, capturing total revenue minus the direct cost of cryptoassets and margin interest.
Comparing against last year hides a sharp drop from the second quarter. Earlier in 2026, trading in stocks, commodities and currencies offset a crypto slump, but in the third quarter stock and commodity trading fell 38% from the second quarter, and October trading fell further across both categories.
- Total net contribution: $186 million, down 13% from a year ago and down 19% from the second quarter
- Stock, commodity and currency trading income: $88.5 million, down 38% from the second quarter's $141.6 million
- Crypto net trading contribution (excluding staking rewards): $26.3 million by our math, down 53% from $56 million a year ago
- October stock and commodity activity: 48.2 million trades (down 22% from a year ago) at $184 per trade (down 49%)
- October crypto activity: 2.0 million trades (down 62% from a year ago) at $228 per trade (down 29%)
Three months ago, management suggested a slow July might be a seasonal low point. Instead, by our math, October's drop in trade counts and trade sizes means total dollar volume fell 60% from a year ago in capital markets and 73% in crypto.
What to watch: fourth-quarter net trading income across stocks, commodities and crypto. Another sequential drop will confirm that multi-asset rotation cannot protect revenue when retail trading quiets down across every market at once.
Marketing Costs Rise While User Revenue Drops
Growing the user base is both a driver and a cost risk for the trading platform. Funded accounts — customers who have verified their identity, deposited money, made a trade and hold a positive balance — rose 18% from a year ago to 4.39 million, "driven primarily by strength in user acquisition and retention efforts".
That user growth required a 42% jump in selling and marketing expenses to $68.1 million. Because net contribution shrank at the same time, marketing consumed 36.6% of net contribution, up 14.3 percentage points from 22.3% a year ago and well above management's earlier 25% target.
- Net contribution per funded account: $42.44 by our math, down 26% from $57.53 a year ago and down from $53.60 in the second quarter
- Selling and marketing: 36.6% of net contribution, up 14.3 percentage points from a year ago
- Research and development: $42.1 million, or 22.6% of net contribution, up 4.9 percentage points from a year ago
- Operating profit (Adjusted EBITDA) margin on net contribution: 18.4% by our math, down 18.0 percentage points from 36.3% a year ago
New accounts are bringing in less revenue than existing ones while costing more to acquire. That combination cut operating profit excluding one-offs (Adjusted EBITDA) by 56% to $34.2 million.
What to watch: selling and marketing as a share of net contribution in the fourth quarter. A ratio staying above 30% while revenue per account falls will show customer acquisition is squeezing profit margins.
Shrinking Cash Balances Cut Interest Income
Beside trading fees, the brokerage earns interest on customer cash balances, corporate cash, leveraged margin positions and staked cryptoassets, which it groups together as interest-earning assets. Lower central bank interest rates and smaller customer margin loans have begun to reduce this income stream.
By our math, net interest income before staking rewards fell 17% from a year ago to $48.6 million, as interest collected from users dropped 15% to $50.0 million while margin interest expense rose 10% to $10.7 million. In October, interest-earning assets fell 20% from a year ago to $7.0 billion, a steeper drop than July's 8% decline.
What to watch: monthly interest-earning assets and net interest income in the fourth quarter. Continued 20% declines in the asset base will remove the steady interest buffer that previously cushioned slow trading quarters.
AI Tools Grow Without Disclosed Revenue
Chief executive Yoni Assia highlighted the launch of a rebuilt mobile app "built from the ground up with AI at its core, enabling us to ship products faster to our global community". The group also launched Edge, a desktop platform bringing charting and order tools "into a customizable workspace".
Users connecting automated software agents to trade via Claude, ChatGPT and Grok rose 250% from the second quarter, and the App Store passed 250 active apps. However, management gave no dollar figures for assets or revenue tied to AI portfolios, while total assets under administration stayed flat from a year ago at $20.8 billion and fell 6% in October to $19.2 billion.
What to watch: any disclosure of assets held in Agent Portfolios or revenue per AI user. Until those numbers appear and lift overall trade volumes, the AI tools remain an unquantified feature rather than a revenue driver.
💲 Other KPIs
Free cash flow fell 47% from a year ago and 43% from the second quarter, by our math, subtracting $0.4 million of equipment and software purchases from $21.5 million of operating cash flow. Lower operating profit drove the drop, converting 11.4% of net contribution into free cash flow.
Balances owed to platform customers fell 15.6% from $147.8 million at the end of June, though they remained up 15.7% from December's $107.8 million. The third-quarter reduction in user and omnibus account balances created a $25.7 million working-capital cash outflow on the cash flow statement.
Unrestricted cash ($881.3 million) plus short-term investments ($342.1 million) held steady against $1.21 billion at the end of June, as the group paused share buybacks during the quarter. During the period, the treasury team shifted $76.0 million net out of cash equivalents into short-term bank deposits.
❓ Key Questions
Why did management omit a fourth-quarter financial or expense outlook?
The earnings release contains no revenue, net contribution or operating expense targets for the fourth quarter. With October trade volumes and trade sizes down across both stocks and crypto, investors need to know if management plans to pull back on its $68 million quarterly marketing spend.
Where is the full five-line net contribution breakdown table?
In prior quarters, the company published a table breaking net contribution into five lines: stock and commodity trading, crypto trading, net interest, eToro Money, and subscriptions. The third-quarter release omitted this table, forcing investors to estimate the crypto and interest lines from the cash flow statement.
What are the economics and retention of recent user cohorts?
Funded accounts grew 18% from a year ago while net contribution per account fell 26% to $42.44. Management has not disclosed how much revenue 2026 account additions generate compared with older cohorts, or how long it takes to earn back the higher marketing spend.
What did eToro pay for LB Finanzas in Argentina?
The company announced an agreement to acquire Argentine digital investment platform LB Finanzas, its fourth acquisition signed in 2026, without disclosing the purchase price, user count or revenue. Investors need to know how much cash the deal requires alongside the pending $231 million TradeZero purchase.