eToro Group Ltd. (ETOR) Earnings

Management highlights

- Overall Financial & Operational Performance • Q2 2026 total net contribution increased 9% year-over-year to $229 million; adjusted EBITDA grew 9% year-over-year to $78 million, with an adjusted EBITDA margin of 34% flat year-over-year • Core KPIs: Funded accounts grew 18% year-over-year to 4.28 million, driven by marketing investment and improved user retention; assets under administration (AUA) grew 10% year-over-year to $19 billion, reflecting strong user inflows • Ended Q2 with $1.2 billion in cash, cash equivalents and short-term investments, and generated $39 million in operating cash flow; repurchased 2.3 million shares for $87 million under the existing share repurchase program - Strategic Pillar Product Innovation • Trading: Launched Toro Edge, a new web platform for active traders with professional-grade tools integrated into the company's AI ecosystem; introduced margin buying power directly from eToro cash accounts to simplify margin trading access; enabled pre-IPO trading for SpaceX for eligible European users • Investing: Expanded the Toro App Store to over 75 third-party developer/partner/pro-investor built applications; launched agent portfolios that let users connect AI agents to dedicated portfolios while retaining full control over risk and allocation; introduced agentic investing via the company's in-house AI agent Tori and user goal-focused subaccounts • Wealth Management: The company's savings offering grew 15x year-over-year in AUM, demonstrating strong momentum for its full-service wealth building proposition • Neobanking: Launched eToro Work to enable automated direct investing from employee paychecks; acquired crypto self-custody wallet provider Zengo; made a strategic investment in an on-chain perpetual futures platform; became a founding partner of OpenUSD; eToro money card issuance grew over 30% quarter-over-quarter across Europe - Key Acquisition • Announced a planned acquisition of TradeZero for up to $230 million in cash and stock, expected to close in H1 2027 • TradeZero generated ~$80 million in revenue over the last 12 months with over 80% gross margins in Q2 2026; the transaction is expected to be adjusted EPS accretive in the first full year post-close • TradeZero adds differentiated capabilities including four proprietary trading platforms, advanced active trader tools, and a robust U.S. broker-dealer self-clearing infrastructure; it expands eToro's presence in the U.S. and adds entry to the Canadian market

Guidance

- Q3 2026 adjusted operating expenses are expected to be slightly higher than Q2 2026, driven primarily by continued investment in growth activities including marketing and a small increase in R&D - July 2026 preliminary trends: funded accounts grew 18% year-over-year to 4.32 million, AUA declined 5% year-over-year due to falling crypto prices, and total trading activity was flat year-over-year in line with normal seasonal patterns; early August trading activity has already shown improvement from July levels - The company maintains its 2026 strategic priority of accelerating funded accounts growth, with sales and marketing spend targeted at 29% of net contribution in line with prior expectations - Management expects continued sustainable profitable long-term growth as it executes on its product expansion and U.S. growth strategy

Segment performance

• Capital Markets (equities, commodities, currencies): Net trading contribution grew 25% year-over-year to $142 million, representing 62% of total Q2 2026 net contribution. Growth was driven by rising user engagement and a 64% year-over-year increase in total trades as users shifted activity from crypto to equities. • Crypto: Net trading contribution was $11 million, representing 4.8% of total net contribution. The year-over-year decline reflects lower crypto trading activity, a user shift toward equities, and a $2 million negative valuation impact on corporate crypto holdings. • Net Interest Income: Contributed $49 million, up 7% year-over-year, representing 21.4% of total net contribution. Growth was driven by a 12% increase in higher interest-earning assets from rising user cash deposits and corporate cash balances. • eToro Money: Contribution grew 44% year-over-year to $26 million, representing 11.4% of total net contribution. Growth was driven by a 92% year-over-year increase in total money transfers from rising deposits and user activity.

Risks & headwinds

- All forward-looking statements regarding product development, acquisition integration, future growth, and market performance are subject to material risks and uncertainties that could cause actual results to differ materially from expectations; key risks are detailed in the company's SEC filings - Crypto market performance is inherently cyclical, and ongoing price weakness could continue to pressure crypto net contribution in upcoming quarters - Seasonal market volatility and market corrections can lead to temporary dips in trading activity and customer margin borrowing, as seen in July 2026 - Acquisition completion and projected synergies (revenue and cost) are not guaranteed, and integration of TradeZero's operations and technology may face unanticipated delays or challenges

Analyst Q&A

• Q: What incremental capabilities and strategic goals does the TradeZero acquisition deliver for eToro's U.S. expansion? /

  A: TradeZero provides a strong existing U.S. team, self-clearing broker-dealer infrastructure, and unique patented technology for short selling, leverage trading, and futures that eToro will use to launch full global eToro product functionality in the U.S. It also adds an established community of active, desktop-focused traders that aligns with eToro's new Toro Edge professional platform offering. The acquisition accelerates eToro's U.S. growth by bringing popular products unavailable domestically to the market, and adds entry into Canada. Management remains open to additional strategic acquisitions in the U.S. and globally. (317 characters)

• Q: How has early adoption of agent portfolios progressed, and what are the capabilities and user controls for AI-powered trading? /

  A: Early adoption has been driven by technically sophisticated, AI-friendly users who are trading at very high volumes relative to average accounts. eToro recently added official MCP connectivity for third-party AI models including Grok and Claude, letting users authorize AI agents to trade directly on their behalf. Users retain full control over all permissions, including limiting agents to specific sub-portfolios or only allowing read access. With TradeZero's options APIs, eToro expects to soon add options trading support for AI agents to its global platform. (359 characters)

• Q: What is eToro's outlook for crypto, and how will crypto develop from a speculative to utility-driven asset class? /

  A: Management remains long-term bullish on crypto and on-chain finance, noting this is eToro fourth crypto cycle, following a consistent pattern of post-halving peaks, corrections, and new rallies. Price movement does not always align with technological innovation, and most innovation is built during bear market cycles. eToro is uniquely positioned at the intersection of traditional finance and digital assets, and is already seeing utility growth from on-chain tokenization of real assets like pre-IPO SpaceX, with broader industry support for on-chain finance building. (341 characters)

• Q: What was the customer response to the SpaceX pre-IPO offering, and what opportunity does an IPO market reopening create for eToro? /

  A: Over 200,000 eToro customers traded over $1.7 billion in SpaceX shares and derivatives, and the offering drove meaningful new funded account growth in Q2 2026. The successful IPO demonstrated strong retail investor demand for access to pre-IPO and new IPO shares, and eToro's innovative model of pre-IPO price trading and retail allocation was well received. Management expects more large IPOs (including rumored Anthropic and OpenAI offerings) to continue driving client activity and new user growth, and TradeZero's short selling infrastructure will create additional revenue opportunities from securities lending as new volatile tech IPOs enter the market. (397 characters)