eToro Group Ltd. (ETOR) Q4 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

eToro's earnings call reveals strategic plans for global expansion, AI-driven innovation, and a robust U.S. market strategy. The announced $150 million share repurchase program and M&A appetite further bolster confidence. Despite some unclear responses, the overall sentiment is positive due to strong revenue projections, product development, and market strategies. The positive outlook is reinforced by the company's focus on shareholder value and expansion in promising sectors such as crypto and wealth management.

Key Financial Performance

Net Contribution Increased 10% year-over-year to $868 million for the year and rose 6% sequentially in Q4 to $227 million. This reflects continued momentum and the strength of eToro's diversified offering.

Adjusted EBITDA Grew 4% year-over-year to $317 million and 11% quarter-over-quarter to $87 million in Q4, delivering a 38% adjusted EBITDA margin. This growth was achieved despite the challenging crypto market environment, showcasing the benefits of eToro's multi-asset model and global diversification.

Assets Under Administration (AUA) Increased 11% year-over-year to $18.5 billion in Q4, driven by record net deposits and improving customer retention metrics.

Funded Accounts Grew 9% year-over-year to 3.81 million, reflecting the strength of eToro's multi-asset business model and disciplined data-driven marketing approach.

Net Trading Contribution from Capital Markets Increased 43% year-over-year to $116 million, driven by investor rotation between crypto and traditional asset classes, with particularly strong performance in commodities.

Net Trading Contribution from Crypto Declined 72% year-over-year to $26 million due to the crypto tailwinds in Q4 2024 and lower invested amounts per trade.

Net Interest Income Increased 18% year-over-year to $59 million, driven by a 29% increase in higher interest-earning assets, including customer cash deposits, margin book, staking, and corporate cash.

eToro Money Contribution Declined 6% year-over-year to $23 million, largely due to higher cash redemption in crypto in 2024.

Adjusted Operating Expenses (OpEx) Totaled $140 million in Q4, with adjusted selling and marketing expenses at $46 million (20% of net contribution). Marketing strategy delivered strong ROI, with cohorts generating meaningful revenue even after 8 years.

Adjusted Diluted EPS Reported at $0.71 in Q4 compared to $0.79 in Q4 2024, reflecting changes in market conditions and crypto-related impacts.

Free Cash Flow from Operations Generated $42 million in Q4, highlighting strong cash generation and operational efficiency.

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Operating Highlights

AI adoption: eToro accelerated innovation and AI adoption across its platform, embedding AI into its operations and product development. AI is now core to the eToro experience, enabling smarter tools and personalized insights.

24/7 trading: eToro introduced round-the-clock access to a selection of popular assets and plans to expand 24/7 trading across additional asset classes.

Crypto and decentralized finance: eToro surpassed 150 supported crypto assets and plans to expand to over 300 in the near term. It also enhanced staking capabilities and launched a noncustodial crypto wallet bridging traditional finance and decentralized finance.

Smart Portfolios: Launched two new Smart Portfolios in partnership with Amundi, providing access to professionally managed strategies. Expanded to 127 Smart Portfolios, including AI-powered Alpha Portfolios.

Wealth management: Expanded long-term tax-advantaged savings solutions in Australia, U.K., and France. Strengthened ISA proposition in the U.K. and launched new savings products in France.

Neobanking: eToro Money saw a 29% year-over-year increase in total money transfers and a 650% increase in transaction volume from Q4 2024 to Q4 2025. Expanded debit card footprint and launched a noncustodial crypto wallet.

U.S. market expansion: Broadened crypto offering to over 100 coins and enhanced staking capabilities. Plans to roll out additional crypto products and Smart Portfolios.

Global market coverage: Expanded coverage to include Hong Kong, Nordic, and Middle East stock exchanges. Provides access to 25 exchanges globally and over 12,000 assets.

Regional hubs: Established Singapore as a regional hub to attract more investors from Asia. Focused on deepening engagement in Europe and increasing share of wallet.

Financial performance: Net contribution increased 10% to $868 million in 2025. Adjusted EBITDA grew 4% year-over-year to $317 million, with a 38% margin in Q4.

Marketing efficiency: Marketing strategy delivered strong ROI, with cohorts generating meaningful revenue even after 8 years. Plans to increase sales and marketing investment to drive growth.

Cash management: Ended Q4 with $1.3 billion in cash and generated $42 million in free cash flow. Announced an additional $100 million share repurchase authorization.

AI-first strategy: eToro is now an AI-first company, embedding AI across its business to accelerate product development and improve efficiency. AI is used to build the eToro super-app and enhance operational speed.

On-chain market infrastructure: Focused on bridging digital assets and traditional markets, supporting tokenized markets and new forms of financial participation. Plans to roll out tokenized real-world assets in 2026.

Global expansion: Continued focus on strengthening global footprint, selectively entering new markets, and localizing user experience to grow in early-stage markets.

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Risk or Challenges

Crypto Market Volatility: The decline in net trading contribution from crypto by 72% year-over-year due to lower invested amounts per trade and softer trading activity, particularly in November and December, highlights the risk of dependency on volatile crypto markets.

Regulatory and Compliance Risks: The company operates in multiple jurisdictions, including the U.S., Europe, and Asia, which exposes it to varying regulatory requirements and potential compliance challenges, especially as it expands its crypto and decentralized finance offerings.

Market Dependency: The company's performance is influenced by market conditions, such as the decline in crypto trading activity and the dependency on commodity trading for growth, which could be impacted by external economic factors.

Operational Complexity: The rapid adoption of AI and the development of the eToro super-app introduce operational risks, including potential inefficiencies, errors, or delays in implementation.

Competitive Pressures: The financial services industry is highly competitive, and the company's focus on innovation and global expansion may face challenges from established players and new entrants.

Economic Uncertainty: The company's growth and profitability could be impacted by broader economic uncertainties, such as interest rate fluctuations and global economic conditions.

Customer Retention and Acquisition Costs: The planned increase in sales and marketing investment from 21% to 25% of net contribution to drive growth could pose risks if the expected ROI is not achieved.

Supply Chain and Technological Risks: The reliance on AI and technological infrastructure for product development and operations could expose the company to risks related to system failures, cybersecurity threats, or technological obsolescence.

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Guidance & Outlook

Revenue and Growth Expectations: eToro expects accelerated growth in 2026, driven by increased sales and marketing investments, which will scale gradually to 25% of net contribution. The company anticipates strong returns on these investments, with a focus on driving key KPI growth.

Product and Market Expansion: eToro plans to expand its 24/7 trading capabilities across additional asset classes and increase the number of supported crypto assets to over 300 in the near term. By the end of 2026, the company aims to support over 100,000 tradable assets across equities and crypto. Additionally, eToro will continue to broaden access to global markets, including new exchanges and localized offerings.

AI and Technological Advancements: eToro is embedding AI across its operations to accelerate product development and improve efficiency. The company is building its eToro super-app entirely with AI and plans to launch an App Store with nearly 1,000 apps in the pipeline. AI tools like Tori will continue to evolve, providing smarter tools and personalized insights for investors.

Wealth Management and Savings Solutions: eToro aims to further localize and scale its wealth management offerings, focusing on tax-advantaged savings solutions in markets like Australia, the U.K., and France. These markets represent a multi-trillion-dollar long-term opportunity.

Global Expansion: eToro will continue to expand its product offerings in existing regions and selectively enter new markets. The company plans to deepen engagement in Europe, expand its presence in Asia, and bring the full eToro experience to the U.S., including additional crypto products and Smart Portfolios.

Tokenization and On-Chain Market Infrastructure: eToro is positioning itself to lead the shift to on-chain market infrastructure. The company plans to roll out tokenized real-world assets in 2026, such as tokenized private markets and real estate, and expand its noncustodial wallet to support swaps, lending, and prediction markets.

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Shareholder Return Plan

Share Repurchase Program: In the fourth quarter, we repurchased 1.5 million shares with $59.5 million pursuant to our previously communicated share repurchase program. Alongside today's earnings release, we announced an additional $100 million authorization under our share repurchase program, increasing total authorization to $250 million. To date, we have deployed $100 million under the program. This reflects our confidence in the long-term outlook and our commitment to driving shareholder value.

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Key Q&A

Q:How has eToro managed the current volatility in commodities?

A:eToro has seen significant engagement and high trading volumes in commodities, particularly in October last year and January this year, driven by volatility and price increases in gold.

Q:Can you provide context on the current crypto market backdrop and how eToro is operating differently compared to previous downturns?

A:eToro remains bullish on crypto and Bitcoin's future. They have shifted focus to equities and commodities during periods of lower crypto interest and are building new crypto products, including noncustodial wallets. They see a friendlier regulatory environment and expect more engagement from younger, crypto-native generations.

Q:What is the time period for the increase in sales and marketing expenses from 21% to 25%, and what is the expense outlook for 2026?

A:The increase to 25% will happen gradually throughout the year, not necessarily in Q1. eToro is expanding in markets like the U.S., Singapore, and UAE. G&A and R&D expenses are expected to remain stable with minor growth, and AI is expected to help scale the business without significantly increasing costs.

Q:What is the outlook for trading at eToro with the integration of AI and 24/7 on-chain settlement?

A:eToro expects a significant uplift in algorithmic and automated trading activity, leading to increased trading volumes and clicks over time. AI advancements and new tools like the App Store are expected to cater to sophisticated investors and automate trading strategies.

Q:What does increased marketing mean for new account additions and account growth over the next few years?

A:eToro expects double-digit account growth and plans to scale marketing activities to achieve this. The CAC to LTV ratio is expected to remain similar, with an ROI of 3.5% to 4.5%.

Q:What is the pace of G&A and R&D expansion expected for 2026?

A:G&A and R&D expenses are expected to remain stable with minor growth. AI is expected to help scale the business without significantly increasing costs, and recent headcount adjustments have been made to improve efficiency.

Q:What is eToro's appetite for M&A in 2026, and what are the target areas?

A:eToro has a high appetite for M&A and is in active discussions with several target companies. They are looking for accretive opportunities in the crypto space, U.S., and globally, as well as in brokerage and wealth management. They aim to find the right teams and opportunities to scale significantly.

Q:How should we think about crypto take rates for the rest of the year?

A:The take rate declined slightly in Q4 due to a small balance sheet exposure but is expected to remain at the usual 1% going forward.

Q:What is eToro's App Store and app strategy?

A:eToro's App Store allows Pro Investors to develop and share apps that cater to sophisticated trading strategies. These apps are expected to enhance innovation and engagement among eToro's community, with a subscription model planned for monetization.

Q:What is the update on eToro's U.S. strategy and customer traction?

A:eToro has launched CopyTrader in the U.S. and plans to launch Smart Portfolios in H1 2026. They are scaling marketing activities and seeing significant uptick in customer traction, with plans to launch more products in the U.S. in 2026.

Q:What is the timing for the fiduciary license and prediction markets rollout in the U.S.?

A:The fiduciary license is expected in H1 2026, enabling the launch of Smart Portfolios. Prediction markets are expected to roll out in Q3 or Q4 2026.

Q:What is the split of marketing spend between U.S. and ex-U.S. markets?

A:The U.S. accounts for a small but growing portion of the marketing budget. eToro scales marketing based on CAC to LTV ratios, with higher percentages allocated to the U.S. in 2025 and 2026.

Q:What drove the rebound in revenue per trade in the ECC segment in Q4, and will it remain elevated in January?

A:The rebound was driven by higher commodities activity, particularly in gold and silver. Revenue per trade is expected to remain in the $0.60 to $0.75 range over the long term.

Q:Has the Board considered other ways to unlock value beyond stock buybacks?

A:The Board is focused on buybacks and M&A opportunities. They aim to accelerate product innovation and marketing activities to drive growth in funded accounts, revenues, and profitability.

Q:What is eToro's strategy for M&A versus focusing on existing markets like Europe?

A:eToro is focused on deepening its presence in existing markets while selectively pursuing M&A opportunities that create local moats and align with its product offerings.

Q:What promotions does eToro currently have live?

A:eToro offers various promotions tailored to different regions, such as incentives for account opening, deposits, and product engagement. These promotions are designed to improve customer acquisition and retention.

Q:What is the strategy for the noncustodial wallet rollout?

A:The noncustodial wallet targets crypto-native younger audiences and offers access to a wide range of tokens. It is promoted to existing customers and aligns with eToro's broader crypto strategy.

Q:What is driving the faster payback period for newer cohorts?

A:The faster payback period is driven by improved marketing strategies, higher first-time deposit amounts, and targeting customers with higher LTV.

Q:What is the competitive landscape for CopyTrader, and how does eToro plan to stay ahead?

A:eToro has a significant moat with long-standing Pro Investors and a strong track record. They plan to stay ahead by innovating and providing new tools for Pro Investors to engage and monetize their expertise.

Q:What is the opportunity for prediction markets outside the U.S.?

A:Prediction markets outside the U.S. are more focused on crypto-native customers using noncustodial wallets. The U.S. market is expected to lead in regulated prediction markets.

Q:What are eToro's thoughts on the Clarity Act and crypto regulation?

A:eToro supports regulatory clarity, which helps the industry mature and unlocks opportunities for new products. They see potential in tokenization and on-chain asset classes.

Q:Will eToro partner or go alone in offering prediction markets?

A:eToro is exploring partnerships in the prediction markets space and is considering working with aggregators to offer competitive pricing.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the pace of G&A and R&D expansion, stating only that expenses would remain stable with minor growth. They also did not provide clear guidance on the revenue per trade for January, stating only a general range of $0.60 to $0.75. Additionally, they did not elaborate on the specific promotions live in different regions, citing the diversity of their markets.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

ETOR Transcript

eToro Group Ltd. (ETOR) Q4 2025 Earnings Call Transcript

Positive2-17

eToro Group Ltd. (ETOR) Q3 2025 Earnings Call Transcript

Positive11-10

The earnings call summary reveals strong financial performance with increased EPS and a solid cash position, supporting operational flexibility. Product development and business updates are promising, with AI and crypto offerings showing growth. Market strategy is robust, focusing on long-term growth in the U.S. and Asia. Although management was vague on some specifics, the overall sentiment from analysts was positive. Shareholder returns through buybacks and potential acquisitions are also favorable. Despite some uncertainties, the positive aspects outweigh the negatives, indicating a likely positive stock price movement.

ETOR Report

eToro Group Ltd. 6-K

6-K

2025-07-03

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