eToro Group Ltd. (ETOR) Earnings

Management highlights

### Core Financial and Operational Performance - Q1 2026 net contribution grew 19% YoY to $258 million, and adjusted EBITDA grew 35% YoY to $109 million, marking the fourth consecutive strong quarter as a public company; adjusted EBITDA margin expanded to 42% from 37% YoY. - Funded accounts grew 12% YoY to over 4.02 million, the fastest organic growth in over a year, with momentum carrying into April (13% YoY funded account growth). Assets Under Administration (AUA) reached $17 billion, up 15% YoY, and grew to $18.7 billion in April, up 90% YoY. - Ended Q1 with $1.3 billion in cash, cash equivalents and short-term investments; generated $104 million in operating cash flow, and repurchased 3.3 million shares for $103 million in Q1 under the existing share repurchase program. ### Product and Strategic Expansion - **Multi-asset trading**: Rolled out 24-7 trading across multiple asset classes (select commodities, single stocks, indices) following successful adoption of 2025's 24-5 offering, added Japanese equities to bring total coverage to 26 global exchanges, and launched crypto trading for users in New York after securing required regulatory licenses. - **AI and agentic innovation**: Made AI a company-wide mandate six months ago, with AI agents supporting all core functions (research, engineering, product, marketing) driving significant productivity gains and faster product delivery. Launched agent portfolios (AI-managed dedicated portfolios via the Tori AI conversational agent) and embedded real-time X market sentiment from SpaceX AI's GROK 4.2 model into Tori workflows. Launched the eToro App Store (in-ecosystem marketplace for trading/analytics apps) and builder portal with open API access, supporting no-code AI-powered tool development. - **Wealth management and neobanking**: Grew adoption of club subscriptions, launching an upgraded premium tier for recurring monthly/annual fees. UK cash ISA AUA grew 15x YoY, with the company planning to expand this localized savings playbook to other key markets. eToro Money card issuance more than doubled quarter-over-quarter, with ongoing expansion of card benefits across Europe and the UK. - **Crypto strategy and M&A**: Acquired Zengo, a leading self-custodial crypto wallet provider, to bridge traditional investing with decentralized finance (DeFi), expand on-chain product capabilities, and add access to thousands of additional crypto assets including tokenized stocks. Also announced a second acquisition of one of Israel's two regulated crypto exchanges.

Guidance

- Marketing spend as a percentage of net contribution is expected to scale gradually from 21% in 2025 to 25% by the end of 2026, with flexibility to scale up or down based on market opportunities. - eToro expects a full rollout of CopyTrader and smart portfolios in the U.S. in H2 2026, following completion of regulatory licensing processes. - The company expects to launch 24-7 commodity trading for U.S. customers within the next 6 to 9 months. - Management expects long-term 10% to 20% additive volume growth from 24-7 trading, consistent with historical adoption seen in crypto after expanding to weekend trading. - Management sees significant accretive M&A opportunities in crypto in 2026, driven by current market conditions, and maintains a strong pipeline of potential targets while keeping optionality for share repurchases.

Segment performance

Capital Markets: Net trading contribution grew 71% year-over-year (YoY) to a record $166 million, accounting for 64.3% of total Q1 2026 net contribution. Commodities represented 60% of total trading commissions in Q1, with volumes up nearly fourfold YoY. Crypto: Net trading contribution was $13 million, down YoY due to lower crypto market activity and a $5 million negative valuation impact on corporate crypto holdings, accounting for 5.0% of total Q1 2026 net contribution. Net Interest Income: Contributed $48 million, down 5% YoY, accounting for 18.6% of total Q1 2026 net contribution. The decline was driven by lower interest rates and user deleveraging, partially offset by 13% growth in higher-interest earning assets from increased user cash deposits and staking. eToro Money: Contribution grew 32% YoY to a record $29 million, accounting for 11.2% of total Q1 2026 net contribution, driven by a 70% YoY increase in total money transfers.

Risks & headwinds

- Forward-looking statements (including financial performance projections, product adoption forecasts, and strategic growth targets) are subject to inherent risks and uncertainties, with actual results potentially differing materially from expectations. Additional detail on risk factors is available in the company's SEC filings. - Crypto markets are cyclical, and current low activity periods are expected, though the company's diversified multi-asset model is designed to provide resilience across market cycles. Lower crypto activity negatively impacts near-term crypto net contribution in periods of low volatility or price downturns. - DeFi and new crypto product offerings face uncertain regulatory frameworks across many global jurisdictions, which could impact development timelines and adoption potential. - Product adoption and revenue growth are highly dependent on market volatility across asset classes, which can fluctuate unexpectedly and impact near-term trading activity and net contribution.

Analyst Q&A

• Q: What is eToro's updated crypto strategy following the Zengo acquisition? /

  A: eToro has been a pioneer in regulated crypto offering since 2013. Growing crypto-native audiences (particularly younger users) now manage their full financial lives on-chain, and the Zengo acquisition accelerates eToro's ability to offer a native on-chain product. It allows customers to self-custody their crypto, transact across thousands of coins and hundreds of blockchains, and will enable future product launches including on-chain swaps, yield, prediction markets and perpetual futures to expand eToro's DeFi capabilities.

• Q: How sustainable is the current shift in trading activity from crypto to commodities, and how do users discover new asset classes on the platform? /

  A: eToro's multi-asset model is built to let users shift between assets natively as market conditions change: 60% of Q1 commodity traders originally joined eToro to trade crypto or equities. The company supports user discovery via educational resources (eToro Academy) and the Tori AI agent, which shares personalized market insights and opportunity alerts. More product use per customer increases lifetime value and net deposit growth, so the cross-asset shift is a structural feature of eToro's model rather than a temporary trend.

• Q: What early adoption and volume impacts have you seen for agentic AI portfolios, and what is the take rate structure for these products? /

  A: Agentic portfolios are still in early days (launched three weeks before the call), but have already recorded over 500,000 trades. The product sees significantly higher trading velocity per customer, as users typically allocate a small portion of their total portfolio to AI management, leading to more frequent smaller trades. The take rate for agentic portfolios follows the copy trading model (lower than standalone trading), matching the existing structure of smart portfolios that agentic portfolios are built on.

• Q: What volume impact do you expect from the new 24-7 trading offering? /

  A: 24-5 trading shifted 30% of stock volume to after-market hours, with some net additive volume gain. For 24-7 trading, which is still early, management expects 10% to 20% long-term additive volume, aligned with the impact seen when eToro expanded crypto to 24-7 trading. Demand is driven by user expectations shaped by crypto, as many retail users do not understand why traditional markets close on weekends, and growth will track volatility of weekend-traded assets over time.