eToro Group targets U.S. active traders with TradeZero acquisition after stronger Q2 profit

eToro Group Ltd. is accelerating its push into the U.S. active-trading market with an agreement to acquire TradeZero for consideration of up to $231 million, announced alongside second-quarter results showing sharply higher profitability and continued account growth. Net contribution increased 9% year over year to $229 million, while GAAP net income surged 77% to $53 million and adjusted net income climbed 17% to $63 million. Funded accounts increased 18% to 4.28 million and assets under administration rose 10% to $19.2 billion at June 30, strengthening the financial backdrop for another acquisition. However, a steep slowdown in July crypto trading and a roughly 15% decline in eToro Group shares on August 11 show that investors are looking beyond the headline profit increase and questioning how durable current growth will prove.

The TradeZero transaction gives that debate an important strategic dimension because eToro Group is effectively using acquisitions to accelerate areas where building infrastructure organically could take substantially longer. TradeZero brings U.S. broker-dealer capabilities, proprietary active-trading technology, operations in Canada and other international markets, and a customer base focused more heavily on frequent traders than eToro Group’s broader multi-asset community. The acquisition is expected to close during the first half of 2027, subject to regulatory approvals and other customary conditions, and management expects it to be accretive to adjusted earnings per share during its first year after completion.

The price also appears meaningful without being transformational relative to eToro Group’s liquidity. TradeZero generated approximately $80 million in revenue during the 12 months ended June 30, 2026, with an 81% gross margin, implying that the maximum $231 million purchase consideration is equivalent to less than three times trailing revenue. eToro Group ended June with approximately $1.2 billion in cash, cash equivalents and short-term investments, giving the company considerable financial flexibility even as part of the acquisition consideration may involve newly issued shares.

TradeZero gives eToro Group a faster route into the U.S. active-trader market

Under the agreement, eToro Group could pay aggregate consideration of up to $231 million through a combination of cash and as many as 2.5 million newly issued Class A common shares, subject to customary adjustments. TradeZero was founded in 2015 and now operates through regulated businesses serving customers in the United States, Canada and international markets, giving eToro Group additional brokerage infrastructure that would otherwise require considerable time and regulatory investment to replicate.

The strategic attraction goes beyond geographic reach because TradeZero specializes in active traders, an audience that differs somewhat from the social-investing and multi-asset customer base historically associated with eToro Group. Its technology includes desktop, web and mobile trading platforms as well as proprietary tools for locating shares available to short, capabilities that could help eToro Group compete more directly for sophisticated retail trading activity in U.S. equities and options.

Management indicated that combining TradeZero’s infrastructure with eToro Group’s global distribution should allow the enlarged business to introduce products more quickly for U.S. customers. TradeZero’s roughly $80 million of trailing revenue and 81% gross margin also make the target financially interesting because the business appears capable of adding relatively high-margin revenue rather than simply expanding customer numbers at the expense of profitability.

The acquisition is eToro Group’s third signed transaction during 2026, demonstrating a much more active approach to inorganic expansion. The company completed its acquisitions of self-custodial cryptocurrency wallet provider Zengo and Israeli crypto platform Bit2C during the second quarter, while TradeZero extends the strategy into traditional brokerage infrastructure and active equity trading.

Taken together, the transactions show eToro Group trying to build a broader financial platform spanning conventional investing, active trading, cryptocurrency, self-custody, wealth management and digital payments. That expansion could make individual users more valuable if customers increasingly adopt several services, but it also increases integration complexity and raises the importance of maintaining discipline as management absorbs multiple acquisitions within a relatively short period.

eToro Group’s Q2 profit surge shows equities are offsetting weaker crypto activity

Second-quarter net contribution increased to $229 million from $210 million a year earlier, driven primarily by stronger equities trading activity. GAAP net income reached $53.5 million compared with $30.2 million, while adjusted EBITDA increased 9% to approximately $78 million and adjusted diluted earnings rose to $0.68 per share from $0.56.

The company’s accounting makes net contribution particularly useful when assessing operating performance because gross cryptocurrency revenue can be extremely large while being accompanied by similarly large cryptocurrency costs. Total reported revenue and income declined to approximately $1.59 billion from $2.09 billion, largely because cryptocurrency revenue fell sharply, but crypto cost of revenue declined alongside it, leaving net contribution higher overall.

Equity, commodity and currency trading provided a notable counterbalance. Net trading income from those assets increased to approximately $141.6 million from $114 million in the comparable quarter, demonstrating how eToro Group’s multi-asset platform can benefit when customer activity rotates between markets rather than depending entirely on cryptocurrencies.

Management highlighted that more than 60% of users who traded commodities between the fourth quarter of 2025 and first quarter of 2026 subsequently traded equities during Q2, while nearly nine out of ten of those customers had also traded cryptocurrencies. The figures support eToro Group’s argument that a diversified product offering can keep customers engaged even as enthusiasm moves from one asset class to another.

Funded-account growth provides another encouraging signal. The number of funded accounts increased 18% year over year to 4.28 million at quarter-end and subsequently reached 4.32 million in July, suggesting that eToro Group continued attracting and retaining users despite substantial changes in the mix of market activity.

Assets under administration reached $19.2 billion at June 30, up 10% from $17.5 billion a year earlier. That figure subsequently fell to $18.5 billion in July and was 5% below the year-earlier level, however, showing how quickly customer asset values can fluctuate with market movements, withdrawals and changes in trading activity.

July crypto trading collapse explains why investors may be looking past the Q2 earnings beat

The most significant warning inside the August 11 update came from eToro Group’s July operating metrics. Cryptocurrency trades fell 73% year over year to just 1.4 million, while the average amount invested per crypto trade dropped 50% to $182, indicating that both trading frequency and transaction size weakened dramatically from the comparable period.

Traditional capital-markets activity held up better but was not immune to pressure. The number of equity, commodity and currency trades remained flat year over year at 48.5 million during July, while the average invested amount per trade fell 23% to $207. Interest-earning assets also declined 8% to $6.8 billion, although total money transfers increased 10% to $1.1 billion.

Those figures make the second-half setup considerably more nuanced than the 77% quarterly net-income increase suggests. eToro Group demonstrated during Q2 that stronger equity activity can compensate for fluctuations elsewhere, but a prolonged decline in crypto volumes combined with smaller transaction sizes across traditional markets could eventually make year-over-year net contribution growth more difficult.

The company is responding by expanding the range of services that can generate engagement beyond straightforward trading. During the quarter, eToro Group launched a new mobile application centered around its Tori artificial-intelligence agent, expanded its application ecosystem to more than 75 applications, introduced its eToro Edge active-trading platform and received a U.S. registered investment adviser license that enables the planned launch of Smart Portfolios in the United States.

Wealth management and payments provide additional diversification. eToro Group reported a 15-fold year-over-year increase in assets within its United Kingdom Cash ISA offering, while the number of eToro Money cards issued across Europe grew by more than 30% sequentially during the quarter. These businesses remain part of a broader effort to turn the platform from a trading destination into a financial ecosystem where customers can invest, save and move money.

TradeZero fits directly into that strategy because it strengthens the opposite end of the customer spectrum. While savings, managed portfolios and wealth products target customers seeking longer-term financial management, TradeZero gives eToro Group greater exposure to active traders who may generate substantially higher transaction frequency.

eToro Group stock plunges 15% as stronger earnings fail to overcome growth concerns

eToro Group shares were trading at approximately $28.87 during the August 11 session, down about 15.1% from the previous close of $34. The stock had traded as high as $35.75 before falling to an intraday low around $28.85, placing the shares near their session low despite the substantial year-over-year increase in quarterly earnings.

The size of the decline suggests investors are assigning more weight to future growth conditions than to the profitability already delivered during the second quarter. The July decline in assets under administration, collapse in cryptocurrency trading volumes and lower invested amounts per transaction provide several reasons for caution, while the TradeZero transaction adds acquisition and integration risk even though management expects the deal to be earnings accretive.

Potential share issuance is another factor worth monitoring. Because up to 2.5 million new eToro Group Class A shares can form part of the TradeZero purchase price, the transaction could create some dilution for existing shareholders, although the final cash-and-stock mix and purchase-price adjustments will determine the eventual impact.

The balance sheet gives management room to absorb the transaction. Cash and cash equivalents totaled approximately $946 million at June 30, while short-term investments added another $267 million, leaving combined cash and short-term investments at roughly $1.2 billion.

That liquidity allows eToro Group to pursue growth without making the TradeZero acquisition an immediate balance-sheet stress event, but the strategic hurdle remains higher than simply closing the deal. Management must demonstrate that TradeZero can accelerate U.S. customer growth, strengthen active-trading economics and add enough earnings to compensate for the cash deployment, potential dilution and integration requirements.

The second-quarter numbers give eToro Group a credible foundation for that expansion because profitability, funded accounts and net contribution all moved higher. The sharp August 11 selloff nevertheless shows that investors are not prepared to extrapolate those gains automatically into the second half, making July activity trends and the eventual performance of the TradeZero acquisition critical measures of whether eToro Group can sustain its post-IPO growth story.

Key takeaways from eToro Group’s Q2 earnings and TradeZero acquisition

• eToro Group Ltd. increased Q2 net contribution 9% to $229 million, while GAAP net income surged 77% to $53 million.
• Adjusted net income rose 17% to $63 million and adjusted EBITDA increased 9% to approximately $78 million.
• Funded accounts increased 18% to 4.28 million, while assets under administration reached $19.2 billion at June 30.
• eToro Group agreed to acquire TradeZero for up to $231 million through cash and as many as 2.5 million newly issued shares.
• TradeZero generated approximately $80 million in trailing revenue at an 81% gross margin, with the acquisition expected to be adjusted-EPS accretive.
• July crypto trades plunged 73% year over year, while the average amount invested per crypto transaction fell 50%.
• July assets under administration fell to $18.5 billion, down 5% year over year despite funded accounts remaining 18% higher.
• eToro Group held approximately $1.2 billion in cash, cash equivalents and short-term investments at the end of June.
• eToro Group shares fell about 15% to $28.87 on August 11, showing investors remain cautious despite stronger Q2 profitability.