eToro’s Q3 profit plunges 74% to $15 million as crypto trading cools

eToro just learned what happens when your customers stop trading crypto. The Nasdaq-listed brokerage reported third-quarter net income of $15 million, down 74% from a year earlier.

The culprit, according to the company, was a sharp pullback in crypto trading activity.

The numbers behind the slide

eToro (ETOR) released the results in its earnings report on Tuesday. GAAP net income came in at $15 million, compared with $57 million in the same quarter last year.

On a per-share basis, diluted earnings fell to $0.14 from $0.53.

Net contribution, a metric the company uses to track revenue after certain trading-related costs, dropped 13% to $186 million. That compares with $215 million a year prior, and eToro attributed the decline mainly to lower crypto trading.

Adjusted EBITDA took an even harder hit. It fell 56% to $34 million, down from $78 million in the year-ago quarter.

More users, less action

eToro’s customer base is actually growing.

Funded accounts rose 18% year over year to 4.39 million. Assets under administration held steady at $20.8 billion.

The early fourth-quarter data does not suggest that traffic is picking back up. Crypto trades on the platform in October fell 62% year over year to 2 million.

Buybacks and a bet on AI

eToro’s board authorized a share repurchase program of up to $250 million.

The company also launched an AI-focused trading app during the quarter.

What this means for eToro and its investors

The central issue is concentration risk. eToro offers stocks alongside crypto, yet the company itself pinned the bulk of its revenue decline on reduced crypto activity.

The 62% drop in October crypto trades is the number to watch.

Funded accounts grew 18%, and assets under administration remain stable at $20.8 billion, suggesting customers are not fleeing.

The $250 million buyback authorization signals management confidence, but it is a ceiling, not a commitment.