eToro (NASDAQ: ETOR) reported second-quarter results that surpassed Wall Street expectations, posting $53 million in GAAP net income as markets opened on Tuesday. The same disclosure brought news of a $231 million agreement to acquire US brokerage TradeZero, alongside figures showing a steep year-over-year decline in the platform's cryptocurrency trading activity, underscoring how the company is leaning more heavily on equities and brokerage expansion as crypto volumes soften.

Despite the earnings beat, ETOR shares failed to gain traction, extending a downtrend from the prior session. The stock fell more than 8% in early Tuesday trading, changing hands at $31.15 per share. According to Google Finance, eToro's market value has declined to $2.51 billion.

Q2 Financial Highlights

According to eToro's second-quarter 2026 earnings release, adjusted diluted earnings came in at $0.68 per share for the quarter ended June 30, beating the $0.61 consensus estimate. This marks eToro's fourth consecutive quarter of surpassing expectations.

Key figures from the report include:

• GAAP net income of $53 million, up 77% from $30 million a year earlier
• Net contribution of $229 million, a 9% increase driven by equities trading
• Funded accounts rose 18% to 4.28 million
• Assets under administration (AUM) reached $19.2 billion
• Cash, cash equivalents, and short-term investments estimated at $1.2 billion

CFO Meron Shani noted that customers are rotating across asset classes rather than concentrating in any single one. This trend was reflected in user behavior: 60% of eToro users who traded commodities between Q4 2025 and Q1 2026 expanded into equities in Q2. Nearly 90% of that group also traded crypto during the same period.

Crypto Trading Volume Declines Sharply

The drop in eToro's crypto trading activity mirrors a broader industry-wide slowdown. Total cryptocurrency trades on the platform fell to 1.4 million in July 2026, a 73% decline year-over-year. The average investment per trade also decreased by 50% to $182.

The crypto slowdown was visible on eToro's balance sheet. Revenue fell approximately 30% to $1.34 billion from $1.9 billion a year earlier. Equities and commodities combined for $141 million in net income during the quarter, while crypto assets contributed $19.7 million. As previously reported, eToro's crypto profit had shrunk to roughly 5% of net trading profit in Q1 2026, a reminder that the platform's revenue mix has become more dependent on non-crypto trading activity.

TradeZero Acquisition Targets US Market

The TradeZero acquisition represents eToro's push to strengthen its presence in the US, its weakest geographic market. Founded in 2015, TradeZero operates online brokerage services across the US, Canada, and international markets, serving active traders.

Under the terms of the deal, eToro will pay cash plus up to 2.5 million newly issued Class A shares, with the total consideration capped at $231 million. The transaction is expected to close in the first half of 2027, subject to regulatory approval.

The acquisition gives eToro broker-dealer infrastructure, which is more difficult to build internally than to acquire in the US market, where launching regulated products requires more than transferring technology from another jurisdiction. For eToro, that makes the deal less about adding scale quickly than about filling in operating capabilities needed to compete more directly in a market where brokerage rules and approvals shape how fast a platform can expand.

Calcalist reported that TradeZero generated approximately $80 million in revenue for the 12 months ending June 30, with an 81% gross margin. At the top of the deal's range, this values TradeZero at roughly 2.9 times sales. Jefferies served as eToro's financial advisor. The company described this as its third acquisition signed in 2026.

CEO Yoni Assia stated: "Today's announcement is an important step in building our US business."

eToro has been gradually expanding its US footprint, having entered New York in April following a lengthy wait for authorization under the state's BitLicense regime.