Despite posting a 48% year-over-year net income growth, eToro (NASDAQ: ETOR) reported third-quarter results that revealed a sequential slowdown, with net contribution inching up just 2.4% from the previous quarter.

Shareholders, however, appear to be reacting positively to the newest report, and the company’s stock was up 9 percent in premarket trading.

eToro Posts Modest Q3 Growth as Revenue Levels Off

The trading platform posted a net contribution of $215 million for the three months ended September 30, up from $210 million in the second quarter. The company's net income reached $57 million, a jump from $30.2 million in Q2, though the earlier period included $15 million in IPO-related costs that skewed the comparison.

CFO Meron Shani touted the results as proof of “profitable growth” and “disciplined cost management,” noting that adjusted EBITDA climbed 43% year-over-year to $78 million. But the sequential quarter told a different story, with adjusted EBITDA rising just 8.3% from Q2's $72 million.

However, on an annual basis, the results look much stronger for eToro. Revenue was up 28% from a year earlier, while net income rose 48%.

User Growth Hits Speed Bump

The company added 100,000 funded accounts during the quarter, bringing the total to 3.73 million, a modest 2.8% increase from 3.63 million at the end of June. Assets under administration grew to $20.8 billion, up 18.9% from $17.5 billion in Q2, driven largely by market appreciation rather than new deposits.

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eToro's user acquisition Acquisition Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Read this Term engine appears to be cooling after its May initial public offering. While the company blamed no specific factor, the growth rate has decelerated from earlier in the year when it absorbed customers from its 2024 acquisition of the Australian app Spaceship.

“We are focused on increasing our customer base and share of wallet,” Shani said, though the quarterly numbers suggest that's becoming harder to achieve.

October Metrics Show Mixed Signals

In an unusual disclosure, eToro released selected October business metrics that painted a picture of volatile trading activity. Capital markets trades surged 53% year-over-year to 62 million, while crypto trades jumped 84% to 5 million. However, assets under administration slipped to $20.5 billion in October from $20.8 billion at quarter-end, suggesting either market declines or customer withdrawals.

Funded accounts ticked up to 3.76 million in October, adding just 30,000 users in the month, a pace that would deliver annual growth well below the company's historical rates.

Buyback Raises Questions About Capital Strategy

The company's board authorized a $150 million share repurchase program, with plans to execute an initial $50 million through an accelerated buyback. Management framed the move as a sign of confidence, claiming “its current share price does not fully reflect the Company's fundamental value.”

The repurchase authorization also serves another purpose: giving eToro currency for potential acquisitions. The company disclosed that buybacks provide “additional flexibility to support potential future strategic initiatives, including mergers and acquisitions, where eToro shares could serve as an effective transaction currency.”

That language suggests management may be eyeing deals, though no specific targets were mentioned. With $1.2 billion in cash and short-term investments on the balance sheet, eToro has the firepower to pursue transactions beyond what its stock would fund.

Revenue Mix Stays Concentrated in Crypto

The company's reliance on cryptocurrency trading remains acute. Revenue from cryptoassets totaled $3.97 billion in Q3, though cost of revenue consumed $3.89 billion of that figure, leaving net contribution from crypto of just $77.4 million. That crypto margin came in below Q2's crypto contribution, highlighting the thin economics of cryptocurrency intermediation.

Traditional equity trading delivered $72.9 million in net contribution, down from $114 million in the second quarter. Net interest income provided another bright spot at $58.9 million, up from $43.9 million in Q2, as the company benefited from higher balances in customer accounts.

Product Rollout Continues Across Four Pillars

CEO Yoni Assia outlined continued product development across what the company calls its four strategic pillars: trading, investing, wealth management, and neo-banking. The third quarter saw the launch of 24/5 stock trading for all S&P 500 and Nasdaq 100 stocks, expanded futures access in Europe, and the introduction of Copy Trading in the United States.

“As eToro continues to scale, we believe we are well-positioned to capture the significant growth opportunities presented by the inevitable macro tailwinds and deliver long-term shareholder value,” he said.

The company's eToro Money accounts reached 1.75 million, with debit card issuance jumping 2.4 times from the second quarter. The Money product offers up to 4% stock-back rewards on purchases.

Cost Control Improves, But Expenses Rise

Total costs increased to $4.04 billion from $2.06 billion in Q2, driven almost entirely by the cost of crypto revenue, which mirrors the company's transaction volume. Operating expenses, combining R&D, sales and marketing Marketing Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Read this Term, and general administrative costs, totaled $143.2 million, down from $167.7 million in the second quarter.

The company spent $37.9 million on research and development in Q3, down from $38.9 million in Q2. Sales and marketing expenses dropped to $47.9 million from $52.6 million, suggesting either improved efficiency or reduced customer acquisition efforts.

Finance expenses of $2.6 million were down sharply from $6.3 million in Q2, although the company did not provide an explanation for the decline.

eToro Engaging Kalshi and Polymarket

Notably, eToro is in discussions with Kalshi and Polymarket to potentially add event contracts to its platform, according to Assia’s announcement during the Q3 earnings call on Monday.

“We are talking to Kalshi and Polymarket, obviously, the market leaders in prediction markets,” he shared. “And we are excited about exploring the path of our users to be able to trade prediction markets on financial events.”

Assia said eToro’s existing infrastructure, which already supports futures and cryptocurrency products, could be adapted to include event-based trading instruments offered by the two platforms. He expressed optimism that prediction markets focused on financial products and geopolitics create significant value.