eToro UK's Massive Cost Reductions Lead to 13% Net Profit Increase in 2022

by Damian Chmiel
  • eToro UK net income fell 46% in 2022 to $143.8 million.
  • However, the net profit rose 13%, achieving $3.43 million.
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eToro logo displayed on advertising board at St James' Park (Source: Chronicle Live)
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Thanks to significant cost-cutting measures, eToro's UK division managed to achieve a higher net profit in 2022, amounting to $3.43 million. This was accomplished despite nearly halving its net income and seeing almost a threefold reduction in trading commissions compared to the previous year. At the same time, the company successfully acquired 100,000 new funded UK accounts.

Lower Revenue but Higher Net Profit for eToro

In recent weeks, many British financial firms have reported their 2022 results, and the pattern is usually the same: higher revenues but lower profits due to rising costs of operations. eToro (UK) Limited managed to reverse this trend. The company maintained profitability and improved its performance despite lower retail trading activity, which negatively impacted revenue from trading commissions.

How did eToro achieve this?

An analysis of the 2022 report shows that trading commissions fell by nearly 60%, from $307.87 million reported in 2021 to $131.32 million last year. "The fall in revenue can be attributed to a significant reduction in trading activity across the year, particularly in crypto," the company commented. To fight the crypto slump, eToro has expanded its presence in the EU and gained CySEC digital assets license.

The firm drastically reduced trading costs from $61.1 million to just $2.32 million. Administrative and operational costs also decreased 45%, falling from $257.97 million to $139.92 million. "The UK business was required to streamline certain activities and cut costs in 2022, and as a result, operating expenses fell 46%," eToro UK added.

Despite this, operating profit remained well below the 2021 result, amounting to $3.84 million compared to $6.22 million. However, eToro UK significantly increased its interest income from $112,969 to over $3.56 million, a jump of 3000%. As a result, the net profit for 2022 was $3.43 million, a boost of 13% compared to the $3.03 million reported in 2021.

New Customers and a Positive Outlook for the Future

The company also reported that despite a significant decline in retail investment activity, it managed to acquire nearly 100,000 new funded UK accounts. It also retained previous customers, although a large portion remained inactive throughout 2022. This inactivity negatively affected the company's valuation, which dropped to $1.7 billion.

Despite negative market sentiment, the entire eToro Group also attracted new customers, ending the year with nearly 31 million globally registered investors and 2.8 million funded accounts. This number increased by 16% compared to 2021.

What are the forecasts for the slowly ending 2023?

eToro admits that it has survived several different market cycles over the past 16 years and, thanks to the diversification of its products, can weather most market storms relatively unscathed.

eToro "is emerging from 2022 in a very healthy position with a strong balance sheet. This has enabled the business to continue investing in its product offering, improving the user experience," the company added.

Moreover, the attitude of eToro's customers remains positive. At the moment, they consider a recession to be a more pressing issue than high inflation; however, 78% feel optimistic about the future of the markets and their investments.

Thanks to significant cost-cutting measures, eToro's UK division managed to achieve a higher net profit in 2022, amounting to $3.43 million. This was accomplished despite nearly halving its net income and seeing almost a threefold reduction in trading commissions compared to the previous year. At the same time, the company successfully acquired 100,000 new funded UK accounts.

Lower Revenue but Higher Net Profit for eToro

In recent weeks, many British financial firms have reported their 2022 results, and the pattern is usually the same: higher revenues but lower profits due to rising costs of operations. eToro (UK) Limited managed to reverse this trend. The company maintained profitability and improved its performance despite lower retail trading activity, which negatively impacted revenue from trading commissions.

How did eToro achieve this?

An analysis of the 2022 report shows that trading commissions fell by nearly 60%, from $307.87 million reported in 2021 to $131.32 million last year. "The fall in revenue can be attributed to a significant reduction in trading activity across the year, particularly in crypto," the company commented. To fight the crypto slump, eToro has expanded its presence in the EU and gained CySEC digital assets license.

The firm drastically reduced trading costs from $61.1 million to just $2.32 million. Administrative and operational costs also decreased 45%, falling from $257.97 million to $139.92 million. "The UK business was required to streamline certain activities and cut costs in 2022, and as a result, operating expenses fell 46%," eToro UK added.

Despite this, operating profit remained well below the 2021 result, amounting to $3.84 million compared to $6.22 million. However, eToro UK significantly increased its interest income from $112,969 to over $3.56 million, a jump of 3000%. As a result, the net profit for 2022 was $3.43 million, a boost of 13% compared to the $3.03 million reported in 2021.

New Customers and a Positive Outlook for the Future

The company also reported that despite a significant decline in retail investment activity, it managed to acquire nearly 100,000 new funded UK accounts. It also retained previous customers, although a large portion remained inactive throughout 2022. This inactivity negatively affected the company's valuation, which dropped to $1.7 billion.

Despite negative market sentiment, the entire eToro Group also attracted new customers, ending the year with nearly 31 million globally registered investors and 2.8 million funded accounts. This number increased by 16% compared to 2021.

What are the forecasts for the slowly ending 2023?

eToro admits that it has survived several different market cycles over the past 16 years and, thanks to the diversification of its products, can weather most market storms relatively unscathed.

eToro "is emerging from 2022 in a very healthy position with a strong balance sheet. This has enabled the business to continue investing in its product offering, improving the user experience," the company added.

Moreover, the attitude of eToro's customers remains positive. At the moment, they consider a recession to be a more pressing issue than high inflation; however, 78% feel optimistic about the future of the markets and their investments.

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