eToro (ETOR) Q2 2025: Net Contribution Climbs 26% as Tokenized Asset Push and AI Tools Expand Platform Reach
eToro’s first quarter as a public company saw accelerated net contribution and margin expansion, as the business leaned into AI-driven investing tools, tokenized asset launches, and geographic growth. Strategic bets on regulated crypto expansion and 24-5 trading are reshaping the product mix, while early traction in APAC and the U.S. signal a more globalized growth engine. With AI and tokenization now central to the roadmap, eToro is positioning for a future where digital and traditional assets converge—though execution and regulatory clarity remain key watchpoints for investors.
Summary
- AI and Tokenization Drive Product Expansion: New AI-powered tools and tokenized stocks broaden eToro’s investment universe and user engagement.
- Geographic Diversification Accelerates: Singapore license and U.S. crypto rollout set the stage for multi-region growth.
- Profitability Focus Underpins Growth: Operating leverage and disciplined marketing spend support sustainable margin improvement.
Performance Analysis
eToro delivered a 26% year-over-year increase in net contribution, reaching $210 million, with adjusted EBITDA up 31% and margin expansion to 34%. The company’s asset under administration (AUA) rose 54% to $7.5 billion, while funded accounts grew 14% to 3.63 million, reflecting both new customer acquisition and higher average account balances. Segment results show the trading business (equities, commodities, currencies) as the largest contributor, up 37% to $114 million, driven by a 54% rise in invested amount per trade—a sign of deeper engagement among users. Crypto net contribution climbed 34% to $27 million, despite some volume normalization as traders shifted focus between asset classes during periods of market volatility. Interest-earning assets and eToro Money, the neobanking arm, posted modest growth, with the latter up 17% to $18 million as money transfers increased.
Operating expenses remained tightly managed, with marketing spend flexed to demand and a stated focus on high-ROI customer acquisition. The company exited the quarter with $1.2 billion in cash and $61 million in free cash flow, underscoring a strong liquidity position. The launch of a $250 million credit facility further boosts financial flexibility as eToro invests in product and market expansion.
- Trading Activity Surge: April’s market volatility drove a spike in trading, with invested amount per trade up 54%, before normalizing in July.
- Crypto Product Breadth: U.S. crypto asset coverage expanded from 3 to 100, fueling new user growth and engagement.
- Margin Discipline: Adjusted EBITDA margin rose 140 basis points YoY, reflecting improved operating leverage and cost control.
Overall, the quarter demonstrates eToro’s ability to blend product innovation with operational discipline, though future growth will be tested by regional execution and competitive intensity.
Executive Commentary
"We believe that the next wave of financial innovation will be driven by collaboration between people and technology. At eToro, we're already using AI to provide users with personalized insights, identify trends, and optimize their strategies. But this is just the beginning."
Yoni Asya, Founder and Chief Executive Officer
"Our philosophy is focused on sustainable, profitable revenue growth, which is supported by three pillars. First, diversification of revenue streams... Second, strategic investment to support growth in funded accounts... And third, disciplined cost management with a focus on streamlining operations, optimizing costs, and improving efficiency across the organization."
Mehran Shani, Chief Financial Officer
Strategic Positioning
1. AI-Powered Investing as Core Differentiator
AI is now deeply embedded in eToro’s platform strategy. The company rolled out Tori, an AI assistant leveraging models like GPT-5, to provide users with real-time insights, portfolio guidance, and natural language support. The new alpha portfolios, AI-powered long-short strategies, democratize quantitative investing—tools once reserved for institutional players. Management views AI as a force multiplier for both user engagement and internal efficiency, with early evidence of accelerated product development and deeper user stickiness.
2. Tokenization and 24-5 Trading Expand Addressable Market
eToro’s push into tokenized stocks and 24-5 trading is reshaping the investment universe for retail users. The company believes that $100 trillion in assets could move on-chain over the next two decades, and is positioning to capture this shift by enabling fractional, around-the-clock trading of both traditional and digital assets. Regulatory clarity in Europe (MECA) and the U.S. is seen as a catalyst for scaling tokenized offerings and onboarding new asset classes, including bonds and real estate.
3. Geographic Diversification and Localized Expansion
New licenses in Singapore and expanded crypto offerings in the U.S. mark a step-change in eToro’s global reach. Asia and the U.S. are now seen as high-potential engines for future growth, with the company layering in local products, language support, and payment rails. The move to offer options and futures across more markets, and the rollout of the eToro Money card in Europe, further localize the user experience and deepen wallet share.
4. Flexible Customer Acquisition and Marketing ROI
Marketing spend remains disciplined and dynamic, with 70% of costs variable and closely tied to net contribution. Management targets a ~20% marketing spend ratio, flexing investment based on product-market fit and observed ROI. This approach supports both profitable growth and agile response to market dynamics, especially as new products and geographies come online.
5. Embedded Neobanking and Wealth Management
eToro Money and expanded wealth management products (retirement, life insurance, savings) are broadening the platform’s role in users’ financial lives. The company is rolling out recurring investment and savings plans in multiple regions, aiming to increase both engagement and share of wallet over time.
Key Considerations
eToro’s quarter was defined by the interplay of product innovation, geographic expansion, and disciplined execution. Management’s focus on AI and tokenization is reshaping the growth narrative, but also introduces new operational and regulatory complexities.
Key Considerations:
- AI Adoption and User Engagement: Early traction with Tori and AI-powered portfolios could drive higher engagement and retention, but requires ongoing investment in data and user education.
- Tokenization as a Structural Growth Lever: Success in scaling tokenized assets hinges on regulatory clarity and liquidity, especially as new asset classes (bonds, real estate) come online.
- Global Expansion Execution: New licenses in Singapore and product launches in the U.S. increase addressable market, but also raise the bar for local compliance and operational scale.
- Marketing Efficiency and Customer Quality: Higher average account sizes and disciplined marketing spend point to improved customer quality, but growth in funded accounts slowed sequentially, signaling a need to balance acquisition with engagement.
- Crypto Market Volatility: Crypto activity remains sensitive to market cycles and regulatory developments, impacting both revenue mix and user behavior quarter-to-quarter.
Risks
eToro faces material risks from regulatory shifts in key markets, especially as it expands tokenized assets and crypto offerings. Execution risk is heightened by the complexity of global product rollouts and the need for seamless localization. Competitive pressure from both fintechs and incumbent brokers remains intense, particularly as digital asset adoption accelerates. Market volatility, especially in crypto, can drive unpredictable swings in trading activity and revenue mix, challenging forecasting and margin consistency.
Forward Outlook
For Q3 2025, eToro expects:
- Crypto activity to remain elevated, with capital markets trading normalizing after Q2’s surge.
- Continued rollout of new products, including staking and copy trader in the U.S., and further expansion of tokenized assets.
For full-year 2025, management reiterated its focus on:
- Disciplined, profitable growth, with margin expansion and reinvestment in product innovation.
- Scaling in new regions (APAC, U.S.) and deepening platform capabilities in AI and tokenization.
Management highlighted that AI-driven product velocity and regulatory clarity in core markets will be key drivers of financial performance in the back half of 2025.
- U.S. market expansion and product launches will drive incremental user growth.
- Tokenization initiatives expected to broaden asset coverage and trading hours.
Takeaways
eToro’s Q2 marked a decisive pivot toward AI and tokenization, setting the stage for a more global, technology-driven investing platform.
- AI and Tokenization Are Now Core to Growth Narrative: The company’s success will increasingly depend on its ability to deliver differentiated, AI-powered investing experiences and scale tokenized assets across markets.
- Geographic Expansion Brings Both Opportunity and Complexity: New licenses and product rollouts in APAC and the U.S. open up significant new TAM, but require flawless execution and regulatory navigation.
- Watch for Product Uptake and Margin Consistency: Investors should monitor adoption of AI tools, tokenized assets, and new wealth products, as well as the company’s ability to sustain margin gains while scaling globally.
Conclusion
eToro’s first quarter as a public company showcased strong growth, margin expansion, and a bold strategic shift toward AI and tokenized assets. The company’s ability to execute on global expansion and product innovation, while maintaining profitability, will define its trajectory in the rapidly evolving digital investing landscape.
Industry Read-Through
eToro’s results signal accelerating convergence between traditional and digital assets, with tokenization and AI set to reshape retail investing. The company’s push into 24-5 trading and on-chain assets foreshadows broader industry moves toward fractionalization, continuous trading, and AI-driven portfolio management. Incumbent brokers and fintechs alike will need to invest in data, automation, and regulatory agility to keep pace. The success (or challenges) of eToro’s expansion in APAC and the U.S. will be a key barometer for the scalability of global, multi-asset retail platforms in the next phase of fintech competition.