eToro UK generates higher profit even as revenue halves

abdelaziz Fathi

Despite the decline in revenues, eToro UK’s user base saw consistent growth. Almost 100,000 funded UK accounts were added in the past year. However, a substantial segment of this user base adopted a cautious stance, choosing not to actively trade in 2022.

eToro (UK) Limited reported a total revenue of $143.8 million in the previous fiscal year, marking a 46% decline from the $264.2 million accumulated in 2021. The social investment network attributed this drop primarily to a slump in trading activity throughout the year, particularly amongst cryptocurrency traders.

The latest results on the UK Companies House showed weak performance in eToro’s financial metrics. Yoni Assia co-founded broker posted a total of £131 million worth of trading commissions, which represents a 57 percent decline year-over-year from £307 million the company reported in 2021.

For comparison, the parent entity generated $631 million in revenue for the full-year 2022, down 47 percent year-on-year from $1.2 billion in 2021. Trading commissions generated from crypto trading accounted for 19 percent of the total commissions eToro earned in 2022, compared to nearly two thirds the previous year.

Despite the decline in revenues, eToro UK’s user base saw consistent growth. Almost 100,000 funded UK accounts were added in the past year. However, a substantial segment of this user base adopted a cautious stance, choosing not to actively trade in 2022.

This backdrop necessitated cost-cutting and efficiency measures. Consequently, operating expenses for eToro UK dropped by 46% to stand at $139.9 million, a considerable decline from 2021’s $258.0 million. This shows that the brokerage market continues to be highly competitive. As a result, the profit margins and fees have remained under pressure.

Looking at the group’s bottom-line numbers for the financial year, eToro (UK) reported ‎a net profit of £3.4 million‎, compared to £3 million it earned a year earlier.

eToro, which describes itself as the world’s leading social investing network, has been among the biggest beneficiaries of the retail investing COVID-19 boom. While eToro’s social investing product did most of the success since its inception 16 years ago, cryptocurrency trading on the platform took off.

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