eToro UK turns profit in 2020 as trading commissions grow 1400pct

abdelaziz Fathi

eToro (UK) Limited had turned profit in the previous fiscal year thanks to a massive increase in revenue for the twelve months ending December 31, 2020.

The latest results on the UK Companies House showed a healthy uptick in eToro’s financial metrics. Yoni Assia co-founded broker posted a total of £42 million worth of trading commissions, which represents a growth of 1400 percent year-over-year from only £3.05 million the company reported in 2019.

For comparison, the parent entity generated $602 million in revenues for the same year, representing year-on-year growth of 146%. This growth fuelled a rise in trading activity as eToro’s platforms executed over 326 million trades globally in 2020, up from 91 million in 2019.

Operating losses of 2019 were also reversed during the FY 2020, and net income now in the black. Looking at the group’s bottom-line numbers for the financial year, eToro (UK) reported ‎a net profit of £1.8 million‎, compared to £0.52 million in losses a year earlier.

Notably, the strong growth in 2020 revenue was largely offset by a sharp rise in operating expenses which totaled £39.7 million, up from £5.6 million for 2019. This shows that the brokerage market continues to be highly competitive. As a result, the profit margins and fees have remained under pressure.

eToro, which describes itself as the world’s leading social investing network, welcomed over 5 million new users in 2020. But the larger group marked a 20 million user milestone this year with $9.4 billion assets under administration.

According to its most recent filing, the majority of new accounts invested in commission-free stocks, crypto or to copy another investor on the platform.

eToro, which earned $264 million from crypto trading commissions in Q2 2021, is now competing with the likes of Robinhood, Vanguard, E-Trade in the US after it secured the membership of Financial Industry Regulatory Authority, Inc. (FINRA). The Israeli firm, which is gearing up for an eye-catching $10 billion IPO, allowed US customers to trade stocks at no cost in July, ramping up the intensity of the brokers’ fight to eliminate trading commissions.

In eToro’s existing markets, the company’s 20 million-plus users are able to trade and hold more than 1,500 markets, including stocks, bonds, cryptocurrencies, forex, commodities and more.

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