eToro's crypto trading business swung to a $7.2 million loss in the second quarter, a sharp reversal from the $37.7 million profit the segment posted a year earlier, even as the broader company beat Wall Street's earnings estimates and struck a deal to buy U.S. brokerage TradeZero.
Gross crypto revenue fell 29% year-over-year to $1.35 billion from $1.91 billion, and the cost of that revenue matched gross revenue almost dollar for dollar, wiping out the segment's margin entirely. July crypto trades on the platform dropped 73% from a year earlier to 1.4 million, while the average trade size roughly halved to $182, evidence that both the volume and the conviction of eToro's crypto customers thinned out at the same time.
The pullback wasn't isolated to eToro. Other retail-facing platforms have flagged the same cooling in crypto activity through the middle of 2026 as trading volumes normalized after last year's rally, a pattern that has left brokers leaning harder on equities and diversified revenue to offset the slowdown.
The Rest of the Business Held Up
Away from crypto, eToro's results were stronger. Net contribution rose 9% to $229 million, funded accounts grew 18% to 4.28 million, and adjusted diluted earnings per share came in at $0.68, ahead of the $0.61 analysts had expected. Despite the beat, eToro's stock fell roughly 11-12% following the announcement, suggesting investors focused more on the crypto deterioration and the cost of the newly announced acquisition than on the headline earnings beat.
A $231 Million Bet on U.S. Equities
Alongside the earnings, eToro said it agreed to acquire TradeZero, a U.S. equities brokerage known for direct market access and extended-hours trading, in a deal worth up to $231 million in cash and stock, including roughly $31 million in earn-out provisions tied to performance targets, according to eToro's own announcement. TradeZero generated about $80 million in revenue over the twelve months through June, at an 81% gross margin, and the deal is expected to close in the first half of 2027 pending regulatory approval.
The purchase is eToro's third acquisition of 2026, following its earlier purchases of crypto wallet firm Zengo and Israeli exchange Bit2C in the second quarter. Taken together, the deals point to a company diversifying away from crypto-trading dependence even as it keeps building out digital-asset infrastructure, including onchain perpetual futures the company has described as \u201ccoming soon.\u201d
Related: BitMart Faces Insolvency Claim From Market Maker Amid Wind-Down
For now, the TradeZero deal signals where eToro sees its near-term growth: U.S. equities and day-trading infrastructure, a segment far less exposed to the swings in retail crypto appetite that just erased a full year's worth of profit from its digital-asset desk.
