eToro, the Nasdaq-listed trading and investing platform, said third-quarter net income fell 74% from a year earlier to $15.0 million, its results release shows, and net contribution, its preferred top-line measure, fell 13% to $186 million. The company said the drop was driven primarily by lower crypto trading activity.

Revenue from crypto assets fell to $1.35 billion, from $3.97 billion a year earlier.

That headline figure flatters the business, then and now. eToro books the full value of the crypto it sells to users as revenue and the cost of buying it as an expense. After that cost, spot crypto left it about $59 million in the quarter, against about $77 million a year earlier, our arithmetic on the company’s figures shows.

The numbers that matter

  • Net contribution: $186 million, down from $215 million.
  • Adjusted EBITDA: $34.2 million, down 56% from $77.9 million.
  • Diluted earnings per share: $0.14, against $0.53.
  • Equities, commodities and currencies: net trading income rose 21% to $88.5 million.
  • Net interest income from users: $50.0 million, down from $58.9 million.
  • Funded accounts: 4.39 million, up 18%.
  • Assets under administration: $20.8 billion, flat on the year.

Costs moved the other way. Selling and marketing spend rose 42% to $68.1 million, and a $30.9 million loss on crypto derivatives trading was larger than a year earlier.

Why investors sold

The shares fell about 6% to $22.00 at 14:49 UTC, against Monday’s $23.32 close, Yahoo Finance data show.

The board authorised a share repurchase programme of up to $250 million. The company said it believes its current share price “does not fully reflect the Company’s fundamental value”, and that its shares could also be used for acquisitions. It has agreed to buy LB Finanzas, a digital investment and payments platform in Argentina.

eToro has cash, cash equivalents and short-term investments of $1.2 billion.

The skeptics’ reading

Shani’s “sequential recovery” covers the quarter. The October figures eToro published alongside it show crypto trades down 62% from a year earlier, to 2.0 million, and the average invested per crypto trade down 29% to $228. Assets under administration slipped to $19.2 billion.

eToro is not alone this season. BitGo’s revenue halved on Monday, Robinhood’s crypto revenue fell 55% in late October, and Coinbase’s third-quarter revenue fell 35%.

What’s next

The fourth quarter ends on 31 December, and October’s figures are the first look at it.

This article is for information only and is not investment advice.