eToro doubles revenue in 2021, but posts $84mln Q4 loss

Israeli social trading network eToro today reported financial results for the fourth quarter and the full year ended December 31, 2020.

The company generated $1.2 billion in revenue for the full-year 2021, a 105 percent increase year-on-year from $600 million in 2020. However, the multi-asset brokerage company posted negative net income triggered by a sharp increase in its operational expenses.

According to the investor update published by eToro, the company amassed a total trading commission at around $290 million. This compares to $222 million in Q3 2021 and $164 million in Q4 2020.

In addition, the report outlines eToro added approximately 2.1 million new registered users in Q4 2021. This figure is up by 33 percent from 1.6 million new clients the company onboarded in the third quarter.

As a result, eToro had 27 million in total users and 2.4 million funded accounts as of December 31, 2021. Assets under administration (AUA) also stood at $10.7 billion in Q3 2021.

eToro 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 15 years ago, cryptocurrency trading on the platform took off. Trading commissions generated from digital asset trading accounted for nearly two thirds of the total commissions eToro earned in 2021.

Q4 2021 financial summary

As per the report, crypto trading activity rebounded from lows it hit earlier in the year, leading to considerably higher new funded accounts.

During the Q4 2021, eToro’s total commissions were $304 million, up 85 percent versus Q4 2020. The soild performance was driven by strong commissions from trading activity, higher interest income and other charges. Net trading income was reported at $237 million, up 50 percent versus Q4 2020, driven by strong growth in funded accounts and a rebound in trading activity in cryptoassets.

Total operating expenses excluding stock-based compensation and merger-related expenses were $263 million, up 68 percent year-over-year, driven by higher marketing expenses and investments to support our growth, including a significant increase in global headcount.

Summing up, eToro reported a net loss of $84 million, primarily due to a non-cash charge of $60 million in stock-based compensation for its employees and $11 million of transaction costs related to the business combination with FTCV.

eToro has lowered its going-public-through-SPAC valuation down to $8.8 billion from the earlier planned $10.4 billion, as market conditions change and SPACs face more headwind.

Israeli social trading network has also pushed back the completion of its reverse merger deal with US SPAC Fintech Acquisition Corp, the black check company backed by Betsy Cohen that is taking it public. Specifically, the deal deadline was extended from the earlier anticipated close on December 31, 2021 to June 30, 2022, though the two insist they will close the deal before that date.