eToro Group Ltd.

Hi, my name is Daniel Amir, head of investor relations. This webcast is being recorded and will be available for replay in the investor section of eToro's website. Our earnings press release, investor presentation, and April monthly spreadsheet is now available on our website at investors.eToro.com. Today, I'm joined by Yoni Asya, our CEO, and by Mehron Chani, our CFO. Following the prepared remarks, we will conduct a Q&A session and answer questions from both institutional research analysts and a selection of the most upvoted question previously submitted by eToro's retail shareholders. But before we begin, I want to note that today's discussion contains forward-looking statements, including statements about goals, business outlook, industry trends, market opportunities, expectations for future financial performance, and similar items, all of which are subject to risk, uncertainties, and assumptions. And you can find more information about these risks and uncertainties in the press release that we issued today and in the risk factors section of our filings at sec.gov. Actual results may differ and we take no obligation to revise or update any forward-looking statements. Finally, during today's meeting, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Definitions and reconciliation of GAAP to non-GAAP measures is available in our press release, investor presentation, and on the SEC.gov website as applicable. With that, I will pass the call to Yoni.

Thank you, Daniel, and thank you to everyone joining us today. Welcome to eToro's first quarter 2026 earnings call. After Maron and I conclude our prepared remarks, we will open the call for questions. This was a very strong quarter and a very strong start to 2026. Net contribution and adjusted EBITDA were both record as a public company. Net contribution increased by 19% year-over-year to $258 million, while adjusted EBITDA grew 35% to $109 million. This marks our fourth consecutive strong quarter since becoming a public listing. Just as importantly, the quarter demonstrates the durability of our model and a confirmation of our strategy as trading continued to shift from crypto to commodities and our diversified offering kept users engaged. This highlights our ability to sell across market environments and is a core structure advantage. We also saw meaningful acceleration across our key performance indicators. Funded accounts grew 12% year over year to over 4 million, represented our fastest organic growth in over a year, driven by increased strategic marketing investment and improved retention efforts. Momentum carried into April, with funded accounts growing 13% year over year. Asset Sunward Administration reached 17 billion, up 15% year-over-year, driven by strong customer inflows. We are a highly diversified global financial services company. We're building a global platform for investing, built around the idea that everyone should have access to the world's financial markets in a simple and transparent way. Today, users can invest across almost every major asset classes from stocks, indices, commodities, currencies, crypto assets, tokenized assets and emerging market opportunities like prediction markets. Innovation remained at the core of our strategy. We continue to expand our platform with new products and technologies, including AI-powered investing experiences, 24-7 trading capabilities, and on-chain financial infrastructure, while continuing to strengthen our traditional investment offering. We believe these initiatives position us well to capture the long-term evolution of global investing and wealth creation. Six months ago, we made AI a company-wide mandate across every function in eToro. We didn't just adopt tools, we rethought how we operate. Today, every function inside eToro – research, engineering, product development, and marketing – is supported by AI agents that operate against our infrastructure, continuously upgrade themselves as frontier models improve. The impact is significant. We're already seeing significant productivity gains in engineering with more to come and similar acceleration is extending across the rest of the organization. Work that historically took quarters now ships in a fraction of the time. Capabilities that used to require deep technical expertise are becoming accessible across the business. We believe 2026 is the year of agents, and eToro is among the early adopters of this shift in our industry. This is an engine behind a significantly faster product roadmap. As we deliver against our mission, we have remained focused on executing our four strategic pillars, trading, investing, wealth management, and neobanking. Allow me to share a few highlights across each of these areas. In trading, we saw incredibly strong growth in commodities, which represented 60% of trading commission in the first quarter, with volumes increasing nearly fourfold year over year. This reflects both market conditions as well as the strength of our multi-asset model, which continues to drive cross-asset engagement. Over the past six months, users who initially traded crypto or equities accounted for most of the commodities trading volume. That is the multi-asset model in action, and it is how we deepen user engagement over time. The strength and resilience of eToro's business model are anchored in our proven ability to sell across a diversified multi-asset platform, a pattern we've successfully executed through both crypto rallies and periods of elevated activity in traditional capital markets. Our 24-5 trading offering launched last year. It is being widely used and it underscores the global nature of our user base. This year, we took the next step. We rolled out 24-7 trading across multiple asset classes. eToro users can now trade select commodities, single stocks, and indices around the clock with more to come. We see this as an evolution in capital markets. Traditional markets are starting to look like crypto markets and users want to trade on their own schedule. We also continue to expand our offering. With the addition this quarter of Japanese equities, eToro users can now trade equities from 26 of the world's leading stock exchanges. In the U.S., we expanded our crypto offering with the launch of crypto trading for users in New York, the epicenter of the country's financial markets, following the successful activation of our BitLicense and MoneyTransmitter license. Turning to investing, copy trading remains a core differentiator for eToro, as we're the only company offering automated agentic trading. This quarter, copy trading reached an all-time high, driven by rising demand to copy and pro-investors who are actively reacting to volatile market events. Copy trading is widely used by users, reinforcing its role as a cornerstone of our social investing model. As an AI-first company, AI-powered investing sits at the core center of our innovation strategy. We're entering a new era of investing, where AI is reshaping how individuals access markets, make decisions, and build wealth. At eToro, we see AI as a force that levels the playing field, giving every investor access to capabilities once reserved only for institutions. Our vision is to equip each user with their own team of AI agent, tools that analyze the markets, generate insights, and share personalized analysis, while enabling them to build, share, and scale strategies within a global collaborative investing ecosystem. We're extending the same agent architecture we have built internally directly to our users by putting institutional-grade capabilities into the hands of every retail investor on eToro, designed to seemingly integrate with a community they already trust to learn from and engage with. ultimately ai is accelerating a long-term trend of making investing more accessible more social and more personalized the internet democratized information blockchain democratized value ai is now democratizing financial expertise and as finance and technology continue to converge it is becoming the primary interface between users and the markets ai will help millions of people participate in the markets with greater confidence, better tools, and a stronger connection to both data and community. The introduction of agent portfolios is also a meaningful step on that journey. Agent portfolios let users allocate capital to AI-driven strategies inside a dedicated environment in their eToro account. Through Tori, our AI investing agent and conversational interface, users define the parameters and the AI agents run the portfolio. They get exposure to intelligent portfolio management in a controlled and transparent way while keeping full control over their broader investments. As part of our AI efforts, we also recently expanded our partnership with SpaceX AI by embedding real-time X intelligence and market sentiment powered by the frontier GROK 4.2 model directly into the investment workflows of Tori. As more activity shifts toward automated AI-driven strategies, we expect increased engagement, trading activity, and volume across the platform. Building on this, we have launched eToro App Store, a marketplace for trading and analytics applications directly within the eToro ecosystem. We've also introduced a builder's portal, providing partners with access to APIs, tools, and development resources. Some of the apps developed include AI Trading, an AI trading cockpit, a trading hub, a Bloomberg-style terminal for traders, Price Point turns web page into trading signal, and POTUS turns politicians and influencer comments into trading signals. Together with agent portfolios, the eToro app store and our builders portal create a foundation for a new builders economy, enabling the creation and distribution of applications to millions of users, including no-code AI-powered tools. Developers, quantitative strategists, and everyday users can now access, create, share, and scale financial applications across our global platform. Over time, we expect a broad set of applications to be built on top of eToro, further expanding the capabilities of our ecosystem and fostering a more engaged, loyal user base. In wealth management, the continued adoption of our club subscription gave us the runway to introduce an upgraded plan, giving users access to first-class benefits of our premium tier for a monthly or annual recurring fee. More users can now get enhanced rewards, professional tools, and premium experiences, which we believe drives deeper engagement and higher user satisfaction. Our cash ISA offering in the UK also had a record quarter. ISA AUA grew 15 times compared to the same period last year, with underlying market opportunity exceeding $1 trillion. We're now using that playbook to push deeper into localized savings products across other key markets. In EO Banking, Itoro Money delivered a record quarter. We continue to invest in localization and in regional expansion, enhancing the user experience and supporting long-term growth. We've seen strong adoption to the Itoro Money card, available today in Europe and the UK, and we'll continue to expand the benefits associated with that card. In the first quarter, the number of cards issued more than doubled quarter over quarter. Finally, last month, we announced the acquisition of Zengo, a leading self-custodial crypto wallet provider, marking an important step in advancing our long-term crypto strategy. At eToro, we have long believed that blockchain technology and digital assets will play a central role in the future of finance. Crypto is revolutionary because it reduces friction in financial services, gives individuals and companies true ownership of their assets, and expands access to a more inclusive global economy. As one of the first crypto companies to offer crypto back in 2013, we've been pioneers in blockchain technology. Having experienced many crypto cycles, we believe that crypto downtimes are the time to build, and this acquisition reflects that long-term commitment and approach. Zengo combines naturally with eToro. Our global multi-asset platform and distribution, together with their secure self-custodial wallet technology, gives users direct control over their digital assets while staying seemingly connected to on-chain infrastructure. This transaction enhances our digital asset capabilities and accelerates our strategy to bridge traditional investing with decentralized financing, unlocking new opportunities across tokenized assets, prediction markets, and perpetual futures. Globally, we now offer over 200 crypto assets on eToro and access now to thousands of more on Zengo, including tokenized stocks. Importantly, our crypto efforts are not dependent on short-term market conditions. We are seeking to position eToro to lead the transition to on-chain financial world. To wrap up, we've delivered strong financial results, grown funded accounts ahead of the market, and continue to drive product innovation, particularly in AI. At the same time, we continue to thoughtfully pursue strategic initiatives, including expansion through acquisitions and our share repurchase program. Our focus remains firmly on creating long-term value, and we believe our strong start to the year reflects our unwavering commitment to that objective. With that, I'll hand it over to Mehran.

Thank you, Yoni. As Yoni mentioned, we are very pleased with our first quarter results, which demonstrate our continued momentum as well as the durability of our diversified business model. First quarter net contribution grew 19% year-over-year to $258 million, and adjusted EBITDA grew 35% year-over-year to $109 million. In line with our focus on diversified profitable revenue growth, our adjusted EBITDA margin was 42% compared to 37% a year ago. These very strong margin results were due to higher net contribution in the quarter. Our KPIs reflect strong momentum in the first quarter, with AUA increasing 15% year-over-year to $17 billion and funded accounts growing 12% year-over-year to $4.02 million. These positive trends continued into April, which I will discuss in more detail shortly. Growth was driven by strong user acquisition and retention supported by continued investment in marketing initiatives. Now let's take a closer look at our first quarter financials by business lines compared to a year ago. our net trending contribution from capital markets grew 71% year-over-year to a record $166 million, supported by increased engagement of our customers and crypto traders shifting to trading capital markets with commodities being particularly strong. As Yoni mentioned, in Q1, commodities accounted for 60% of our trading commissions. The 90% rise in the number of trades during the quarter was primarily driven by strong market activity in commodities and record inflows into copy trading as pro-investors reacted to evolving market conditions in the first quarter. This performance reflects growing user engagement and the strength of our multi-asset business model. Additionally, the growth of our business is reflected in the steady increase in total invested amount over time. This growth has been driven by the expansion of our capital markets business and the continued shift of crypto customers towards broader investment products amid crypto market cyclicality. Net trading contribution from crypto was $13 million, with a year-over-year decline driven primarily by lower trading activity and customers shifting to trade commodities. As we have seen in prior crypto cycles, these periods of volatility are expected, and our diversified business model has demonstrated resilience across microcycles. Our crypto net contribution includes a $5 million negative valuation impact of our corporate crypto holdings, resulting in a balance of $14 million at the end of the quarter. Net interest income contributed $48 million, down 5% year-over-year, largely driven by a lower interest rate environment and user deleveraging amid market volatility. The decline was partially offset by a 13% increase in higher interest earning assets as a result of an increase in user cash deposits, staking, and corporate cash. Etoro Money's contribution grew 32% year-over-year to a record $29 million, driven by a 70% year-over-year increase in total money transfers as we continue to experience increased deposits and user activity. In the first quarter, adjusted OPEX was $150 million, up 7% quarter-on-quarter, driven by a $12 million increase in customer acquisition costs. Our adjusted selling and marketing expenses for the quarter was $58 million, or 22% of net contribution. As discussed last quarter, given the strength of our cohort returns and our objective to accelerate growth in 2026, we plan to increase our sales and marketing investment from 21% last year, scaling gradually to 25% of net contribution this year. Adjusted R&D, G&A, and operating expenses for the quarter were $38 million and $54 million, respectively. Our adjusted diluted EPS for the quarter was 91 cents compared to 77 cents in the first quarter of 2025. Moving to our balance sheet, we ended the quarter with $1.3 billion in cash, cash equivalents, and short-term investments, and generated $104 million of cash from operating activities during the quarter. In the first quarter, we repurchased approximately 3.3 million shares with an aggregate of $103 million in accordance with our previously announced share repurchase program. Now, let me share a few comments on the second quarter trends. As part of our quarterly results today, we also released our April monthly KPIs. April has continued on a positive trajectory with the business momentum carrying through from Q1. Our capital markets business followed the same year-over-year pattern as Q1, with significant growth in total trades, led by equities and commodities, with a higher than average revenue per trade. We have seen the multi-asset strength yet again, when 40% of the customers who traded commodities in Q1 also traded stocks or crypto in April. In April, KPIs accelerated. AUA reached $18.7 billion, up 90% year-over-year, and funded accounts grew to $4.07 million, up 13% year-over-year. These KPIs reflect the strength of our multi-asset platform and a confirmation of our strategy. even against the backdrop of the current crypto market cycle. To summarize, we are very pleased with our strong first quarter performance and positive momentum year to date. We believe we are well positioned to capture new opportunities, drive sustainable growth, and further strengthen eToro's leadership at the forefront of trading and investing while delivering meaningful value to shareholders. With that, Daniel, let's move to Q&A.