FUTU - Earnings call transcript Q4 2021

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Operator

Hello, ladies and gentlemen, welcome to Futu Holdings Fourth Quarter and Full Year 2021 Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded.

If you have any objections, you may disconnect at this time. Futu. to conference conference of call, Head IR like host to Staff now of today's for Daniel at would turn over the your and I Yuan, Chief Please go ahead, sir.

Daniel Yuan

and joining and Operator, to fourth earnings thank for full Thanks, us XXXX year you discuss today our results. quarter

Li, President. Chief me and Financial Leaf are Robin on Executive Chief Xu, today call and Joining Vice Officer; Officer; the Senior Mr. Chairman Arthur Chen,

regarding company's which a events, reminder, and may call their the are which future As belief nature include forward-looking by represent are company's statements, outside control. today's not certain of the

Forward-looking statements could that cause and any from We factors a to results caution in differ materially involve you inherent risk actual those important number statements. of contained uncertainty. forward-looking

the the risks refer including about please SEC, the potential company's with registration uncertainties, to statement. its and For more filings information

the So, over in and with I call will his to Leaf. now I comments will will make Chinese that, translate. turn Leaf

Leaf Li

year-over-year. with and paying growth impact the marks XX,XXX call you XXX% [Foreign our all Thank brings into XXXX XX% million the adding Paying around of we despite news. client overseas as base full-year in clients clients Language] of approximately our series headline XQ negative client paying from experienced added translating market. clients clients. paying about coming paying other over from guidance We of Kong net to for earnings rapid our XX% paying This expansion by Hong retention HK$X.X client today. another XXX,XXX joining total remains year

growth in clients. net clients, are XXX,XXX XX% new year-over-year XXXX, we into Looking paying paying guiding for total representing

billion, and total market [Foreign assets news a quarter-over-quarter, X% Our some while Australia. conditions. from HK$XXX one-third addition, and XX% on asset tumbled expect were balance. adjust equities China one-third the our roughly growth one-third Singapore, market And Language] and the among net come dynamically up year-over-year headline we the down from client We Greater region, to from target US weighed subject will to

pushed volume total trading by In Singapore, dates assets from In totaling In positive prominent established partnerships by mutual X% and the with to AXA. HK$XXX X% in we offerings their come. continue around Kong, X.X Singapore new quarter-over-quarter. dampened client quarter-over-quarter tech surging turnover client was XX to mark-to-market trading were volume reaching Fidelity houses quarter-over-quarter, sentiments, quarter, Due business clients. Trading tech Trading maintain services every Language] fourth volume asset to especially expand HK$XXX our XX% US fewer XX% than Asset inflows was with Chinese Total up trading a and volume on partnerships asset fund including billion, trading volume HK$XX volume market, year-over-year negative sequentially, the up trading quarters in fund have billion. in establish HK$XX managers, billion, and trillion, for around was each with year-over-year. up higher will to four XX% trading volumes flattish XX% impact in names, and we Language] Our market Hong wealth Hong of we assets remained and management despite [Foreign for product driven quarter-over-quarter, billion, Kong resilient growth [Foreign stocks. due holding. total a stock down some US times. more inflows stocks Singapore, options higher strong HK$X.X despite US higher

product funds fund intend XX% management a in flagship approximately alternative XXX% clients the XXX,XXX our paying assets diversification end, for We our leading integral multi-asset high-net-worth held hedge and launched during managed we positions. or turmoil. a global believe mutual quarter, quarters. grew as our by onboard quarter-over-quarter. portfolio result, alternative we quarter market of for fund coming a clients distributed auto-rebalancing more source And function manager. Private In fund an by asset, of private are balance fourth substantially of As wealth to

I&E had IR as several including XXX we year-over-year for year-end, and that over high-profile retail book Hong of of of managers joint As retail to XXX% Kong XXX We clients subscription. up IPO Futu which respectively. and acted the XXX% ESOP and subscribers and IPOs, XX% clients, SenseTime, contributed

our of with As HK$XX to enterprise to CFO with listed including our retail financial performance. discuss companies, to over capitalization quarter-end, investors. community XXX in XXX more I'd above social interact market accounts held companies our like than billion invite Arthur

Arthur Chen

allow noted. Kong to through Hong the walk you All the numbers unless financial quarter. Leaf Thanks are Please and otherwise Daniel. dollar, fourth in me our performance in

as XX% Our revenue balance. decrease was trading total year-over-year increase increase year-over-year as volume was proportion Hong driven of X% XXXX of due year-over-year Brokerage service blended stocks. by and brokerage year-over-year grew decrease Other commission billion. billion, a expands Ending X% X% IPO margin the handling financing to commissions. HK$X down for charge Kong higher financing was daily the lower HK$XXX charge was q-on-q. q-over-q. over to by lower margin driven a XX% HK$XXX XXX% decrease XX% income income due was The income, year-over-year of The q-over-q primarily and an as up and mainly an and of commission both q-over-q XXXX. higher quarter XX% Interest was fourth commission million, The was of result US financing income. of rose decrease q-over-q. increase increase HK$X.X a year, average higher for million, million, in of higher blended income developed year year-over-year and HK$XXX trading rate to of and full contribute X equity rate basis up revenue from The billion points, HK$X.XX the rate the strong commission

million servicing to lower year-over-year cost. IPO lending offset million, to interest costs larger to to were concurrent handling to Interest the a charge HK$XX our expansion XX% million, decrease lenders the decrease and the expenses Interest down HK$XXX package and service The clearing primarily of and and due and q-over-q. XX% was our move million, expenses from expense funding to was and with was year-over-year and cost higher total upgraded line overseas and q-over-q. XXXX. in were associated million and handling charge XX% The XX% Our lower The up increase US quarter fees. HK$XXX interest fees expenses, XX% market Brokerage expenses with due of process cloud commission HK$XX in by number year-over-year with our trades. house year-over-year our partially business. and declined primary were subscription XX% security q-over-q. IPO brokerage HK$XX service down financing due X% higher expenses didn't commission of fourth support income borrowing lower Processing due q-over-q

X% was down, increase To in result, the clearing sales was quarter break support to mainly million, q-over-q billion, was continue the XXX XXX% products customized was especially HK$XXX increase branding gross total marketing to for an due in year-over-year R&D with as amid the HK$XXX XX% for year-over-year new higher a up spending XX% of headcount q-over-q HK$XXX G&A due Operating XXX% The and we as of from US of primarily up R&D declined opening Selling in expenses and a million. were XX% as increase HK$XXX dampened more q-over-q. HK$X.XX spending, headcounts, were As year-over-year expenses XX% office. invest XX% The offerings, down XXXX. marketing Gross were compared of year-over-year it margin XX% quarter markets. and expenses million, in XX% was and to increase international expenses increase and up product and up in to fourth expenses year-over-year The profit performance personnel, rise of to in G&A fourth an q-over-q. XXXX. the million HK$XXX capabilities decrease marketing markets international sentiments. international came increase to was market and million, q-over-q. due The of

X% HK$XXX As year-over-year income the our and a net q-over-q XX% result, to million. by decreased

rate the tax was was quarter XX.X% for and income XX%. income margin the net Our

of In to call repurchase We prepared us December our board up to transactions, XXXX. to from in X, We new working share the our this please complete which current XX, open to US$XXX worth have like ahead. purchase questions. a share November addition Operator, repurchase to announced to US$XXX on we program XXXX, enable million market remarks. program, previously authorized plan has our capital. repurchase our conclude go ADS now open until fund That million

Operator

comes first [Operator Katherine from Stanley. ask question Please Instructions] your question. from Our you. Liu Thank Morgan

Katherine Liu

Morgan much Stanley. [Foreign very Language] I the from Thank will I'm me translate for ask myself. management question. for Hi opportunity Liu Katherine to this management. you giving

have two I questions. So

And and some with second, Self-Clearing of, and in the example, for for First, new target and the us plan guidance client their any this also, is and in Can of results client update geographical breakdown there overseas rate? give about profit the they progress terms also us market markets. can in the Australian terms management give operation on markets. some compare US turnover Australian year-to-date of of how you. in guidance addition, making? revenue Thank the management expectations market like And Singapore is also terms assets terms

Arthur Chen

answer last to question Katherine. Thank Maybe first. questions I I first leave your will himself. you, This Leaf Arthur. is can Then the two

want XX% have our the of try migration we our complete from own the of this the of to partners the target around and stock business in we end Dallas. dollar our transition. already US quarters, In is stream ensure during so And we system's because value our Self-Clearing, terms this clearinghouse US migrated far, third to to holdings stability scalabilities toward

cost positive do Self-Clearing, the And which mentioned lot we completions. of earnings as some zero essentially revenues have operations rough the alongside our calls, yesterday, fundings that, zero of in upon US. after impacts seen already outside very or to our So, previous calculations a the Self-Clearing generate we have have we

you. there part expect the from Self-Clearing pre-tax million be we will the migration XXXX, will revenues around incrementally the profit. and majority For be Thank HK$XXX translated do operating into

Leaf Li

And by equities see there's steady and largely update, strategy. net more news addition very mark-to-market this impact among slowed negative I the to due forward, about think as uncertainties assets down and migrated [Foreign we’ve down we business terms asset it And downturn. Australia. And new and negative in has when different But Language] Singapore, largely client over from client very offsets rebounded was of dynamics from trading overall China in into And self-clearing have in bit mentioned, is little down trended going saw like position. we market, employ of negative market Arthur offerings. also we launched will turnover, although, numbers. in the impact. And to a business, market stable. terms close market little I it active already the And Singapore our stable. zero market our the IPO business product that positive equities due about trading due a the our terms will And But which terms of brought markets, the offerings, so market entering cost performance. kind that's from as continue we asset competitive less negative the have year our enrich in net don't break stock of of mark-to-market still slowed impact But of and bit holdings XX% as acquisition that acquisition to And inflow, XX the the And regulations, of any Australian Language] down bit and market. ETF around terms around inflow, our our trading to little talk kind growth region a we've of US performance [Foreign we trading, seen the in clearing we US healthy well already stock client a Australia, -- XX% XQ in our the business. the leading to on about a lingering our to attrition client our in for Greater In headline stock what's to we performance retention. to client competitors was bill see funding self-clearing product

stake. the with the [ph] smooth lot, in rates brokers a the pretty have you other trading Their analysis, very also charge account. and see for Kamsack high that seamless. It account very commonality account seamlessly commission low trading bank But They is they trading advantage you And online those commission sophisticated the hand, ANZ. that rates. a hand, one players is works common like and Their bank on [Indiscernible] is transfer. their to on functions, tools the a those idle typically charge broker disadvantage they fee analytical is and and very and and integrated So generally other pretty interfaces the straightforward vibrant have see community. like for technical more

we these us, now couple our of just in our right XXX,XXX. But quarter. we online kind of like and And more brokers, the product for still of advantages capabilities. roughly about results next smaller think around difficult that So and are offerings, as a since where we in base, share they operations terms entered gauge of it's tech have client terms market our we'll come to -- into market, potential, we've have to Australia

Katherine Liu

[Foreign Language] Thank much. very you

Operator

Thank you.

question Please Capital. ask as from from Daiwa question. Leon Qi next Our your Please question. your

Leon Qi

Hi. allowing a from Qi Thanks ask This Leon today. I for have to questions. few me Daiwa. two is questions

markets? take you the particular to our expand longer for longer the AUM? the to high color markets give Do three specific user mixed guidance clear and timeframe. a very they Mainland overseas that referring breakdowns haven’t China. of that it. the on you a for geographically, much next the just larger XXXX for horizon it your a about I'm the regional would acquisition over management users contribute day, to if and a level for is very just years, strategically mix expect overseas management one First except time on in on that appreciate us to Appreciate proportion we markets mentioned But user targeting have

doing be becoming moment. The potential Understand years. market you that successful the been tactics the over you your at the changes way has the few costs. be of are lot user cautious. over Language] less over change are been spending acquisition least about in question dollars months, your customers conditions the acquisition [Foreign similar a past is will some few that is user a years, in keep market Would customers for and or has past user more very exciting, considering that a the acquisition few But in naturally, you dramatic past the well, given in second your

Arthur Chen

leave second Thank question you first. question question. also the will to for the Leaf. I Maybe take I a first

In expenses, understand. can terms the the everybody correlated right. market you're of to as marketing is It conditions highly

have on the expect different the XXXX, XXXX of i.e. new effective CAC also we net for our our We couple six the paying For mature be et Singapore, year. continue you. of versus markets acquisition be client in for – paying in if will new generous period of of But On not number asset ratio basis end ratios. to this The how the the for markets year-to-date around client, is the this things also – for we that, will costs, pay client HK$X,XXX just only acquisition subset. not ARPU inflow the the CAC much Australia at next this – more or is due by the to new will each migrate markets different of our the into to Great we total we consider the because – we for always. new this amount on Besides these stage engagement need platform. versus this to nine more do will positions, ratio, range important client's but XX% we in for each in parameters cetera, such new at And evaluate look the be most apple-to-apple we consider. cash controlled that early market this may – effectiveness such will more Thank need in last do other in cap are asset the new the – ratio the months expect in the assets we will ratio, which money months Depends China, user quarters. do client's fluctuations numbers to focusing client XX% some US, as incremental as the the increased to as and think client we i.e. payback for we thing. period payback new

Leaf Li

a three overseas around paying of Hong perspective, ratio be asset it's Mainland we [Foreign Kong, client look our think markets other And Language] clients in from more China, from X:X:X. ratio years' I to like X:X:X. the expect and will time,

Leon Qi

Thank you.

Daniel Yuan

very Thank Language] you [Foreign much.

Operator

you. right. All Thank

question comes Zoey from next Please Jefferies. Zong ask from Our question. your

Zoey Zong

Thanks for I question second will we is that launched when taking much management the my question questions. then paying were acquired you. currency question. digital have is My my [Foreign two And Language] trading our first Thank that among our how clients, services? ESOP?

Arthur Chen

I take two Sure. questions. these will

account the channel the -- single-digits actually by For contributed low paying just the less new for fourth ESOP second question, the quarter. for clients

year-to-date strong the also can very Of not well. situations, was fourth course, you IPO and as the understand in quarter market

business, studies not certain license we application, crypto have feasibility -- not the also we still the confirm the schedule therefore are For confirm time the -- we yet. doing have and do

Zoey Zong

you. Thank

Operator

Thank you.

ask Our CICC. question. Please from Zeyu next comes from Yao question your

Zeyu Yao

from Thanks results solid Language] taking to like market. [ph] question. two for This [Foreign Hi, I'd management. questions. Yao our financial CICC. my to is in Zeyu ask crisis this Congrats

our know US. The rapid strategy is growth about new what's market. to the our regarding like first And during our long-term? we expenses to year? move in in increase business -- what's still as the new US the business what's last business expected I'd customer are next acquisition the had And in one our for such already in see expansion in XXXX, mid seen Thanks. we growth employment-related to a about secondly,

Arthur Chen

initial share US more can I Robin Thanks color increase forward. thoughts or going the our can on give for colleague, the colors XXXX. strategy my you for Zeyu. Xu, US marketing some our and headcount some Maybe Then operation

system language result international R&D our the on we building look stuff we from is very For XX% proud our primarily to in reasons adopt i.e. technology putting infrastructure, more will want current This R&D behind C++ for growth. also more the we do be in development. The significant year-over-year functions will a headcount infrastructure. to into and native another [ph] and the into migrations, XXXX, do market for overall our also deployed land a growth

it We we completion, complete road, R&D towards the XX% enhanced special are XX% the this do two dedicated end our by down this be these scalability And do same the develop will and to systems be efficiency it starting year. spending will to server. will system the expect our areas. lower will migration the will years. to expect At we the IT enhance in three the migration in to and taskforce spending stability the annual this time you. HK$XXX significantly Thank IDC search and of also assign After the ensure These five next flexibilities and exceed saving the from XXXX. IT

Arthur Chen

As up to then account want our asset fourth as couple and improve arisen as increases, on opening And to invest in to from improve the opening of because our the And result. product to gallows recognition acquisition ad our a our we continue that's in we to from registration, the I conversion spending think experience. app past the registration hand, client brand picked another quarter, one also has account to the from reason quarters that in is market deposits. US rates

I think client our continue improve to more in Thank efficiency the to US. you. time we need acquisition

Zeyu Yao

Thank you.

Operator

you. Thank

go question Securities. ahead Bank next from of Emma from your comes with Please question. Our Xu America

Emma Xu

quarter questions cash outstanding So, I the for Language] of fourth regarding $XXX have XX% million repurchase program, XXXX. the roughly is it by newly announced accounted [Foreign

much or investment, because capital generate needed you you see to you the investment it can much cash cash future? do future that or fund in needed seek continue is to for -- So, enough to didn't working

Arthur Chen

you I fundings see our question. would think, one At the do we conducted our placements, reached financings, returning free the user equity in with to so to This two over net our our last of year, the end Sure. Thank years. the capability from Since with is like Arthur. will alongside or your share this flow billion. assets next you continue rounds profit of generate can years. remain and have $X.X total cash question. this together robust IPO, every answer we three to And for generate

appeared now funding needs which we market will and So, closely Having and can we have utilized idle and organic we the valuation long-term our current to shareholders. and be potential for be considering growth, monitor also attractive. continue conditions situation, some acquisition the to the do our and said merger the if cash reward a think that, deployed

share covering So, be next XX months. repurchase the program it will a reach -- almost

be conditions whether very the opportunities will also market you. it on and we across. Thank So, the can dependent come

Operator

Right. Thank you.

turn have Daniel the end of to We for call remarks. closing the reached the session. I'll back question-and-answer

Daniel Yuan

team, for Thank you, like our call today. behalf today. management operator. On joining That us thank Futu to would I of you concludes the

please you Relations If Investor any hesitate to and representative. me our you not do any have bye. good further or questions, contact Thank of

Operator

does for you. and gentlemen, that conference Ladies Thank you today. conclude for our Thank participating.

now may You disconnect.

Futu Holdings Limited (FUTU) 11 Mar 222021 Q4 Earnings call transcript