Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, ladies and gentlemen. Welcome to Futu Holdings Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions] Today’s conference call is being recorded.

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

Daniel Yuan

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

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

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

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

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

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

Leaf Li

Thank market which our you In XX% around in the half market rebound quarter, we sentiment, call clients, affected in the over the deceleration second sustainability to the of and plummet sequentially. of the fourth acquisition. today. down all XX,XXX half client quarter paying user joining added of led Stock the earnings for uncertainties first

Our million, growth In over challenging in stickiness remained market representing the of we quarterly retention around reached average year-over-year. client year add total above exceeding rate to XXX,XXX XXXX managed XX%. XX% to our our claims Despite speaks a clients XXXX, paying XX%, full paying by X.X product. guidance backdrop, which our

over XX% new In in the Kong. through In targeted apps. well workshops quarter, as Hong clients the people and as product among population age Kong, continue offline paying XX over of XX our we Hong to over promote online our contributed past campaigns

an serve events average offerings in and asset improvement month net market, further this client saw refine we will and product We at In first quality the population. the to U.S. continued clients fixed products. in in market reach rollout money to fourth client acquisition attributable and paying Singapore approximately interest XX% income increased the new quarter, of resilient remained mainly in inflow by fund sequentially. offline Client

assets billion. The sequential Hong year-over-year asset our increased XX% holding appreciation Total due quarter-over-quarter regions. of by and clients’ across client inflow X% net robust all increase and largely market to Kong was to stock HKDXXX

quarter declined As XX% sequentially. end, financing lending and securities of margin by balance

While we lending saw hard balance market of their clients securities during some balance an margin declined amid uptick call financing in market unwound volatility, rebound. positions as

China Solar Kong quarter, billion. sequentially XX% trading to quarter-over-quarter stock the by Hong constituted flattish increased fourth stock volume volume XX%. to higher HKDXXX The HKDX.X Hong can be short-term was leveraged new attributed increase trillion, trends. market at which In volume which of Kong trading trading trading and and on make tactical used clients as tool to of ETF, bets economy inversed companies

historic XX% climbed and sequentially market in Our to market futures further respectively. trading HKDXXX Hong sell-off shares trading of to stock options mainly X% and technology down name. volume XX% amid U.S. as was U.S. Kong highs billion,

We billion, onboarded product sustained Singapore. Total thereby quarter, China grew we to market Hong their XX% money Kong structured objectives market hikes. and interest BlackRock, Innovation the awareness in first different interest high amid In driven funds to brand platform turmoil. became meet Hong clients net equity Plus. Money client XX% enhancing for distribute risk/return Fund in funds and fourth in mainly and of the BGF index-linked Futu In commodity in the as offerings management year-over-year worth quarter-over-quarter during HKDXX to also by rate retail expanded wealth we funds alternative assets the Kong,

underwrote to XXX XXX according We all Hong XXXX DigiTech IPOs, we clients, by and more several among those ESOP We joint enterprise the HKDXX XX% cap with Kong including high-profile XX as of market first In XX Our to end fourth IPOs IPO Kong ranked IR with in product billion listed and respectively. XX% business in year-over-year Delicious. corporate of launched one XXXX used for book services. offerings. the Hong our in over and distribution clients XX had as all of companies as enterprise acted XXX also runners Momo Of and quarter, brokers up or Weilong clients have ESOP companies ESOP to solution provide Wind. the year, Singapore well

to like I’d to financial discuss performance. our invite CFO, our Next, Arthur,

Arthur Chen

Daniel. Thank you, Leaf and

open we financial give of on our aggregate end repurchased you year, announced through update March last ADS $XXX repurchase to maximum of going million million million approximately about have At approved program. share constitutes This an performance, program X repurchase of market Before total like repurchase XX% $XXX share the our purchase our under latest an amount XXXX. the I’d with transactions. the amount on in of XX,

financial me fourth unless allow Hong please walk numbers Now quarter. in the in performance to noted. Kong dollars through you our are otherwise All

from XX% and charge Despite in X.X and the Q-over-Q. The XXXX. increase XXXX blended points. X% commission year-over-year up billion, driven fourth volatility, handling ended quarter of HKDX.X revenue we full market was a basis an XX% higher year rate HKDX billion, HKDX.X XX% with was billion of of Brokerage revenue commission billion. was HKDX.X income growing mainly by Total to increase

finance to hike XX% XX% balance. trading by increase was higher due was dropped income shares by interest in trade rates, mainly of year-over-year the more stock interest deposits driven daily higher the benchmark from income due U.S. financing share pricing lower offset lower to increase margin to Interest stock billion, The cash commission and a than which average and Q-over-Q. price the margin HKDX.X model blended of number rate an as The per further increased. commission led for income

charge self-clearing HKDXX handling increase income and savings and income in line of cost million, brokerage Expenses fourth Brokerage down expenses was the XX% charge down XX% U.S. was [Technical an of mainly handling Q-over-Q. million, year-over-year Difficulty], HKDXXX in our and business. commission XX.X% million from didn’t Other XX% XXXX. to due our quarter with HKDXX from commission move

XXX% our Processing business. million, was Q-over-Q. XX% XXX% to Q-over-Q. Q-over-Q and up expenses fees. upgrade and were by servicing was year-over-year HKDXXX year-over-year year-over-year costs was lending up and increase system driven and and due mainly data higher security year-over-year The associated HKDXX X% The transmission income million, higher interest fee Interest increase with

total a was As our XX% an quarter gross HKDX.X of billion, in result, fourth profit billion the increase HKDX.X of XXXX. from

mainly to XX% The X% X% increase it margin Gross million, to To down compared headcount. HKDXXX XX% down, million. – X% R&D was expenses break R&D was to HKDXXX the in increase year-over-year as were expenses of XXXX. and quarter Q-over-Q. year-over-year the Operating in Q-over-Q and year-over-year up were XX% up due fourth increase

support in and U.S. markets. investing to offerings product self-clearing international products continue We for new capabilities the the customized

high-teens XXXX, client Selling expenses we end HKDXXX on our lower sentiment of million, employees costs. international into and headcount and to at the Expenses was acquisition down the middle declined acquisition top expansion by amid XX% grow and further last Looking weak to our market marketing XX% Q-over-Q. of client new year year-over-year markets. to X,XXX intend to slower into support due

headcount relating and extent, listing. and XX% IPO The to Kong G&A expenses increase an up in personnel a to general and primarily was increase professional rise were lesser HKDXXX administrative million, fees XX% in Q-over-Q. proposed due for our to Hong year-over-year

compared expanded income the last and income fourth due by result, to quarter spending. to in quarter as XX% marketing XX% to our year, same the to million. increased As net XX% Q-over-Q lower year-over-year XX% a in margin mainly HKDXXX Net

Our rate effective U.S. higher to the quarter XX.X% our was tax rate due operations. for from in tax

ahead. the go to That to like questions. Operator, concludes please open our prepared call remarks. We now

Operator

question, [Operator you. Pu Our ask you Instructions] Thank comes Han first the from line question Han. of CICC. Please from

Han Pu

This is Thanks two Han much very CICC. strong And for another I have congrats taking the from question. on quarter. questions.

behind more business Could structure to fourth Japan, as and example, on product the also market, the growth the user the the we Thanks. in products and business? user management profile about rapid the please driver our forward you growth service? see how share how in and the of Firstly, latest besides for the Australia about and wealth progress in the our the continued revenue plan, the Secondly, new such color contribution and penetration business. quarter brokerage the

Leaf Li

the constantly offline continued acquisition In client by via budget opening inefficient And clients funnel. QX acquisition Australian client reduced product also improved we and account exchanges, with from channels we online and in the market, connection for [ph] optimize experience. deepening channels, the various clients’

clients cost will client a as QX product efficiently ability Australia upgrade the and you. substantially a acquisition on result, to Q-o-Q to continue basis. in acquire we the as as strategy. our Thank well in our future, So fell in the capability improve marketing And

And and have worth types wealth in financial in risk notes, on clients in including been gradually the AUM helped Wealth fund Hong we almost structured to product That’s looking business offerings of see structured during mainly and fund in equity plan we appetites. and with of an to cycle. asset momentum customers Thank dividend expanding And first low-risk the aim And professional half meet business, have high of management net Kong investment especially percentage assets, to in and clients portfolios, business needs funds, fourth diversify room linked broadening and we by clients. remain QX, in Singapore products a more better in fund meanwhile, been growing. Singapore, rate and while hike the paying wealth the a notes lot fixed wealth products including also of attract management year new maintained introducing in product clients QX dividend-paying with structured the allocation will inflows ahead, growth growth you. this management maybe of in And true five the because products we portfolios in brought investors and asset is entirely new provide our fund for bonds, attractive by lot low-risk we to offerings Management products private fund quarter, our different continuously fund focus and has needs mutual notes, comprehensive specifically the market. etcetera. driven of to other growth categories, strong

Operator

Thank you.

from Chiyao. the Morgan Huang line you Chiyao of comes ask question next Please from Our question, Stanley.

Chiyao Huang

a on fourth Hi. And seeing growth is income, on higher and XXXX? quarter are in my to products? brokerage second rapid roughly from commission in derivative the the My fourth question is first management’s outlook we the the driver the the which quarter. for interest the on brokerage rate And what’s commission rating contribution question the is how

And do invest? utilize cash And scale the so percentage our wondering we to the that XXXX? cash idle plan client plan utilize you. and the in client of what’s and idle Thank basically, how is we what to

Arthur Chen

pricing our take the quarter. by model will quite volatile was our effective fourth which make questions. markets Number typical higher. the model, think U.S. market in the two terms mainly because I you. was Thank meaningful hike stock corrections, one, rate, implies these of I much commission pricing driven become in reasons The

a you And on a our we specific increase reason high blend maintaining continue mentioned as also investment in quarter the call, in level these other fourth tradings our top market commission, the not is, any relatively positive more education further The side, mentioned, targets Instead, we what for quarter also in of be our as earnings fourth enhance do itself. commission volatility, our our and in rate. product roughly – total benefit But focus derivative one-third last given to has will set on in history. I for products. director of the terms commissions account the contribution derivatives, which the

of the or will low appetite. functions these to these roll U.S. this we or how professional portfolio products instance, derivative sell inclined these gradually traders. to not risk year, For more push out we to And derivative with attract our are clients option

accounts XX% idle but interest very cash it some regarding The our is conditions. the the our how to of give you say, XX% the – in on range, we but history, roughly utilize, market cash it income, idle assets, percentage-wise markets much to volatility, difficult different can can client second question different market general total depends quantify I for

relatively instance, the not clients’ because Actually, higher. position, in was very the percentage-wise, cash – market our For in fourth the good. was year very even idle quarter, whole last or it

have deposits the year-on-year interest of to the cash duration income high the a benefiting is, mainly to basis, think less choice. of SFC months. reason banks idle Thank deployment forward rate environment. we actually, than this looking bank will the regulations, usage, commercial the for X The I a interest And not grow the only you. on do clients can the according year, lot continue into with put to we from

Operator

Thank you.

Renaissance. next comes the of Our Cindy from question, from you Cindy. question line Wang Please China ask

Cindy Wang

So, to giving thanks this management for chance ask me questions.

questions. two have I So

the market. to related First is question U.S.

new of increase to So, month quarter, net asset XX% in quarter-over-quarter. inflow onboarding average clients paying the of for fourth their first by

the And in U.S. acquisition inflow client new do new U.S. to of have asset the So, expectation any contribution and increase? help terms what’s paying you XXXX. fourth of asset in inflow client number net quarter the in in strategy

So to costs. acquisition the related question is customer second

CAC So XX% do recent you. the in this us quarter-over-quarter. give full the the down how year? sustained And of fourth we quarter, Can if of Thank trend quarter will was the see be and declines kind you in XXXX there? first

Arthur Chen

Thank will question you. first. to answer. first I second your Leaf the I’ll take to leave question

For on quarter, the speed Kong our markets. CAC the and basis also, dynamic actually, overseas in in clients of just We our distributions quality on on optimized clients. importantly, of Hong certain a focus adjust our clients, our more the the incentives not fourth further we but also in channel to only

very predict still to is it difficult think I situations. forward, XXXX Going

And case we the a will market client the QX And on slowed assets affected will increased threshold. improving first CAC largely weak, sentiment in product the quality. XXXX. functions, mainly gradually options [ph] improve we stocks and for because the in this year. centered on market. our quarter And U.S. the this market, acquisition enter client competitiveness and as our advanced to new and acquisition remained enhance add paying client on U.S. And client Client clients in the while hand, asset have month local I we also inflows we enhance U.S. and to basis. On willingness from or on no on inflow multi-leg asset continue will in our focused in year, improve plan be clients our adjusted we other the down products on net to now to portfolio focus think mentioned, focusing U.S. already docs the reward product be hand, quality. you. acquisition guidance, XX%, controlling average the XXXX. Thank deliberately which as U.S. index capabilities launched improving base slowed forward, and the such around And one first and same for going in sequential clients’ we options by attracting down regarding as the U.S. derivative our cost growth derivatives client and the guidance to

Operator

Thank you.

ask from comes your from Frank. Zheng Suisse. Frank Our Credit next question, Please question

Frank Zheng

have questions. from Frank two Credit is This Zheng Suisse. I

services the could The that interest when the spread related first one of The is timetable? the understand, financing fee we rate is expense Japan second latest relatively question interest up new would and surged affected market but is general, in fee quarter entries. in progress already online? to considering [ph] to in What interest the business Is in quarter-on-quarter rate income value like fixed is margin fixed, in an the the be is interest rates, rate rate expenses elevate. cycle, fourth with

Arthur Chen

new new you are base looking market are pipelines. right. our markets, expand new in very of the do one, this will some Number terms year. you markets I of Thank to the In expansion, in have are questions. Frank, We much. case, two we your take I Asia in for both both think

for think terms the still the to update will I two we terms our are in meaningful. timeline, given coming market addressable the approval. we markets, predict though, some regulators’ it total still you for more waiting and exact be will difficult potential for is more But Hopefully, of in nowadays quarters. in confirmations these color very license of give very

pricing it thanks sales is also But margin will the little rate be interest strong sheet. spread will rate. fixed funding high relatively very think expenses, cost on regarding U.S. financing narrowed Second, from that the our a bit a given speaking, be side, environment, the to our impacted and I but the on strategy clearing interest the balance capabilities

look you money. base, you came margin lot can see financing, funding a If our the total own at source actually, of our from equity

funding pressures cost think you. the XXXX. still I in the manageable So therefore, from Thank is

Operator

Thank you.

Leon Leon. your comes Daiwa. from next from Please question ask Qi question, Our

Leon Qi

is questions Leon questions. Two for today. This taking from Thanks Hi. Qi Daiwa. my

strategy noticed Hong if is we any about in has increasing our on carrying give terms that Firstly Kong customer think share business in us you offline I offline second can more recently, out and color Kong? help Futu plans of us been regarding much. should more very the appreciate your Hong is Hong in question for management We services. AUM? business. the that wallet Does And latest Thank regarding listing. how Kong

Arthur Chen

much to Leon. answer. Kong nowadays. take for There will Hong confirmed timelines IPO second your I question is will first very question Thank to our the you no leave first, Leaf I listing any and

the the fully complete the to is year this with and think collaborate management our Mainland I cooperate inspection soon as priority as top for to possible. regulators

the proceeds. the priority later, further of assess also So, Kong listing this market IPO you. our of depending Hong and Thank our is we will and top on use our feasibilities depending conditions

Leaf Li

Kong, in younger we has younger tax groups. compared the age And on and the are our And middle generations longer to cycles. we than that So, clients. age conversion middle generally rate better groups the savvy age the Hong middle hope generations of among the platform, penetration higher Futu less with have serve see groups

As acquired. campaigns, improve plan Kong points, as shorten the account conversion to communication can cycle the to of so in clients the clients. of we carried Thank etcetera, these and quality offline touch quantity reach with KOLs, services such, opening clients including we also face-to-face potential the cooperation through Hong out you. offline And multiple as

Operator

from the comes Our Katherine of JPMorgan. Katherine. line next Please question, your ask from Lei [Operator Instructions] question

Peter Zhang

Peter this of on question is behalf asking Sorry, Katherine.

a is fall outflow see does the we impact any business Thank CAC We do wish to And So, Futu’s of understood offshore in AUM current CAC on on the December? the in announcement Futu the what’s operation, brokers. announcement last particular, there you. let tightening understand that me translation.

Arthur Chen

Peter. you, Thank

Let me answer your question.

we following some net First Roughly, of in the situation accounts year’s give last Kong think are to inflow. clients colors do witness net there amount time I was outflow are particularly is with general which concerns, compared the of sentiment client And the we some X% will think – reversed end of We about because clients’ the first movement the January. the outflows the there faced of But all, – I our I you the daily some interest. Hong manageable. of overall gradually our from our in some February. of outflow for XXXX, at we asset nowadays, the situation X% quite at starting total And manageable. client situation assets, think the record roughly end half

for the of Secondly, of at we we it a view, long-term with On point of a be we accept clients. And CSRC we with end the the have the an cooperation year, the if news, regarding regulators. They I orderly industry’s think existing industry-wide the It existing the be in from CSRC’s news full number healthy the with regulator’s last deal also, spoke one, growth. do follow net-to-net clients. the – fully February, clarities some how will there think basis, will mentioning deal ask persons the to you are and for middle situation.

this will regulators much. regard. cooperate very So, with constructive to you we Thank in very take manners the

Operator

Daniel the closing I showing you your [Operator conference am for will Instructions] questions. remarks. questions. now very turn further for to I much no Alright. back Thank all

Daniel Yuan

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

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

Operator

concludes This you. for today’s call. you Thank participating. Thank conference

disconnect. now may You

Futu Holdings Limited (FUTU) 28 Mar 232022 Q4 Earnings call transcript