Earnings call transcript Q2 2023

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Operator

Hello, ladies and gentlemen. Welcome to Futu Holdings' Second Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a Q&A session. Today's conference call is being recorded. Instructions] [Operator

IR like conference conference of call, CEO Head now host to Staff turn go and today's Please for Daniel of to would over the your to ahead, I sir. Futu. at Yuan, Chief

Daniel Yuan

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

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

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

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

the to potential please XX-F. SEC, about with the uncertainties, and the its filings information annual on refer including risks more report Form Company's For

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

Leaf Hua Li

for client paying pleased the second today. all million, sequential markets in the number total drove all Thank I'm bringing across to in clients a that our nearly growth of to we over acceleration robust X.X paying quarter, acquisition. you overseas joining clients acquired XX,XXX organic XX% announce

how market interface. open In marketing user clients on as third trading prefer campaigns who our contributed the effective accounts navigate attracted Hong to second of quarter, Kong instructions in-person offline one and approximately new paying older clients

channels our in market incentives. enticing quarterly of U.S., In of also client quality funds. witness more fragile market money remained retention market, we above client brought group's the rate Despite sentiments, on we on iterated higher U.S., back In XX%. paying paying yield we clients the client marketing as equity Singapore and growth the outperformance and strong of market

all better stock access and U.S. and we enhancing bracket Singapore. Kong algorithmic in continue day, EPS In give futures, now Hong new U.S. the Kong clients order certain clients thereby to strategy their stocks to across a a features markets, of Hong quarter, accessibility in Singapore products trading. options help and for stock In week, days launched hours orders and out roll for and execute U.S. five Australia, to clients trading we second XX the we an

client total on offset impact. X% and which client HK$XXX inflow were Total assets holdings market year-over-year stock quarter-over-quarter. remained markets billion dragged in net flattish The mark-to-market Hong up assets. Negative Kong client impact overseas asset robust, the

asset the balance their in unwound consecutive achieved a the quarter respectively. sequentially, strong clients delivered position. quarter-over-quarter This assets market in total and financing as during increase was client securities total lending and second Margin the average client growth digits growth declined sequential Singapore with lending Singapore by and fourth some double assets. market XX% security marginally X.X% XX% where quarter

to HK$XXX declined Total names and volume to U.S. and down XX% to Hong was over quarter due billion technology volume disappointing performance. trading quarter China XX%, over contracted. clients was HK$XXX technology quarter billion, stock trading quarter HK$X XX% of by interest in volume trillion. waning price down stocks trading trading inverse Kong stock turnover given EPS as stock sequentially leverage

yields notes this cater expand of to clients. year high spread to robust product structured were and fund sustain notes to behind by Total return Hong driver over market In growth. Kong, To linked of year billion net the expectations key diversified risk quarter and a involve over and call/put offerings client worth XX% with quarter. HK$XX assets XX% funds high asset management on-boarding we money continue

significantly and year launched to effort year management, behalf. managers in of we the Singapore allow from to year. client In In manage more wealth that In an quarter client's on X% in end, of held in double assets the Singapore, assets than over management management Singapore, beyond wealth their as XX% trusted clients quarter. expand over ago up accounts wealth positions fund average retail

them of as have of XXXX. over year including Hong companies used of book first one of in Hong XX quarter, of We enterprise of have runners listed or the product and offerings. the year, several and Kong In IPO more the clients XXX distribution Edianyun. Kong IPOs, we out XX and profile all our quarter acted half those XX% IR end joint high YSB of

I management am wealth online Corporation is Japan Moomoo. wholly-owned least, Moomoo Last its our our but platform, brokerage to that officially conduct subsidiary, Limited Security announce Japanese business by regulators pleased via Japan not approved and to the

pension market growing we and The immense into and retail of of trading affluent high large opportunity. Japan for is are increasing online U.S. and tap trading, to this characterized number excited by stock market investors, penetration its

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

Arthur Chen

and Daniel. Leaf Thanks,

financial program announced our through $XXX on XX, performance, I'd you share million repurchase going March Before on give an latest our like XXXX. to update

This first of of we our end have XX half, on of the in transaction. repurchase an million million the XX% about open share repurchase program. maximum repurchased the $XXX approved approximately constitutes amount with market ADS aggregate amount At total purchase

XXXX. Total to back the were HK$X.X of the in XX% are revenues up from for Hong below quarter. Now All billion in performance numbers Kong financial the second billion, the the in quarter mentioned second HK$X.X dollars. quarter

points. decrease commission X.X X% volume, decline HK$XXX trading million, charge by the in blended the and to in Q-over-Q the mainly of income was Q-over-Q. and due a partially offset X.X points the Brokerage from was total a commission The rate handling increase to decrease basis year-over-year XX% basis

increase from maintained higher was and income income income. lending security The higher HK$X.X by was deposits cash and driven Q-over-Q. HK$XXX Other Interest year-over-year an interest billion, XX% up Q-over-Q. income increase of most X% year-over-year and flat a million, was XXX% then

currency income lower exchange was the by and higher fee distribution increase income since the stable were by data underwriting largely service and largely information income. The and distribution market fund open Other driven Q-over-Q fee and high income year-over-year income. maintained offset income transfer the

down an million XX% savings million, handling from Brokerage HK$XXX from XX% XXXX. HK$XXX decrease and the was was million, HK$XX business. expenses XX% sales and clearing year-over-year lower cost the our U.S. of volume cost increase Q-on-Q. to trading and quarter in was second of attributable Total The charge in commission

XXX% Higher also and with HK$XXX expenses Q-over-Q. increase by borrowing the million, XX% Q-over-Q from and associated costs Interest was contribute security year-over-year, increase. up expenses business. our The were financing mainly margin the driven lending higher to business funding

information were a transformation X% HK$XX Processing fee and also due and the Q-over-Q. increase the XX% higher market basis. costs was to up year-over-year and fee, The million, system fee data usage on sequential increased primarily servicing

result, quarter increase margin XX% of of billion was X.X was XXXX. in billion, XX% profit compared the second As X.X as from in total quarter second of XX% gross to the a XXXX. Gross

Operating the Q-over-Q X% was Q-over-Q, XXX increasing product the to expenses and R&D due localization invest product in markets. the upgrade international X% increase expenses and year-over-year, were R&D XXX was as to and new to year-over-year in offerings, we support million. mainly million infrastructure, continue headcount XX% XX% up our

Q-over-Q The expenses and due million customer marketing lower and accelerate client Selling decrease and Q-over-Q. was acquisition. costs by year-over-year, acquisition to XXX was year-over-year driven increase the down up mainly was XX% XX%

to in expansion. year-over-year, international XX% and due and XXX the personnel for general mainly to support account X% increase head business expenses was million administrative G&A increase Q-over-Q, was the of our

billion. the expenses. selling XX% the by decreased net last income our result, to and X% increased the total top lower strong X.X margin and XX% XX% due the line same marketing year, by year-over-year, a Net growth to quarter income primary in Q-over-Q As expense from to and

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

Operator

the now go please, from one will We [Operator line of first moment Chiyao ahead. from the Instructions] take MS. question, Huang Please

Chiyao Huang

translate. briefly me Let

and the Kong volume than So and the overall further in the both the quarter slip two the of we're questions market trading regarding the Hong in U.S. Futu. trading second seeing volume,

are And seeing the what's sharply driving the bouncing roughly brokerage factors you. quarter just Thank the quite there? second So in implication the commission wondering what's we and behind? also,

Arthur Chen

is questions. second Thank line see quarter just the it Chiyao. market volume, regardless is will is actually in U.S. -- quarter board, has trading we today the but the overall trading to we conditions, the the take in Kong decreased, be particularly U.S. very of velocity the challenging second also the and or Hong observe both temporary one, rebound clients in you, from regarding your across Number seem the in very our situation in generally Hong I quarter. trading in in the Kong. actually velocity the as What the with market see we two

times major as the of reason commissions, several the elaborate to is we behavior Then in client's in more before trading U.S. related the stock. the terms trading

quarter. implied second trading the value which in see rate market, become stock second versus As the U.S. in let quarter, low the clients higher lender more blended commission this our we

Operator

next CICC. the the go Han Please take now ahead. will We from Pu of line from question

Pu Han

questions. I my from translate. is I'll have taking Thanks This Pu for Han two here. management questions CICC.

activity? the breakdown wealth U.S. client total the balance? products? Kong is much How risk and U.S. and for how does the stocks asset And much total and does cash accounts the one the Kong first AUM regarding for also revenue stock Hong The revenue management the by balance the Hong assets. And market and account

inflow. second net client the question asset regarding is The

So, what's and respectively? Singapore, inflow Kong, I Mainland in Hong wonder, also asset the China, clients of

Arthur Chen

question second your leave. answer first first the leave we'll to I'll and question

we see quarter in inflow first versus second rebound the of quarter, asset the second terms In quarter. net in the very the healthy

headline use negative the quarter, uncomfortable certain accounts. in in in their which that clients our park got second Given some parking terms assets we caused of

actually this which quarters among inflows, the Kong Hong in removed the has contributed been by different Singapore breakdown to fully regions. of afterwards. most So, and asset impact followed second the

question I second leave the to Leaf.

Leaf Hua Li

low past more allocated the which relatively doubled and continue quarters, the stocks remained Futu's with of client assets rise asset for U.S. actually client of client and accounting of Management past accounted Wealth than balance. the In by and couple in than few of Kong stocks, cash balance XQ, has about total more client's to of the the now teens for assets quarters, end XX% to proportion Hong assets breakdown stable year-over-year,

usually answer revenue XX% stocks the And blended higher. trading volume. of Kong Hong breakdown the rate U.S. Kong between and the And at your trading about is XX% regarding slightly to volume. Hong of contributed question U.S. stocks, U.S. the stocks stocks for contribute commission

commission our U.S. about trading. from of actually you. came So, XX% stock trading Thank

Operator

Thank you.

Please go from Renaissance. line will take from ahead. Cindy next We now Wang the the question China of

Cindy Wang

management you Cindy for my This is Thank China Renaissance. from call. taking

So I have questions. two

related acquisition First to customer the cost. question is

good sequentially. the have So, we new second quarter strong clients see a

CAC actually down. the However, went

of that is sustainable to half second And is in question second going the Japan the So, to the market. XXXX? related

So Japan since approval Government, we for get down the license Moomoo Japan. Beta app from so version congrats in the to have

grow to bit client version members in is this a MAU? help Beta the effect little your year? going half can the color client to of talk So new And you second Thank terms of what's and in you more the about on feedback that you. in

Arthur Chen

Cindy. colors you, acquisition first to markets. average Thank Japan while client your Kong happy more lower was The Leaf average. thoughts cost CAC in about blended that blended think very and the and Singapore his I question, be the will commission the and I quarter in HK$X,XXX was than In -- than in second per was Hong higher take will U.S. around slightly client. the share

we I in quarter, second some very good channels get continue to particularly think to promotions optimize results. offline different a channel the

of So, acquisition got efficiency the improve customer our and adjust in quality has further our and client also the we the future target to groups reward, will acquisitions. the of on strategy efforts marketing dynamically efficiency me

year of before. digit this second into CAC that still full the the personally decrease with our but across think course average Thank the Therefore, them remain having than Looking hand said will view single CAC have view half markets, high I you. to slightly optimistic on Leaf. may more our I of a uncertainties year, different last compared over year. think we the be

Leaf Hua Li

ratio pure information features market from in We networking lot with the than potential. market interests. market user of in Japanese is user Japanese the very based a highly, to users. less and and Moomoo's user accumulating good a platform also iterated have many highly a been our community data significant days, averaging high that trading DAU operating indicating data around active on Japan on for feedback XX% shows certainly as trends year, And engagement We've community growth

among We of brought value in displays that function has of not terms in such Moomoo Japanese Although absent as fund offers stocks, And local to Japan. trading Moomoo now various Moomoo capabilities, technical flows available is product already currently and U.S. unique analysis. users. platforms, functionalities were Japanese and on covering fundamental believe visual

quotes are minute XX in market XX And data. to And a with secondly, Japan provided most have securities delay a brokers real-time in cost.

is only stocks, state for However, We've in exchange free in only in also broadcast global in furthermore, community, real-time live and Moomoo options Japanese community. Japan very foreign markets. KOLs online the numerous U.S. for provides for And quotes, resulting capital events an offering the of future Moomoo user not platform engagement. popular and financial but conducted social high online currently introduced

to plans, the in a quarter received provide the Japanese but investors and replicated near after from trading not least, trading or various Japanese also analytical can regarding have in of Japan future. And product are and which and we trading actively functions to with duration, in launch the types, smooth the aim in approval last experience. future we investment development this regulators, And be terms comprehensive strong fourth the capabilities we preparing categories year our tools,

Operator

from from of coming Please go We question will the Daiwa. next line ahead. the Qi now Leon take

Leon Qi

my have Thanks for say the Japan expectations from market, in online we broker in do better More space in Leon my competitive My that me beta run you, in we period on specifically, any our question version. payback This Let that experience English. the CAC questions. than is our Daiwa. from record on Qi U.S. would landscape taking Japan? first questions is regarding management Japan, the it's

And on question my Kong. is second Hong

offline see very And opened glad excited experience We to an people are offerings. the in product that Kong. has Hong FU many, about recently very many are center

do we we financial kind from open experiences to operating more offline and what want user matrix to ask Just shops are shops? matrix that plan management the of or offline expecting

Arthur Chen

you. Thank

Daniel, and thoughts. Kong, I think colors in colleague, can regarding Hong be our is and physical about first Leaf question by my very happy answered think, store share the I these more to

Daniel Yuan

Right.

and understand clients, among majority market trading Rakuten competitive including Japan, brokerage Rakuten accumulated five now a players. we in brokerage we is now what the We terms SBI share saw is securities SBI online the the industry regarding X The Japan account for that each the million So U.S. internet are dominated in a the top have of They benign believe, brokers in it X than few more of the players. volume. which in landscape top over and by lot

product a that think we fragmented a offers and the our significant a competitive is what But lot overall, we landscape we U.S., in saw advantage, more the than very believe that current Japanese we online Japan. growing over one existing very is earlier, obtain confident we to market are as the brokers. meaningful rapidly, the And share huge. a mentioned And and market in

more early haven't And affluent costs Overall, started probably I really actually, talk a to acquisition on Japanese acquiring think are period. too clients lot U.S. since monetize generally the investors. lot we analysis, than in investors initial payback retail customer it's our a to more there based and about Japan. are ways on yet, trading But the

of commissions high still least in the stock for major all the for for example. still while, pretty now, at take charge zero U.S., commission trading brokers in the charge U.S. Let's everyone Japan trading, U.S. stock trading. standards U.S. It charges, industry is stock online

the in generally, you. Japan. investors are more and Thank opportunities think, are we there So, wealthier monetization

Leaf Hua Li

experience group customer online difficult happened this previously visited these us this Since people July many online on it customers with to be to not further marketing who and account the XXst, client want for X,XXX opening are that to And group have opening our into. store are process. a through channels, target tap over middle-aged familiar but was of reach we who our the

important Futu's has group. So, this become channel has recognition us brand to helped establish and these the experience with clients enhance connection door an among

of better the us to our Hong users and experience communications of actually experience to Kong addition, acquisition cost. the is so customer we collected In these understanding market offerings. product in make acquisition according than Kong face-to-face stores a have the And allows Futu's far, Hong average have data with door customer lower cost

brand and image from experience at So help further cost. actually Kong perspective, a lower enhanced CAC client reach groups underpenetrated previously can stores in a Hong us

of venue believe offline corporate a plan as building, perspective we use also events us help help costs, various which to very these that doors for and offices, door operating the client educational with activities record long-term expect investor -- to experience continues we and these From Kong. brand if costs. save And door good experience acquisition, more in will we if you. to Hong experience of progress in Thank further experience stock terms this have really stores

Operator

closing Thank conference you. Yuan Daniel I for now over remarks. to like will the to turn back

Daniel Yuan

I of Management That like concludes behalf our Team, to you On thank Futu call for today. us joining would tonight.

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

Operator

That you our Thank today. participating. does conclude conference for for

now disconnect. may You

Futu Holdings Limited (FUTU) 24 Aug 232023 Q2 Earnings call transcript