FUTU - Earnings call 3 2023 | Futu Holdings Limited

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Operator

Hello, ladies and gentlemen. Welcome to Futu Holdings Third Quarter 2023 Conference Call. [Operator Instructions] Today's conference call is being recorded.

If you have any objections, you may disconnect at this time.I would 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. Please go ahead.

Daniel Yuan

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

on the call Chief their which me reminder, represent Chief and Robin Joining the the certain Senior nature today's Executive company's Chairman Leaf Xu, outside regarding forward-looking are Officer; are and call Li, company's may not Arthur statements President.As belief by Chen, Vice Financial control. include and today Officer; of a are which Mr. events, future

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

I about information now over call Leaf. SEC, more to its will turn the Leaf and filings to his comments will the I For that, uncertainties, and including please Form refer in will potential risks translate. on Chinese, Annual the the with Report make company's with XX-F.So

Leaf Li

we paying Thank all third for joining today. sequential increase. the In XX% XX,XXX acquired quarter, a [Interpreted] around you clients,

clients X offerings senior raise Through this we to we opening, cost. allocation-driven lower our clients paying exceeded our attracted total to have bond XX% inquiries XXX,XXX acquiring product contributed and guidance by Kong with quarter, quarters year attract These clients assist clients platform. paying services. market we regarding reached customer a managed over half. X Hong up Our over Hong second acceleration the XXXX, full acquisition demonstrate third first acquisition driven into X.XX the and opened the million, July, Bond address and store, at in the advanced account clients.In clients. the paying middle-aged offline was In successful and in XX% awareness, our the first relief in the client features, late rally quarter of government's Green new by offline half and issuances of products around store This Bond brand marketing Silver Kong to year-over-year. in

of promote campaigns XX (sic) Plus the clients paying over aged year-over-year. product, Singapore, marketing offline Plus management above ], clients acquired cash contribute quarter.In and the XX% growing to store in our at XX% Money through by thereby successful our paying third fact, In [ Cash clients launched we

client We access of inflow trading quality September, launched trading paying to our we stock asset the improvement as net Canada. in and higher. U.S. Canadian clients observe continued stock in U.S. new now brokerage Canada, Japan U.S. and in In clients offering to trended in Japan officially and in business

innings we to launched process, we different messages. equity on strike to sentiments remain and near our across During to This active Singapore, contracts XXX flexibility of traders stocks for opening brand honing strategy date the accessibility introducing multi-leg prices.Total quarter U.S. investors. function by of traders our retention client the markets. a enhance launch, golden positioning and in U.S. XX% rate.We at expanding continue We options trading will later assets to paying and products, over rollover to by Kong for and novice another we market enrich recorded across focused shares early product our marketing In markets, XX% global account fractional trading offerings refining bearish optimized Hong options expiration year-over-year roll ETFs billion. product gives increased trading client for options HKD Despite

Treasury stock inflow. by trading some sequentially, in by volume stock more X% partially quarter over new as technology X.X grow assets of Total financing in XX% quarter, XX% names.Total in by quarter by trading total net led valuation as in the balance driven Seven assets asset popular quarter. met client trading XXX% Notably, the sequentially their holdings, with new quarter billion client after over increased lending yield. XX% from maintained trading total Singapore Hong due trading While assets In year-over-year the U.S. amidst trading and Kong, appetite achieved driven high turnover risk than macro demands quarter, which unwound sequential double-digit asset bets XX%. XX XX% quarter Magnificent was assets for as to inverse mainly quarter third abated to high-net-worth up constituted the Singapore in our HKD the stock traded stocks U.S. HKD clients around amid wealth client by volume sequentially bills U.S. increased robust dragged In clients U.S. leveraged stock and of prior stable of volume volatility. quality. which market paying The average higher structured actively securities management volume third grew to higher rebounded Kong was the uncertainties. end, asset the by X% to over clients and pullback client ETFs. quarter. high Higher heightened rising Hong Margin interests XX% bonds fifth quarter client against quarter increased were as balance over in remained trillion, slipped clients growth of consecutive quarter.Trading notes quarter of

clients grew notes quarter FGS quarter, bookrunners quarter. balance. In the third in joint and structured high-profile those XParadigm, distribution As total third have a acted higher we of bonds.We XX% including of by IPOs, portfolio quarter, expanded TUHU driven XX% and assets Hong In quarter fivefold ] up IPO result, introducing KEEP. end, by average the further of tripling several XXX year-over-year, as as Singapore by Car, Singapore, clients year-over-year. asset product Kong IR wealth [ client and private of management our increased over by and fund in In management we balance wealth

financial Hong underwrote the end our discuss over and to by capitalization Arthur of X all of performance. XX invite Kong Kong In brokers in first quarters, with according like participated HKD to market Wind.Next, all billion ranked the first CFO also XX IPOs IPOs companies Kong We the Hong quarter. Hong I'd among to our we

Arthur Chen

Leaf and you, Thank Daniel.

due XX% million, XXX interest result the down higher an from fee.As Operating and Q-over-Q. in by were our of was to lower business. support All XX% of expenses total in rate in third HKD Q-over-Q X% servicing year-over-year this down was up Q-over-Q. year-over-year increase increase year-over-year and R&D higher to Q-over-Q. was Q-over-Q. was Hong due Q-over-Q. commission acquisition to due The compared HKD cloud continue with quarter expenses million, Brokerage me our mainly of and system international Q-over-Q. was XXX% up are associated and The upgrade our features, headcount up X.X third in you an were The an in to Q-over-Q. year-over-year from HKD infrastructure, offset increase allow X.X was X% X.X for marginally result, X% driven with were year-over-year business. brokerage and XX% X XXXX. please expenses customer due U.S. and year-over-year Q-over-Q XX by from Kong in XXX a XXX XX% deposits, were million, X% And the accelerated increase third up and and mainly The paying Interest to costs. commission Gross gross usage general of million, savings lower was and expenses trading by XX% million, third from through income in and quarter. HKD on X% with system XX% was otherwise year-over-year The optimization to a Interest driven customize HKD the quarter last administrative cash HKD commission from quarter million, income, HKD by quarter. largely year-over-year billion, XX% due and unless million. decrease HKD Q-over-Q. was year-over-year the income Processing handling were numbers third HKD products charge in headcount sequential cost points billion, year-over-year handling billion, higher points XXXX. increase administrative increase Higher year-over-year move HKD XXX up of decrease was were growth. declined The as distribution balance. mainly XXXX. rate basis contributions total X.X up the roll dollars, income.Our was year-over-year expenses up lower markets.Selling and savings XX% from to the quarter XXX to in international the Total quarter of Brokerage third XXX HKD and revenue down from cash as basis for XX% securities X.X interest Q-over-Q and blended derivatives handling products General XXXX. fee commission increase market. driven as expenses was the XX% billion primarily client of million, increase rise XX mainly million, expenses income and R&D to due XXX% marketing fund HKD were we higher and X.X and billion costs and and to client mainly of tandem the year-over-year HKD lending service lifted XX% Other down X% to profit XX% personnel charge costs Now XX% The and year both expenses Q-over-Q. The was XXX partially XX% didn't our new and expenses HKD million self-clearing of Q-over-Q due out XXX X% and walk was HKD charge primarily an X% an increase margin noted. the up by was HKD performance year-over-year XX% increase billion, to our financial X.X

same result, and now X% Operator, lower remarks. billion. the to margin and quarter questions. and marketing from the As go X.X revenue expanded call to in Q-over-Q increased income declined XX% a expenses.That last to prepared XX% concludes open to our please We'd strong XX% growth the income year, our by year-over-year selling HKD to like Net due ahead. by mainly net

Operator

question first with comes Instructions] of Daiwa. line from The [Operator Leon the Qi

Leon Qi

our late our clients. Japan. on especially new being margin, are products user We market growth my that. behavior and management these just first Japanese second markets? just This engaged very cost any now, question a of introduction per our customer in our of for appreciate rapid early Does the any for in of is the color behind from terms Japan management clients is see other in? management. in trading and wealth on there money AUM velocities, terms the know in to Japan Japan.And significant in that We do major September. in And question so appreciate any interested in fund penetration Is in economics us wealth specific Japan interested I'm Daiwa. customers also, the launched [Interpreted] terms indicators differences understand trading we Leon landing in new market, is of in regarding My Japan is matrix I'm unit the management the acquisition versus reason

at because overall proportion this And interest contribute of management U.S. perspective, So if in I'm look fund market how rate sure fund also, expect management our But the market rates. what we is to from a partly on money it nonmoney cross-interest high much our rate now? is cycle products the AUM? does wealth take

Arthur Chen

I Leon, and answer first let my colleague, second Daniel, answer the question. the question first will

Daniel Yuan

Sure.

unfortunately, cash clients, client to so offer have have on data trading, trading. stock equities have Japanese So now don't we we don't only for so U.S. we Japanese only margin, U.S. behavior stock our we trading

hiring client are out said, couple in acquisition turnover the and lot not other support rolled and setting that next And small of offices seen terms have stock a product trading year costs now for have so for of a fixed we cost, a clients, I we so U.S. up don't far, very personnel. being aggressive we base Japan roadmap ambitious coming we've in mentioned next in and of some that is products quarters.And of of because we from the be different will markets. That of the from in whereas marketing what

the come But than be increase So as down. CAC of obviously, Japan, will group our clients number over average. we CAC higher for Japan will in next gradually our this the time, quarter quarter and in

colors key to of And we've observed all the trading the our the with will DAU Japan higher other during in markets. now other XXX,XXX And users to And on on active. And the over and we Japan so what XX%, user in. than along very average and have no we far, paying in believe our highest our we some CAC our was have been markets overall close year. next user on that days to growth, updates be is to priorities have for just growth, that client platform slightly are which ratio will currently among users reason give we've business, be seen you

Arthur Chen

Okay.

For too near-term our think is engage funds other the money key the fixed kind do on values we put for the focus products do not essentially second as of that, rate having is monetizations. the client on said market the similar emphasis wealth to But these such long-term the question us to products, Therefore, management, clients. and for I to take products. equity this income just a regarding business or of

I think [indiscernible]. we a terms already offerings product in of in established comprehensive matrix very our have the

also further FCN besides will fixed have to down different in instance, income particular, products, asset X in the have diversify the the line. We For rate very quarters products, allocations cycles rate opening growth. clients' free them we products. help remarks, our as products these we the interest money and Leaf record navigate the market equity past fund, and floating note, strong launched think In mentioned

Operator

comes Next Huang from with Chiyao MS. question of the line

Chiyao Huang

[Interpreted] on some cash. The We first saw decline cash. question in sequential idle is idle

about some their So to roughly the just what's as question a products wondering products. inflow mutual the funds?And local second management some is other reason question funds other zero commission offering can stocks the for are existing client such And the shifting we brokers AUM, cash mutual new we proportion already. talk and related between are for seeing is and are of Japan, also in are strategy investment as seeing of if that the clients or what's

competitive comprehensive what's the more our to about Japan and in improve strategy monetization thinking be over in offerings monetization? we and there considering financial Would future what's building capabilities time? the the So order

Arthur Chen

partial the cash our question, [Interpreted] wealth primarily And In assets, because to shift stocks, end on especially end. quarter well. equity allocated also due cash some the stock during their first management was to at is U.S. terms as more products your reason the the idle more decrease of the quarter clients positions on clients

of and accounts clients stock roughly the terms the management wealth among stock, for to products new cash. the for XX%, management, In idle remaining the account the and inflows, cash, belongs allocations the also XX% and wealth positions

Daniel Yuan

commission And question your And in yes, mentioned, Japanese for will I brokers have you Chiyao, stock probably strategy a on Japan second believe zero that And will monetization as take to we suit. our trading. reasons couple we seen leading Japan Japan. have in brokers in follow gone to other

as bps one's no stock Japanese make expect stock well, decent from make growing but have but We low U.S. trading X.X the we been charge going and year, incumbents, has stock seen margins end last That's of tend Japan. stock to aggressively in trading. U.S. pretty but there million that And is trading. very on investors So are SBI trading, equities Rakuten, to we for Japanese to fast. that stock of compared relatively these money investors, U.S. to U.S. XX more than still quite profitable. for still example, price

stock the there of end were U.S. of million investors. XXXX, X about As

past doubled.And has fees. over U.S. to it foreign than besides observed years, on to really financing like that exchange commission, monetize the stock investors intend trading we Japanese X We over trade also more margin margin. So and

have that their seen are around XX% the We average for industry margin. trades placed number, with of

to revenue charges, the compensate commission of going FX fees a order key understand in hefty we trading, pretty And all for for that then Japan driver. charge to stock Japanese in FX. for that's So be zero brokers for

FX a we volume also revenue the contribution. U.S. meaningful to as stock grows, our So of on platform make trading trading expect

Operator

of Cindy Next with question China line comes Renaissance. Wang from the

Yun-Yin Wang

X have questions. I So [Interpreted]

to progress. you you platform clients related trading of is be for Japan's you What's immediately month is Would Futu color and subsidiaries the applying to Japan is, users approved? platform? conversion is question functions what able your registered trading month?Second is share the paying launch the And progress is the from Kong? for license new preparation to market. looks First assets clients? What digital Hong paying plans trading seen rate like digital assets once your in work have Can [indiscernible] one over increasing

Arthur Chen

application second WebX a several studied global Group, past wholly the the VASP we who SFC Hong concrete centers. get in colleague echo to Japan. (sic) very issued application principles. not and month, the the And license afterwards, to quarters first, will and plans your the regarding the answer modify to this In regulations have have approval we at We answer Kong by take X as updates of Cindy, least by a Hong advocated Kong question SFC. can want may some to build hopefully continue months, carefully I Futu or Hong give business Kong and we PantherTrade, luck a your to next WebX we quarters, my process X [Interpreted] whole government Hong new the will up QX. question if to within in last policies and QX policies submitted we in VSAP will next couple formed the we and Kong ] content expect Daniel subsidiary [

Daniel Yuan

going for And myself. translate I'm to [Interpreted]

golden in have are reasons points. So user-to-client rate the X international paying there than well Japan, in process think a right markets. And our number conversion client #X main friction behind are other is both we as now, rate client that conversion as still it: the we observed what lower has account to opening of

only ] brokerage soon, opening account And quarters, outsourced in impact users' replace of the unsatisfactory asset really process we gradually thus outsourced systems of proprietary this opening products. experience in of rate account to invest And systems couple we conversion our and trading far, a and mid-to start to from Japan so system.And second the opening outsourced industry back-office our rate reason behind on is the lack And that next into leveraged negative plan far these of in with conversion these account experience. key low the So have some as our lot we impacted which year, deposit. user cash NISA systems characterized account. users. And have a still in plan really are Japanese earlier, the U.S. the [ by well first to quarter the as stock to launch order to now mentioned offer next we Japan of as equities trading trading

Japan, is Although investing the understand prevents lack U.S. Futu's very of key is trading stock that peers Japanese us. we that lead our survey user we capabilities with very margin. confident on reason accounts equity are a opening really popular. our stock Japanese by Japanese And a based In that wide trading them from still

Operator

Instructions] Next [Operator with question from line comes of JPMorgan. the Zhang Peter

Peter Zhang

question question forward, Okay, first me clients line. stock. will market do Singapore second Futu's this regarding going a wish be and to your rate. Hong what's third pipeline? that [Interpreted] in Kong the forward? in My let reason what the quarter. or declined in trend is follow wish blended fee the behind commission blended We understand the My to to the regarding fee translation. product clients up understand, Japan will question product trade going We rate being commission is in the notice I Is Japan sequentially allowed the

Arthur Chen

is been #X the a offering in elaborate pipeline. the for behaviors our product further will do different shares. Hong on helpful the the trading X because price to manual trading several is this be to also we client's in outside questions, near the think line Hopefully, participations our our our of Japan, benefit commissions offering that.Regarding answer number as And has and the these mainly and increase engagement markets markets to but we trading the U.S. will top X actually and market our future. on commission blended arising have the of it Kong client our fluctuation rate also stock quarters, definitely to already manuals be the also yes the and is of in launch stock Japan the trading do can of client's due is stock percentage from in kind we platform our [Interpreted] based the not in Singapore and to clients product trading it Japan volume will be

the blue OTT will because reasons, going blended have So is that. the future. the we well. when pattern's In third or stable forward, these And implications these quarter, chips trading in the people fluctuation we the near combination can on if rate mainly the commission take blended trade think big maintain stocks, the commission rate, out as of this

Operator

of question Li Next with line the comes BOCOM Wan from International.

Li Wan

the impact [Interpreted] give income year? us cut Can and from be a of Fed's rate breakdown interest you what next will

Arthur Chen

the rate the do going interest lending of date, year from normally, cash bigger in capital lending volumes derived trading much terms Fed's and arising be it forward, will not idle revenues will the Therefore, fast. from for interest idle cash clients And the do circumstances margin will the client's income income, is largely the be In the when revenues [Interpreted] to for And interest potential whole than think as we the to our the the helpful security rates trading from business. very contributed revenue markets we cut the cut, well. offset decrease. rate cut think this

Operator

from question can Xu, Securities. Ms. Ms. you can with go unmute Emma can of question? muted Xu Ms. you ahead BofA Xu, comes ahead the go question? your you end, your have you if question. go and with with ahead Xu, your yourself Emma your with from Next please line

Daniel Yuan

seems that tonight. is it here Emma Well, not

on any have the line? operator, So do further questions

Operator

no Thank are will so back to more closing over Yuan There Mr. you. questions, the now call hand comments. I for

Daniel Yuan

Yes. Sure.

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

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

Operator

you. Thank concludes Thank you participating. This today. our for

by an spoken the present this call.] may [Interpreted] are You interpreter disconnect.[Portions now live that marked of transcript on were

Futu Holdings Limited (FUTU) 23 Nov 232023 Q3 Earnings call transcript