FUTU - Earnings call transcript Q2 2024

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Operator

Hello, ladies and gentlemen, welcome to Futu Holdings Second Quarter 2024 Earnings 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, sir.

Daniel Yuan

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

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

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

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

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

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

Leaf Li

joining clients In quarter-over-quarter. the full year-over-year paying By into paying of our crossed all call guidance. XXX,XXX earnings a acquired we you we year million the into quarter, translating of clients, Thank achieved XX% representing year-over-year growth today. have paying the months the quarter, [Interpreted] for we XXX% X client XX% second milestone, end growth. over X growth new X% and XXXX, our

clients year-to-date to like guidance would momentum, XXX,XXX strong XXXX. to our new raise the Given we paying in again

clients markets, and quarters maintained our momentum highest despite strong row number second as double-digit Kong new to In the paying offerings, contributing continue marketing among by amid the market client X deceleration. awareness. Japan, brand recorded to paying grew and and strengthen product all rebound, new Malaysia clients quarter-over-quarter over in Meanwhile, New quarter. a clients double-digit Hong our paying increase in in growth collectively both paying sequential Singapore iterate sequential growth we X/X of contributed initiatives of

that room The growth emergence Kong major Singapore. virtual believe supportive to of more product given helps operate much regulatory in environment, and Compared linear short-term other asset with our broader But client and and Hong be not cryptocurrency with that recent our platforms. in for rising in, we less update asset portfolio user-friendly markets we the clients and penetration Hong of about when Kong offering the market help obviously, cycles trading of subjective Singapore awareness we One some virtual launch trading market with higher adoption a crypto low share. correlation our highly will sentiment. we is think their develop monetization product assets thus drive to curve roadmap, wallet and to navigate classes

for the savings money In we To that international In we to enables to months. are funds in launch launched we the Japan, coming cash. market idle services. on local ringgit out we on funds. Malaysia, margin and and track the market USD-denominated also trading our their IPO other terms stock clients just markets, roadmap subscription clients in Malaysia, in earn Cash introduced In Canada, product rolled on NISA IPO of help account, vibrant recently our capitalize mutual Malaysian U.S. Plus product incentives

XXX sentiment. HKD more inflow stockholdings. X leverage clients XX% continue net jumped rapid market our year XX% our take quarter, have and amid With net was appreciation and recording In position assets quarter-over-quarter growth, full XXXX record The the uplift only inflow market a by billion. sequential client asset we year. asset our robust second succeeded the number client the into Total the of year-over-year markets growth to months on to fueled across

lending an balance climbed securities of result, XX a to margin all-time financing billion. HKD high As and

doubled. consecutive total quarter-over-quarter, Singapore average quarter assets recorded quarters. sequential In XX% sequential the by while client more Average client in eighth marking grew by growth. net market Driven double-digit asset consecutive Malaysia total X robust than into inflow growth assets growth, funds, of and client a in Australia, for money XX% equities realized client assets assets

The continue trillion, quarter [ up notioned and U.S. Hong XX% quarter-over-quarter. XX% for Total year-over-year the ] indexes X.XX and an grew major stock Kong trading into second HKD volume growing to optimism all-time high.

persisted stock For also emitting Trading technology and sentiment. market Kong shift velocity trading, for Hong client high names. interest palpable sequentially, dividend to rebounded

Mania stock As XX% U.S. continued billion, of increased a grew by by trading trillion. trading to result, boosted Hong meme-stock, quarter-over-quarter by HKD Kong XX% X.XX the stock sequentially volume HKD volume XXX resurgence AI to and

user-friendly U.S. ago options options traders. XX% the and compared to among quarter. while advanced appeal educational with year options more options traded around extensive the traders year-over-year, contracts number In boosted tools, the of trading the our the quarter, increased resources the interface by U.S. than of market, in In combined second number doubled

HKD Management bills. Total client Wealth assets safer growth funds like diversification XX to exceptional our and more saw and year-over-year to of treasury funds as quarter-over-quarter clients part assets billion. market another recorded continue quarter by and around money and U.S. XX% XX% grew

XX% wealth for our and quarter wealth over accounted clients of of assets end, of client assets As positions. XX% management help paying total management

up in of have We IPO first XX of XXXX. largest the the distribution in underwrote IR half Hong X year-over-year. We XX% XXX clients, Kong IPOs

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

Arthur Chen

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

HKD The income up Total driven Brokerage and revenue XX% XX% by XXXX. Q-o-Q. in increase second X.X year-over-year X.X mainly growth X.X XX% a year-over-year and from HKD of XX% was was trading up the in Q-o-Q billion, quarter handling million XX% billion, was volume. and commission HKD charge total

stock U.S. pricing points commission from X.X basis share per rate our blended Given basis to for increased X.X points. trading, the model

income in was Q-over-Q was Q-o-Q year-over-year faster up Interest by primarily in the X.X Q-over-Q. both XX% The income income lending higher at HKD underwriting was higher and brokerage to to and an Other a Q-o-Q margin increase year-on-year trading income, increase decline attributable security margin a borrowing income balance the volume while XXX daily rate HKD up higher billion, Q-over-Q. grew X% fee increase result, partially funded The driven and than from business. mainly year-over-year income. As XX% million, interest was increase year-over-year due and income average was financing distribution the XX% offset the Q-on-Q. by and and

XX by capital Our a wider volume from stock in scheme pricing stock charge trading sequentially, of HKD the for mainly per were we of margin an order points XX% the of The year-over-year model, HKD trading. XXX per due income total to trading maximum were of increase million, under U.S. expenses handling fee charge expenses costs second basis million, for a XX% U.S. XX% Brokerage up million Q-over-Q. and grew HKD share to quarter the and up XXX XXXX. commission XX

will trade be mismatch when was of as clients low-priced between quarter, and second So more revenue the growth expenses. in rate case a meme-stock, the the there

Interest Q-over-Q expenses XX% borrowing and was and XX% XXX product were increase our expenses increase a costs year-over-year interest XXX to higher lending million, The information HKD The driven due HKD was higher and fees. securities higher servicing was and year-over-year mainly XX% driven Q-o-Q. million, market associated service up and by business. by mainly data largely year-over-year and Q-over-Q increase up and XX% was year-over-year Q-over-Q. with Processing fee

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

X.X year-over-year and increase the quarter. R&D Gross and expenses Selling an in to up offset Q-over-Q by in markets. was R&D The and The triple-digit to mainly year-over-year and margin year-over-year HKD million, to marketing Operating headcount was increase Q-over-Q. new sequential was and to year-over-year our XX% acquisition support driven year-over-year HKD HKD the expenses costs. Q-over-Q XX.X% were mainly XX% XXX year increase were due up lower year-over-year increase up acquisition the X% new in growth clients, XX% billion. ago as driven in expenses was by XX.X% XX% XX% compared costs. million, were client by paying increase client Q-over-Q Q-o-Q. XXX The partially

expenses HKD The due increase million, primarily and G&A in year-over-year Q-over-Q. headcount XX% was increase XXX G&A up for to Q-over-Q performance. were year-over-year XX%

Operating marketing XX% from declined HKD income increased of XX% XX.X% XXXX, margin result, a higher expenses. mostly quarter the XX.X% and to in operations to As year-over-year to X.X second from Q-over-Q due billion. by

Net to compared billion. XX.X% to quarter income second as to last XX% net the year-over-year declined quarter Our XX.X% year. X.X X% same in the Q-o-Q increased and in by margin income HKD

Our effective tax rate for the quarter XX.X%. was

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

Operator

And first Instructions] [Operator the from of Cindy Wang the question line comes China from Renaissance.

Yun-Yin Wang

[Interpreted] related One I question crypto X services. have is to questions.

you in Kong what's Hong launched recently, Could feedback Singapore. client some acquisition and trading you and on So color provide strategy? crypto your on crypto client the services have

trading lately third velocity, you trend months and Second is for the security quarter, third like trading and including balance. now volume, us around is margin quarter, give the X the lending for some financing there AUM so can basically

Arthur Chen

velocity inflows. quarter second that remain of trading volume, And sequential there strong will witness these we to also that we Hong very challenges turnover seen the today, face and both in a markets. is cetera, market trading what client still [Interpreted] and due in from clients some -- very the asset the increase. loss we Kong Despite the et implications terms Q-on-Q we have negative indicators -- market For impacts to be robust

of us with the of rate, which the a commission these that some terms some line trading lot got the more are we take rate. in uptick meme-stock In in quarter in positive benefit that give terms second given clients low-value

So will in third very such quarter benefit become the so you far. normalized much. Thank

Daniel Yuan

X trading We mainstream now Singapore offer respectively, Kong and number pairs [Interpreted] a August cryptocurrency and and limited ]. Hong on of we XX, trading [ in launched August

have trading have whole pullback The of cryptocurrency small very long cryptocurrency client the experienced ago. and we because we that trading market are the pretty recently, not So both a clients but scale in to of the cryptocurrency the activated assets offered product fluctuation. because comparison and far, clients And business. significant number of their volume accounts,

Right now, you. further platform. to and continue a education to to enhance one-stop allocation continue to capabilities investor enhance provide our our value Thank asset product is our as proposition operations and focus

Operator

the MS. from Chiyao Huang of question the line And comes from next

Chiyao Huang

could are got assets. more on terms much the mark-to-market How geographic much color from in is is coming [Interpreted] And in So inflows in increase client of mix in the the I and on X One how is -- the provide questions. the XQ? Q-on-Q particular, inflow management where driven.

trend putting the acceleration Japan. we right the is to And assets clients trend any -- the the currently their XQ where in And what's Do first is And in at so the in now. Japanese money and the are acquisition. second client how going client the quarter? compared on in also, per quarter second see far question Japan

Arthur Chen

second I colleagues, question, Daniel. will will I to question my the first and take leave your

single-digit majority down, assets from by actually accounts client it in XX% on our accounts the in contribution Now new the in and of the the to their for market roughly assets asset And belongs are And for comes high contribution cash markets inflows, inflow. client our total X% inflows Hong terms remaining [Interpreted] both these second and of the increased X% or of increased which transfer to terms client XX% positive to from of the the contribution quarter, total stock in to Q-over-Q. of benefit asset net terms key Kong the benefit. of which X accounts total roughly break to of asset top Singapore, our

Daniel Yuan

the and the clients decent quarter, absolute terms Malaysia actually paying in in number [Interpreted] a very tier. of in paying clients a And second in Japan the net we very growth. recorded are So overall, saw new of contributed, robust quarter-over-quarter first so Japan

gave So we of we quarter still growth. a X.X close having very users million end, Japan very about very And that what Japan year-end, by to healthy second guidance. million And we with X XXX,XXX the we is to quarter. the at were had which the and confident think saw we're we also users, in in guidance previously, in happy

growth, of driver terms things. client in paying So X for new

it's of product. continue First to a just roll new to out all,

next couple lack also a remarks, a mentioned aware now, are So important, have in offer overseas. opening brand, of especially we we the those comparison in realized, lot a And financial Leaf in some bit in brand building is to products. of players investors as and mainstream a plan products secondly, as a of months. users to couple usually more key the we've Japan trust from Japan, of his brand to time And right still take very the

had a our So also we launch power higher in to we'll in all the did contributed why that's and to continue invest [ invest to brand that's and ambassador continue a equity, quarter, brand these a why and in ] we'll brand, building. brand second

and dollars right assets now, of thousand clients U.S. mostly stocks. of client couple And it's average in a still terms U.S. into allocated

to been of that you. from go offering, Japan Japan in have Thank as the of level. increasing, the we Although to these the volume to will our closer assets trading we stock percentage continue contribution percentage stock and and Japan continue product believe percentage stock market enhance up

Operator

And the the next from of line You question Fan comes from CICC.

You Fan

I've questions. X [Interpreted] got

plan was our product pipeline, especially markets and first question Malaysia. new for like offerings, The product in Japan new any

And share program. what's repurchase the progress question, of second the our

Daniel Yuan

subscription in we've quarter-to-date, nice So IPO product. funds; rolled pipeline for And in of of Plus is #X, market I the U.S. the and new accounts; Japan, to thirdly, important pace Leaf savings And for Cash earlier, the product Malaysian [Interpreted] for include mutual us couple roll margin financing. out NISA we product, and mentioned which terms #X, as the a kept and also months, what stock services we've of very a product quarter, of very rollout. couple out intend in also financial Malaysia, actually a the next third money products think and

our market products And roll existing from so stocks experience, during rate And transfer and client Malaysia, market increase usually the stock future in money Malaysian IPO help we contributor attract growth. in clients can terms hot, can when this be brokers can subscription the to of good client high quarter, a the plan product new And pipeline is of very service in assets. we other Malaysia. environment, for IPO that out

Arthur Chen

program XXXX. actually and also cover [Interpreted] XXXX Our existing repurchase share will

program this yet. have far, So not exercised we

also -- you will of and and them. other of We we investors, on if exercise if post we analysts our exercise any any shareholders keep

Operator

next from of The question Zoey Jefferies. the comes from line Zong

Yi Zong

[Interpreted] I have X questions.

crypto series? First, your what's the business of model

trend interest And we increased reason Wondering XX% expenses the should have QX. going think behind? that about we how forward? And sequentially what's second, by seen in the

Arthur Chen

the particular, I quarter, on the situation the in the and difficult associated -- stock of expenses which borrowing second hard give driven is relied which a terms -- of pricing estimation and demand increase In stock clients, the in is interest to think borrowing [Interpreted] interest precise very our terms in implied mainly more project. with the rate in and market the financing is margin very stock to supply

I continue penetration the associated with borrowing both the if clients revenue the And income in just our as further the increase. store of -- the status on I quo, will top retail universe assume activities, to rate status expenses think if line our such

Daniel Yuan

commission. is [Interpreted] designed cryptocurrency we competitiveness So and market balance we trading straightforward monetization offer trading to as our for since scheme, now charge our only the services, the when we very a potential. business pricing we And want model

cost, into Kong trading. profit now cryptocurrency upstream And right an enjoy upstream our both we under consideration the provider in pricing with So Singapore, gross Hong to good offer model, taking work we current pretty still and margin.

Thank higher net than rate trading you. U.S. the is trading. cryptocurrency and stock of rate the Kong Hong for take So take net

Operator

comes question of line from Securities. America from next Bank the Xu And the of Emma

Emma Xu

I So X have questions. [Interpreted]

is client acquisition. about first the The question

your to paying your paying which XXX,XXX new And target XXX,XXX, acquisition year first implies quarter. in per quite fourth client is usually need new raised means is low strong. around you to seasonally full client just That acquire client client your You still quarter acquisition quarter.

then that is markets of about could growth recent in second the So the the cut stock. your which us client rate are volatilities given in -- quarter? And third question expectations rising you AI is driving tell wild the and

cut, how this the expectation income will income next the but in the take within interest I given cetera. will cut correspondingly, bp interest allocation the stock? stock the AI bonds allocation limited value rate probably and So between impact say, the it rate behaviors of could year? growth and terms impact stock have do it say stocks, options, impact et say, your rising you your client your interest of changing to And how this on your from would And in see changes rate be, then the what income? know asset XX impact year, on the the

Arthur Chen

breakdown mentioned the the contribute Singapore, Kong our the Hong acquired whole in accounts new opening guidance pie. And based situations, X/X whole U.S. achieve the do expect of second we from are -- XX% be question, fourth is first the clients on quarter-to-date we course, And the for of revised major acquisition, the the markets coming the second have roughly terms And our client to for the the and contribution clients of these election XXX,XXX uncertainties course, In have we quarter. new mentioned year. the should witnessed Leaf negative we new second of despite before similar the Japan which got clients guidance combined of remarks, be still very [Interpreted] quarter, from the we for arising #X to quarter. new year. And the targets some in as cut. for from contributions is acquired paying over can paying this what in for half can we the And the some already implications there which in we in rate Malaysia, and for confident

acquisitions have rate the the by from rate benefit also profit our pretax to potential Every XX any not HKD be market some positive point hike account increase sensitivity new million profit, HKD these did if for operating trading the X the basis X positive preliminary we impacted We because client million and volume implications from will estimations. -- cut, implications. of

fixed fixed the asset income in there your clients the more treasuries have universe, fixed witness a asset be management But the not significant our products, allocations from further, including witnessed very short far, and we income by duration cetera. wealth et on so also will do allocation we client observations. And changes arising

Operator

line the comes from Charles And of Zhou the UBS. next question from

Cheng Zhou

management congratulations the first of [Interpreted] to all, team. So

set I above results it's a also think the very consensus. strong and of

So managed. I my costs client this regarding well is question acquisition think very to because the is

So updates so guidance? any a do for do guidance updates, have the we huge -- also well. full any we any decent any or year And if here you we from new have for have don't the there's believe upside XXXX as

So the could in second in also also client your second acquisition related several the marketing is share half? My key to please of income. markets and you interest strategy question the

well idle income are there as income. financing understanding stock lending IPO margin cash financing major X components: as the interest Our and income, interest

So could second X us quarter? the income the split for you please just help interest components these from to

Arthur Chen

X because CAC it current think CAC, or lower On -- for HKD which guidance we Based [Interpreted] X update. range in the quarter, will your constructive HKD still is relatively XX% which of than the speaking, terms a be of For even rate, our our very new I Number think in acquired versus situation which whole the maintain is year. the base a questions. X,XXX, has second any range about low Q-over-Q around the be QX, end And level, contribution the third the guidance. I X,XXX guidance, low in HKD very CAC think in clients very run relatively In will the the have is on year. quarter. the -- significant range Malaysia. of increase for of below it's become terms just for CAC I low for whole normalized relatively We our locate in quarter in to of today, likely this more the second X,XXX

of I income financing material in idle U.S. the market interest changes the Kong Hong the slightly in very the from Kong the not IPO and clients income of is both interest were feeling equally the -- income cash cash is much. because breakdown in margin interest income terms than in idle and and of Hong half. the you higher breakdown despite interest U.S., second the the and from the in deriving also my feeling Thank the contribute almost Then financing

Operator

question next the the of Zhang from Peter line from comes And JPMorgan.

Peter Zhang

which giving on Malaysia JPMorgan. Many from is opportunity us the to the on questions. Peter do the business for give have is translation. me My the thanks first ask Malaysia could questions. progress X me management business. Let the I management of details question more [Interpreted] This

Airstar For question example, turnover? about my profile asset the asset, the the second client Futu understand Kong. And average client client outlook trading of forward and Malaysian in invest bank virtual Futu's cooperate going Bank is We inflow, how business. And into to what's I with understand client this rationale what's what the net XX% Airstar Hong Bank. to in strategy June. behind and investment wish the the shares this

Arthur Chen

[Interpreted] in we in in clients, and Futu synergy the of management terms business our will for we to -- from management Now motivations bank. in to one wealth business, accounts. to investments. the I the several we key also years And brokerage fund continue Kong, do the banking the of there the course, scenarios the given also provided and the suggestion wealth future our and business to points lot retail net of of brokerage more met in the also by more worth for secondly, of the normally terms think same get be transfer high Number a key requests and we lot business think do these strategic and of direction, users between is clients past a a think lot of reason pain consider Hong our or

focus the the and think our I and enhance products. on that, infrastructure how capabilities long-term deal the contribute work closely hard be We the more with said -- Having alongside technology of especially capabilities commercial work the strategy. local of of just and shareholders, and completed second Airstar far, to So Airstar was quarter. align strive the management further Futu to the Xiaomi our to with Airstar near-term in Bank -- other will Bank's itself, very very R&D foster

Daniel Yuan

clients client level far, also, our operate. for most the turnover attracted Malaysia than terms platform meaningfully U.S. given some we've the one-stop and proposition the the average. our [Interpreted] we trading our higher in value Asian young and a a clients so higher of stocks, names they [ and are are as And have the seen profile, Malaysian group investment So of trading have income of them country level ] than of that have experience,

So and launched second in than Singapore. in when CAC given the the think numbers seen we the of Malaysia is have we payback we first ARPU period quarter, better

end all month-over-month quarter client average improve. client across inflow, As increase, and trending actually assets in as client the cohorts Q-on-Q. Malaysia, believe were of our average assets second our Malaysia the in we asset economics to continue to assets will unit of different the up XX% And average net continue was

terms quarter clients so investment able transfer users third convert because and as due Q-on-Q. accumulated steady for the of in large was market schemes growth leading acquisition. In product of we the So our a quarter, very from third we and for believe our the Malaysian second second that, to for U.S. we the Malaysian in shares spillover brand in our apart were a stocks And quarter, And But clients for paying also quarter U.S. paying funds U.S. from in also of net helped That's momentum And third strong and paying we Malaysia. existing IPO growth a fractional number to a second Singapore stocks sequentially, the partially first subscription quarter and in money for into is new stocks. one-stop high quarter-to-date quarter, also client stock quarter-to-date, the expect automatic the a new clients. down steady was stocks. launched acquisition quarter. quarter-over-quarter of quarter, in platform with the and bit equity quarter strong because stock we sentiment the when of capabilities second second also trend, the mostly the client Malaysian the also launched market and base

Operator

from Shin the Hu CLSA. next the from of question comes And line

Unknown Analyst

is trading factor How the What commission mid-cap big was trading the [indiscernible]. what indicator is in stock -- of rate the this a stock change of the And towards influence timing rate What [Interpreted] media trading? rate U.S. track quarter? what fee total in distribution influence in to trading second How could in share commission from is be good did and volume? a dividends. bonds change? considering single And the U.S. issuing trading the good

Arthur Chen

will to related in generate I economics then distribution Nvidia fund question, deploy of your higher returns which capital. And to the cost cetera, far, to trading, for do not higher et In is is treasury your extent further clients' we only -- these I of to or similar industry we we I very dividend volumes there commercial distribution our in trading some which question, our capital. confidentiality of still think ] of more some confident [ so arrangement. for XX% concrete [Interpreted] the Thank the investments of quarter. And terms the our the thing can the accounts first but thing XX% which have terms areas any is U.S. second -- growth than The roughly typical, second is we think are arrangement But was model. potential the which very policy. huge reason And key a can share can stock you. our

Operator

any would back go now hand to time to for I Due ahead. closing constraints, remarks. Yuan Please Daniel

Daniel Yuan

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

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

Operator

Ladies gentlemen, and concludes this today's Thank call. you participating. conference for

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

Futu Holdings Limited (FUTU) 20 Aug 242024 Q2 Earnings call transcript