FUTU - Earnings call transcript Q3 2024

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Operator

Hello, ladies and gentlemen. Welcome to Futu Holdings Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO, Head of Strategy and IR at Futu. Please go ahead, sir.

Daniel Yuan

Thanks, operator, and thank you for joining us today to discuss our third quarter 2024 earnings results.

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

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

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

risks potential company's Leaf the the uncertainties, please SEC about its Chinese, the information more to With will turn and refer to comments in will and filings Including Leaf. For his call over now the I with make that, will annual report. I translate.

Leaf Li

[Foreign Language]

Daniel Yuan

our the wrapped joining paying today. [Interpreted] quarter-over-quarter. net and new all earnings quarter up XXX,XXX Thank up XXX% year-over-year clients flattish for We with call you

reached Our to markets XXX,XXX quarters have resilient established XXXX, and we Three total million, expect growth ones. in thanks paying strong year year-over-year. paying we clients up guidance newer XX% in of into exceed and our full XXX,XXX approximately acquired to X.X momentum clients, comfortably growth

Leaf Li

Language] [Foreign

Daniel Yuan

clients [Interpreted] As acquisition and and accelerated remains top paying new client in market our row, on we quarters iterate markets. a among campaigns paying collectively acquisition X and contributor effective Malaysia in the over continue sentiment, client Kong Singapore X/X of various elevated Hong of launched which strategies to to contributed clients. new Three

on quarter. doing in Japan, among we investors to pullback in investment In a our steady amid as and third equities We're progress value one-stop the further committed we've broadened brand to enhance Japan client product lay offerings our in Malaysia, retail elevating despite image platform. market interest acquisition made proposition

Leaf Li

Language] [Foreign

Daniel Yuan

Japan started gain and plan In terms rolled in among we USD-denominated money NISA decent trading and which our margin funds. clients. Japan savings dividend of Ring account product we've out Hong to In mutual reinvestment market rolled funds Aid recently trading offerings, and and supported options Malaysia, We stock Kong. in launched U.S. U.S. new traction out

the became offer Malaysia to options also We in trading. first broker U.S.

Leaf Li

[Foreign Language]

Daniel Yuan

client client net to [Interpreted] quarter-over-quarter The and strong and of towards equity XX% across holdings client stock amid search and XX% grew to end. robust quarter markets asset inflow to Singapore, China sequential XX% HKD greater by net billion. driven by inflow was increase and grew market extent, the due In asset and movements. Total XX% quarter-over-quarter favorable total assets XXX average a appreciation assets year-over-year

all In client Australia third growth profit. as take assets quarter, call a consecutive average by mode balance. movements maintained our clients their September the market Sharp recorded sequential prompted margin U.S., double-digit some in growth in in risk Canada daily evidenced average sequential for quarter. and the single-digit third clients

As balance a lending financing end quarter of billion. to slipped as result, and margin X% XX by securities HKD

Leaf Li

Language] [Foreign

Daniel Yuan

ETFs volume XX% trillion. trillion, U.S. by to quarter-over-quarter by the X.X which overall by sequentially outpaced [Interpreted] trading The U.S. stock HKD Total grew was operating trading leveraged China of the volume in sluggish rather in and July and amid sentiments activities equities stocks August. technology in September. muted up momentum heightened our interest August, trading of trading XX% X.XX in growth growth elevated picked quickly and rising to fueled volatility clients HKD in Despite

trading the volume week-over-week. XXX% of week to Kong of for stock XXX September volume Overall, by our HKD surged And trading together China with contributed XX, to slipped Hong billion. during X% Hong week. stock trading Notably, quarter-over-quarter over Kong by ADRs volumes half the

Leaf Li

Language] [Foreign

Daniel Yuan

fixed income funds. quarter of Management strong funds recorded Wealth [Interpreted] of another growth on money market the yields of back enticing and

cater XX% XX% assets Singapore. Hong clients XX from demand service our quarter. in held of wealth for products XX% and robo-advisory year-over-year paying launched allocation, client ETF-based As in To quarter-over-quarter of management HKD we and quarter up asset client XX% to billion. Kong to the grew total second end, Around

Leaf Li

[Foreign Language]

Daniel Yuan

clients, We IPO year-over-year. of in the have XXX XXXX. distribution We in our X underwrote up Hong the [Interpreted] first quarters XX.X% Kong X IPOs largest

Leaf Li

[Foreign Language]

Daniel Yuan

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

Arthur Chen

Leaf you billion XX% was from Please billion, Daniel. was HKD allow quarter HKD Thank up Hong XX% me charge income numbers and and otherwise X.X the quarter. the through X.X you, and XXXX. of third in third billion financial XX% handling revenue Q-over-Q. are X.X HKD in our walk to in commission dollar Brokerage unless Kong All Total performance up the noted. year-over-year

trading the The and our total higher-priced XX% growth in increase gravitate by volume. by clients commission Q-over-Q in mainly blended offset towards as stocks. XX% decline year-over-year was Partially a driven rate

X Our from to basis Q-over-Q. X.X points down blended went commission points basis rate

business. by Interest driven balance up was margin was year-over-year The XX% X% in in from bank the security increase income billion, Q-over-Q, due X.X income. interest the deposit lending borrowing was higher income mainly income average margin increase and the financing and by higher driven to mainly margin Q-over-Q and and financing HKD daily year-over-year growth interest income increase

and year-over-year fund up Other and higher income distribution and XX% XXX to increase exchange currency attributable was HKD income was XX% The Q-over-Q. primarily Q-over-Q income. higher year-over-year million, both

the expenses XX was quarter Brokerage Brokerage commission narrow expenses XX% margin Our from charge a million, total business. than by our handling savings brokerage an to cost year-over-year, cost grew HKD up from were year-over-year. sales XX% increase HKD million, of mainly clearing XXX due XXX U.S. in and income of third HKD million XXXX.

Q-over-Q, security the year-over-year with transmission expenses and year-over-year XX% up year-over-year Processing borrowing were Interest and expenses by and fees product year-over-year million, by was business. the The up fee data a mainly Q-over-Q HKD million, growing XX% driven higher Q-o-Q. and the increase was XX% lending associated driven mainly and HKD service interest of XXX XXX and scale. our XX% was costs higher servicing result as business

year-over-year the of profit Operating quarter. XX% year-over-year increase was was up The and expenses and XXXX. and As to up expenses quarter in compared in billion a Q-over-Q markets. driven billion, increase third XX.X% year support gross R&D X.X margin XX% billion. of by XXX ago HKD Gross a R&D the X% went was million, new result, to headcount X% were total Q-over-Q as HKD new Q-o-Q. HKD X.X increase flattish X.X an HKD and XX.X% products to from year-over-year mainly in

Selling improved increase acquisition by down decline and general partially new in and and lower marketing and clients, increase administrative was Q-over-Q growth The expenses were in driven million, triple-digit for mainly were to HKD XXX expenses in The Q-over-Q. XX% G&A up year-over-year mainly HKD year-over-year million, primarily customer by paying Q-over-Q X% offset due client costs. headcount year-over-year up Q-over-Q. personnel. and an increase The due was X% year-over-year year-over-year to acquisition. XX% efficiency XXX was a

by of and XX% increased Operating X.X to third XXXX. XX% margin As a income result, the billion. year-over-year increased to XX.X% HKD in from quarter year-over-year Q-over-Q from operations XX.X%

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

Lower the to in foreign the was mainly due net quarter. from income margin unrealized appreciation third RMB exchange the of loss

of of announce of of record XXXX. as per Directors XX.X%, quarter approved for are a business cash USD ordinary shares rate close holders X on dividend X, of in and X.XX to ADS the USD pleased the we tax or December our of per share that of to addition, ADS ordinary was Board effective special Our holders

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

Operator

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

Yun-Yin Wang

Okay. I [Foreign Language] here. have X questions

September. the in since the -- China assets rose of end since First,

trading rate fourth run the volume. blended And current rate Kong volume in up give fourth in on And on as based customer So color can trading your commission quarter, the us would help quarter? of a total and percentage volume ADR some Hong the acquisition Kong? that your in also new Hong you overall trading

the Second some you question really would And paying development us amount will third crypto. us and could help And overall price related quarter? update VATP Kong? clients? on in the also, Can Hong new you the give license Bitcoin October in transitional crypto give since is the for to your color

Arthur Chen

Cindy. you, Thank

about and your I leave colleague, Let question second question to first answer me will my crypto, Daniel. Language] [Foreign the

of VATP in are Hopefully, regulators the inquiries. for market can on-site terms update in and visits the license, of their the process we by reviewed give some the updates of some In we the future. being terms in still near

have as the we opening in And crypto quarter in already remarks, our launched third mentioned Kong. Li the business in Hong

think penetration Given data, up of the very the trading pick volumes the very, the recent meaningfully. also we and users

Hong volumes trading USD Now day. the I of in was range daily on million to average USD in assets XX every XX the Kong million the crypto think

us recent digital positive momentum. rallies volume acquisitions and And think continue in assets, trading will definitely in it Kong I give considering the recently. will new penetration And our do the Hong on the client to help keep current the

Daniel Yuan

Language] [Foreign

early much of seen experienced at both than stocks But and later over September, the still October, in numbers experienced Kong late ADRs the in percentage China a and stronger the XX% experienced we've assets trading altogether overall, and Hong rapid some exceeded search, And trading remarks, what is a as Hong his ADRs of China volume in point. mentioned third China and on, quarter. as volumes the Li it opening lot of contribution Kong decrease. volume stocks of So trading some pullback, sequential

very quarter equities so the performed around in U.S. election. the So in well, fourth first -- U.S. especially far, the the have

clients our that particularly of surges. are experienced names technology fond the of Some rapid

fourth factors So stock there rate. the sequential very rate in affect And have of a our are blended that as increase where our we commission U.S. you trading in a blended volume. number aware, commission overall, quarter, are the seen meaningful that's

In so in have faster clients. commission quarter-to-date, because in commission slight in volume paying in And at cash a mostly brought our a new increase than increased the which trading derivatives, terms far, acquisition, a of increase equities mild we client our decline blended seen of the we pullback rate. fourth an seen pace rate, the quarter have

client early with acquisition. And which in acquisition. October and to primarily attributable is that Mostly well our Kong volatility, in have very performed -- stocks the and Hong experienced Kong Hong ADRs October because China increase helped client continued

Operator

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

Chiyao Huang

[Foreign Language]

potential And recurring have So and X to investment especially got X years? questions. the also context around the dividend, market markets. shareholder how is overseas related growth more into that in the plans I the a thinking X the next, these say, in special the we with will return in put One to about

on expense. Second question and the sales marketing is

sales and more portion acquisition nature So just and wondering on depending be marketing fixed more should be client of expense what the number. should and portion in what variable

overseas should in the XXXX, different our fixed for in the given we expect what to plans So markets? budget grow

Arthur Chen

Futu. in special question As inception is particular, rate our the just our answer this is leave [Foreign will attention also of fifth the also first weeks Let I We Futu. since And to shareholder And second for you the pay XXXX. we me and Thank year, you, of Language] aware, Chiyao may of moment the be A special your IPO shareholder Daniel. the very in dividend. couple quarter ago, about celebrated very third question this XXth reward annual values. a anniversary the the to

set total the year the is to is payout shareholders amounting XXXX, demonstrate of quarter. to gratitude of cash series for which million, This cash repurchase USD commitment of for we to XXX values. listing, dividend the have this the dividend the Since to at long-term we total the a to the the this our net this opportunity third to our accounts our fifth take shareholder past. of this special express major anniversary share X.X% end want in size programs to equities Considering rationale and

and any on no balance appropriate, will cash Considering our our our we is our also negative be hand, there client operations afterwards. this acquisitions, and think implications sheet current to size

into we whether years dividend make policies, very future next business will and development. the the will a our to more taking market revisit up conditions much. you account payout As we Thank in visible set after

Daniel Yuan

the sales initial So we'll nature, marketing be couple as a as have year, think rest and and salary marketing plans And imminent no to in interpreted Language] is and which disciplined we [Foreign year. rapid our the we've new expansion in in be expense, among fixed phase this related, as related. new can more markets overall, over I launch next passed is XX% of relatively a so from any headcount markets next year, perspective,

a of And on the depend variety expense marketing external will factors.

Thank our give call you. year, in earnings quarter in March next more fourth guidance. we'll So out

Operator

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

You Fan

This CICC. have questions is Language] from You [Foreign And Fan here. I X

the much net one and breakdown how regional the from from And assets. first much is The AUM breakdown. market-to-market appreciation? regarding the How what's the client is of asset inflow client the

cut more the of would you net current share the second income. color the about The also, our the And interest please is rate question breakdown on of income. impact interest interest on

Arthur Chen

breakdown, XX% question total your the answer quarters. about terms income. similar to part the financing Fed I to store second In and will to interest idle cash patterns sensitivity interest for income almost the goes leave And XX% terms our I the update of the mainly second roughly of accounts cut. the the interest [Foreign Daniel. breakdowns, There's no cetera. income income will question the rate Language] interest in the from from implications The structure first the et remaining and lending, borrowing our in to the margin of is

profit amount the the become their we quarter, third absolute bigger, which that the in is cut coming rate offset what cash the idle and locking negative the from implications partially given In lot clients quarter third of U.S. the a the observed in of

Daniel Yuan

terms [Foreign assets in of our exceptionally end assets, comes market Language] in especially the the well. over of quarter growth So when China client appreciation client performed our equities half that towards from quarter, of

overall quarter, remained asset third very the inflow net in robust. So

first bit number the in the the base sequentially the high quarter down quarter, still well second trended So but numbers. a given exceeded

are billion inflow overseas And HKD asset contributed we by markets asset about our still inflow optimistic different from in majority markets. net we breakdown net market and net the Hong row, quarters over followed Singapore. in seen of of to the the geographies, inflow very sustainability asset X is a terms have And which of overseas contributed XX Kong in between

Operator

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

Cheng Zhou

to [Foreign management. first of Language] So all, the congratulations

follow-up have the I special think regarding it's I a results. dividend. a very solid set of question

we the know buyback also dividend. think I you right? shareholders, the the and So have

now? consider see when a giving And currently? dividend the prefer you dividend so do do determine forward? buyback buyback the you feel factors you -- So do a rationale or investor And what prefer the what's going the dividend? what And behind of or you how do you will

is profit question beat, largely is compared line. the Visible glad line but see that we to a is the second My just X% are with in Alpha consensus, top net

HKD one of XXX.X is item which costs there's noticed also We of million, not other and loss small.

affect item? so for So what for please profit could this would clarify your forward? is net would management, clarify And you going so this -- you also please

Arthur Chen

X actually, the touch combination potential specific inflows. take dividend, investors, of group the a they're we more of visibilities cash Thanks, questions. will of cash these care Charles. and Regarding investors share I also use we When will gives dividend, do [Foreign our buyback Language] which special the the do dividends. we notice cash base with

all the in into shareholders. shareholders actually, to different going the commitment take account forward, value shareholder order we from demonstrate to So will different to create demand of our our

of also noncash Then the exchange all that dollars unrealized U.S. which items. regarding versus the dollars, both due the the appreciation breakdown from the fluctuations RMB behind of U.S. foreign of and are to dollars Singapore the nature loss others, is mainly versus arising

-- fourth rate, majority the the be others third So of FX the by if reversed will judging quarter. in quarter current the part in the we

this focusing if profit -- line. noise the part, just the So our key also the from and we operating operations take top

I is line much. in and think the profit Thank the almost line. top the -- the trend growth you very between operating

Operator

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

Emma Xu

Language] have So I X [Foreign questions.

strategies first in is major question your the The about markets.

So don't for plans markets you you next that mentioned new have year.

on growth Canada quarter, asset emphasize client consecutive for And Hong Singapore Malaysia all Australia's X this and recorded markets, double-digit doing you also and focus we'll quarters. sequential that probably So Kong, U.S., are existing well. average

market in see this you in major improvement have changed that so is quality the to you what client the the U.S. driven by the market? the major in or it market especially strategies So appreciation,

are the the China events a rate And of election. cut, recently, including there second policies the question that and is U.S. Fed macro the numerous lot from

trading behavior meaningful in some changes asset you allocation. see do investors So and

Daniel Yuan

[Foreign Language]

translate briefly earlier. my similar your the question take given first, second that's answer to little maybe out answers, we And I'll [Interpreted] a gave X to

of surge we September the of then the early also volume percentage pull back. China percentage late China the a So trading increase contributed And overall, stocks given in in ADRs percent and and saw of Hong the by in Kong pulled back a performance mix, our volume But terms bit trading equities October. quarter-over-quarter.

performed the in And the well U.S. performing stock stocks trading U.S. technology virtual volume. been asset terms of generally very especially quarter stocks, some election, boosted Stocks and well of overall the fourth have date, U.S. and around exceptionally to stocks U.S.

Li call on to chat your touched answer hard earnings offline. to on give question, markets, concise And more happy it's a a and number to of Hua first and our

over But think of we just just to our better understanding time, summarize, business. I have a

have demands. a and understanding of each of We understanding markets of capabilities these we've and and developed better every one a also client better our the

we approach all product markets, about focus we we but our fits on unique size more instead, So pipelines. users don't have a develop of towards X learning one all

marketing have different points, We different we client unique on emphasize messages. strategies. have and We selling operations different

I overall, iterate understanding you. on each of these X based to markets. of think So continue we'll our Thank

Operator

As would any to Daniel hand no remarks. now questions, like Yuan there for further are to closing I back

Daniel Yuan

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

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

Operator

conference for call. and gentleman, you participating. this Ladies today's Thank conclude's

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

Futu Holdings Limited (FUTU) 19 Nov 242024 Q3 Earnings call transcript