Webull Corporation Class A Ordinary Shares Q3 FY2025 earnings call

• Strong Q3 results with continued momentum and growth, driven by favorable market conditions, product diversification, and geographic expansion.
• Product diversification: Reintroduced crypto with futures trading, launched sports prediction markets via partnership with Kalshi, and unveiled Vega, an AI-powered decision-making tool. Webull Premium has 90,000 subscribers, tracking ahead of target.
• Geographic expansion: Webull Canada set to reach $1 billion in assets under management, launched in EU (Netherlands), entered partnership with Merits Financial Group for U.S. market access in South Korea, and expanded options trading in Singapore, Hong Kong, and Japan.
• Funded accounts and customer assets: Added ~200,000 new funded accounts, total funded accounts at 4.93 million; customer assets at $21.2 billion, a 84% year-over-year increase.

In the third quarter, Webull Corporation generated revenue of $156.9 million, a 55% year-over-year increase. Adjusted operating expenses were $120.2 million, up 13% year-over-year. Adjusted operating profit was $36.7 million, representing a 28.7% improvement in adjusted operating profit margin year-over-year. Customer assets reached an all-time high of $21.2 billion, inclusive of $1.2 billion from the acquisition of Webull Pay. Equity trading volume surged 71% year over year. Interest-related income grew 32% year over year to RMB43.4 million, driven by growth in client assets across various categories.

• Continue to enhance existing product offerings and execute on the roadmap, including further development of Vega.
• Webull Premium subscription target of 100,000 by year-end remains on track with 90,000 subscribers already.
• Expand crypto offerings globally and continue to introduce new products and geographies for market share growth.

• Uncertainties associated with forward-looking statements, as actual results may differ due to various factors.
• Regulatory challenges in international expansions and compliance with local regulations.
• Intense competition in the financial technology space, particularly in crypto, prediction markets, and other product segments.

Q: Can you size the revenue opportunity for prediction markets and share economics with Kalshi?

A: Prediction markets have seen strong growth, with 30 million contracts placed in October. Charge $0.01 commission per contract and get exchange rebate from Kalshi, blended rate 1.25-1.5¢ per contract. Also reengages dormant accounts and addresses new TAM.

Q: Where is the strength in net deposits coming from?

A: Driven by marketing style evolution (incentive transfer programs) and geographic expansion, including growth in Canada, Australia, Thailand, etc., with U.S. products driving demand outside the U.S.

Q: Sustainability of incremental margins and marketing spend?

A: Margin expansion is healthy for growth, with focus on optimizing expenses. Marketing spend shifted to asset matching promotions for better ROI and predictable amortization.

Q: Crypto strategy evolution and pricing?

A: Relaunching crypto with focus on sophisticated active traders, aiming to squeeze take rates, with new additions to crypto offering planned.

Q: Merits partnership and revenue impact?

A: Merits is first institutional partnership, with revenues showing up in transaction volumes, and more B2B partnerships in pipeline.

Q: Funded accounts growth outside U.S. and Vega impact?

A: Funded accounts outside U.S. growing, with local teams executing locally. Vega AI has phenomenal user engagement, developed in-house with no increased cost.

Q: Localized features and roadmap in international markets?

A: Local teams tailor products, adding features like tax wrappers, and exporting U.S. retail trading experience globally.

Q: Impact of U.S. IVD market volatility?

A: Webull is well-positioned for volatile markets as its sophisticated customers trade more during volatility.