Futu Holdings Ltd. Q4 FY2024 earnings call

• Client Acquisitions: Client acquisitions accelerated across all markets. In the fourth quarter alone, 215,000 paying clients were added, and total paying clients reached over 2.4 million by year-end, a 41% year-over-year increase. Guiding 800,000 new paying clients in 2025. The Hong Kong market was a top growth driver in Q4. Singapore saw quality growth with higher average assets. Malaysia had strong paying client growth. Japan saw double-digit quarter-over-quarter growth in new paying clients.
• Product Updates: In 2024, 209 iterations of the mobile app and desktop clients were made, with 7,762 new features added, up 37% and 32% year-over-year respectively. Japan launched U.S. margin trading. The U.S. unveiled Options Strategy Builder on the desktop version. Hong Kong and Singapore established a bond trading desk. Recurring investment plans were launched for local stocks in Australia and Canada.
• Market Performance: U.S. stock trading volume grew 36% quarter-over-quarter to a historic high of HK$2.08 trillion. Hong Kong stock trading volume grew 117% quarter-over-quarter to HK$755 billion. Wealth management AUM increased 93% year-over-year, driven by money market funds. In 2024, 482 IPO distributions were made to IR clients, and Futu underwrote 40 Hong Kong IPOs (first among brokers for the third consecutive year), adopting the new FINI IPO settlement platform.

Total revenue in the fourth quarter of 2024 was HK$4.4 billion, a significant increase of 87% from the same period in 2023. Full-year revenue reached HK$13.6 billion, up 36% year-over-year. Brokerage commission and handling charge income in the fourth quarter was HK$2.1 billion, surging 128% year-over-year and 35% quarter-over-quarter. Interest income in Q4 was HK$2 billion, up 52% year-over-year and 19% quarter-over-quarter. Other income in Q4 was HK$353 million, jumping 157% year-over-year and 69% quarter-over-quarter. Total client assets stood at HK$743 billion, up 43% year-over-year and 7% quarter-over-quarter. Overseas markets saw the highest quarterly net asset inflow. In Singapore, client assets grew 19% quarter-over-quarter for the 10th consecutive quarter. Margin financing and security planning balance was HK$51 billion, a 25% sequential increase. Total trading volume in Q4 was HK$2.89 trillion, surging 202% year-over-year and 52% quarter-over-quarter. Wealth management client assets were HK$111 billion, up 93% year-over-year and 14% quarter-over-quarter, accounting for 15% of total client assets.

• 2025 Guidance: Guiding 800,000 new paying clients in 2025. Year-to-date 2025, higher net new paying clients, net asset inflows, and trading volume are expected based on the current run rate. Overseas markets have a rich product pipeline, with Japan planning to expand Japanese equity trade capabilities and optimize U.S. trading, Malaysia having product innovations, the U.S. rolling out crypto training, and wealth management expanding structured notes.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in forward-looking statements. For more information about potential risks and uncertainties, refer to the company's filings with the SEC, including its annual report.

Q: About new paying clients guidance and client acquisition cost.

A: Arthur Chen stated the 800,000 new paying client guidance includes existing markets, not new markets. Targeted CAC for 2025 is HK$2,500 to HK$3,000, with more spending on brand equity for long-term user loyalty.

Q: Trading volume and product pipeline.

A: Arthur Chen provided color on Q1 run rate, noting higher net new paying clients, net asset inflows, and trading volume expected. Mentioned a rich product pipeline for overseas markets, including Japan, Malaysia, U.S., and wealth management expansions.

Q: AUM breakdown and Hong Kong IPO impact.

A: In Q4, client asset inflow was larger than market-to-market impact, with 24% from Great China areas. Direct revenues from Hong Kong IPO contribute low single digits to total revenue, but the new FINI platform benefits client participation and market consolidation.

Q: Operating expense divergence and other income.

A: G&A expense Q-on-Q increase in Q4 due to year-end bonuses, professional expenses, and organizational restructuring. Other income increase due to Wealth Management revenues and FX exchange fees, with expectations of similar trends in 2025.

Q: Blended commission rate and capital return.

A: Blended commission rate decline due to product mix change (more high-value U.S. stocks/options). Share repurchase program not utilized yet, will revisit dividend policies at year-end 2025.

Q: Derivatives trading and market volatility.

A: Derivatives commissions accounted for ~one-third of total trading commissions in Q4, with no material change in the ratio in Q1 so far.

Q: Interest income breakdown and rate cut impact.

A: Interest income breakdown: ~40%-45% from idle cash deposits, remaining from margin financing, etc. Every 25 basis points Fed rate cut could negatively impact monthly pretax profit by HK$8 million-HK$10 million.

Q: Regional new paying client growth and AUM guidance.

A: Mature markets like Hong Kong and Singapore contributed ~40%-45% of Q4 new paying clients. Daniel Yuan commented on net asset inflow expectations and AUM trends, noting average client assets growth across markets and cross-selling opportunities.