Futu Holdings Limited Q3 FY2025 earnings call

• Funded accounts: 3,130,000, up 43% year-over-year and 9% quarter-over-quarter; net new funded accounts 254,000, up 65% year-over-year and 25% sequentially.
• Market performance: Hong Kong had highest quarterly net client app since 2021, US business had high-quality growth with double-digit sequential increase in new funded accounts and double-digit sequential growth in option traders and contracts.
• Product launches: Launched Versa Derivative and SGX Futures in Singapore, upgraded AI tool for Malay language and local stock analysis in Malaysia.
• Events: MoveFest held in Singapore and Malaysia, attracting over 28,000 investors.
• Asset movement: ~1/3 of client assets from net client asset inflow, ~2/3 from mark-to-market fluctuations; fourth-quarter mark-to-market implication negative but asset inflows momentum robust.
• Trading volume: Hong Kong stock trading volume up 43% sequentially to HKD 1.19 trillion, US stock trading volume up 161% sequentially, Ethereum trading volume quadrupled, Solana launch in Hong Kong well received.

Futu Holdings Limited reported total revenue of HKD 6.4 billion in the third quarter, up 86% from the same period in 2024. Brokerage commission and handling charge income was HKD 2.9 billion, up 91% year-over-year and 13% quarter-over-quarter. Interest income was HKD 3 billion, up 79% year-over-year and 33% quarter-over-quarter. Other income was HKD 441 million, up 111% year-over-year and flat quarter-over-quarter. Total client assets reached HKD 1.24 trillion, up 79% year-over-year and 27% quarter-over-quarter. Total trading volume rose 105% year-over-year and 9% quarter-over-quarter to HKD 3.9 trillion. Wealth management assets rose 8% sequentially to HKD 175.6 billion. Funded accounts were 3,130,000, a 43% year-over-year and 9% quarter-over-quarter increase. Hong Kong was the largest contributor to new funded accounts for four straight quarters, Singapore saw steady sequential growth in new funded accounts, and Malaysia had a huge runway for client growth.

• Fourth-quarter to date, asset inflows momentum remains robust with no slowdown compared to prior quarters.
• Client acquisition cost in Q4 is healthy, with no indication of significant increase from current trends.

• Market volatility could impact client assets and trading volume.
• Regulatory changes in different markets could affect product launches and business operations, especially for crypto and tokenization.
• Crypto market volatility may influence crypto trading performance and revenue.

Q: Could you break down client assets by mark-to-market gains and net asset inflows and what's the current run rate for net asset inflows and client assets in Q4?

A: Around one-third from net client asset inflow, two-thirds from mark-to-market; fourth-quarter to date mark-to-market implication negative but asset inflows momentum robust with no slowdown.

Q: What's the recent customer acquisition trend and expected customer acquisition cost in Q4?

A: Client acquisition momentum and cost remain healthy in Q4, more optimistic regarding over-year client acquisition cost vs. initial target.

Q: What's the driving force behind strong interest income growth and breakdown of interest income?

A: Interest income from client idle cash, margin financing, and security borrowing/lending; security borrowing/lending growth due to more utilization of hard-to-borrow stocks in market.

Q: Latest crypto business contribution to revenue and driving forces for expansion?

A: Crypto growth broad-based across markets; in Hong Kong, client's crypto AUM and trading volume triple-digit sequential growth; in Singapore, triple-digit growth in trading volume; in US, new functions and coins launched; growth contingent on regulatory approvals.

Q: Sensitivity analysis to Fed rate cut and R&D/G&A cost plans?

A: Every 25 basis point Fed rate cut negatively impacts monthly pretax profit by ~HKD 37 million but offset by positive factors; G&A has front-loading costs for new markets and crypto/license preparations; R&D to optimize AI capabilities for clients and streamline business processes.

Q: Regional breakdown of new fund accounts and US market strategy?

A: Hong Kong and Malaysia collectively ~50% of new fund accounts; Greater China clients ~46% of accounts, overseas ~54%; US business growth due to brand influence and superior product experience for active traders.

Q: Investment in Air Star Bank and regional mix of client AUM net inflow?

A: Increased stake in Air Star Bank to 68.4%; Hong Kong's percentage contribution to net asset inflow down slightly due to other markets' strong inflows; more high net worth clients in Hong Kong expected to continue.

Q: Crypto product pipeline, tokenization, and M&A plans?

A: Tokenization product launch regulatory dependent; open to M&A in crypto space to build capabilities.