UP Fintech Holding Ltd. Q3 FY2024 earnings call

• Driven by an expanded client base and an active market backdrop in the US, total trading volume and commission income saw increases.
• Added 50,500 newly funded accounts in the third quarter, achieving the annual guidance of 150,000 newly funded accounts ahead of schedule.
• Upgraded product offerings: in September, officially launched Hong Kong stock options and short-selling features; in November, collaborated with Hong Kong Exchange to upgrade Hong Kong stock option feature with weekly contracts; upgraded Tiger Boss debit card to include T+0 automatic subscription and redemption for Tiger Vault; enhanced overnight trading capabilities.
• 2B business: underwrote 13 US and Hong Kong IPOs in the third quarter, and added 18 new ESOP clients, with total ESOP clients served reaching 597 by the end of Q3 2024.

In the third quarter, total trading volume reached US$163 billion, with cash equity trading volume at US$41.4 billion, up 54% and 24% quarter-over-quarter respectively. Commission income was US$41.2 million, up 21% quarter-over-quarter and 78% year-over-year. Interest-related income was US$48 million, up 9% quarter-over-quarter. Total revenue hit an all-time high of US$101 million, up 16% quarter-over-quarter and 44% year-over-year. GAAP and non-GAAP net income attributable to UP Fintech were US$17.8 million and US$20.1 million respectively. Newly funded accounts in the third quarter totaled 50,500, a 3% sequential increase and 105% year-over-year increase, with approximately 60% of newly funded users from Singapore and Southeast Asia, 15% each from Australia and New Zealand region, 15% from the Hong Kong market, and over 5% from the US market. Total clients' assets were $40.8 billion, up 7% quarter-over-quarter and 116% year-over-year.

• Achieved the annual guidance of acquiring 150,000 newly funded accounts ahead of schedule.
• October was a standout month with trading volume and commission performance reaching historic highs, with October's trading volume and commissions more than doubling the average monthly performance of the first half of the year.
• Q4 has started strongly, with November trading volume showing solid performance so far.

The statements made contain forward-looking statements, and a number of factors could cause actual results to differ materially from those in the forward-looking statements. For more information, refer to the Form 6-K furnished on November 12, 2024, and the annual report on Form 20-F filed on April 22, 2024.

Q: Please give the breakdown of the regional mix of newly funded accounts and the reason behind the decline in take rate.

A: In the third quarter, about 60% of newly funded users came from Singapore and Southeast Asia, about 15% each from Australia and New Zealand region, 15% from the Hong Kong market, and more than 5% from the US market. The decline in blended take rate was largely due to an increase in future trading volume, NASDAQ's general upward trend in Q3 pushing average stock price higher, ADR composition in Q3, and Hong Kong offering zero commission.

Q: Share the run rate since October and view on operating efficiency.

A: Client assets had net inflow in October, newly funded accounts maintained rapid growth, and October was a standout month with trading volume and commissions at record levels. Operating efficiency improved with operating profit margin reaching 26% in the third quarter.

Q: Share progress in Hong Kong market and wealth management data.

A: Hong Kong market has ~20,000 funded users, average client asset in Hong Kong surpassed Singapore, ARPU for retail users in Hong Kong was the highest in Q3. Wealth management AUM in Q3 increased over 40% quarter-over-quarter and doubled year-over-year, exceeding US$1 billion, with ~30% of Q3 newly funded users using wealth management services, and Hong Kong wealth management business saw nearly 50% quarter-over-quarter increase in clients and doubled AUM quarter-over-quarter.