Release Date: August 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- UP Fintech Holding Ltd (TIGR, Financial) reported a record total revenue of USD87.4 million for Q2 2024, reflecting a 10.8% quarter-over-quarter increase and a 32.4% year-over-year increase.
- The company achieved its second-highest quarterly commission revenue in its operating history, with commission income reaching USD34.1 million, up 22.7% quarter-over-quarter and 54.9% year-over-year.
- UP Fintech Holding Ltd (TIGR) added 48,900 newly funded accounts in Q2 2024, representing a 69% sequential increase and a 68% increase year-over-year, with significant contributions from Singapore and Southeast Asia.
- Client assets reached an all-time high of USD38.2 billion, marking a 16% quarter-over-quarter and 121% year-over-year increase, driven by strong net asset inflows and market gains.
- The company introduced new product offerings, including Hong Kong stock options and short selling for Hong Kong stocks, enhancing its competitiveness and appeal to local users.
Negative Points
- The bottom line was negatively impacted by a loss provision of USD13.2 million related to a Hong Kong stock pledging and withdrawal case.
- Interest expense increased by 30% year-over-year to USD13.6 million, reflecting the high-interest rate environment.
- Employee compensation and benefits expenses rose by 20% year-over-year to USD28.6 million due to headcount increases for overseas growth and R&D.
- Marketing expenses increased by 36% year-over-year to USD6.4 million, driven by higher spending on user acquisition and branding.
- General and administrative expenses surged by 345% year-over-year to USD20.2 million, primarily due to the one-time loss provision.
Q & A Highlights
Q: The US stock market has been volatile in August. Can you share some run rates over the past two months, such as the number of new users and client assets, and the impact on financial performance? Also, if we enter a rate-cutting cycle, how might you adjust your business, and what impact would a 25 basis point rate cut have on the company's interest income?
A: (Tianhua Wu, CEO) In terms of client assets, the net asset inflow was strong in the first two months of Q3, and the number of newly funded users continued to grow rapidly. July saw the highest single-month revenue in our operating history, and August trading volume has been very active. September is uncertain due to factors like the US election and Fed interest rate decisions, but overall, Q3 is shaping up well. (Fei Zeng, CFO) A rate cut may negatively impact our interest income, but it could also lead to more active trading volume and commission income. A 25 bps rate cut would impact total revenue for Q4 by about 1%.
Q: The profitability in this quarter was mainly impacted by loss provisions. Could you explain the reason for the allowance for receivables from customers and any following treatment with clients? Also, what is the likelihood of such provisions happening again in the future?
A: (Tianhua Wu, CEO) The impairment was linked to our Hong Kong stock pledging transaction business. We have taken measures to recover the loss, including signing a repayment agreement with the client and having a controlling shareholder as guarantor. The full amount was written off in Q2, but if we receive repayment, we will reverse the loss provision. We have stopped similar Hong Kong stock pledging transactions due to market conditions and risks, and there are no outstanding stock pledging transactions using Hong Kong stock as collateral anymore.
Q: The second quarter saw significant growth in new funded accounts. Can you provide a regional breakdown and any new customer acquisition strategies adopted in this quarter?
A: (Tianhua Wu, CEO) About 65% of new funded clients came from Singapore and Southeast Asia, 15% from Hong Kong, and 10% each from Australia, New Zealand, and the US. The US and Hong Kong stock markets performed well in Q2, and we increased our marketing spending by 45% quarter-over-quarter. New products like the Tiger BOSS debit card and Contra Trading features in Singapore also contributed significantly to the growth.
Q: How is the progress in the Hong Kong market development, including the traditional brokerage business and the company's virtual currency business? What are the plans for deploying this business, such as pricing and customer acquisition strategy?
A: (Fei Zeng, CFO) We are pleased with our progress in Hong Kong. In Q2, the average net asset inflow from newly acquired clients was over USD15,000, and the Hong Kong market saw the highest ARPU for the group. We increased local partnerships and advertising, resulting in over 7,000 new funded users in Q2. For the virtual asset business, we offer competitive pricing with zero commission and platform fees for spot crypto trading. Our campaign for professional investors was very successful, doubling our PI users by the end of June.
Q: How is the company's wealth management business progressing? What is the current scale and any updates on product offerings?
A: (Tianhua Wu, CEO) Our wealth management business saw strong growth in Q2, with assets and user numbers increasing by over 20% quarter-over-quarter and around 150% year-over-year. We upgraded the Tiger Vault to support T+0 functionality across all licenses, allowing instant conversion of balances into buying power. The underlying assets of Tiger Vault performed well, with average seven-day annualized yields exceeding market averages. We have moved our wealth management business to the home interface of our app, making it easier for users to access a variety of asset management products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
