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spk03: Ladies and gentlemen, thank you for standing by and welcome to the UP FinTech Holding Limited fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today, March 20th, 2024. I would now like to hand the conference over to your first speaker today, Mr. Aaron Lee, the Head of Investor Relations. Thank you. Please go ahead.
spk06: Thank you, operator. Hello, everyone, and thank you for joining us for the call today. UpFintech Coding Limited's fourth quarter and full year 2023 earnings release was distributed earlier today and is available on our website at ir.itigerup.com, as well as Globe Newswire Services. On the call today from UpFintech, Mr. Wu Tianhua. Chairman and Chief Executive Officer, Mr. Zhuang Zeng, Chief Financial Officer, Mr. Huang Lei, CEO of U.S. Tiger Securities, and Mr. Kenny Zhao, our Financial Controller. Mr. Wu will give an overview of our business operations and discuss corporate highlights. Mr. Zeng will then discuss our financial results. They will both be available to answer your questions during the Q&A session that follows the remarks. Now let me cover the safe harbor. The statements we are about to make contain forward-looking statements. Based on the meaning of the U.S. Private Security Litigation Reform Act of 1995, a number of factors could cause actual results to differ materially from those containing any forward-looking statement. For more information about factors that could cause actual results to materially differ from those in the forward-looking statements, please refer to our Form 6-K, published today, March 20, 2024, and our annual report on Form 20-F, filed on April 26, 2023. We undertake no obligation to update any forward-looking statement, except as required under applicable law. It is my pleasure to now introduce our Chairman and Chief Executive Officer, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by English translation. Mr. Wu, please go ahead with your remarks.
spk00: Hello, everyone. I would like to thank all of you for attending the fourth quarter and the full-year press conference of Tiger International in 2023. Hello, everyone.
spk06: Thank you for joining the Tiger Brokers Fourth Quarter and Full Year 2023 Earnings Conference Call.
spk00: Today is the fifth anniversary of the 5th anniversary of the 5th anniversary of the 5th anniversary of the 5th anniversary of the 5th anniversary of the 5th anniversary of the 5th anniversary of Today marks the fifth anniversary of Tiger's listing on NASDAQ. During the past five years,
spk06: they committed to our mission that technology redefines global investing and have expanded our business globally to Singapore, Southeast Asia, Australia, New Zealand, the United States, Hong Kong, and the United Kingdom. They have made significant improvement in various aspects, including product offering, industry know-how, user base, and profitability. They've also navigated through market turbulence, geopolitical and regulatory uncertainties, This valuable experience will help us to have sustainable growth in the future. As of the end of 2023, the majority of our total client assets came from users in overseas markets. We are proud of our international reach and will continue to serve our clients with dedication and innovation.
spk00: In 2023, we will continue to advance our internationalization strategy and advance our leading position in Singapore. After entering the two-star market, The Hong Kong retail market opened a new battlefield and achieved satisfactory results. At the same time, the high interest rate environment brought by the increase in revenue from the United States and the United States of America, the total income of the fourth quarter reached 70 million dollars, and the third quarter's balance was evened out, which increased by 9.6% in the same period last year. The total income of the whole year reached 27.3 billion dollars, which increased by 21% in 2022. In addition, we are very happy to see that the company has made significant improvements in the retail sector in 2023. mainly due to the brand advantages and development capabilities of Tiger International, and the variable cost for us, including goods cost and calculation cost, in order to continue to optimize operations in terms of fixed cost. The net profit of the parent company for the whole year is 3,260 million US dollars, and the net profit of the non-GAM of the parent company is 4,270 million US dollars, respectively, 14.8 times and 3.4 times in 2022. The historical height since the establishment of the company, In 2023, we continue to advise our internationalization strategy
spk06: further solidifying our leading position in Singapore and officially entered Hong Kong. Benefiting from the higher interest rate environment, fourth quarter total revenue reached $70 million, a 9.6% increase compared to the same period of last year. Our full year total revenue amounted to $273 million, representing a 21% increase from 2022. Additionally, we saw significant improvement in our bottom line in 2023, primarily due to our branch strength and R&D capabilities, which enabled us to save costs and deploy resources more efficiently. Full-year net profit reached US$32.6 million. Non-GAAP net profit reached US$42.7 million, a record high since our company funding. and representing a jump of 14.8 times and 3.4 times of the same figure in 2022. In the fourth quarter, due to depreciation of U.S. dollar against other currency, we recorded a 7 million U.S. dollar non-cash foreign exchange loss versus a 2 million foreign exchange gain in the third quarter. Resulted, our non-cash net income declined quarter-by-quarter to 1.1 million U.S. dollars.
spk00: The number of new users in this quarter is 39,000, which is 58.6% compared to the previous quarter. The number of new users in the whole year is 123,100, which is basically the same as the market in mainland China. This exceeds our goal of 100,000 new users per year. By the end of 2023, the total number of new users will exceed 900,000, which is 15.8% compared to the end of 2022. The number of new customers in this quarter has increased significantly compared to the previous quarter. This is mainly due to our effective attempts in goods. For example, we use Singapore as a bridge to expand to neighboring countries and regions. With the advantage of local brands within many years, we have achieved good user increase. At the same time, we have lowered the cost of goods in the fourth quarter to less than US$150. In terms of customer nature, the inflow of close assets remains strong. And under the window, the single-segment history is high Four-segment customers have invested more than 8.2 billion dollars Plus the supply value profit of 35 billion dollars brought by U.S. stock warm-up This quarter, the total customer assets reached 306 billion dollars 62.1% of the growth in the last quarter More than twice as much as in 2022 This is mainly due to the fact that while we are serving retail users We are also constantly following the needs and habits of institutional users to deliver optimized products Therefore, we have gained more trust and recognition from institutional users. At the same time, we are also very happy to see that the quality of new entry users in this quarter is improving. Singapore's new entry customers have an average entry cost of more than 160,000 US dollars in this quarter, which is the highest record since we entered the Singapore market. The above many business indicators show that the market in which the company has entered has a wide space for development. At the same time, it also shows that we have achieved good results in the strategy of deepening the existing market.
spk06: In the fourth quarter, we added 39,000 funded accounts, an increase of 58.6% from the previous quarter. The total number of funded accounts for the year reached 123,100, exceeded our annual guidance of 100,000 funded accounts. This majority came from markets outside of mainland China. The total number of funded accounts at the end of 2023 exceeded 900,000, representing a growth of 15.8% compared to the end of last year. In the fourth quarter, by leveraging our strong presence in Singapore, we were working with partners to explore customer acquisition initiatives in the Southeast Asian region, which resulted in a rise in quarterly new-funded accounts while reducing average CEC to a historical low of below US$150. In terms of total client assets, the trend of asset inflow remains strong. We saw record US$8.2 billion net asset inflow this quarter. In addition to US$3.5 billion mark-to-market gain, total client assets jumped 62.1% quarter-over-quarter and more than doubled year-over-year to US$30.6 billion at the end of 2023. The increase in client assets was primarily due to our ongoing product development to meet the needs of institutional clients. Additionally, We are very glad to see the quality of our newly acquired customer further improved in the fourth quarter. The average net asset inflows of newly acquired clients in Singapore was above US$16,000 in the fourth quarter, setting a historic high since our launch into Singapore retail market.
spk00: We continue to expand our product line to improve user experience. This is also the key to long-term success. In the fourth quarter, We implemented a strategy to calculate the risk thresholds according to the fund-raising strategy of the fund-raising combination. The fund-raising deposit thresholds were lowered. We also implemented a strategy in the financial management. We proposed a structure-based asset selection to provide high-quality users with a richer choice of assets. In addition, with the growing number of encrypted currency transactions around the world, including in more and more areas such as Singapore and Hong Kong, The acceptance of the virtual currency industry and the demand for supervision are also improving day by day. Laowu International has developed the ability to communicate with the supervision bank within many years due to the fact that it is a blockchain business. It has also improved its versatility in the field of products. For example, in January this year, we launched 11 Bitcoin ETF transactions in areas that meet the supervision requirements, including Singapore. In the Hong Kong market, we obtained the Hong Kong SFC audit, We continue to add new products on our platform to enhance user experience, which we believe is the key to our long-term success. In the fourth quarter, we introduced Combo Option Strategy feature, a very user-friendly product
spk06: that allows users to execute multi-like options trees based on our net margin requirements. Additionally, we launched the fixed coupon notes product, offering professional investors a more diversified wealth management experience. In addition, as crypto is becoming an important asset class globally, it's a natural extension of business as broker-dealer to add this new asset class with Tiger's fintech background and know-how. In January, we started to offer 11 Bitcoin ETFs trading based on local regulatory frameworks. In Hong Kong, Hong Kong SFC up-lifted our Type 1 license to include virtual asset dealing services for professional investors. This positions us as one of the first mainstream online brokerage firms in Hong Kong to receive approval for such a license upgrade.
spk00: When our international BEO continues to develop, Our 2B business continues to perform well. In the investment banking service, we underwrote a total of nine US and Hong Kong IPOs in the fourth quarter.
spk06: including Shiye Daotian Group and G&T Express, bringing the total number of U.S. and Hong Kong IPOs underwritten for the year to 28. In our ESOP business, we added 30 new clients in the fourth quarter, bringing the total number of ESOP clients served to 535 as of the end of 2023. Now I would like to invite our CFO Zhang to go over our financials.
spk01: Great. Thanks, Tianhuai and Aaron. Let me go through our financial performance for the fourth quarter. All numbers are in U.S. dollar. Total revenue were $70 million this quarter, remained flat quarter over quarter, and increased 9.6% year over year. Full year total revenue were $272.5 million. increased 20.9% compared to last year. Cash equity take rate was 6.5 bps this quarter, slightly increased from last quarter. Raising commission revenue, about 60% come from cash equities, 30% from options, and the rest comes from futures and other products. Now on to cost. Interest expense was $16 million. increased by 123% from the same quarter of last year, as interest expense and security lending expense both increased in light of the rate hike. Execution and clearing expense were $2.2 million, decreased 44% from the same quarter of last year, primarily due to more efficiency in self-clearing for U.S. and Hong Kong securities. Employee compensation and benefits expense were $26.5 million, an increase of 8% year-over-year due to an increase of global headcounts. Occupancy, depreciation, and amortization expense increased 8.4% to 2.2 million due to increase in rent. Communication and data expense were 8.5 million, an increase of 21% year over year due to the increase in user base and IT related fees. Marketing expense were 5.8 million this quarter, decreased 22% year over year as we remember them as marketing campaigns. General administrative expense were $7.3 million, an increase of 23% year-over-year due to professional service fees recorded in the first quarter. Total operating costs were $52.5 million, slightly increased 3.1% from the same quarter of last year. Gap-led loss was $1.8 million. Non-gap-led income was $1.1 million. The sequential drop in bottom-line was primarily due to a non-cash foreign exchange losses resulted from the depreciation of the US dollar during this quarter. For the year of 2023, total GAAP profit was $32.6 million, and the non-GAAP-led income was $42.7 million, a historical high in our company history. Now I have concluded our presentation. Operator, please open the light for Q&A. Thanks.
spk03: Thank you. As a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Cindy Wang from China Renaissance. Please go ahead. Your line is open.
spk05: That is, can you give us a guide on the new number of new users in 2024, and a strategy of distribution and business development in general, and whether it will enter a new market this year? Thanks for giving me this chance to ask questions. So I have two questions. First one is the net profit has increased significantly in 2023, but profitability in Q4 was dropped sequentially mainly because of the FX loss. So have you seen any improvement in first quarter this year based on the current run rate? And the second is, could you give us guidance on new funded accounts in 2024, as well as the breakdown of each region and business development strategy? Any new markets you will enter this year? Thank you.
spk01: Okay, thank you, Cindy. I'll answer your first question first, and then I'll ask Tianhua to answer your second question. First of all, There are a few reasons for the decline of the long gap. First of all, from the income point of view, our gross revenue is relatively balanced. But since we are now in a relatively high-end environment, the interest rate has risen, leading to the decline of our net total revenue of about US$400 million. The second reason is that the market will generally raise some fixed costs, such as professional service fees. This is also relatively normal. The last point is also the main impact, which comes from the loss of the exchange rate. Because the dollar has a certain depreciation in the fourth quarter compared to the Singapore dollar and the RMB. So it brought about 7 million US dollars of loss to our dollar assets. And the third quarter is an exchange rate of about 2 million US dollars. So this column, in contrast, brought about 9 million US dollars of decline to the interest rate. Of course, this has nothing to do with cash flow. It is an accounting process at the report level. And then about Runway, in the past two months since this year, we have seen that the market activity and the activity of users have improved. And then the trend of customer assets is also very strong. At the same time, we think that the exchange rate of the first quarter is relatively stable. So we think that the profit situation of the first quarter will certainly be better than that of the fourth quarter. Then I will simply translate it. So the non-GAF bottom line decreased in the fourth quarter versus the third quarter. There are several factors. So first one is for our total revenue is flat quarter over quarter. But we incur more interest expense during the fourth quarter due to the rate hike cycle. So the total net revenue decreased $4 million quarter-over-quarter. The second factor is that in the first quarter, more costs will hit the books, such as professional service fees, which results in a $3 million jump in the cost. The third reason is foreign exchange losses. So in the first quarter, the U.S. dollar depreciated against R&P and the Singapore dollar. So we incur a non-cash $7 million foreign exchange losses in the first quarter versus a $2 million gain in the third quarter. So combine those two factors, so it leads to a non-cash decrease of about $9 million on a sequential basis. And in terms of run rate, so we have seen an increase in trading activities during the first two months of this year. And we also saw a very strong client-led asset inflow. So, given the foreign exchange rate was relatively stable in the first quarter, we expect the profitability in the first quarter will be much better than the fourth quarter. Thanks.
spk00: Okay, let's move on to the second question. This year, our new entry rate target was 150,000 people. In terms of the area, Singapore and the surrounding areas accounted for about 60%. Australia, New Zealand, and the United States accounted for about 15%. and about 10% in the Hong Kong region. This distribution is similar to the market value in 2023. We will adjust our investment based on the market performance of each market in 2024. Of course, we will raise the target from 100,000 in 2023 to 150,000 in 2024. Each market will also bring an increase in the number of customers. We think the market that the company has entered has a huge potential. In Singapore, even though we already have a high market share in the local market, we still have a long way to go. We can also see this from the number of new users and quality of the new users in Singapore and surrounding areas. In Auxin and the Hong Kong market, we also have more room for improvement and expansion. Therefore, the whole company will still focus on the market we have entered in 2024. In 2024, our target is to add 150,000 new financial accounts.
spk06: About 60% come from Singapore and Southeast Asia. Australia, New Zealand market and the United States account for 15% each, and Hong Kong market accounts for 10%. This regional breakdown is quite similar to our actual result in 2023, and we will adjust the input based on market opportunity and ROI of each region. And of course, with the target increase from 100,000 in 2023 to 150,000 in 2024, we will expect the incremental pure number to increase from each market accordingly. We believe that the market they have already entered have tremendous potential. Taking Singapore, for example, where Tiger Broker already has a relatively high market share. However, there's still significant room for growth. This can be seen from the number and quality of our newly acquired clients in Singapore in fourth quarter. In markets like Australia, New Zealand, and Hong Kong, we have even more room to improve and expand. So in 2024, our focus will remain on the markets we've already entered by optimizing the efficiency of our R&D resources, introducing more product features, including virtual assets trading, to enhance our R pool and profitability. Additionally, we will also look for opportunities to enter new markets based on market conditions. Thank you. Operator, let's move on to the next question. Thank you.
spk03: Thank you. Please stand by. Our next question comes from the line of Judy Zhang from Citi. Please go ahead. Your line is open.
spk02: Thank you, Ms. Guan, for giving me a chance to ask a question. I have two questions. The first question is that we have seen a significant increase in customer assets in the fourth quarter, but there has been no obvious increase in commissions and transactions. What is the reason behind this? Thank you for taking my question. I have two questions. The first question is regarding the commission and the turnover. We saw the customer AOM has increased significantly in the boss quarter. but the commission turnover didn't improve that much. What's the underlying reasons behind? And second question is regarding on the new funded customer. So the new paying customer has increased a lot, queue on queue, but the CAC reached to the record low level. Can management share with us what's the, you know, give us some color on the company's new customer acquisition strategy? Thank you.
spk00: Okay, thank you. In the fourth quarter of the company, our customer assets increased by 62% and doubled to $30.6 billion. The first reason is that in the fourth quarter, we were affected by the rise in Nasdaq index and capital stock. This brought a profit of $35 billion in supply value to our customer assets. In other words, if we don't consider net income, the company's overall corporate assets will also have an increase of about 15%. In addition, this company has been in addition to the deep-rooted retail market, we have also passed, including e-soft business, including investment business, as well as our institutional economic business. In this process, we have accumulated a large amount of net income and potential institutional customers. These attempts also led to the fourth quarter. we have gained the trust and affection of more institutional users from all over the world, and have transferred their knowledge to the Tiger platform. So this has made a significant contribution to our 4th quarter of 8.2 billion customers. However, due to the fact that some of them are funds that are invested in the market, their return on transactions and exchange rate are not comparable to that of retail investors. So this type of institutional investment, the increase in the contribution of 4th quarter of users,
spk06: Okay, for the first question, by the end of the fourth quarter, total client asset increased by 62% compared to the previous quarter, and more than doubled compared to the end of last year, to 30.6 billion US dollars. There are a few factors contributing to this growth. Firstly, the rise in NASDAQ index and high names in the fourth quarter led to a marked market gain of 3.5 billion US dollars, our total client asset. This means that even without considering net asset inflow, our total net asset would have seen an increase of around 15% compared to the previous quarter. Additionally, apart from focusing on the retail market, we have been serving a large number of institutional investors through efforts such as ESOP and investment banking. In the fourth quarter, these efforts gained more trust and recognition from global investors. who transferred their position to our platform. This significantly contributed to the total of 8.2 billion net asset inflow in the fourth quarter. However, to be honest, some of these institutional investors are venturing capital and private equity on primary market, which have lower velocity compared to retail investors or hedge funds. As a result, the contribution of the increased client assets from this kind of institutional investors So our commission revenue was fairly limited in the fourth quarter and so far.
spk00: Second question. In the fourth quarter, we did some promotion around Singapore and the surrounding market in order to operate some online platforms. In the past three years, we have given Singapore businesses a good reputation in the entire region, allowing users to actively visit to increase the natural flow. At the same time, the natural flow increases the total number of users, which also encourages For the second question, in the fourth quarter, we enhanced our brand presence in Singapore and Southeast Asia market by rolling out more online advertising.
spk06: We have seen an increase in organic traffic and mouth-to-mouth referral and led to a high number of new funded accounts in the fourth quarter. However, we've seen the users from different acquisition approaches may vary in quality. So moving forward, we will dynamically adjust our customer acquisition strategies based on their effectiveness to ensure the health of our pool and profit model. Thank you, Judy. Operator, please move on to the next question.
spk03: Thank you. Please stand by for our next question. Our next question comes from the line of Han Pu from CICC. Please go ahead. Your line is open.
spk04: Thank you for taking my question. This is Han from CICC. I have two quick questions. Firstly, could you please share the original breakdown of the newly founded accounts in Q4? And secondly, could you please give us more color on the Hong Kong business operation, especially for the crypto trading business? Thanks.
spk00: 好,谢谢。我来回答第一个问题,June回答第二个。 Among the new funded accounts in the fourth quarter, above 60% came from Singapore and Southeast Asia. Nearly 20% came from the United States.
spk06: The contribution from Hong Kong and Australia and New Zealand region accounted for around 10% each. Okay. Hello.
spk01: Let me answer the question about Hong Kong. First of all, we officially entered Hong Kong last year. So we have been in Hong Kong for a year now. Overall, we are relatively satisfied with the current progress. In Hong Kong, which is a very competitive market, we continue to be the most sincere users to create real value. So far, Hong Kong users who come to the old stock platform to trade Hong Kong shares are still free of charge and free platform fees. In addition, in terms of products, we have been continuously optimizing over the past year. We are also relatively satisfied with the current product performance. In the fourth quarter, we launched the function of US bond and trading sharing. In the first quarter of this year, SSC has completed the upgrade of the first row and supports the PI users to trade in crypto on the tiger platform. It is expected that this feature will be available in the next one or two months. Of course, we will also apply for the relevant license in the crypto industry according to the other guidance of SSC to ensure that we can manage this business legally. Then our local user base is also gradually expanding, and customer quality is also continuously improving. In the early days of Hong Kong, we were exploring the market and understanding the local users and customers, and the speed was slower. In the fourth quarter, we applied local customers' strategies through a year of understanding the market. Therefore, in the fourth quarter, the entry price of the Hong Kong market exceeded the total of the first three quarters. We have entered Hong Kong retail market for one year, and so far we are relatively satisfied with our progress. So to get strength such a competitive market in Hong Kong, We offer one of the most friendly pricing to our users. Until now, Hong Kong users can still enjoy zero commission and zero plan fees when they are trading Hong Kong securities on Tiger platform. Also, we have been optimizing our product offering over the past year, and we are quite satisfied with the level of improvement in our current product features. In the first quarter, we launched the UST bonds and the trading spark features in Hong Kong. In the first quarter of this year, we uplift the Type 1 license with SFC, allowing PI users to trade crypto on the Tiger Hong Kong platform. We expect this feature to go live in the next one or two months. Our local business is gradually expanding, and the user quality also improved from time to time. In the early stage of our work in Hong Kong, we were exploring the market and understanding our local users, which took some time. In the first quarter, we implemented a more localized customer acquisition strategy. As a result, the lead asset inflow in the Hong Kong market exceeded in the total for the first three quarters of this year. Additionally, the average lead asset inflow from newly acquired clients in the first quarter exceeded 5,000 USD, indicating a good user quality in the Hong Kong market and a big growth opportunity for us to explore in the future. Thanks. Thanks, Mel. Let's move on.
spk03: Thank you, Glenn. Thank you. There are no further questions at this time, so I'll hand the call back to Aaron for closing remarks.
spk06: Thank you. I would like to thank everyone for joining our call today. I'm now closing the call on behalf of the management team here at Tiger. We do appreciate your participation in today's call. If you have any further questions, please reach out to our Investor Relations team. This concludes the call, and thank you very much for your time. Thank you. Thank you.
spk03: This concludes today's conference call. Thank you for participating. You may now disconnect.
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