Futu Holdings Limited

Ladies and gentlemen, welcome to Futu Holdings' second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, we have Q&A session. Today's conference call is being recorded. If you have any objections, you may now disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Daniel Yuan. Chief of Staff to CEO, Head of Strategy, and IRFU2. Please go ahead, sir.

Thanks, Operator, and thank you for joining us today to discuss our second quarter 2025 earnings results. Joining me on the call today are Mr. Lee Flea, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Xu, Senior Vice President. As a reminder, today's call may include four looking statements. which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control. Forward-looking statements involving hearing bits and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual reports. With that, I will now turn the call over to Leif. Leif will make his comments in Chinese, and I will translate.

Thank you for attending today's conference. As of the end of the second quarter, the total number of real estate customers, about 2.9 million, increased by 41% and increased by 8%. Fudu has won an important milestone in the international process. As of the end of the second quarter, the share of real estate customers outside of Fudu Securities Hong Kong has exceeded 50%. Thank you all for joining our earnings call today.

As of quarter end, total funded accounts reached approximately 2.9 million. representing a 41% increase year-over-year and an 8% rise quarter-over-quarter. We've reached a key milestone in our international expansion, which is at the quarter end, over 50% of funded accounts are from clients outside of Tutu Security Hong Kong. Singapore and the U.S. are our largest international markets, followed by the rapidly expanding Malaysia and Japan, while Australia and Canada show robust growth momentum. This expanding international footprint is a testament to our vision of becoming an influential global financial services platform.

本季度竞争有资产客户约20.4万,红比增长32% 香港市场以连续第三个季度贡献最多的有资产客户增长 4月初受贸易摩擦影响,市场波动加剧 随后贸易关系缓和,推动股市迅速反弹 The rise of high-temperature IPOs in the middle of May inspired the market to participate in the hot market. The U.S. market has also achieved steady growth. In the second quarter, we became the official sponsor of the New York Major League Baseball Team. This cooperation will continue to expand our influence in the U.S. and the global market. In June, we also launched encrypted currency trading services in most states in the United States, further consolidating the value of FUTU as a one-stop trading platform.

During the quarter, we acquired 204,000 new funded accounts, a 32% from a year earlier. Hong Kong continued to lead all markets to new funded accounts for the third straight quarter. Elevated market volatility from trade tensions in early April, followed by a sharp rebound from trade truths, as well as a wave of high profile IPOs in May, spurred retail participation. Our US business also delivered robust growth. In the second quarter, we became the official sponsor of the New York Mets, a partnership that will continue to broaden our brand reach in the U.S. and internationally. We also launched cryptocurrency trading in most of the states in June, reinforcing our value proposition as a one-stop trading platform.

In Malaysia, we continued to deepen our product service localization, launching the MaGu IPO financing service and MaGu financial reporting calendar. In Japan, we cooperated with Nasdaq and the Japanese Exchange Group to hold the first offline investment summit, Move Fast Japan, which attracted more than 12,000 investors from Tokyo to participate, and improved the brand's local popularity. After NiuNiu AI successfully launched in Hong Kong, in the second quarter, we will promote MooMoo AI to all overseas markets and provide more intelligent tools to global investors. In Malaysia, we further localized our offerings by introducing IPO financing services for local listings and the Malaysian stock earnings calendar.

In Japan, we partnered with NASDAQ and the Japan Exchange Group to host our inaugural offline investment event, MoveFest Japan, which attracted over 12,000 Tokyo investors to sign up, strengthening our brand recognition in Japan. Building on the successful debut of Futubull AI in Hong Kong, we rolled out MooMoo AI across all international markets, equipping investors worldwide with smarter tools for more efficient investing. Client engagement remains strong across regions. our funded account quarterly retention rate was once again well above 98%, reflecting the high level of loyalty and satisfaction among our global client base.

As of the end of the second quarter, the total net profit of our clients has reached 9739 billion Hong Kong dollars, which is 68% higher than the previous year and 17% higher than the previous year. It is worth mentioning that the net profit of our clients in the first half of the year was almost doubled, Thanks to the strong entry fees and the improvement of the stock market value of Hong Kong and U.S. stocks, the average assets of all markets have increased significantly. Among them, the total assets of Singapore and the total assets of customers have increased by 19% and 26% respectively. The company's financing and financing balance has remained stable at 5.14 billion Hong Kong dollars. Although the market plummeted at the beginning of April, causing customers to move to Hong Kong,

By the end of the second quarter, total client assets hit a record HK$974 billion, up 68% year-over-year and 17% quarter-over-quarter. Notably, net asset inflow in the first half of 2025 nearly doubled compared to the same period last year. Thanks to robust net asset inflow and favorable mark-to-market appreciation from Hong Kong and U.S. equities, Average client assets across all markets register a sequential increase. In Singapore, average client assets and total client assets rose 19% and 26% quarter-to-quarter, respectively. The group's margin financing and security planning balance remained stable at $51.4 billion by quarter-end. While clients initially deleveraged amid the sharp market downturn in early April, a gradual recovery in risk appetite fostered a rebound in margin financing activity.

In the second quarter, the total transaction rate reached 3.5 trillion yuan, which is the same as the growth of 12% compared to the growth of 12%. In this quarter, the market fluctuation caused by trade negotiations pushed the daily transaction rate to create a new high, and the warm-up of the encrypted currency market further pulled the growth of the transaction volume. The transaction rate of each stock increased by 20% compared to the growth of 2.7 trillion yuan, mainly driven by new energy vehicles and encrypted currency-related stocks. In the second quarter, total trading volume reached HK$3.59 trillion, representing 121% year-over-year and 12% quarter-to-quarter growth.

During the quarter, volatility stemming from trade talks drove unprecedented spikes in daily trading volume. while renewed enthusiasm in the cryptocurrency space further accelerated trading momentum. U.S. stock trading volume climbed 20% sequentially to HK$2.7 trillion, led by EV and crypto stocks. Hong Kong stock trading volume contracted 9% quarter-to-quarter to HK$833.5 billion, primarily due to tempered interest in the technology sector, partially offset by higher turnover and new consumption names.

China's wealth management customer assets amount to 1632 billion Hong Kong dollars, with a growth of 104% and a return of 17%. In Hong Kong and Singapore, we have added Hong Kong and RMB bonds and floating interest bonds, which further enriches the product category of fixed income. In Hong Kong, we have launched a full-fledged structural product, becoming the first online brokerage company to provide structural products to retail customers. We have become the first Hong Kong company, and also the only one, to sell the entire Internet platform of Huaxia Fund, Hong Kong's currency-based currency fund, which has strengthened our leading position in the field of digital assets.

Wealth management client assets were $163.2 billion at the quarter end, of 104% year-over-year and 17% quarter-of-a-quarter. In Hong Kong and Singapore, we strengthened our fixed income offerings with Hong Kong dollar and RMB-denominated bonds as well as floating rate bonds. In Hong Kong, we launched principal protective structure products, becoming the first online broker to offer retail-facing structure products. We also became the first and only online brokerage platform in Hong Kong to distribute China AMC Hong Kong's tokenized money market funds, solidifying our position at the forefront of digital asset innovation.

At the end of this year, our service's IPO distribution and IR customer numbers reached 517,000, Hong Kong's IPO market continued a strong trend in the first quarter. The number of IPOs and investors participating in the IPO continued to rise. This quarter, we, as a joint accounting manager, participated in a number of well-known listing projects. It is worth mentioning that in the HaiTian Weiyue IPO, we attracted a record 10.2 million buyers. The number of buyers and the total number of buyers are not in the hands of all traders. As of quarter end, we have 517 IPO distribution in IR clients, up 15% year-over-year.

Hong Kong IPO market gained further momentum from the first quarter with increased deal volume and rising investor participation. During the quarter, we acted as joint big runners for multiple prominent listings. Notably, in the high-pin slavery and food IPO, we attracted a record 102,000 subscribers, ranking first among all brokers in both number of subscribers and total subscription amounts. In the first half of 2025, we partnered with six of the 10 largest Hong Kong IPOs by fundraising sites, and facilitated over 10 billion Hong Kong dollars in subscription amount for 12 IPOs each, underscoring our unparalleled retail distribution capabilities. Next, I'd like to invite our CFO Arthur to discuss our financial performance.

Thank you, Lee and Daniel. Please allow me to walk you through our financial performance in the second quarter. All the numbers are in Hong Kong dollars, unless otherwise noted. Total revenue was $5.3 billion, up 70% from $3.1 billion in the second quarter of 2024. Brokerage commission and handling charge income was $2.6 billion, an increase of 87% year-over-year and 12% Q-over-Q. The year-over-year increase was driven by higher trading volume, partially offset by the decline in blended commission rate. We adopt per share and per contract pricing model for U.S. stocks and U.S. option trading, respectively. As a result, Brokerage income will grow at a slower rate than trading volume where our clients trade higher price stocks and options. The QOQ increase was mainly driven by the sequential growth in trading volume. Interest income was 2.3 billion, up 44% year-over-year and 11% QOQ. The year-over-year increase was driven by high interest income from security borrowing and the lending business, bank deposits, and the margin financing. The Q over Q increase was driven by higher interest income from security borrowing and the lending business, as well as higher interest income from bank deposits, partially offset by lower margin financing income due to sequential decline in daily average margin financing balance. Other income was $444 million, up 176% year-over-year and 41% Q over Q. The year-over-year and the Q-over-Q increase was primarily attributable to higher fund distribution service income and the currency exchange income. Our total cost was $671 million, an increase of 13% from $574 million in the second quarter of 2024. Brokerage commission and handling charge expenses was $161 million, about 84% year-over-year and 12% Q-over-Q. Both the year-over-year and the Q-over-Q increase was roughly in line with the movement of our brokerage commission and handling charge income. Interest expenses were $378 million left year-over-year and down 20% Q-over-Q. The year-over-year increase in interest expenses associated with our security borrowing and the lending business was offset by the year-over-year decrease in margin financing interest expenses. The Q of Q decrease was mainly due to lower interest expenses associated with our security borrowing and the lending business, as well as lower margin financing interest expenses because of the hybrid rate decline. Processing and servicing costs was $133 million, up 21% year-over-year and down 2% Q of Q. The year-over-year increase was largely due to higher data transmission fees and market information and data fees. The QVQ decline was mainly driven by lower market information and the data fee as well as lower crowd service fees. As a result, total gross profit was $4.6 billion, an increase of 82% from $2.6 billion in the second quarter of 2024. Gross margin was 87.4% as compared to 81.6% in the second quarter of 2024. Operating expenses was up 21% year-over-year and 3% Q-over-Q to $1.3 billion. R&D expenses was $442 million, up 18% year-over-year and 14% Q-over-Q. The year-over-year and Q-over-Q increase was mainly driven by greater investments in AI capabilities. Selling and marketing expenses was $429 million, up 27% year-over-year and down 7% Q-over-Q. The year-over-year increase was mainly attributable to higher new fund accounts partially offset by lower client acquisition costs per unit. The Q-over-Q decrease was due to sequential decrease in new fund accounts partially offset by higher client acquisition costs per unit. General and administrative expenses were $425 million, up 17% year-over-year and 2% Q-over-Q. The year-over-year increase was primarily due to an increase in general and administrative head accounts. As a result, income from operation increased 126% year-over-year and 25% Q2 to $3.3 billion. Operating margin increased to 63% from 47.3% in the second quarter of 2024, mostly due to strong top-line growth and operating leverage. Our net income increased by 113% year-over-year and 20% Q2 to $2.6 billion. Net income margin expanded to 48.4% in the second quarter as compared to 38.6% in the same quarter last year. Our effect tax rate for the quarter was 18.4%. That concludes our prepared remarks. We now would like to open the call to questions. Operator, please go ahead. Thank you.

Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by as we compile the Q&A roster. Thank you for your patience. Thank you for your patience. Please stand by as we compile the Q&A roster. Our first question comes from the line of Cindy Wen from China Resilience. Please go ahead.

Thank you for giving me the opportunity to ask this question. Congratulations to the company for having a very good performance in the second quarter. I have two questions to ask. First, I would like to ask that this year's new admission is almost doubled. Can you explain to us the main reason behind this? And then whether the company has made any adjustments in the marketing to attract investors to continue to enter? In the second half of the year, how does the company want to maintain a strong trend of new investors? The second question is to ask about the business of crypto. Currently, we have been online in Hong Kong, Singapore and the United States. Thanks for taking my call and congrats for the very good result in second quarter. And I have two questions here. First one is, The net asset inflow was very strong in first half of this year and almost double compared to last year. So what's the reasoning behind it? And do you adjust any marketing campaign to attract asset inflow? And how do you maintain the momentum in second half? Second question is crypto trading has launched in Hong Kong, Singapore, and U.S. Can you give us some color on the number of clients and trading volume in the second quarter or the first half and also July and any new products or market will launch in second half. Thank you.

Okay, Cindy, let me answer these two questions. The first one is about the performance of the first half of the year. I think there may be several reasons. First, from the product itself, in the first half of this year, just like Liv mentioned in the opening remarks, we have provided more new products in terms of the product itself, whether it is in terms of financial management, including cryptocurrency. In the last few years, there have been a lot of new products launched this year. With the experience of our entire one-stop investment service, this will be of great help to new customers and customers who have entered the market. The second is the construction of our operation and brand. This year, we especially launched a lot of new brand construction in the overseas market. Especially in the US market, when we were in the second quarter, we also had a very large brand cooperation with Bunch of the Mets in the US. So from the actual effect of this brand cooperation, whether it is for the customers in the US market, including our entire overseas brand, the situation of client entry is a relatively obvious help. Especially this year, uh uh For example, the expansion of some offline stores and some of our new products, especially in wealth management and encrypted currency, we will have more related products to be launched. In addition to our own reasons, of course, in the first half of this year, also from the external environment, because the performance of Hong Kong and US stocks this year is also very good, and it also contains a lot of investment opportunities. This, of course, has also played a positive role in the optimization of our customers' income. This is your first question. The second question is from the perspective of the business of crypto, it is true that in the second quarter, we have launched some services corresponding to crypto in different markets. Because the time to launch is relatively short, for example, in the United States, we basically launched it in June. uh uh uh uh, uh, In terms of a very strong asset inflow in the first half, I think alongside the benefit we got from the market itself, given that the US market and the Hong Kong market performed quite well in the first half, which definitely is a positive implication to the client asset inflows. Internal-wise, on the quarter side, we further enriched our quarter offering, especially in the first half. A lot of new products in the areas of wealth management, crypto, and fixed incomes actually provide further enrich our positions as a one-stop investment platform to our users. This will definitely be a positive for our clients' engagement and also new client asset inflows. On the marketing, branding-wise, And operational-wise, we also put a lot of efforts, especially in the overseas markets such as the U.S. Our collaborations with Matt in the second quarters bear a very strong fruit in terms of the new client acquisition in the U.S. and also the brand implication further expands to other overseas markets as well. In particular, in the second quarter, all the assets inflows from the overseas markets outside of Great China, the amount is almost exceed the absolute amount what we acquired from similar markets in 2024, which was very, very impressive. I think in the second half, we will continue to enhance our brand acquisitions in terms of, for instance, there will be more physical stocks roll out in different markets in the second half. And also, there will be some new port offering in the wealth management and in the crypto side as well in the second half. For instance, we do have the plans to provide crypto transfer in and transfer out functionalities for overseas markets alongside the Hong Kong markets as well. And secondly, specific for the crypto trading, in terms of the momentum, we saw very strong momentum in terms of crypto asset holding and also the trading velocity. For instance, the asset value of the cryptos at the second quarter end, you know, which, you know, 4 billion Hong Kong dollars compared with the first half, which recorded, you know, over 40% QMQ increase. And I do see, I do believe that the numbers will continue to see a very strong robust in the third quarter as well, thanks to further penetrations in our paying clients to engage crypto trading. In the second half, there will also be some new product pipelines in the crypto trading as well. Besides that, we are also doing some new feasibility studies for certain new markets, which we want to acquire the exchange license as well.

Thank you. Thank you.

Just a moment for our next question, please. Next, we have Chih-Yao Huang from MS. Please go ahead.

Okay, thank you, Manager Chen, for giving me the opportunity to ask a question. I'm Huang Chih-Yao from Morgan Stanley. I have two questions I'd like to ask. The first one is also about crypto. Thank you, Manager Chen, for providing some latest colors about crypto. I'd like to ask Manager Chen, in the medium term, what strategic prospects do you have in the crypto business? For example, in the layout of photos, product planning, and future transformation space, what prospects do you have? Especially considering the VATP license in Hong Kong, what do you think will be the future? The second question is about the Japanese market. I just heard that there is a very obvious progress in overseas entry. I would like to ask about the Japanese market, because it has been in the Japanese market for about two years. What changes have we seen in the Japanese market, including the local competitive pattern and the quantity? Let me briefly translate two questions, basically. One is on crypto. I'm just wondering what's the mid to long-term strategic views on crypto business in terms of licensing products and also the potential for monetization. In particular, I was wondering what's the strategic upside coming from the crypto exchange license in Hong Kong? And the second question is regarding the Japan market. As the company has been in Japan market for almost two years, guess what's the understanding about the market? Any change in the understanding, especially regarding the competitive landscape and probably the major competitive strength of the incumbents, how FUTU is dealing with the competition What's our key value at the moment? And what's our targeted clients there versus the incumbents? Thank you. Thank you.

Okay, thank you, Qi. I'll answer the first question about crypto. The second question is about the Japanese market. I'll ask my colleague Daniel to answer it. I personally think that from the perspective of crypto debt, we are now focusing on four aspects. We are doing this now. Because I think that crypto itself is a new track in the crypto industry as well as in other industries. So I want to summarize what we are doing in the four aspects. I summed it up as a race. R stands for Real World Assets. Our current business, including our client group, has many advantages in the traditional financial field, whether it is from the supply of assets, including our very powerful financial management platform. In fact, it is a very good foundation for more RWA exploration. For example, we have just mentioned that we may have a very good cooperation with Huaxia Fund in Hong Kong. As the first tokenized money marketer of Huaxia Fund, we are the first and also the only seller in the retail market as a channel. In the field of wealth management, we have a very good relationship with more than 80 world-renowned asset management companies. Currently, we have more than 100 billion wealth management AOM assets. This is a very good foundation for us to connect with more asset groups in the future. A represents advanced technology. I think anything related to crypto, from our point of view, is how to use better blockchain technology, especially in terms of security and technology. uh uh uh uh uh C stands for conversion. I think conversion comes from two aspects. One aspect is the crypto native, the crypto native cryptocurrency. The other aspect is the traditional financial community. What we hope to achieve is to integrate these two groups on this supporting platform. As you can see, in the past, we have actually done a lot of work related to crypto investment. For example, a few days ago, we actually just went online and provided all the retail customers in Hong Kong with Sorana's corresponding currency transaction. At the same time, we also have a plan to launch more simulation transactions, Sorana-related simulation transactions, so that more new Hong Kong retail investors can get access to crypto-related assets. So, in this aspect, it may not be fully reflected in the crypto business itself, but it may also be reflected in some of the traditional business sectors that we currently have. The fourth E is Exchange. As you just mentioned, we are currently in the second stage of the BATP license application in Hong Kong. We are also considering other markets in Hong Kong, including Singapore and the US, to acquire more relevant licenses related to the exchange. As the entire connection between on-chain and off-chain, very important, including crypto native and traditional finance. One of the very important core points in these different user groups is a very important area that we will invest in in the future. I think some of the space corresponding to VATP is still very huge. In addition to itself, In the current environment, it may provide a better user experience for our users, including reducing the cost of cleaning up the oil. In the long run, it will actually have a greater expansion for our entire customer base. Our customers may no longer be limited to one of our own customers. It may also expand to other chains, the corresponding retail customers or institutional customers. In addition, Exchange is a very important entry point in the innovation field of Web3 that will be promoted in Hong Kong in the future, whether it is now that the Hong Kong Procurement Association has also proposed Aspire this year, We believe that in addition to the current crypto-related cash transactions, there may be more future staking, including on the side of crypto-related extension products. In fact, there are a lot of convenience spaces in this area. In my personal view, I think our narrative for the whole group in the crypto side can consist of four aspects. I will summarize. I call it the RACE, R-A-C-E. The R means the real world assets because we have a very strong positions in terms of the traditional finance. So there will be a lot of bargaining powers or positions in the traditional asset product offerings. For instance, we have a very strong positions in the wealth management segment. We have already partnership over 80s world class fund manager companies. For instance, recently we just do a collaboration with China Asset Management in Hong Kong to be the first and exclusive retail distributors for their first tokenized money market funds. Down the road, I think such kind of collaborations in the fund distributions, how to connect traditional finance from Web3, from the offline to on-chain will be definitely very interesting areas to explore. Secondly, the A means advanced technologies. I think this is a very important part to set us apart from our partners or from our peers because we always emphasize the safety as the first parameters when we do Web3 products. Not to mention there will be more integrations for our AI capabilities, how to further utilize our AI capabilities in the Web3 segment as well. Thirdly, it's the conversions between the traditional finance and the crypto native in terms of the new clients' referrals and also the cross-selling opportunities. For instance, a couple of days ago, we just launched the product offerings for the Solana tradings to all Hong Kong retail investors. And we do have the plans to provide paper tradings for Solana tradings in a very short time in order to further engage the newcomers to the crypto universe. The last word, E, means exchange. As you said, we are in the phase two of the ATP license application in Hong Kong, and we are doing the feasibility studies for more license applications in other markets. Exchange definitely will be a gateway to connect crypto native and also traditional finance, and also in terms of monetization, Despite now, the monetization more comes from the trading itself, but in the long term, I think VATP will, number one, will save our upstream costs to further enhance our use experience, to provide a seamless use experience to our clients. And secondly, our client target will not only be the retail investor but ourselves. We may also expand our offerings to other peers or institution clients as well. Thirdly, as you can see, a lot of new initiatives mentioned by Hong Kong regulators. For instance, they mentioned Aspire initiative this year, which was quite encouraging. I think there will be a lot of new monetization potentials, such as, you know, the derivatives, the stakings. So these are all incremental revenues in the long term, which will benefit from the regulatory push-up. Thank you.

Hi, JL. This is Daniel, and I'll take your second question. I'll take your second question on Japan. I think I'm going to first share about our understanding of the competitive landscape, market dynamics, And then I'm going to talk about what we have done in 2Q accordingly. So in terms of the competitive landscape, as we all know, it's been a pretty steady market structure over the past couple of years. SBI and Rakuten consistently have 80% of the market share in terms of retail investors. And they have both constructed a very robust ecosystem of one-stop financial services and even beyond financial services and created lots of very sticky touch points with the end clients. That being said, we think Moomoo still has a very unique value proposition, especially for self-directed investors interested in the U.S. markets, whether it's our pricing or market data or training experience or our social community. These are all very friendly and super competitive for self-directed investors. So we're thinking there is a real gap in the market for us to fill. And on top of that, what we have come to realize, and also something we've shared before, is that branding is super important in Japan. It takes time to win the trust of the Japan retail investors. So accordingly, we have done lots of branding events, whether it's advertising or hosting events with some of the other very prominent financial institutions or organizations in Japan. And back to what we have done in the second quarter, based on these understandings, So we continue to optimize our U.S.-related trading capabilities and to streamline that investing experience. In the second quarter, we launched U.S. options trading, and we have seen that the penetration of U.S. options as well as the revenue contribution from U.S. options has been coming up steadily over the month. We also started to support the deposit and the outflow of U.S. dollars So before, clients need to exchange that into Japanese yen. So by doing that, we reduce the friction in this currency exchange. We have also seen very high engagement and turnover in the second quarter in Japan. And in fact, the total trading volume in Japan went up by over 50% quarter over quarter. And we have seen sequential increase in both the trading turnover of U.S. stocks and Japan stocks. And the average client assets at the quarter end also register double-digit sequential growth. So we think these are all super encouraging signs and data points. And going forward, we'll continue to optimize our training experience for both the U.S. stocks and Japan stocks. And in the second quarter, we also launched some AI-related capabilities in Japan. And what we have seen is that the penetration or adoption rate of AI chatbots is actually the highest in Japan among all of our international markets. And the customer satisfaction rate consistently stayed above 90%, which shows that there are a sizable number of self-directed Japanese investors who are interested in doing their own research and use these tools to help them make informed investment decisions. And we want to leverage AI-leveraged financial technology to continue to lower the barrier of investing for U.S. stocks. And we think that there is a growing demand for U.S. stocks for us to cater to. And also in terms of brand building, we've also done a fair amount. In the second quarter, we partnered with NASDAQ and the Japan Stock Exchange to host the MUFEST event. Over 12,000 retail investors in Tokyo signed up, which we think is quite a sizable crowd. And we think that over the past couple of quarters, we've really been able to elevate our brand recognition and trust among the retail investors in Japan. And let me translate for myself. 介紹關於日本的問題 首先我們分享一下我們對於市場競爭格局 包括市場空間 包括產品定位的一些理解 然後接著可能基於這些理解 我會講一下我們二階度在日本做了哪一些事情 The competition in Japan is actually relatively stable. In the past few years, we all know that SBI and LeTian are two companies that occupy 80% of the market share of retail investors. And they have also built one-stop financial services, including some other life services. The ecosystem has a lot to do with customers. But we still think that LUMU has a very unique value proposition, especially for active self-sufficient traders who want to invest in overseas stocks. whether it's our pricing, our market, our information, or our trading experience, including community, etc., we feel that for active independent traders, they are very attractive. In addition, in the past, we have repeatedly mentioned that it is very important to build this brand in Japan, so that it can improve the credibility of the Japanese users. In the past few seasons, we have been continuously using this advertisement, including these sponsorships, and other joint activities to improve the reputation and credibility of our brand. Based on this understanding, we also did a lot of work in Japan in the second quarter. First of all, we continued to polish the related capabilities of Meigu, and optimized the customer's trading experience. In April, we launched the Meigu Qichuan trading. The penetration rate of Qichuan trading, including the contribution of trading income, is increasing steadily every month. We also supported the customer to use the direct deposit of US dollars to reduce the exchange loss caused by the transfer between US dollars and US dollars. We are very happy to see that the activity rate of Japanese customers in the second quarter is very high. The total transaction volume increased by 50% in the first quarter. In addition, the exchange rate of U.S. stocks and Japanese stocks has increased significantly. In terms of AUM, the double-digit growth of mutual assets has also been achieved. So we think these are all very good signals. In the future, we will continue to optimize and supplement the product capabilities related to U.S. stocks and Japanese stocks. In the second quarter, we also launched AI-related functions in Japan. After some time on the line, we found that the penetration rate of Japanese users using AI is actually the highest in all markets overseas. And the satisfaction of customers has also remained at more than 90% of this high level. We think that there are a lot of investors in Japan who want to invest independently, and they have a strong motivation to learn and are willing to actively use this tool to help them make better investment decisions. We hope to use AI and other financial technology capabilities to continuously reduce the threshold of U.S. investment and meet the local demand for U.S. investment. In terms of brand construction, we have actually made a lot of improvements. In the second quarter, we and Nasdaq and the Japanese Exchange Group held a NewFest investment conference. Thank you. Thank you. Just remember for our next question, please.

Next, we have Yufan from CICC. Please go ahead.

Hello, thank you for giving me the opportunity to ask this question. I am Fan You, an analyst at Zhongjin Company. Congratulations to the company's performance for creating a new high again. I have two questions for the management team. First of all, I would like to ask the management team to share with us whether they can share with us the trends in terms of customers, income, and user transaction activity in the past three seasons. Can you give us more color? This is the first question. The second question is about the U.S. market. We have seen some changes in the U.S. market since this year. Do you have more data to share about the U.S. market and some considerations and solutions? I will quickly turn it over. Thanks, management, for taking my question. This is Yoyo Fan from CICC, and I have two questions here. The first one is can you please give more color on the third quarter regarding like the client acquisition, the net asset inflow, and also the trading volume? And the second question is about the U.S. market. We see solid growth achieve this year. So would you please share more data and also what's the plan and target for the U.S. market? Thank you.

Well, thank you for these two questions. This is Daniel.

I will take both of these questions. First of all, in terms of the third quarter quarter-to-day trend, based on the run rate, we expect a steady Q-on-Q net new funded accounts. So it's pretty steady compared to the last quarter. We've also seen a positive market-to-market impact, which coupled with net asset inflow should continue to push We've also seen very active trading behaviors, and based on the current run rate, if the market sentiment is able to persist, we think there is a chance that our trading volume could have another Q1Q increase on top of the very high base in the second quarter. And in terms of our development in the U.S. market, a couple of data points we could share. Well, first of all, we've really seen the positive flywheels thanks to the continued product development and the strengthening of brand equity. The net new ads in terms of funded accounts in the U.S. continue to contribute very meaningfully to the group. And in the second quarter, we've also seen the number of options traders, as well as the total number of options contracts traded, reached historic high. And in fact, both numbers registered five consecutive quarters of sequential increase. So we think these are super encouraging. And in the second quarter, as we shared earlier, we strived this partnership with the New York Mets, and we've been deeply embedded in this ecosystem of New York Mets. We think this strategic partnership helps us elevate our brand image among the team's tens of millions of fans in the U.S., but also we really get our name out there internationally thanks to the sports team's international influence. Besides building our brand, we've also iterated on our product, In June, we launched cryptocurrency trading in most states in the U.S., and we now support over 30 mainstream crypto trading pairs, and we've seen a continuous increase in adoption rate among our U.S. clients. We've also launched Moomoo AI, including AI Chatbox, AI-empowered stock investment tools, and lots of technical charts and stock-related fundamental data. We also, in the future, we plan to launch kind of AI stock screeners to help our investors better sit through the thousands of stocks. So, yeah, lots of product innovations as well. And overall, we are very optimistic about the growth prospects in the U.S. market. And let me translate. First of all, regarding some of the data on our 3Q so far, if you look at the current run rate, this increase in the number of customers, compared to Q2, it should maintain a more stable level. The market, the impact of this market-to-market is currently positive, and then added a record of three quarters so far, it should be able to drive the total customer assets to increase further. At the same time, the customer's trading mood is very high. Then, at the current level, if the market can continue, we have a chance to have a further small-scale return on the high-tech of 2Q. Regarding the progress in the US market, we continue to improve the brand power and product capability in the US, which brings a positive cycle of business growth. In the second quarter, the United States continued to contribute to the group with a very meaningful increase in customers with assets. At the same time, in the second quarter, the total number of transactions in the U.S. market and the total number of transactions have all reached a historical high, and have achieved a steady growth for five consecutive quarters. In terms of the brand, the second quarter actually mentioned that we have reached a deep cooperation with the New York majority. We are also fully integrated into the New York MAPS ecosystem. This strategic cooperation not only allowed us to increase the brand's popularity among tens of millions of fans in the United States, but at the same time, we also took advantage of the global influence of MAPS to launch our brand to some other overseas markets. In addition to the increase in brand power, we are also continuing to increase our product capability. In June, we launched encrypted currency transactions in most states in the United States. Currently, we support more than 30 mainstream encrypted currency pre-orders. In terms of the quantity of customers, the transaction frequency is also gradually increasing. Thank you.

Thank you. One moment for our next question, please. Next, we have Charles Zhou from UBS.

Please go ahead. In fact, I have already been asked a few questions, so I may have two more questions to ask. First, I would like to ask about our customers in the second quarter. Can you share with us the composition of each place? And then we also noticed that our customers in the second quarter are actually falling. I want to ask what is the reason for this, because we see that the whole market is in a good mood, especially that we also noticed some news media reports about this. So I have two questions. So first, can you maybe give us a little bit more information about the regional mix? of the client acquisition in the second quarter. And also we noticed that, you know, on a queue-on-queue basis, there's a sequential slowdown for the customer acquisition. Meanwhile, also noticed some news report about more stringent onboarding of the mainland Chinese clients in Hong Kong in June. So what will be the potential impact to your client acquisition looking forward? And also any potential change to your full-year guidance of 800,000? Thank you.

Charles, let me answer your two questions. One is based on the breakdown of the second quarter. The two markets, the Hong Kong market and the Malaysian market, have maintained a very good market position. So, the two markets combined have contributed more than half of the new users. As Daniel mentioned, Hong Kong has been in the third quarter for three consecutive weeks. We have contributed the most to our organic customers. The rest of the growth of our customers is mainly from Singapore, the U.S. and the Japanese market. In the first half of the year, we have completed 460,000 organic customers in the second quarter. Compared to this year, the goal of 800,000 customers in the market this year is even faster than the progress of the time. From now on, we are still very confident that we can achieve our goal for this year. So, at present, we have not made any adjustments to the guidance. From what you just mentioned, the number of customers in the second quarter is very high compared to the first quarter. Compared to that, there is a small decline. But in terms of the absolute number of growth, it is still in a very high position in history. From some specific reasons, the trade war from the end of the first quarter of March to the beginning of April, although it has been a positive help to our existing customer transactions, the impact of March and April is indeed on our new customers in different markets. In April, there was some negative impact in this. You just mentioned, for example, In terms of the management of Hong Kong, or some requirements for goods, there are some new and stricter requirements for our entire goods. We haven't seen a very significant impact on this. So looking forward, whether it's Hong Kong or other markets, in terms of the growth of goods in the third quarter, I personally still maintain a cautious optimism. Now, in terms of the new paying fund accounts we acquired in the second quarter, Hong Kong and Malaysia collective basis account for over 50% of the new client acquisitions in the second quarter. Then the remaining part was mainly income from Singapore, U.S., and also Japan. In total, for the first half of this year, we have already achieved $460,000 New Fund Accounts, which accounts for over 50% of our annual 800K New Fund Accounts targets. We remain very confident to achieve our full year target nowadays. And we do not see any meaningful implications for the new regulations in terms of the new onboarding in Hong Kong. So far, all the new clients' acquisition across different markets remain very healthy and robust. So I personally feel very confident to achieve our full-year target.

Thank you.

Okay, thank you.

Thank you. Just a moment for our next question, please. Next, we have Emma Hsu from BOFA Securities. Please go ahead.

Thank you for the opportunity to ask this question. Congratulations to the company for achieving very strong performance again. I also have two questions here. One is to ask about interest income. In fact, the interest income of this second quarter is still quite strong than expected. Just now, the management floor on the phone conference also talked about the second quarter. The interest income side is mainly rising in the loan business, and then there is also the and the interest income related to limited funds have also increased. But in the second quarter, we also saw a big drop in hypo, right? I just want to ask, why does the second quarter seem to have not seen a big drop in hypo, which has a obvious impact on the interest income of the second quarter? But you just said that at the interest expense end, the interest expense of the loan business has dropped. And then this margin financing is also because of the drop in hypo. Now we see that in the third quarter, hypo has been obviously rebounded in the last few days. But compared to the beginning of May, the level of the beginning of May still has a significant drop. What kind of impact will these factors have on our three-quarter net interest income? And then the second question is to ask about the other income. We found that the growth in the past few months has been very strong. In the second quarter, it increased by 40%, and in the same period, it increased by 176%. And you also mentioned that this is mainly related to the fund sharing business, as well as the relevant income of the union. The growth is also very strong. Although this is only 8% of our total income, in the future, we will see if this can still So the first question is about the interest income. It's actually much stronger than expected. So you mentioned that the gross interest income increased mainly due to the increased income from the stock borrowing and lending business, as well as interest income from idle cash. But in second quarter, hypo dropped a lot. It seems it doesn't impact your interest income a lot. So could you tell us what's the reason behind? But on the other hand, your interest expense declined due to lower cost related to the margin to the stock following and lending business as well as lower hypo. So why there is a divergence between the trend of the gross interest income and interest expense? And what would be the trend in the third quarter for your net interest income? And the second question is about other income, which grew very strongly in second quarter, up 42% quarter over quarter and 176% year over year. You mentioned that it is mainly related to your final distribution business and FX income business. So could you tell us what drives the strong growth behind, and do you expect such strong momentum to continue in the future? Thank you.

Okay, Emma, let me answer these two questions. The first one is about interest income. Although in the second quarter, we can see that the interest rate environment in Hong Kong has a relatively obvious decline, but Because in the second quarter, there is a relatively obvious increase in the share price of the entire market. So overall, we have obtained a very good loan income in some of the hard-to-borrow stocks. This is the first reason. The second reason is that the overall market has increased because of the fluctuation. Overall, we see that customers have more indexes. uh uh uh uh uh uh uh uh uh uh uh uh uh uh for the first questions regarding the interest income despite we see a very you know meaningful hybrid declines which may have some certain negative implications to our interest income But thanks to some policy factors, number one is given the markets become more volatile and the people, the investors take different opinions, then the interest for the short, on the short side, has increased a lot in the second quarter. In particular, we got a lot of benefits from some hard-to-borrow stocks from the securities landings. Secondly is we see more clients to locking their profit given the markets become both volatiles and that they want to, you know, take some money off the tables. Consequently, the cash positions within their portfolios increase a lot. Therefore, you know, these benefits actually fully offset the negative implications from the yield. And also, in the third quarter so far, we see a little bit rebound in the high goals. And at the same time, we also see the cash positions for our clients continue to be maintaining relatively high levels. And also, we see a very strong client asset inflow as well. So compared with the second quarter, I think the interest income in the third quarter, the momentum will continue. Then for the second question regarding the other incomes, you are right. We got some benefits from the FX and also the management fees arising from our wealth management products. And I strongly believe that these two revenue streams can continue in line with our expansions for our wealth management products. and also if the market continues to be choppy, actually there will be more consequent demand for the NFX, you know, exchange. So besides these two normal parts, also we recall certain, you know, technology service fee incomes from our technology expansion, you know, service, you know, provided by Elstar Bank in the second quarter as well.

Thank you. Thank you. Thank you for all the questions. I will now pass back to Daniel for closing remarks. Thank you for all the questions.

I will now pass back to Daniel for closing remarks.

That concludes our call today. On behalf of the FUTU management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you and goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.