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spk04: Today's conference is scheduled to begin shortly. Please continue to stand by. We thank you for your patience. So, Ladies and gentlemen, thank you for standing by and welcome to Up Fin Tech Holding Limited First Quarter 2022 Earnings Conference Call. At this time, all participants are in the 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, 10th of June, 2022. I'd now like to hand the conference over to your first speaker today, Ms. Jing. Thank you. Please go ahead.
spk00: Thank you, operator. Hello, everyone, and thank you for joining us for the call today. AppFintech Holding Limited's first quarter 2022 earnings release was distributed earlier today and is available on our IR website at ir.itiger.com, as well as Globe Newswear services. On the call today from AppFintech, I'm Mr. Wu Tianhua, Chairman and Chief Executive Officer. Mr. Zheng, Chief Financial Officer, Mr. Huang Lei, CEO of US Tiger Securities, and Mr. Kenny Zhao, our Financial Controller. Mr. Wu will give an overview of our business operations and discuss corporate highlights. Mr. Zheng will then discuss our financial results. They will both be available to answer your questions during the Q&A session that follows their remarks. Let me cover the safe harbor. The statements we are about to make contain forward-looking statements. Within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, a number of factors could cause actual results to differ materially from those contained in 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 6K, furnished today, June 10, 2022, and our annual report on Form 20F, filed on April 28, 2022. 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 an English translation. Mr. Wu, please go ahead with your remarks.
spk05: 大家好,非常感谢各位来参加老五国际2022年第一季度财报发布会。 Hello everyone, thank you for joining the Tiger Brokers' first quarter 2022 earnings conference call. 今年一季度市场环境比去年同期低迷。 Macro environment was more difficult in the first quarter versus a year ago.
spk00: which leads to a slowdown in trading commission and underwriting revenue. Total revenue in the first quarter was $52.6 million, decreased 35.2% year over year. But interest income stays flat thanks to the gradual buildup of self-clearing for U.S. securities. On a quarter-over-quarter basis, Total trading volume increased 6% from fourth quarter last year with moderate increase in trading commission.
spk05: We added
spk00: 30,150 funded accounts this quarter, with over 80% coming from outside of China. Our total number of funded accounts also exceeded 700,000 by the end of the first quarter, an increase of 87.1% from the same quarter last year. Our goal is to acquire at least 100,000 new funded accounts this year. Total client assets decreased year over year to $15.2 billion due to mark-to-market loss. But we saw strong net asset inflow of $3.5 billion this quarter, demonstrating user confidence in our platform even with increased market uncertainty. 接下来和大家同步一下业务的最新发展。 Now I would like to update on several key business developments at our company.
spk05: 第一,老五国际的国际化进展良好。 在第一季度,新增入金用户数超过80%来自海外。 充分证明老五国际的新一代科技平台在许多国际市场有较强的竞争力。 今年第一季度,老五国际已经正式登陆澳洲市场。 目前我们的M排名... We also made a lot of local investments in the product sector. For example, in Australia, we started to support cash account transaction authority. In Singapore, we have increased the depth of our new stock market to the level 2 market all over the country, and cooperated with Singapore to launch a investment live broadcast to focus on Singapore's investment opportunities. After the development of time in the past few years, Our internationalization is progressing well. In the first quarter, over 80% of newly founded users were derived from overseas markets, demonstrating the appeal of our next-generation fintech platform across regions. In the first quarter,
spk00: We officially launched in Australia, and our ranking is ahead of competitors in the local iOS app store. We also spent lots of effort to localize our products. For example, in Australia, we launched option trading for cash accounts. In Singapore, we added level two market data for Singapore stocks, and it's working with SGX to live stream investor education to promote Singapore markets. We have been in Singapore for only two years, and now Singapore already becomes our company's largest market and home base. We are confident we can achieve similar results in other countries or regions.
spk05: We have a better infrastructure and service system. In terms of U.S. stocks, we have achieved more than 90% of U.S. stocks in the first quarter and more than 70% of U.S. stocks in total. This has further strengthened our leading advantage in U.S. stock trading. At the same time, we are also upgrading the trading system of Tiger Hong Kong to try to complete the trading of Hong Kong stocks in the next few quarters to improve the advantage of Tiger in Hong Kong stock trading.
spk00: we continue to invest in research and development to improve operational efficiency and to enhance user experience. In March, we started to self-clearing and self-custodian Singapore equities, so we can fully leverage our self-developed brokerage infrastructure to better service Singapore users. In the US, by the end of the first quarter, over 90% of cash equities and 70% of options contracts are already self-cleared through our U.S. subsidiaries, further strengthening our competitive advantages in trading U.S. securities. We are also in the process to upgrade our Hong Kong trading system so we can start self-clearing Hong Kong equities in the next couple of quarters to achieve better unit economics.
spk05: In terms of the U.S., the company participated in the sale of seven U.S. IPO projects, which is a new technology force for global investment. According to the third-party WANDA information data provided, the first quarter of the U.S. IPO sales ranking in the first quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the second quarter of the
spk00: Our IPO underwriting business continued to perform, even with weak market backdrop. In the first quarter, we underwrote Le Pu Shengwu and Changxin Qi Zhi IPO in Hong Kong. In the U.S., we were underwriter for seven U.S. IPOs, making us one of the most active U.S. underwriters. according to WANDE's WIND Data Consulting.
spk05: Fourth, in terms of corporate services, WANDE has added 13 new customers in the first quarter, with 300 new customers in each quarter, including Alibaba, WWF Singapore, and others. WANDE has built a bridge of communication between investors and WANDE. On the one hand, it has expanded the brand influence of the listed companies. On the other hand, it has allowed investors to know more about WANDE.
spk00: In terms of corporate services, we added 13 clients on Tiger Community in the first quarter and reached 300 corporate clients in total, including clients such as Alibaba and WWF Singapore. We are proud to be the bridge connecting issuers with investors.
spk05: In the field of ESOP and employee equity management services, Laowu International's relevant business development trend. In the first quarter of 2022, Laowu International ESOP added 25 corporate customers. The total number of service customers has reached 338, with a growth of 105%. The ESOP service provided by Laowu International covers the entire process of service system from project design to digital management. It has become a multi-A stock, Hong Kong stock,
spk00: Our ASOP business continues to expand. In the first quarter, we added 25 new companies to a total of 338 ASOP clients, a year-to-year growth rate of 105%. We provide a comprehensive ASOP services from plan design to digital management and have become the go-to choice for many startups and public companies. Now, I would like to invite our CFO John to go over our financials.
spk06: Thanks, Tianhua and Jingwen. Let me go through our financial performance for the first quarter. All numbers are in U.S. dollar. Total revenue were $52.6 million, down 35% year-over-year, as weaker market backdrop in the first quarter slowed down commission and underwriting revenue. In Iowa's market sentiment, margin and securities lending balance also decreased, but we managed to increase lead interest-related income by 8% year-over-year. by lowering interest expense and generate more securities lending revenue through self-clearing. As we mentioned in the earnings release, starting from this quarter, we will report our derivatives trading, mostly U.S. options and U.S. futures, using a number of contracts. Cash equities will be reported on a standalone basis using trading volume. This change will not affect previously disclosed operating data. The goal is to help investors better understand our operation. So for this quarter, commission from cash equities were 22 million. Account for 72% of total commission. The other 28% are mostly commissions from derivatives trading. Based on 34.7 billion equity trading volume this quarter, take rate is 6.3 bps for cash equities. In the first quarter of last year, Cash equity accounted for 76% of total commission, and the derivatives accounted for 24%. Cash equity take rate was 6.6 bps in this first quarter last year. Now on the cost. Execution and carrying expense were $4.5 million, decreased 45% year over year, and 34% quarter over quarter, primarily due to more self-clearing of U.S. equities. Employee compensation increased 67% year-over-year to $27.5 million. As last year, we kept adding headcounts across regions to support our global expansion. In light of the headcount increase, occupancy expense increased 69% to $2 million. SG&A increased 12% to $4.5 million year-over-year. Marketing expenses were $10 million in the first quarter. decreased 22% year over year. We are very prudent with our marketing spending because we feel now is not the best market window to attract high quality users. We will keep a close eye on CAC and payback to adjust our marketing strategy. Communication and market data expense were $6.4 million, an increase of 61% from a year ago due to rapid user growth. Total operating costs were $55 million, increased 17.6% from the same quarter last year. Long-gap lead loss, which excludes share-based compensation and impairment loss from the long-term investment, was $1.9 million this quarter. Now I have concluded my remarks. Operator, please open the line for Q&A. Thanks.
spk04: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, Please press star one on your telephone and write your name to be announced. If you wish to withdraw your request, please press the pound or hash key. Please stand by while we compile the question and answer roster. So once again, star one for questions. Our first question comes from the line of Han Pu from CICC. Please ask your question.
spk02: Thanks for taking my question. This is Han from CICC. I have two questions. First of all, could you please help break down the newly paying clients in region for the first quarter? And how about the mix of our full year guidance? Secondly, we see the acquisition cost per paying client went up a lot in the first quarter. What would be the reason and how do we see the trend in the coming quarters? Thanks.
spk05: Thank you. This year, we have 30,150 users in the first quarter. The total number of users is about 15% in mainland China, including ESOP users. 80% are from Singapore. The rest are from Australia, New Zealand, the United States, and other regions. The number of overseas users is 85% in the current quarter. We expect to have at least 100,000 users this year. Let me translate. So to your first question, in the first quarter, about 15% of the funded account came from mainland China, including ESOP clients. 80% came from Singapore.
spk06: and the rest 5% from Australia, New Zealand, and the US. In total, 85% of the funded account this quarter is from outside of China. So our target is to acquire at least 100,000 newly funded accounts this year. We expect the distribution will be around 15% from mainland China, 60% from Singapore, and the rest 25% from countries, regions like Hong Kong, Australia, and the US.
spk05: The second question is about the rise in the cost of goods. The main reason is that the big market environment in the first quarter of this year is relatively poor. In the case where the return is not high, it will affect the transfer rate and trading will of users, so the cost of goods has risen. In addition, in the first quarter of this year, we also entered the new market in Australia. When we first entered a market, we will increase the investment of brands, similar to the situation when we first entered Singapore. So we invested about 25% of the marketing cost in the first quarter. It is expected to maintain a similar level in the next few quarters. We are also testing a number of marketing strategies for customers. In general, we are relatively cautious in the current market environment. The overall marketing cost will be reduced by the same or the same. We also continue to pay attention to Okay, so in general, when market sentiment is weak, investors prefer to stay on the side line.
spk06: So customer account to funder account conversion rate will be lower. Thus, the CAC tends to be higher versus when market is more active. In addition to the market effect, we launched our service in Australia in the first quarter. When we enter a new market, similar to what we have done in Singapore, we will spend more on branding to promote our company. Branding accounted for around 25% of our marketing expenses in the first quarter, and we expect branding remains a big portion of our marketing for the next few quarters. So branding expenses plus trying out various marketing strategies also leads to a higher CIC when we just enter a new market. So in short, we are very prudent with the marketing spending. So you can see our total marketing expense decreased year over year and quarter over quarter. We keep a very close eye on CIC and payback to make sure we can have a very healthy, you know, like a unique, loving model. And we will just be very dynamic to adjust our marketing strategy. Thank you.
spk02: Thank you. That's very helpful.
spk04: Thank you. Your next question comes from the line of Julia Chung from CT. Please ask your question.
spk01: 嘿,感謝關以晨給我的提問的機會。 我是花旗的Julia。 那我這邊主要有兩個問題。 那首先關以晨能不能分享在美國 The growth of Hong Kong and Singapore in terms of capital and a short-term goal, and then a future profit and loss contribution. The second one is to ask about the specific expansion situation in Hong Kong. When do you plan to enter the retail market in Hong Kong to work? Can you also tell us about the cost of working in the Hong Kong market, and can you compare the cost of working in other markets now? Thank you for taking my questions. This is Julia Jun from City Research. I have two questions here. First, could you give more colors on the South Korean progress for U.S., Hong Kong, and Singapore, as well as the target pace in the near to mid-term and the expected earning contribution? And second, could you share the updates on Hong Kong business, especially the timelines for acquiring retail customers? and the sales and marketing budget, like the planned customer acquisition cost per head in Hong Kong versus other markets. Thank you.
spk05: Thank you. I will answer the question about Hong Kong first. Qingzuan will answer the question. In Hong Kong, as I said before, our first step is to do the investment business of Hong Kong stock market. The second step is to to carry out stock exchange calculations, and improve the economic model of our stock market. The third step is the local retail industry in Hong Kong. So far, our investment business has been going well. In the first quarter, we participated in a number of stock market projects such as the Hong Kong Debu Biomarker, and the Hong Kong Debu Biomarker, including the female gene that starts today. The tiger is also a marketer. You can see the tiger's Hong Kong name on the cover of the book. If the Hong Kong stock market warms up, the old Hong Kong stock market will be more active. As for the Hong Kong stock market execution and calculation, we have already conducted a multi-level test with the Hong Kong Stock Exchange. The system has also been upgraded and expanded. We hope that in the future, in one to two seasons, we will be able to implement the exchange rate of the Hong Kong stock market through the old Hong Kong stock market to reduce our cost. As for the retail business, in addition to upgrading the underlying trading system, we are also polishing products. OK.
spk06: So to answer your question regarding Hong Kong, so as communicated before, our Hong Kong strategy will be three stages. First stage is be more active in Hong Kong IPO. Right now, we are very active in Hong Kong IPO underwriting. In the first quarter, we'll work on multiple deals. And today, the mega genomics, which just launched a book building today, Tiger is also an underwriter. So we will keep expanding our Hong Kong underwriting business. And the second step will be to use Hong Kong to clear our Hong Kong securities trading. So this step was a little bit delayed due to COVID earlier this year. Now we have completed several rounds of testing with Hong Kong Exchange and is upgrading the trading system to handle more volume. We target to use Tiger Hong Kong to execute and clear Hong Kong trading in the next couple quarters. The third stage, which is the retail marketing. In addition to upgrading our trading infrastructures, we are also fine-tuning our product experience and formula marketing strategies. Our goal is to leverage our global operation experience to help us expand in Hong Kong. Our aim is to start retail marketing towards later this year. In terms of customer acquisition costs in Hong Kong, so right now, given we haven't launched, we don't have a firm grasp, but we understand the acquisition costs in Hong Kong among our peers is pretty high. So what we want to do is to leverage the experience and the know-how and also the strategies in other regions to apply to Hong Kong. Hopefully by then, when we launch, we can find a sustainable CAC and payback model. Thanks. And regarding self-clearing, I will just answer that in English. So overall, our self-clearing progress is according to schedule. By end of first quarter, we self-cleared over 90% of US cash equities and over 70% of US options. The clearing expense for both Prada actually have decreased from close to 20% of commission from first quarter last year to single digits this quarter. So clearing expense varies based on trading volume and product mix. Use this quarter's clearing expense as an example. Within the $4.5 million clearing expense, about $2.1 million expense will be paid to Interactive Broker, primarily for Hong Kong securities and the U.S. option clearing. About $1.5 million are Singapore local clearing at custodian expense. We expect the clearing expense to further go down as we started self-clearing Singapore equities in April. And we will clear more U.S. options through U.S. Tiger and use Tiger Broker Hong Kong for Hong Kong execution once we finish the system upgrades. Thank you.
spk01: Thank you very much, Rocky.
spk04: And next question comes from Cindy Wang from China Renaissance. Please go ahead.
spk03: 谢谢管理层给我这个提问的机会。 我是华新战争的分析师Cindy Wang。 那我这边有两个问题。 第一个问题是想请问一下新加坡这边的一个货客的状况以及客户入境的情形在第一季的表现, 那以及目前第二季度为止的一些进展, 那以及客户跟我们分享一下新加坡这边的一个竞争的一个格局状况。 那第二个问题的话想请问一下澳大利亚市场,因为我们是今年三月的时候刚进入,那现在已经进去了差不多也是有三个月的时间,可不可以跟我们分享一下目前 在当地的一些货客的一个状况啊,然后以及新货客的人数跟入境等等。 Okay, I'll transfer my question. So the first question is regarding to the Singapore market. Can management share some color on the customer acquisition and also the customer assets in Singapore for the first quarter and also the second quarter, as well as the competitive landscape in Singapore? The second question is for the Australian market. Since Tiger Brokers entered into the Australian market in March this year, Can management share some of the customer acquisition costs as well as the new customers' numbers, etc., in the Australia market? Thank you.
spk05: 好的,谢谢。 先说澳大利亚。 我们是在今年春节后刚开始在澳大利亚当地展业。 目前我们的苹果应用市场排名已经赶上并且超过local的主要竞争对手。 At present, in general, it is just the beginning of a brand establishment. We have tried many methods, such as sponsoring local teams to enhance the brand's popularity and localization. At present, the number of new entrants has just begun. In the early stages, it is mainly the investment of some brands, so the cost of entry per class will be higher. We hope that through the operation in the next few months, and the improvement of local brands and products, so that we can significantly improve the local user economy model. Singapore is the largest market for our storage and increase. We continue to maintain the leading advantage in the local market. More than 80% of the added income per quarter comes from Singapore. The customer quality is also very good. The first quarter of this year, the market environment is very bad. Of course, the average income of users is about $1,500. OK.
spk06: So first on Australia, we launched our Australia business after Chinese New Year. So far, our app ranks ahead of our competitors in local app store. Now still at a very early stage, we are trying out different marketing strategies. For example, we sponsored a local rugby team to build our brand and want to be more localized. So far, CSE looks very high, given branding expense and a small number of funded accounts. But I understand, as we mentioned earlier, when we enter a new market and we begin in the CSCO, it looks relatively higher. So hopefully in the next couple of quarters, we can improve unit economics with better understanding of the local markets. On Singapore, we have a leading position in Singapore. So far, it's our biggest market and home base. Over 80% of the newly funded account is from Singapore this quarter. Client asset quality remains very good, even with weak market sentiment in the first quarter. We saw very healthy lead asset inflow from Singapore users. Average deposit for new users in the first quarter is around $7,500, improved from average first deposit of $6,500 in the fourth quarter. Users are also very sticky. users we acquired in the first quarter last year as a cohort. For the past five quarters, we saw lead-acid inflow from this cohort every quarter. Lead-acid inflow this quarter for the company is $3.5 billion, of which $2.6 billion came from Singapore region. Thanks.
spk03: Sorry, I have one more question from Singapore market. Can you talk about the CSE in the Singapore market as well as the competitive landscape? Thank you. Sure. Okay.
spk05: So first of all, in Singapore right now, based on a new survey, our registered users in Singapore accounted for 19% of the population above age 20.
spk06: So we think, first of all, we are very appeal to the younger generation. And also based on the percentage stage, we feel there is still a lot of room to grow. So we still have a lot of market to tap into. Compared to our peers, we feel we are still in a very leading market position in Singapore. As you can see, this quarter, over 80% of the founding account came from Singapore, which shows we still have a very strong graph in the local market. In terms of CIC, The average CAC for Singapore, it did increase a little bit for the past couple of quarters due to the weaker market backdrop. So the CAC for Singapore users is slightly above $250 US dollar, sorry, $250 US dollar for the past quarter. So compared to the groups, average CAC is actually lower, means our marketing strategy is more effective in Singapore and our branding is stronger in Singapore.
spk03: Thank you. Thank you.
spk04: Right. Thank you. There are no further questions. I'll turn the call back to the management team for closing remarks.
spk00: 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.
spk06: Thank you.
spk04: Thank you. Ladies and gentlemen, let this conclude our conference for today. Thank you for participating. You may all disconnect.
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