UP Fintech Holding Limited

Tech Holding Limited Fourth Quarter and Full Year 2024 Earnings Conference Call. 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, March 18, 2025. I'd 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.

Thank you, Operator. Hello, everyone, and thank you for joining us for the call today. AppFintech Coding Limited's fourth quarter and full year 2024 earnings release was distributed earlier today and is available on our IR website at ir.itigerapp.com, as well as Globe Newsletter Services. On the call today from AppFintech are Mr. Wu Tianhua, Chairman and CEO, Mr. Zheng Zeng, our CFO, 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. Zeng will then discuss our financial results. They will both be available to answer your questions during the Q&A sessions that follow the remarks. Now 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 Security Practication 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 differ materially from those in the forward-looking statements, please refer to our Form 6-K furnished today, March 18, 2025, and our annual report, on 20F, filed on April 22, 2024. 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 CEO, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by English translation. Mr. Wu, please go ahead with your remarks.

Hello, everyone. Thank you for joining the Tiger Brokers' fourth quarter and full year 2024 earnings conference call. so that the company achieved good performance again. In the fourth quarter, the total revenue reached 12.4 billion dollars, and the net profit rose by 22.8 percent, and the net profit rose by 77.3 percent. Among them, the commission income and interest income are historically high, respectively, the net profit rose by 35.8 percent and 19.3 percent. The total annual income reached 39.2 billion dollars, which increased by 43.7 percent in 2023, We are also happy to see that the company's profit has significantly improved in 2024. The net profit and non-GAAP net profit of the parent company in the whole year are 60.7 million US dollars and 70.5 million US dollars, plus 86.5% and 65% in 2023 respectively. The net profit and non-GAAP net profit of the parent company in the fourth quarter are US$28.1 million and US$30.5 million, respectively rising 58% and 51.7%. We are very happy to see that the company has a record high in terms of revenue and profit in the fourth quarter or the entire year of 2020. At the same time, the non-gam economy rate in the fourth quarter has also risen from 20% in the third quarter to 25%.

In the fourth quarter, given the expanded client base, comprehensive product offerings, and more active market environment in the US and Hong Kong, our financial and operating results both grew substantially. Our total revenue for the quarter was $124.1 million, making a 22.8% increase quarter-over-quarter and a 77.3% increase year-over-year. Both commission and interest income hit record highs. growing by 35.8% and 16.3% respectively compared to the previous quarter. For the full year, total revenue reached $391.5 million, a 43.7% increase from 2023. We are also pleased to report a significant improvement in profitability for 2024, with gas net income reaching $60.7 million, and non-GAAP net income reaching $70.5 million, up 86.5% and 65% respectively from 2023. In the fourth quarter, GAAP and non-GAAP net profit were $28.1 million and $30.5 million respectively, reflecting a 58% and 51.7% increase quarter-over-quarter. They're excited to see record highs in both revenue and profit for Q4 and the full year of 2024. Additionally, our non-GAAP net profit margin increased from 20% in the third quarter to 25% in the fourth quarter.

本季度新增入境用户59,000.8人, 较上一季度增长的17.2% 全年的入境用户达到了187,400人 It surpasses our goal of 150,000 new users. By the end of 2024, the total number of new users has exceeded 1.09 million. By the end of 2023, it has increased by 20.7%. By the end of 2025, our new number of new users remains the same. In order to guarantee the quality of our users, we have set a goal of 150,000 new users by 2025. In terms of the total number of customers, The net assets flow into the market and maintain a strong trend. The fourth quarter, the number of customers entering the market is more than $1.1 billion, of which about 80% comes from the contributions of the consumer users. Under the influence of the small share of Mato Markitindos, the fourth quarter, the total number of customers reached $4.17 billion. The net profit rose by 2.4%, and the net profit rose by 36.4%. Of which, the net profit rose by about 50% of the Hong Kong market net profit, reaching about 6 times that of the same period last year. into the company's third largest market at the end of the customer nature. In this way, we are also happy to see that in the past three years, in the face of the continuous change in market cycle and investment mood, the company has still made a good internal growth. Now, the number of users and the customer's total assets have achieved a three-year recovery growth rate of 17.5% and 34.7%. The above multiple indicators show that the company has entered the market with a wide range of development spaces,

In the fourth quarter, we added 59,200 newly funded accounts, a 17.2% increase from the previous quarter. For the full year, the total number of newly funded accounts reached 187,400, surpassing our annual target of 150,000 by the end of 2024. The total number of funded accounts reached 1.09 million, up 20.7% year-over-year. Year-to-date, we continue to see strong paying client growth. We target to acquire 150,000 new funded clients in 2025, while prioritizing user quality. In terms of total client assets, net asset inflows remain strong at $1.1 billion for the quarter. with approximately 80% coming from retail users. Although slightly impacted by marked market losses, total client assets grew by 2.4% quarter-over-quarter and 36.4% year-over-year, reaching US$41.7 billion. Notably, client assets in Hong Kong increased by about 50% quarter-over-quarter, growing six times compared to the end of 2023. making Hong Kong our third largest market in terms of client assets. Additionally, we are pleased to see that over the past three years, despite shift in market cycle and investor sentiment, we've achieved strong organic growth. The total number of funded accounts and total client assets have increased at a tagger of 17.5% and 34.7% respectively. These results highlight the tremendous growth potential in the market we've entered. and the trust our users have placed in us from time to time across different regions.

In addition, the company continues to optimize product functions and enriches our business pool to enhance the user's user experience. In terms of virtual assets, after the upgrade of the No. 1 card in Hong Kong, in January this year, our virtual currency trading platform, Y-AX, received the first and seventh-rate cards issued by the Hong Kong Commission. has officially become Hong Kong's leading virtual asset trading platform. In recent years, AI investment investor TigerGPT has been upgraded to Tiger AI, and has become the leading AI model base, becoming the world's first trading platform to integrate this model. This upgrade is an improvement in the logic of survival and the integration of financial data in both aspects, allowing it to more clearly analyze market changes and more effectively interpret investment opportunities, We keep optimizing product features and expanding licenses to enhance user experience.

Following Tiger Broker's Hong Kong Type 1 license uplift, our cryptocurrency platform, YAX Hong Kong, received a license from Hong Kong SFC for Type 1 and Type 7. This officially makes us a licensed virtual asset trading platform in Hong Kong. Recently, we officially upgraded our AI investment assistant Tiger GPT to Tiger AI and integrated with leading AI models, making us the first brokerage platform globally to incorporate this technology. This upgrade boosts our intelligence investment assistant experience in two dimensions, deep logical deduction and financial data integration, enabling it to analyze market shift more clearly and interpret investment opportunities more effectively, empowering both retail investors and experienced professionals to make more informed decisions in complex market conditions, ultimately driving long-term investment value.

第四季度,老股街的2B业务发展迅猛,投行业务策。 第四季度,我们呈销了14个港美股IPO项目, R2B business continues to perform well.

In investment banking business, we underwrote a total of 14 U.S. and Hong Kong IPOs in the fourth quarter, including Mao Ge Ping Company, Pony AI Inc. and Vira Inc. Bring the total number of U.S. and Hong Kong IPOs underwritten for the year to 44. In our ESOP business, we added 16 new clients in the fourth quarter. Bring the total number of ESOP clients served to 613 as of the end of 2024. Now I'd like to invite our CFO, John, to go over our financials.

Let me go through our financial performance for the fourth quarter. All numbers are in U.S. dollars. Total revenue were $124.1 million this quarter, increase of 22.8 percent quarter-over-quarter and 77 percent year-over-year. Both commission income and interest income increased on a quarter-over-quarter and year-over-year basis. Full-year total revenue were $391.5 million, increased 44% compared to last year. Both quarterly and full-year top-line reached an all-time high in our operating history. Cash equities take rate was 6.9 bps this quarter, increased from 6.4 bps last quarter, as trading volumes were less concentrated in higher value names. Within commission revenue, about 70% comes from cash equities. 30% from options, and the rest comes from futures and other products. Now on cost. Interest expense was $16.7 million, increased by 5% from the same quarter of last year due to the increase in margin financing and securities lending activities. Execution and carrying expense were $6.1 million, increased 172% from the same quarter of last year. primarily due to an increase in our trading volume. Employee compensation and benefits expense were 37.2 million, an increase of 41% year-over-year due to an increase of global headcounts. Occupancy depreciation and amortization expense slightly decreased 2% to 2.1 million. Communication and market data expense were 11.8 million, an increase of 38% year-over-year due to the increase in user base and IT-related services. Marketing expenses were $9.5 million this quarter, increased 64% year-over-year, as we increased marketing spending under a more favorable market backdrop. General and administrative expenses were $6.4 million, a decrease of 12% year-over-year due to a decrease in professional service fees. Total operating costs were $73.1 million, an increase of 39% from the same quarter of last year. As a result, in the fourth quarter, gap-led income was $28.1 million. Non-gap-led income was $30.5 million, increased 58% and 52% quarter-over-quarter, respectively. For the full year of 2024, total gap-led income was $60.7 million, and the non-GAAP net income was $70.5 million, also an all-time high and increased 87% and 65% respectively compared to last year. Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

Thank you. We will now begin the question and answer session. To ask a question, please 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 roster. We will now take our first question from the line of Cindy Wang from China Renaissance. Please ask your question, Cindy.

Thank you, Manager Chen, for giving me the opportunity to ask this question. Congratulations, Manager Chen, for your outstanding performance in the fourth quarter. I have two questions for you, Manager Chen. The first one is about what Tianhua has just given, the target of 150,000 new users in 2025. The target guidance is basically the same as in 2024. But in 2024, we actually finally achieved 87,000 people. The guidance of 150,000 is actually a lot higher. So how should we look at the guidance of the new users in 2025? And what is the ratio of the expected market? 然後第二個問題的話,想請教管理層就是說,可不可以幫我們拆分一下您第四季度這個新增的用戶數從各市場的一個區分? 那我很快地翻譯一下我的問題。 Thanks for taking my question and congrats for the great fourth quarter result. So my question is, first one, in 2025, you are targeting to acquire 150,000 new funding clients. which is the same as 2024 guidance. However, new funded clients you acquire in 2024 was much higher than the guidance. So how do we reach through these guidance again in 2025 and the mixed contribution from each market? The second question is, could you give us new funded clients breakdown by Reginald in fourth quarter? Thank you.

Thank you. Let me answer this question. First of all, the first question is that in 2025, we will focus more on quality and ROI priority in terms of goods. At the same time, we will also increase the expansion of the community of high-end users, instead of continuously pursuing the increase in the number of people. Therefore, we have given the goal of adding 150,000 new entry users and the 2020 video. But we hope to see the quality of the new entry users of 150,000 new entry users in 2025 Okay, I'll translate for the first part.

So in 2025, our focus on customer acquisition will prioritize user quality and ROI. We plan to expand our effort to acquire high network user base rather than just pursuing user number growth. Therefore, we are setting a target of 150,000 new friendly users, maintaining the same level as in the 2024. However, we do expect to see the improvement in customer quality metrics, such as the average grant assets of the R pool for this new users in 2025. Regarding the regional mix, we anticipate that the overall situation will pretty much in line with the actual breakdown in 2024, with Greater China region being the primary contributor. And in 2025, while ensuring the quality of new users, we have higher expectation for growth in Hong Kong and U.S. market, and we will consider increasing our marketing input if the market conditions are favorable.

Well, in the Q4, about 60% of new funded users came from Singapore and Southeast Asia.

About 25% were from greater China area. Well, around 10% from Australia and New Zealand market, and the remaining five came from the U.S. market. Thank you. And operator, please move on to the next question.

Thank you. We will now take our next question from the line of Emma Xu from Bank of America Securities. Please ask your question, Emma.

Thank you for the opportunity to ask me this question. Congratulations to the company for achieving a very strong performance. I also have two questions here. The first question is to see if the growth of credit costs is relatively fast, exceeding expectations. What is the reason for this? Then we see that the effective tax rate of the fourth quarter has also increased significantly. What is the reason for this? Then the second question is to ask about the current the growth of client assets, the speed of new users' acquisition, and the amount of transactions. How does the external management look at the recent US market fluctuations and the impact on your legitimate business? I will briefly translate the two questions. So the first question is that your compensation expenses have risen more than anticipated, and why there has been a notable increase in the effective tax rate sequentially. And the second question is the first quarter run rate. for your AUC, the pace of new-founded clients, and trading volume. And what's your thoughts on recent volatilities in the U.S. market on your business?

Hello, Emma. Let me answer your first question first, and then I'll ask Tianhua to answer the second question. As for the labor cost, it is mainly because our business has been doing well for the past 20 years. So we have increased some of our employees' income at the end of the year, and then increased the annual bonus, which caused a rise in labor costs. Then the tax rate is from 14% of Q3 to 25% of Q4, mainly due to the increase in the profit ratio from the US in the fourth quarter, and then the local tax rate is relatively high. Because the market is active in the fourth quarter, The interest rate and return on interest in the U.S. are growing relatively fast. Another reason is the U.S. national debt. We have made some national debt investments in the Trader & Manager area. The national debt income is usually realized after the debt is paid. Q4 has U.S. T-bonds that are not paid. This is also a reason that the U.S. local interest rate has a relatively large increase in the third quarter. I will simply translate it. So the rise in labor costs is mainly due to we added extra employee incentive at the end of the year, which increased the year and bonus accrued. The effective tax rate increased from 14% in the third quarter to 25% in the fourth quarter, primarily due to the increase in profit coming from the U.S. market, where tax rate is relatively higher. A couple reasons. First, the market was reactive in the fourth quarter. which benefited the margin financing and securities lending activities largely increased the local interest income quarter over quarter. Another reason is related to U.S. treasury bonds. For calculating tax, the income from T-bonds is only realized after maturity. So in Q4, we had several T-bonds matured, contributing to the increase in profit from the U.S.

In terms of customer assets, compared to last year, the user's assets have made a good return growth. It is mainly due to the trend of strong interest rates. So far, the first quarter's interest rates have exceeded the overall level of interest rates in the second half of 2024. Although the supply value of customer assets has been affected by some U.S. stock fluctuations recently, but overall, it is still a market gain. In terms of the number of new users, the number of new users remains the same as in the second half of 2024. In terms of the exchange rate, we can see that the exchange rate between Hong Kong and U.S. stocks has been active since this year. The exchange rate of Hong Kong stocks has exceeded that of the fourth quarter of last year. This has also flattened some of the impact of U.S. stocks to a certain extent, making the overall exchange rate equal to that of the fourth quarter. In the recent period since March, we have seen that due to the influence of tariffs, geopolitics, and the decision of interest rates, the US stock market has been fluctuating. From the perspective of the brokerage business model, we are more concerned about the return of users. So, compared to the continuous rise and fall of the market, the appropriate fluctuation, economic events, Okay, I'll translate. So year to date, we've seen a solid sequential increase in total client assets

thanks primarily to strong net asset inflows. Specifically, net asset inflow year-to-date has already exceeded the number in the second half of 2024. While there have been some ups and downs in the U.S. stock market, we are still looking at market gain in general. Plus, the number of new users is growing rapidly, keeping up the momentum we noticed in the second half of 2024. In terms of trading volume, it has been quite active in both Hong Kong and U.S. market this year so far. So the trading volume for Hong Kong stocks has already exceeded what we saw in the fourth quarter of last year. This has balanced out the impact of the recent volatility in the U.S. market. So the overall trading volume has remained steady versus the fourth quarter of last year. Recent in March, the U.S. stock market has experienced some volatility due to the various factors like tariffs, geopolitical issues, and uncertainty in price risk cuts. From our perspective as a broker-dealer, we value more on velocity. We believe that some volatility triggered by economic or political events or headline news actually drives trading volume. In the first three weeks of March, the average daily trading volume on our platform for both Hong Kong and U.S. cash equity has been higher than what we saw in the first two months of this year and in the Q4 of last year. Thank you, Emma. Operator, please move on to the next question.

Thank you. The next question comes from the line of Yo Fan from CICC. Please ask your question, Yo.

Okay, thank you for giving me the opportunity to ask this question. Congratulations to the company for achieving a very bright performance in all areas of business and financial data. I am Fan You, an analyst at Zhongjing. I also have two questions for you. First of all, the first one is about virtual assets, because we have actually received the photo of this virtual asset exchange, so I would like to ask how we look at this photo. It is a professional model for the future, and then it includes what amount of contribution we will make. In addition, I would like to ask the management to share with us a progress in terms of virtual asset transactions in the fourth quarter, especially in the Hong Kong market. Then the second question is about interest income. Uh, because in fact, we look at the four-dimensional degree, our two-dimensional scale. If you look at it in terms of ratio, it is even, but in fact, if you look at this interest income, there is still a double-digit growth in terms of ratio. Uh, and then look at this interest fee, the ratio is about 7% of a growth. Uh, the overall increase in interest income is actually much higher than the increase in the interest fee, so you may also want to ask about this interest income growth, and then the reason behind the growth of this higher than the cost. Then I will translate it here. This is Yoyo Fan from CICC, and I have two questions here. The first one is about crypto. Since we have gained the VATP lessons, how well the lessons contribute to our growth in the crypto sector? And also, would you please give more color on our crypto development in the Hong Kong market in Q4? And the second question is about the interest income. We see the margin finance and the securities lending balance remain flat in Q4. But given the rate cut cycle, the interest income QNQ grew at a double-digit pace and way faster than the interest expense growth pace. So what causes this inconsistent trend?

Okay, thank you, Fan You. Let me answer your two questions. The first one is about crypto trading and the situation in Hong Kong. First of all, before the Spring Festival, we received the 1st and 7th types of Hong Kong SSC, and it has officially become a virtual asset trading platform in Hong Kong. After holding the auction, Tiger Securities can legally provide mainstream cryptocurrency, such as Bitcoin or Ether, as well as decentralized assets for cash transactions and decoupling services, and integrate encrypted services with existing securities and economic businesses to create opportunities for cross-selling. customers can trade in the same ecosystem, ETFs and encrypted assets, create a five-way experience of Web2 and Web3, and consolidate our role as a bridge between traditional finance and centralization. At present, our trading volume is not particularly large, because we are still doing a lot of infrastructure construction to ensure that our crypto platform, YX, can soon be launched. Of course, after the YX is online, we also expect it to be a better integration with our No. 1 card to drive the transaction experience and transaction volume, whether it is Fiat or Crypto. By the way, let's talk about the overall situation of TP Hong Kong. First of all, our customer assets are continuing to increase. The share price has risen by 50% and the share price has fallen by about 6 times. Then the Hong Kong stock market Q4 has been relatively active so far. And then we are on that platform The share price of the stock market Q4 The share price of the Hong Kong stock market has also risen from less than 10% to about 15% And then Q4, the cash income from the Hong Kong stock market, has also risen by more than 160% At the same time, we are also very happy to see that Tiger Hong Kong has been breaking even in the fourth quarter Because in the fourth quarter, the cash and interest income in Hong Kong rose significantly in proportion Then the interest income is doubled in proportion The future combination of market environment and the acceleration of the investment in group resources, we hope that Hong Kong can do more and grow faster. At the same time, in terms of customers, as Tianhao said just now, we still maintain the target of high-quality users and focus on ROI strategy. The average income of Q4 new users in Hong Kong in this quarter is about US$30,000, which is the highest market of the group. Then Hong Kong mutual fund assets are about US$20,000, In terms of VATP, we got the Hong Kong SFC Type 1 and Type 7 licensed before Chinese New Year. This officially makes us a licensed virtual asset trading platform in Hong Kong. With those licenses, we can now legally offer spot trading and the custody service for major cryptocurrencies like Bitcoin and Ether, as well as tokenized assets. By integrating our crypto service with our broker-dealer entity, we can create an ecosystem combining Web2 and Web3 assets. Our goal is to become the bridge between traditional finance and cryptocurrency. Also an update on our Hong Kong business is my client assets have continued to grow, increasing nearly 50% quarter over quarter and about six times year over year. Hong Kong market has been quite active since fourth quarter. So the trading volume of Hong Kong shares has increased from 10% of our total trading volume to about 15%. Commission income from Hong Kong shares has increased by over 160% quarter over quarter. Tiger Broker Hong Kong has achieved breakeven in the fourth quarter, thanks to a significant rise in both commission and interest income, with interest income doubling from the previous quarter. Looking ahead, we will keep investing in Hong Kong to drive the growth. In terms of customer acquisition, we continue to focus on attracting high-quality users and maintaining a strong ROI. In the fourth quarter, newly founded users had an average net asset inflow of over US$30,000. the highest among all markets. Average current asset in Hong Kong is around 20,000 US dollar, also the highest among our overseas markets. Approve from Hong Kong user is also double of the group average. 然后你的第二个问题是关于这个就是 margin financing balance 和那个我们的 interest income 的这个增长 In fact, if we look at the scale of our overall two-container business, the balance is even, but some changes occurred in Q4. Businesses with higher interest rates such as financing and lending are rising. On the contrary, some capital intermediaries that we did before, the balance of other businesses is falling. As a result, in the same overall scale, interest income has risen significantly. In addition, Q4's interest income has risen by about 16%, mainly for several reasons. One is that we have re-communicated with the banks, so we have obtained better external profits in terms of cash funds. At the same time, because the market is relatively active and fluctuating, such as hard to borrow, the supply and demand of this business have improved. This part of the interest rate is relatively high. At the same time, due to the active market, the margin of Hong Kong and US stocks has also improved. I will simply translate it. So although the margin financing balance as a whole remained flat quarter over quarter, but there was a lot of a shift in the fourth quarter. High yield segments such as margin and hard-to-borrow securities lending were showing an increase in balance compared to the previous quarter, while the balance for lower yield visits like treasury management experienced a quarter over quarter decrease. This shift contributed to a higher return on our bottom line. In addition, interest income rose by 16% quarter over quarter, significantly outpacing the increase in interest expense for a few reasons. Number one is we negotiate better returns with local banks that help increase our idle cash interest. The second is the market has been active and volatile, increasing demand in security lending market, also increased the margin activities for U.S. and Hong Kong trading. Thanks.

OK, operator, let's proceed.

I'm showing no further questions. I'd now like to turn the conference back to Aaron for closing comments.

Thank you. I'd 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. Thank you.

Well, thank you very much for your participation in today's conference. This does conclude the program. You may now disconnect.