UP Fintech Holding Limited

Ladies and gentlemen, thank you for standing by and welcome to the Up FinTech Holding Limited first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. There will be a presentation followed by the question and answer session. I must advise you that this conference is being recorded today, May 30th, 2025. I would now like to hand the conference over to our first speaker today, Mr. Aaron Lee, the Head of Investor Relations. Thank you. Please go ahead.

Thank you, Nadia. Hello, everyone, and thank you for joining us for the call today. UpFintech Coding Limited's first quarter 2025 earnings release was distributed earlier today, and it's available on our IR website at ir.itigerup.com, as well as Globe News for our services. On the call today from UpFintech, Mr. Wu Tianhua, Chairman and Chief Executive Officer. Mr. Zhang Zeng, Chief Financial Officer, Mr. Huang Lei, CEO of US Tiger Securities, and Mr. Kenny Zhao, our Financial Controller. Mr. Wu will give our overview of our business operations and discuss corporate highlights. Mr. Zeng will then discuss our financial results. They will both be available to answer your questions during the Q&A session that follows the remarks. Now let me cover the same topic. The statements we are about to make contain forward-looking statements. Within the meaning of the U.S. Private Security Selection 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 forward-looking statements, please refer to our Form 6K furnished today, May 30th, 2025, and our annual report on Form 20F filed on April 23rd, 2025. We undertake no obligation to update any forelooking 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. Hello, everyone.

Thank you for joining Tiger Brokers' first quarter 20.5 earnings conference call.

In the first quarter, the company's net income reached $600,000 a year and rose by 55.3%. During this period, Hong Kong's U.S. stock market overall fluctuated, but maintained a high rate of return. The company's trading volume reached $1,175 billion. Promoting cash income, the same ratio was doubled to $58.3 million, creating a new record. At the same time, at the end of the first quarter, the face-to-face scale increased to $5.2 billion, raising 89.4% of the same ratio, making the first quarter's interest rate reach $5,380 million, raising 22.7% of the same ratio. On the other hand, the continued expansion of the customer size and the improvement of the up value of product diversification have further thinned the cost of the middle and back-end platforms, bringing a stronger performance. DG's non-GAAP net profit of $36,040,000, which belongs to the parent company, increased by 18.3%, and increased by 145%. GAAP's net profit reached $3042,000, which increased by 8.4%. In the first quarter, our total revenue reached $122.6 million of 55.3% year-over-year.

Despite heightened volatility in the Hong Kong and U.S. markets, trading activity remained strong. As a result, total trading volume reached $217 billion, driving commission income to a record high of $58.3 million, more than doubling year-over-year. In addition, market financing and securities lending balance increased to $5.2 billion, increased 89.4% year-over-year. net interest income reached $53.8 million, increased 22.7% year-over-year. On our bottom line, continued growth in our user base and rising R2, driven by product diversification, have helped us further leverage fixed operation costs, leading to stronger, more sustainable profitability. Non-GAAP net income attributed to our fintech increased to $36 million, reflecting an 18.3% sequential increase and a 145% increase year-over-year. GAAP net income attributed to our fintech reached $30.4 million, up 8.4% quarter-over-quarter and 146.7% year-over-year. Both net income and profit margin set record high, and this continued improvement in earnings quality

gives us greater flexibility to pursue strategic initiatives and further accelerate long-term growth. growth of 23.5% in the same ratio. In terms of customer nature, Jinyou Road maintained a strong trend. The first quarter achieved a net income of $3.4 billion. The main contribution comes from the sales users in Singapore and the Central China region. With the rise of the market, the stock price of about $7.8 billion was raised. The total customer nature has a high historical value of $45.9 billion, a growth of 9.9% in the same ratio, and a growth of 39.5%. and has achieved a growth of 10 consecutive seasons. Of these, over 20% of customers in the Greater China-China region have increased their assets. In the first quarter, the number of new entry-level users from the Hong Kong region exceeded 30,000 US dollars. This shows that in the years when we entered the Hong Kong retail market, we gradually gained the trust and affection of local users through high-quality products and services. Hong Kong has also become a place

In the first quarter, we added 60,900 new funded accounts, which accounts for over 40% of our fully target of acquiring at least 150,000 new funded accounts in 2025, and representing a 2.9% increase quarter-over-quarter and a strong 111.2% growth year-over-year. The total number of funded accounts reached 1,152,900 as of the end of the first quarter, an increase of 23.5% year-over-year. In terms of client assets, net inflow remains strong, reaching $3.4 billion for the quarter, driven primarily by retail clients in Singapore and Greater China region. Combined with approximately 780 million US dollars in mark-to-market gains, total client assets reached a record high of 45.9 billion US dollars, up 9.9% quarter-per-quarter and 39.5% year-over-year, marking our 10th consecutive quarter of growth. In addition, client assets from the Greater China region increased by over 20% quarter-per-quarter, Also, we are encouraged to see the average net effect inflow of newly acquired clients from the Hong Kong market in the first quarter exceeded US$30,000, demonstrating the growing trust and engagement they've built in the market during the two years after entering. Following the success in Singapore, Hong Kong has become a key strategic market where we are investing further to deepen our presence.

In the first quarter, LOW International continues to optimize product functions and continuously enhance user experience. In terms of AI, in the first quarter of the company, we officially upgraded TIG-GBT to TIG-AI. This upgrade not only has the original single-model integration and expansion into a dual-model structure, but also, according to the actual use needs of users, adds the ability to integrate user self-selecting stocks and long-term data. Based on user self-selection, to provide a more personalized AI analysis. After the upgrade, the user satisfaction of Tiger AI exceeded 80%. In terms of virtual asset business, after the upgrade of the No. 1 card completed by Tiger Hong Kong, we have now obtained the SSC license. Now, we can provide virtual asset transactions, storage, and T-shirt services to retail and professional investors. This has not only created an account that covers a variety of trading types, but also promoted traditional investment customers In the first quarter, we continue to enhance our product offerings and improve user experience.

On the AI front, We officially upgraded Tiger GPT to Tiger AI, marking a significant step forward in the personalization and intelligence. The upgrade expanded our AI capability from a single model to a dual model architecture and introduced new features that allow integration with users' watchlists and portfolio data. This allows Tiger AI to deliver more personalized and relevant investment insights. Following the upgrade, user satisfaction with Tiger AI exceeded 80%. As for crypto, following Type 1 license uplift, Tiger Brokers Hong Kong has now received approval from the Hong Kong SFC to offer virtual asset trading, deposit, and withdraw services to both retail and professional investors. This means not only can we support multi-asset classes within a single account, while also building greater synergy between traditional investors and digital asset holders, laying the groundwork for increased market participation and buy-through activity. In addition, we recently launched the equity repo and delivery versus payment features, significantly improving the efficiency of our stock borrowing and lending operations and strengthening our service capability for institution and high network clients.

Lao Wu International's currency business continues to grow. In the first quarter, we launched four Hong Kong stock IPO projects, including Chifeng Gold and Nanshan New York, and also participated in the Hong Kong stock IPO of Snow White. The IPO acquisition amount has created a high historical record in Hong Kong stocks. The new acquisition amount on Lao Wu platform has surpassed 100 billion Hong Kong dollars. In terms of ESOP business, we added 20 ESOP customers in the first quarter of this year. The total number of customers has reached 633.

In our corporate business, we enrolled four Hong Kong IPOs in the first quarter, including Chiffon Gold and Nanshan Aluminum, and participated in Mishu Group's IPO, which set new record for IPO subscription amount in the Hong Kong market. And total subscription amount for this IPO exceeded HK$100 billion on our platform. In our ESOP business, we added 20 new clients in the first quarter. bring the total number of ESOP clients served to 633 as of March 31, 2025, increased by 14% year-over-year. Now I'd like to invite our CFO, John, to go over our financials.

Great. Let me go through our financial performance for the first quarter. All numbers are in U.S. dollars. Commission income was $58.3 million, increased 4% quarter-over-quarter and more than double year-over-year. Interest income was $53.8 million, increased 23% year-over-year, but slightly decreased 4% quarter-over-quarter. The slight decrease was due to majority of our US treasury holdings were matured in the fourth quarter. So in this quarter, we had a one-time decrease of 1.5 million in interest income. Together, total revenue reached 122.6 million, up 55.3% year over year. Cash equities take rate was 6.7 bps this quarter. slightly decreased from 6.9 bps of last quarter. Within commission revenue, about 65% comes from cash equities, 30% from options, and the rest from future and other products. Now on to cost. Interest expense was $15 million, decreased 10% quarter-over-quarter, in light of the decrease in interest income, and slightly increased 2% compared to the same quarter of last year. Execution and carrying expense were $5.3 million, increased 139% from the same period last year, in light of the increase in commission and trading volume. Employee compensation and benefits expense were 33.8 million, an increase of 22% year-over-year due to HECON increase to strengthen overseas growth and R&D. Occupancy depreciation and amortization expense were 2.1 million, remained flat year-over-year Communication and market data expense were $9.8 million, an increase of 14% year-over-year due to the increase in Euro-based and IT-related service fees. Marketing expense were $10.9 million this quarter, increased 148% year-over-year, as market condition is more favorable versus a year ago for user acquisition. General and administrative expenses were $5.1 million, a decrease of 9% year-over-year due to a decrease in professional service fees. Total operating costs were $67.1 million, an increase of 32% from the same quarter of last year. As a result, bottom line increased on both GAAP and non-GAAP basis. GAAP-led income was $30.4 million, up 8.4% quarter-over-quarter and 146.7% year-over-year. Long gap-led income was $36 million, an 18.3% increase quarter-over-quarter and a 145% increase year-over-year. The long gap-led profit margin expanded from 25% in the previous quarter to nearly 30% this quarter. Now I have concluded our presentation. Operator, please open the line for Q&A.

Thanks. Thank you. Dear participants, if you would like to ask a question, please press star 1 1 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 1 1 again. Once again, if you would like to ask a question, please press star 1 1. And now we're going to take our first question. And the question comes to the line of Cindy Wang from China Renaissance. Your line is open. Please ask your question.

Okay, thank you for giving me the opportunity to ask this question. Congratulations to the company for having a very bright performance in the first quarter. I have two questions I would like to ask. First, due to the overall market fluctuation in the second quarter, what kind of impact does this have on the company's operating indicators in the second quarter? Can you analyze the transaction volume, customer assets, and new money accounts? The second question I would like to ask is, we have seen a further improvement in the company's first quarter of profit. In the future, how should we consider the control of cost, especially the number of employees and marketing expenses? Can you give us some guidance on the cost of goods and customer service? Thanks for taking my question and congrats for the great first quarter results. I have two questions here. First, with markets remaining volatile in second quarter, how have these affected the company's run rate so far? And could you share any early trends around trading volume, client assets, and newly funded accounts? Company saw further improvement in profitability in first quarter. Looking ahead, how should we think about the cost, particularly like headcount and customer acquisition? Can you provide us some guidance on the outlook for customer acquisition cost? Thank you.

Thank you. I will answer the first question and John will answer the second one. In general, as of the second quarter, we are satisfied with the current financial performance. In terms of trading volume, in April, there was a huge fluctuation in the market due to the influence of the customs war, which also caused the trading volume of the month to break through the company's historical high. Our first monthly trading volume reached a scale of US$1 billion. So as of the second quarter, compared to the same period of the first quarter, has been improved. Of course, we don't know what kind of news will happen in June. We will continue to monitor the trading situation in June. In terms of customer assets, the entry of gold in April and May is still a relatively strong trend in the first quarter of the year. Moreover, the institutions and distributors of the company's holding markets are also in a state of entry gold. In addition, since the end of April, the market has had a very obvious rebound. and also brought some market gains to the users. So, as of now, we have seen that the stock market has a new high. Compared to the end of the first quarter, there has been a growth of about a double. In terms of the number of new users, due to the fluctuation of the second quarter market, we have also made corresponding dynamic adjustments to the goods and goods activities and methods. We expect that the number of new users to the first quarter will decline. Okay, I'll translate for this part.

Overall, we are quite pleased with how things are shaping up in the second quarter so far. In terms of trading volume, we saw significant pickup in market volatility in April, mainly driven by the concerns over the tariffs. That actually pushed our monthly trading volume to a new record, crossing $100 billion for the first time in our history. So far in Q2, we've seen an improvement compared to the same period in Q1. And it's hard to predict what headline news might emerge in June, but we will be closely monitoring market activity throughout the month. And in terms of client assets, NetAsset's inflow remained strong throughout April and May, continuing the solid pace we saw in the first quarter. Both institutions and retail clients across all of our licensed markets contributed positively. And starting from late April, the market rebound helped drive some meaningful market-to-market gains as well. As of now, client assets already set another record high and increased around double digits compared to the end of the first quarter. And when it comes to the new funded accounts, during the increased market volatility in Q2, we made dynamic adjustment to our acquisition strategies. So we expect the number of new funded users will decrease compared to the high base in the Q1. So the user quality remain healthy and net asset inflow continue to be robust. Therefore, we are confident to meet our annual guidance of acquiring at least

Okay, let me answer Cindy's second question. In terms of manpower cost, we will continue to expand our investment in product and technology development to ensure that we remain at the forefront of the product. At the same time, we will strengthen the long-term construction of core markets such as Hong Kong and the United States, covering the introduction of high-quality talent in the front, middle, and back stages. However, the overall manpower growth rate will be relatively stable. It is expected that the manpower cost per year with a 10% to 20% increase in speed. In terms of purchasing, we will continue to invest in more resources to improve the brand awareness and user penetration of the local market. Of course, the specific rhythm will be adjusted according to the market environment, but overall, we expect the investment in purchasing to show an upward trend. From the data, in the first quarter of 2024 and 2025, our total purchasing cost was between 150 and 180, In the second half of this year, we expect the cost of human resources to rise to 250 to 300 USD per year. There are two main reasons. One is that the market with such high user quality in Hong Kong will expand. From the perspective of Payback, it is acceptable to raise the cost of human resources appropriately. The second point is that the overall business capability of the company has also been strengthened, so we are also willing to invest more resources in brand construction and customer service. So in regards to labor costs, we will continue to invest in product and R&D to maintain our competitive edge as technology is the core of our platform. At the same time, we will be expanding our team in key markets like Hong Kong and the US, and of course functions from front office to back office. That being said, our overall headcount growth will remain disciplined. We expect compensation expense to grow about 10% to 20% per year. We will invest more in customer acquisition to build stronger brand and penetrate deeper into our core markets. The pace of our marketing spending will be based on market conditions. But we expect to spend more in the second half of this year. Our average CAC is between 150 to 180 through 2024 and the first quarter of 2025. For the next few quarters, we expect the average CAC to rise to around 250 to 300 US dollars. There are two key reasons for this. First of all, we will beef up our efforts in high-value markets like Hong Kong, where the quality of the users is significantly higher. From a payback perspective, a higher CAC in those markets is acceptable. We're also ready to invest more in brand and user awareness. This type of investments might not yield immediate conversions, which can push up CAC in the short term. but they are important for our long-term growth and the brand awareness. Thanks.

Thank you. Lydia, please go for the next question.

Thank you. Now we're going to take our next question. And the next question comes from Emma Xu from Bank of America. Your line is open. Please ask your question.

Thank you for giving me the opportunity to ask this question. Congratulations to the company for making a strong profit growth again. I also have two questions. The first question is about the income. We saw that in the first quarter, the flow of assets was very strong, pushing the customer's total assets and achieving double-digit growth. Can you explain in detail the distribution of these funds and the composition of account types? The second question is about interest income and sensitivity analysis. So congratulations on another quarter of strong growth. I have two questions. The first one is about the asset inflow. It was particularly strong in the first quarter, contributing to a double-digit increase in your total client assets. So could you elaborate on the breakdown of these inflows in terms of regions and account types? The second question is about your interest income. We can see that your margin financing and security lending balances grew around 15% in the first quarter, yet the net interest income remained flat-ish sequentially. Was this primarily driven by the declining interest rate? If the Fed cuts interest rate twice this year, say by 25 bps each time, what would be the estimated impact on your P&L?

Thank you. I will answer the first question and Zhou En will answer the second one. In the first quarter, our income was about $3.2 billion. About 60% of it came from users in the China region. About 30% came from Singapore. In the first quarter, we recorded about 3.2 billion US dollars in net asset inflows.

Around 60% of them came from the users in the greater China area, 30% from Singapore, and the remaining 10% from US and Australia and New Zealand markets. Overall, roughly 60% of net asset inflow were contributed by retail clients.

Okay, Eva, let me answer your second question. First of all, the overall increase in the language of the two regions is driven by the more active market environment. Although it has an impact from the west, but if it is only from the two regions, the net interest income is actually increased. Our total net interest income this quarter, compared to the slight decline, is due to the company's investment in us. used House Money to invest in some US Treasuries, and most of these national debt have already expired at the end of last year. As a result, in this quarter, there has been a reduction of about $1.5 million in interest. This is a one-off figure. Regarding the impact of the fall, we expect that the 25% of the fall of the U.S. Treasury every year, regardless of the impact of other market environments, will have a negative impact on our net income of about $1 million to $1.5 million. Okay, so the grossing margin financing and the security and the balance was mainly driven by more active market backdrop. Our net interest income from margin financing alone actually increased quarter over quarter despite the rate cut implication. The reason our total net interest income remained flat this quarter is because a larger portion of our U.S. treasury investment matured at the end of last year. which had a quarterly impact of $1.5 million. As for the impact of future rate cuts, we estimate that for every 25 pips cut by the Federal Reserve, our quarterly net interest income will be negative impact by about 1 to 1.5 million, which is about roughly 1% of our quarterly revenue. Thanks.

Thanks, Emma. Operator, please proceed to the next question.

thank you now we're going to take our next question and the question comes to land of you fan from cicc your line is open please ask your question

Thank you, Manager Chen, for giving me this opportunity. I'm Fan You, an analyst at Zhongjin. I have two questions for Manager Chen. One is about the new users. We can see that this is a very strong quarter. It has reached 40% of the annual turnover. I'd like to ask Manager Chen about the specific distribution of new users. The second question is about the business progress in the Hong Kong market in the first quarter. Thank you management for taking my questions. This is Yoyo Fan from CICC. I have two questions here. The first one is that we see the strong new customer acquisition this quarter. Could you please provide a regional breakdown of the newly funded accounts in Q1? The second question, could you please update on your progress in the Hong Kong market during Q1 and how you view the market opportunity and strategic focus going forward, considering the recent Ant Group's merger with Bright Smart Securities? Well, this intensified the local competition. Thank you.

Thank you. The first question. In the first quarter, about 45% of new users came from Singapore and Southeast Asia. About 35% came from China. About 10% came from Auxin and American markets.

In the first quarter, about 45% of newly funded clients came from Singapore and Southeast Asia. Around 35% were from the greater China region. And Australia, New Zealand, and the U.S. market each accounted for about 10%.

The second question.

The market itself is a very competitive market. Recently, we believe that On the other hand, from the side, this market is still very attractive, whether it is from its international financial status or the overall quality of the users. Hong Kong is a very high-quality market, and more and more players are entering the market, which also shows that this track is very potential. We also think that competition is also a good thing for users to be able to break through the entire industry and constantly improve the service level. As an Internet broker, we have already established a solid core on many dimensions, such as the efficiency of our Hong Kong and U.S. stocks, and the product functions, such as the abundance of U.S. stocks, and the trading capability of virtual assets, and the deep application of AI in investment. These are our outstanding advantages. In terms of product, we have also made some relevant changes in the Hong Kong region. For example, our trading capital is still generally lower than most of the common platforms on the market in Hong Kong. The revenue of our currency fund is also more attractive on the platform. We are working hard to show this to our users. Next, we will continue to increase our human resources and market investment in the Hong Kong region, and bring better product experience to local users. We continue to optimize products in the future through time. We are very confident that we will get our share of the stock. With this opportunity, I would like to share with you the performance of Old Hu Hong Kong in the first quarter of this year. First of all, the quality of Hong Kong users is very outstanding in all of our markets, regardless of whether it is human resources or the degree of transaction return. Hong Kong's up value is the highest among all the companies. In the first quarter of 2025, the average income of new customers in the first quarter was more than $30,000. The growth of customer assets was also very strong. Until the first quarter, The share of real estate has increased by more than 4 times, and the share has also increased by more than 20%. On March 26, we also officially introduced a new upgrade of Tiger AI to Hong Kong users, providing unlimited free service. This tool combines our world-leading large model and our free financial data, greatly improving the analysis efficiency and decision-making quality of investors.

Hong Kong has always been a highly competitive market, and the recent merge between Ant Group and BrightSmart Securities, in our view, future validates the attractiveness of this market. Whether we look at its status as a global financial hub or the high quality of its user base, Hong Kong remains a very compelling market. With more players to enter simply highlights the long-term potential of this market. From our perspective, increased competition is a good thing for local users. It raises the bar for the entire industry and encourages all of us to keep improving. As a tech-driven brokerage, Tiger has already built strong barriers across different key areas. This includes our clearing efficiency for Hong Kong and US equities, a robust product set especially in the US derivatives, virtual asset trading capabilities, and the deep integration of AI in the investment process, all of which set us apart. We've also introduced some product differentiation to better serve local users. For example, our trading commissions are generally lower than the most platforms in this market. and our money market fund yields are comparatively attractive. These are just a few ways we are delivering real value to users. So looking ahead, we plan to continue to invest in both talent and marketing in Hong Kong with the goal of delivering a superior product experience. We are confident that with time, continued optimization and consistent execution, we will be able to secure a meaningful share of the Hong Kong market. And here are some highlights about the Q1 operational highlights about the Hong Kong market. Firstly, thanks to the high average client assets and strong trading velocity, our pool from our Hong Kong users remains the highest among all the markets we entered. In the first quarter, new-funded clients in Hong Kong brought in an average net asset inflow of over US$30,000. Secondly, planned assets in Hong Kong continue to grow at a strong pace of more than 20% quarter-per-quarter and over four times year-over-year, marking it one of our third largest markets in terms of assets under custody. In March, we officially rolled out the upgraded Tiger AI for Hong Kong users. Now it's available with unlimited free access. Powered by world-class leading language AI models and our market data, Tiger AI is designed to help users analyze investments more efficiently and make smarter decisions. Thank you. Operator, next question, please.

For today, I would now like to hand the conference over to Aaron Lee for any closing remarks.

Thank you. I'd like to thank everyone for doing 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. Bye-bye.

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