Futu - Earnings Call - Q2 2025

Transcript

Speaker 6

Hello, 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 a 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 our host for today's conference call, Jingyu (Daniel) Yuan, Chief of Staff to CEO, Head of Strategy, and IR at Futu. Please go ahead, sir.

Speaker 8

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. Leaf Hua Li, Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Li Xu, Senior Vice President. As a reminder, today's call may include forward-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 involve inherent risks 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 report. With that, I will now turn the call over to Leaf. Leaf will make his comments in Chinese, and I will translate.

Speaker 3

感谢大家参加今天的业绩会。截至二季度末，有资产客户总数约290万，同比增长41%，环比增长8%。Futu在国际化竞争中迎来了一个重要的里程碑。截至季度末，Futu Securities Hong Kong主体以外的有资产客户占比已经突破50%，其中新加坡和美国是我们最大的海外市场。紧随其后的是快速扩张的马来西亚与日本，澳大利亚和加拿大也展现出稳健的增长势头。不断扩展的国际版图有力印证了Futu成为有显著影响力的全球金融服务平台的公司愿景。

Speaker 8

Thank you all for joining our earnings call today. As of quarter-end, both 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 Futu Securities 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.

Speaker 3

本季度净增有资产客户约20.4万, 同比增长32%。香港市场已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。加之5月多宗高热度IPO的上线, 共同激发了零售投资者的市场参与热情, 美国市场同样实现了稳健增长。在第二季度, 我们成为New York Mets棒球队的官方赞助商。这一合作将持续扩大我们在美国乃至全球市场的品牌影响力。我们还于6月在美国的大部分州推出了加密货币交易服务, 进一步巩固了Futu作为一站式交易平台的价值主张。

Speaker 8

During the quarter, we acquired 204,000 new funded accounts, a 32% increase from a year earlier. Hong Kong continued to lead all markets in new funded accounts for the third straight quarter. Elevated market volatility from trade tensions in early April, followed by a sharp rebound from trade truces, as well as a wave of high-profile IPOs in May, spurred retail participation. Our U.S. 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.

Speaker 3

在马来西亚, 我们持续深耕产品服务本地化, 上线了马股IPO融资服务以及马股财报日历。在日本, 我们与纳斯达克和日本交易所集团合作, 举办了首届线下投资盛会MoveFest Japan, 吸引超过12,000名东京投资者报名参加, 提升了品牌在当地的知名度。继FutuBull AI在香港成功首发后, 二季度我们将Moomoo AI推广至所有海外市场, 为全球投资者提供更智能的工具, 助力用户更高效地进行投资决策。本季度各市场客户活跃度均保持高水平, 有资产客户季度留存率再次远高于98%, 充分体现了我们全球客户的高忠诚度与满意度。

Speaker 8

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 Stock Exchange 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 remained 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.

Speaker 3

截至二季度末，客户总资产再创新高，达到HKD 973.9 billion，同比增长68%，环比增长17%。值得一提的是，2025年上半年的净入金较去年同期几乎翻倍，得益于强劲的净入金以及客户港美股持仓市值的提升。所有市场的客户平均资产都实现了环比增长，其中新加坡的固定资产和客户总资产环比分别增长19%和26%。集团融资融券季末余额保持稳定，为HKD 51.4 billion。尽管四月初市场大幅下行时客户曾一度去杠杆，但随着风险偏好逐步回升，融资活动也随之反弹。

Speaker 8

By the end of the second quarter, total client assets hit a record $974 billion HKD, up 68% year-over-year and 17% quarter-over-quarter. Notably, net asset inflow in the first half of 2024 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 registered a sequential increase. In Singapore, average client assets and total client assets rose 19% and 26% quarter-over-quarter, respectively. The group's margin financing and securities lending balance remained stable at $51.4 billion HKD 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.

Speaker 3

active trading in the new consumer sector.

Speaker 8

In the second quarter, total trading volume reached $3.59 trillion HKD, representing 121% year-over-year and 12% quarter-over-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 $2.7 trillion HKD, led by EV and crypto stock. Hong Kong stock trading volume contracted 9% quarter-over-quarter to $833.5 billion HKD, primarily due to tempered interest in the technology sector, partially offset by higher turnover in new consumption names.

Speaker 3

funds, consolidating our industry-leading position in digital asset innovation.

Speaker 8

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

Speaker 3

截至季度末，我们服务的IPO分销及IR客户数量达517家，同比增长15%。香港IPO市场延续了一季度的强劲势头，IPO宗数及投资者参与热度持续攀升。本季度我们作为联席账簿管理人参与了多项知名上市项目。值得一提的是，在海天味业IPO中，我们吸引了创纪录的10.2万名认购者，认购人数和总认购金额均位居所有券商之首。2025年上半年，我们与港股IPO募资额排名前十中的六家企业合作，并共有12个IPO在富途平台的认购金额突破HKD 10 billion，体现了我们卓越的零售分销实力。

Speaker 8

As of quarter-end, we had 517 IPO distribution and IR clients, up 15% year-over-year. The 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 book runners for multiple prominent listings. Notably, in the Hai Tin Flavoring and Food IPO, we attracted a record 102,000 subscribers, ranking first among all brokers in both number of subscribers and total subscription amount. In the first half of 2025, we partnered with six of the ten largest Hong Kong IPOs by fundraising size and facilitated over HKD 10 billion in subscription amount for 12 IPOs each, underscoring our unparalleled retail distribution capabilities.

Speaker 3

接下来有请我们的首席财务官Arthur介绍我们的财务表现。

Speaker 8

Next, I'd like to invite our CFO Arthur Chen to discuss our financial performance.

Speaker 7

Thank you, Leaf and Daniel. Please allow me to walk you through our financial performance in the second quarter. All the numbers are in HKD 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% quarter-over-quarter. The year-over-year increase was driven by higher trading volume, partially offset by the decline in blended commission rate. We adopt a 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 when our clients trade higher-priced stocks and options. The Q2 increase was mainly driven by the sequential growth in trading volume. Interest income was $2.3 billion, up 44% year-over-year and 11% quarter-over-quarter.

The year-over-year increase was driven by high interest income from securities borrowing and the lending business, bank deposits, and margin financing. The Q2 increase was driven by higher interest income from securities 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 interest income was $444 million, up 176% year-over-year and 41% quarter-over-quarter. The year-over-year and the quarter-over-quarter 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 were $161 million, up 84% year-over-year and 12% quarter-over-quarter.

Both the year-over-year and the quarter-over-quarter increase were roughly in line with the movement of our brokerage commission and handling charge income. Interest expenses were $378 million, flat year-over-year and down 20% quarter-over-quarter. The year-over-year increase in interest expenses associated with our securities borrowing and the lending business was offset by the year-over-year decrease in margin financing interest expenses. The quarter-over-quarter decrease was mainly due to lower interest expenses associated with our securities borrowing and the lending business, as well as lower margin financing interest expenses because of the hybrid rate decline. Processing and servicing cost was $133 million, up 21% year-over-year and down 2% quarter-over-quarter. The year-over-year increase was largely due to higher data transmission fees and market information and data fees. The Q2 decline was mainly driven by lower market information and data fee, as well as lower cloud 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 were up 21% year-over-year and 3% Q2 to $1.3 billion. R&D expenses were $442 million, up 18% year-over-year and 14% Q2. The year-over-year and Q2 increase were mainly driven by greater investments in AI capabilities. Selling and marketing expenses were $429 million, up 27% year-over-year and down 7% Q2. The year-over-year increase was mainly attributable to higher new funded accounts, partially offset by lower client acquisition costs per unit. The Q2 decrease was due to sequential decrease in new funded accounts, partially offset by higher client acquisition costs per unit. General and administrative expenses were $425 million, up 17% year-over-year and 2% Q2.

The year-over-year increase was primarily due to an increase in general and administrative headcounts. As a result, income from operations 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 effective tax rate for the quarter was 18.4%. That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead. Thank you.

Speaker 6

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

Speaker 2

谢谢关于陈姐我这个提问的机会，然后也恭喜公司在第二季度有一个非常亮眼的一个表现。那我这边有两个问题想提问。第一个的话想请教一下今年上半年我们这个新入金是几乎翻倍，啊，可不可以跟我们大概说明一下这个背后的主要原因为何，然后公司是否在行销上面有做一些调整，啊，去吸引这个投资人持续的入金。那下半年来看的话，公司要如何这样维持新入金的一个强劲的一个趋势。那第二个问题的话想请教一下Crypto的业务，那目前我们在香港、新加坡以及美国这边都已经有上线了，那可以跟我们分享一下就从第二季度的表现或上半年的表现以及七月的状况，在客户数啊，交易量这边的一个趋势是怎么样，然后下半年这边我们有什么的产品或者新的市场会有上线的计划。那我很快的翻译一下我的问题，thanks for taking my call, and congrats for the very good, result in the second quarter. I have two questions here. First one is, the net asset inflow was very strong in the first half of this year and almost doubled compared to last year. What's the reasoning behind it? Do you adjust any, marketing campaign to attract asset inflow? How do you maintain the momentum in the second half? Second question is, Crypto trading has launched in Hong Kong, Singapore, and the US. 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? Any new product or market will launch in the second half? Thank you.

Speaker 7

好的, 陈姐, 我来回答一下这两个问题。第一个是有关这个上半年入金的一个表现, 我觉得可能几个方面的原因吧。第一, 从产品本身, 我们在今年上半年就像 Leaf 之前在 opening remark 的时候提到的, 我们在产品本身是提供了比较多的一些新的一些产品, 无论是在财富管理方面, 包括在这个加密货币方面, 今年上半年都有比较多的一些新的一些产品的一些推出, 那随着我们整个的一个一站式的一个投资服务的一个体验的一个健全, 这个对于获取新的客户, 包括客户的这个入金都有比较好的一个帮助。第二就是从我们的这个运营跟品牌的一个建设, 那我们今年特别在海外市场, 推出了比较多的一些新的一些品牌的一些建设, 特别是像在美国市场, 我们在二季度的时候也跟美国的棒球队 New York Mets, 有一个非常大的一个品牌的一个合作, 那么从这个品牌合作的一个实际的一个效果来看, 无论对美国市场的获客, 包括我们整个海外的品牌映射导致的一个客户的入金的一个情况, 都是有比较明显的一个帮助的, 特别是我们今年上半年我们二季度来看, 我们整个海外市场的一个入金的规模, 已经基本达到去年全年的这样的一个入金的规模, 所以下半年的这个情况来看, 无论在品牌的一些建设, 比如说一些线下的一些门店的一些拓展, 以及我们的一些产品的新的一些产品, 特别在财富管理, 跟加密货币, 方面的一些产品的一些提供方面, 我们会有更多的一些相应的一些产品会推出。那除了我们自身的这个原因, 当然就是今年上半年也就是从外部的这个环境来看, 因为整个今年港股跟美股的一个表现也都是非常好的, 也蕴含了比较多的一些投资的一些机会, 这个当然对于我们的客户的入金的一个情绪也起到了一个正面的一个催化的一个作用, 这是您的第一个问题。第二个问题, 从 Crypto 的这个业务的这个角度来说, 确实我们在二季度陆续上线在不同的一些市场, 已经上线了 Crypto 相应的一些服务, 那么因为上线的这个时间还是比较短的, 比如说美国我们基本大概是在六月份的时候上线的。那么从六月份包括七月份的目前的这个情况来看, 整个我们在二季度 Crypto 相关的这个资产的余额大概差不多达到 HKD 4.0 billion, 那相比一季度, 已经有一个超过 40% 以上的有环比的一个提升, 那么在七月份日均最高的日均的交易量来看, 大概差不多是达到 $40 million 左右这样的一个体量, 那么从下半年来看, 我们可能会在现在推出的一些新的一些市场里面提供更多的一些产品的一些功能, 举例来说, 我们会考虑在新加坡跟美国去提供相应的充币, 跟提币的这样的一个功能, 这个功能是在前不久我们在香港, 已经已经推出来了。那我简单翻译一下, in terms of a very strong asset inflow in the in the in the first half, I think the alongside of the benefit we got from the market itself, given that the U.S. market and the Hong Kong markets performed quite well in the first half, which definitely you know is a positive implications to the client asset inflows.

Internal-wise, on the product side, we further enrich our product offering, especially in the first half. A lot of new products in terms in the areas of wealth management, crypto and fixed incomes actually you know provide you know 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 New York Mets in the second quarters bear a very strong fruit in terms of the new client acquisition in the U.S. and also the brand the brand implication further expands to other overseas markets as well.

In particular, in the second quarter, all the asset inflows from the overseas markets outside of Greater China, the amount almost exceeded the absolute amount we acquired from similar markets in 2024, which was very impressive. I think in the second half, we will continue to enhance our brand acquisitions. For instance, there will be more physical stalls rolled out in different markets in the second half, and there will be some new product offerings in the wealth management and in the crypto side as well in the second half. For instance, we do have plans to provide crypto transfer in and transfer out functionalities for overseas markets alongside the Hong Kong markets as well. Secondly, specific for the crypto trading, in terms of the momentum, we saw very strong Q1 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 reached HKD 4 billion compared with the first half, which recorded over 40% Q1 increase. I do believe that the numbers will continue to be very strong, robust in the third quarter as well, thanks to further penetration in our paying clients to engage crypto trading. In the second half, there will 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.

Speaker 6

Thank you. Just a moment for our next question, please. Next, we have Chiyao Huang from Morgan Stanley. Please go ahead.

Speaker 1

好的, 感谢管理层给我提供的机会。我是 MoveFest Nany 的黄志尧。我有两个问题想请教, 第一个也是关于 Crypto, 感谢管理层刚才也提供了一些这个关于 Crypto 最新的这个 color, 然后我想请教一下管理层对于在一个中长期来看, 在 Crypto 业务上面有哪些策略性的展望, 比方说在这个牌照的布局、产品的规划以及未来这种变现的空间有哪些展望。尤其是考虑到香港的这个 VATP 牌照, 我们觉得未来有哪些进一步充分利用的一些空间和业务的空间。第二个问题是关于这个日本市场的, 刚才也听到这个海外的入金有非常明显的这个进展。想请问的就是在日本市场, 因为富途进入日本市场也有两年左右的这个时间, 那么咱们对这个日本市场的认识有发生哪些变化, 包括这个当地的竞争格局以及这个存量的主要的这种竞争对手, 他们有哪些主要的竞争优势, 然后富途是如何去调整这个我们的这个本地化的策略以及推出的产品的一些策略, 然后我们在日本可能现在最主要的一些 value proposition 大概是什么样, 谢谢。

Speaker 0

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. The second question is regarding the Japan market, as the company has been in the 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.

Speaker 7

好的, 谢谢曲洋。那我来回答第一个有关 Crypto 的问题。第二个有关日本市场的问题, 我请我的同事 Daniel 来回答。我个人觉得从 Crypto 的战略角度, 我们现在大概是着重在四个方面, 我们现在在做的东西, 因为我觉得本身 Crypto 对于像富途这样的券商, 包括行业内其他的券商来说, 都是一个新的赛道。我想总结我们四个方面现在做的东西, 我把它总结成赛跑, race。R 是代表 real world assets, 因为我们现在从事的业务, 包括我们的客户群, 在传统金融领域是有非常多的优势, 无论是从资产端的提供, 包括我们非常强大的财富管理平台。实际为更多 RWA 领域的探索, 奠定了非常好的基础。举例来说, 我们最近刚才 Leaf 也有讲到, 我们最近跟华夏基金在香港有非常好的合作。我们作为华夏基金的第一个 tokenized money market fund, 是作为第一个, 也是唯一一个在零售市场作为渠道的代销商在里面。在财富管理领域, 我们已经跟全球知名的超过 80 家以上的资产管理公司有非常好的合作关系。目前我们有超过千亿的财富管理 AUM 的资产管道, 这是为我们以后跟更多连接资产方的合作奠定了非常好的基础。A 代表 advanced technology, 我觉得任何 Crypto 相关的东西, 从我们的角度更多的是怎么样去利用更好的 blockchain 技术, 特别是在安全性也好, 在技术迭代更新方面也好, 能发挥我们作为金融科技公司的特有能力在里面。虽然这个领域在短期并不一定能产生相应的收入, 但我觉得从长期战略角度来说, 这是非常重要的基础, 也是我们区分于非常多其他平台非常重要的因素。C 代表 conversion, 这个 conversion 我觉得是来自于两个方面, 一方面是 Crypto native 的 Crypto 原生客户群, 另外一个是传统金融的金融人群。我们希望能够做到把这两个人群在富途的平台上融合。大家也可以看到, 从过去一段时间, 我们实际做了非常多有关 Crypto 的投效工作, 比如在几天之前, 我们刚刚上线给香港所有零售客户提供了 Solana 相应币种的交易。同时, 我们也有计划会推出更多模拟交易, Solana 相关的模拟交易, 能让更多新入的香港零售投资者能够接触到 Crypto 相关的资产。在这方面的变现, 体现并不一定完全是在 Crypto 业务本身, 也有可能这方面的变现体现在我们现有的一些传统金融证券业务相关领域。第四个 E 就是 exchange, 就像你刚才讲到的, 我们在香港目前因为在 VATP 牌照申请的第二个阶段, 我们也有考虑在香港、包括新加坡、美国以外的其他市场获取更多跟交易所相关的牌照。交易所作为整个连接 on-chain 跟 off-chain, 包括 Crypto native 跟 traditional finance 不同用户群里面非常重要的核心点, 是未来我们非常重要会投入的领域。从 VATP 的变现空间, 我觉得还是非常巨大。除了本身在现有环境里面可能会给我们的用户提供更好的用户体验, 包括节约我们在上游清结算的成本。更长远来看, 实际对于我们整个客户群也会有比较大的扩展, 我们的客户可能不再局限在我们自身的零售客户, 也有可能会拓展到其他券商的零售客户或者机构客户。另外, exchange 作为非常重要的入口, 在未来更多香港推动的 Web3 创新领域里面, 无论是现在香港证监会在今年也提出了 Aspire 的想法, 我们相信可能除了现在有关 Crypto 相关的现货交易以外, 未来无论是 staking, 包括在一些 Crypto 相关的衍生产品, 实际都有非常多变现空间。所以这是我们目前大概会去考虑或者工作侧重的四个方面。我简单翻译一下, I in in my personal view I think our narrative for for the whole group in in the Crypto side can be consists of four aspects I will summarize I I call it the race RACE the the R means the real world assets because you know we have a very strong positions in terms of the traditional finance so there will be a lot of you know you know bargaining powers or positions in the traditional asset products offerings for instance we have a very strong positions in the wealth management you know segment we have already partnership over eight over 80s world class fund manager companies for instance recently we just do our collaborations 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 you know fund distributions how to connect traditional finance from Web3 from the offline to on chains will be definitely a very big 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 is 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 VATP license application in Hong Kong, and we are doing the feasibility studies for more license applications in other markets. Exchange will definitely be a gateway to connect Crypto native and also traditional finance, and also in terms of monetizations. Despite now the monetization more comes from the trading itself, in the long term I think VATP will, number one, save our upstream cost to further enhance our user experience, to provide a seamless user experience to our clients, and secondly, our client target will not only be the retail investor for 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 initiative, new monetization potentials such as the derivatives, the stakings, so these are all incremental revenues in the long term which will benefit from the regulatory push up. Thank you.

Speaker 8

Thank you. Daniel, I'll take your second question on Japan. I'm going to first share about our understanding about the competitive landscape, market dynamics, and then I'm going to talk about what we have done in the second quarter accordingly. 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 about 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 they created lots of very sticky, very sticky touchpoints 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 our market data or our trading experience or our social community.

These are all very friendly and super competitive for self-directed investors. We're thinking there is a real gap in the market for us to fill. 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. 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. Back to what we have done in the second quarter based on these understandings, 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. Before, clients needed to exchange that into Japanese yen. By doing that, we reduce the friction in going to the exchange. We have also seen very high engagement and turnover in the second quarter in Japan. In fact, the total trading volume in Japan went up by over 50% quarter over quarter. We have seen a sequential increase in both the trading turnover of U.S. stocks and Japan stocks. The average client assets as of quarter end also registered double-digit sequential growth. We think these are all super encouraging signs and data points. Going forward, we'll continue to optimize our current experience for both the U.S. stocks and Japan stocks. In the second quarter, we also launched some AI-related capabilities in Japan.

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. 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. We want to leverage AI, leverage financial technology to continue to lower the barrier of investing through U.S. stocks. We think that there is a growing demand for U.S. stocks for us to cater to. 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 MoveFest event. Over 12,000 retail investors in Tokyo signed up, which we think is a quite sizable crowd.

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. Let me translate for myself. 接着我们这个日本的问题, 然后就首先我们分享一下我们对于这个市场竞争格局, 包括市场空间, 包括产品定位的一些理解。然后接着可能基于这些理解, 我会讲一下我们二季度在日本做了哪一些事情。那在日本的这个竞争格局其实相对是比较稳定的。过去几年其实大家都知道SBI和乐天两家占据了80%的零售投资者的这个市场份额, 然后他们也构建了一站式的这个金融服务, 包括其他的一些生活类服务的这个生态体系, 然后跟客户有非常多的这个触点。但是我们依然觉得这个Moomoo有非常独特的这个价值主张, 尤其是对于有投资海外股票意愿的活跃自主交易者来说, 无论是我们的定价, 还是我们的市场行情, 还是我们的资讯, 还是交易体验, 包括社区等等, 我们觉得对于这个活跃自主交易者来说都是非常有吸引力的。那另外过去我们也反复提到, 就是在日本构建这个品牌是非常重要的, 这样能提升这个日本用户对于我们的这个信任度。那过去几个季度其实我们也不断通过这个广告, 然后包括这些赞助以及其他的一些联名的活动来提升我们品牌的知名度和信任度。那基于这些理解, 我们在这个二季度在日本也做了很多工作。那首先我们也是持续打磨了美股相关的能力, 并优化了客户的这个交易体验。在这个4月份, 我们上涨美股期权的这个交易, 期权交易的这个渗透率, 包括交易收入的贡献, 每个月都在环比的这个稳定的提升。那我们也支持了客户通过美元直接的出入金, 这样可以减少这个客户美元和日元之间转化所产生的这个汇兑损失。我们非常这个开心的看到, 其实日本客户在二季度的交易活跃度是非常高的。那总的交易量环比一季度其实增长了50%。另外这个美股和日股的换手率都出现了这个环比的增长。那在AUM方面, 沪均的资产环比也实现了这个双位数的增长, 所以我们觉得都是一些非常好的这些信号。未来我们也会持续去优化和补充在美股和日股相关的这个产品能力。我们在二季度在日本也上线了AI相关的这个功能。那上线一段时间后, 我们其实发现日本用户使用这个AI问答助手的这个渗透率在我们海外所有市场中其实是最高的, 而且客户的满意度也一直维持在90%以上的这个高水平。那我们觉得日本是有很多有这个自主投资意愿的这个投资者, 然后他们有很强的这个学习的动力, 也愿意去积极的通过这个工具来辅助他们做出更好的这个投资决策。我们是希望能借助AI, 包括其他金融科技的实力, 能够不断降低美股投资的门槛, 也迎合我们发现的在当地不断增加的对于美股投资的这个需求。在品牌建设方面, 我们其实也取得了很多的这个提升。二季度我们和纳斯达克以及日本交易所合作举办了这个New Fact Audit展览会, 也吸引了超过12,000名这个东京的零售投资者报名参加。我们觉得是一个非常成功的活动, 这个活动也进一步深化了日本投资者对于我们品牌的认知与信任。

Speaker 0

Thank you.

you, very detailed.

Speaker 6

Thank you. Just a moment for our next question, please. Next, we have You Fan from CICC. Please go ahead.

Speaker 5

好的, 感谢管理层给我这个提问的机会。我是中金公司的分析师樊呦, 也是恭喜公司的业绩其实再次创了新高。那我这边的话有两个问题想要请教一下管理层。首先第一个的话是想请管理层看能不能分享一下关于三季度以来咱们看到的, 包括这个获客入金, 还有包括这个用户的交易活跃度等等方面的一些趋势, 能不能给更多的一些color。这是第一个问题。第二个问题的话是想要请教一下关于美国市场, 因为我们看到其实美国市场今年以来的话也有一些新的边际上的变化, 想请教一下可能有没有一些更多数据的分享, 然后包括对于美国这个市场后续的一些考虑, 还有包括打法。那我这边快速翻译一下。 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 the, like the client acquisition, the net asset inflow, and also the trading volume? The second question is about the U.S. market. We see solid growth achieved this year. Would you please share more data and also with the plan and target for the U.S. market? Thank you.

Speaker 8

Thank you for these two questions. This is Daniel. I'll take both of these questions. First of all, in terms of the third quarter quarter-to-date trend, based on the run rate, we expect a steady Q1 net new funded accounts. 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 total client AUM to grow sequentially. We've also seen very active trading behaviors. 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 Q1 Q increase on top of the very high base in the second quarter. In terms of our development in the U.S. market, a couple of data points we could share.

First of all, we've really seen the positive flywheel thanks to the continued product development and our strengthening brand equity. The net new ads in terms of funded accounts in the U.S. continue to contribute very meaningfully to the group. In the second quarter, we've also seen the number of options traders, as well as the total number of options contracts traded, reached a historic high. In fact, both numbers registered five consecutive quarters of sequential increase. We think these are super encouraging. In the second quarter, as we shared earlier, we struck 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 amongst 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 product. In June, we launched cryptocurrency trading in most states in the U.S., and we now support over 30 mainstream crypto trading pairs. We've seen a continuous increase in adoption rate among our U.S. clients. We've also launched Moomoo AI, including AI chatbots, AI-powered stock investment tools, and lots of technical charts and new stock-related fundamental data. In the future, we plan to launch kind of AI stock screeners to help our investors better sit through the thousands of stocks. Lots of product innovations as well. Overall, we are very optimistic about the growth prospects in the U.S. market. Let me translate.

首先关于我们三季度目前为止的一些各方面的数据的情况, 以目前的 run rate 来看的话, 这个新增这个有质量客户环比 Q2 应该是保持比较平稳的这个水平。那这个市场这个 market to market 的影响是目前为止是正向的, 然后叠加了三季度目前为止的这个进入金, 应该能带动这个总的客户资产环比有进一步的上升。那同时客户的交易情绪是很高涨的, 然后以目前的水平来看, 如果市场的行情能够延续, 我们有机会交易量能够在二季度的高基数上会有进一步的这个小幅的环比增长。那关于在美国市场的这个进展, 我们在美国持续的品牌力的提升以及产品能力的提升带来了业务增长的一个正向的循环。在二季度, 美国持续为集团贡献了非常 meaningful 的这个竞争的有资产的客户。那同时二季度, 在美国市场的期权交易人数和期权交易张数都创下了历史新高, 而且已经连续五个季度实现了环比的增长。那二季度在品牌方面, 其实前面也提到了我们跟这个纽约的这个大都会的这个对达成了深度的合作, 那我们也全方位融入了纽约这个 Mets 的这个生态赛事体系吧。这一战略合作不仅能够让我们在这个千万级的在美国的这个球迷群体中提升了品牌知名度, 那同时我们也借助了 Mets 的全球的影响力, 把我们的品牌辐射到了其他的一些海外市场。那除了在这个品牌力的提升之外, 我们在这个产品能力上也持续的在提升。在 6 月份, 我们在美国的大部分州上线了加密货币交易, 目前支持超过 30 种主流加密货币现货交易对, 在存量客户的这个交易渗透率也在逐步的提升。那我们二季度也在美国上线了这个 Moomoo AI 的功能, 包括 AI 的问答助手, 股票趋势的分析, 其实 K 键形态的一些技术分析, 包括关键的基本面数据的摘要等等。后续我们也计划去上线 AI 股票的筛选器, 能够帮助客户更好的去定位他们的这个投资标的。总的来说, 我们觉得我们对美国之后的增长保持了很很强的信心。 Thank you.

Speaker 5

你都非常感谢。 Thank you.

Speaker 6

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

Speaker 1

好的, 感谢给我这个提问的机会。首先也是恭喜管理层取得了非常不错的业绩。其实我的几个问题刚才已经被问到了, 所以我可能就还有两个问题问一下吧。第一呢, 我想问一下我们二季度的这个获客, 就是各地的一个组成能不能跟我们分享一下。然后另外呢, 我们也注意到就是二季度的我们这个获客环比呢, 其实是有一个下跌的。想问一下这个是怎么一个原因, 因为我们看到整个市场情绪还不错, 特别是我们也注意到一些新闻媒体报道, 就是关于这个, 中国大陆客户在香港开户有一个更加严格的这个执行。我不知道这个是不是其中一个原因。然后呢, 我们展望未来, 我们的这个获客的情况应该怎么来去考虑, 然后全年我们的这个 80 万的这个指引是不是会发生一些变化。 I have two questions. First, can you maybe give us a little bit more information about the regional mix of the client acquisition in the second quarter? Also, we noticed that, on a Q1 Q basis, there's a sequential slowdown for the customer acquisition. Meanwhile, we also noticed some news reports about more stringent onboarding of the mainland Chinese clients in Hong Kong in June. What will be the potential impact to your client acquisition looking forward? Also, any potential change to your full year guidance of 800,000? Thank you.

好的, Charles, 我来回答一下你这两个问题。那一个从这个二季度的这个 breakdown 来看, 我们的这个香港市场跟马来西亚市场这两个市场都保持了一个非常好的一个获客的一个势头, 所以这两个市场合计呢, 是贡献了超过一半以上的新增的这个有资产的这个客户。那就像前面 Daniel 提到的, 香港已经连续三个季度贡献了最多的这个有资产客户。那么其他的一些其余的这个客户增长呢, 主要是来自于新加坡、美国和日本市场。那整个上半年, 因为截止到二季度, 我们整个已经完成了46万的有竞争的这个有资产客户, 相比今年全年我们给到市场的80万的这个目标来看, 是符合甚至是快于这个时间的一个进度的。从目前来看, 我们还是非常有信心能够整个完成我们今年全年的一个目标。所以目前我们没有对指引有任何的一个调整的一个计划。那从这个你刚才讲到的整个二季度的一个获客的数量, 相比一季度一个非常高的一个基数, 环比是有小幅的一个下降, 但是从绝对的一个增长的一个数量来看, 在历史上依然是处于一个非常高的一个位置。那么从具体的一些原因来看, 确实, 整个一季度末3月份开始到4月头的, 整个贸易战, 虽然对于我们现有的这个客户的一个交易是起到了一个正面的一个帮助, 但是三四月份的这个影响确实对于我们不同市场的一些新获客, 在4月份的时候, 是受到了一些负面的一些影响。在这个里面, 那你刚才讲到的, 比如说有关香港这边的一些监管方面或者对于获客的一些要求, 有一些新的, 更严格的一些要求, 整体对于我们整个的一个获客, 我们并没有看到非常显著的一个影响在这个里面。那所以, 向前去看, 无论是香港, 包括我们其他市场, 在三季度的一些获客的一些增长方面, 我个人还是保持一个谨慎的一个乐观。我简单翻译一下, in terms of the new clients, new paying clients, fund accounts we acquired in the second quarter, Hong Kong and the Malaysia collective basis account for over 50% of the new client acquisitions in the second quarter. The remaining part was mainly come from Singapore, US, and also Japan. In total, for the first half of this year, we have already achieved 460K 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. We do not see any meaningful implications for the new regulations in terms of the new client onboardings in Hong Kong.

So far, all the new clients acquisition across different markets remain very healthy and robust. I personally feel very confident to achieve our full year target. Thank you.

好的, 谢谢。

Speaker 6

Thank you. Just a moment for our next question, please. Next, we have Emma Xu from Bank of America Securities. Please go ahead.

Speaker 2

谢谢给我这个提问的机会, 那恭喜公司在此取得非常强劲的业绩。我这边也有两个问题, 一个是想问一下利息收入的, 其实这个二季度的利息收入还是挺强于预期的。那刚刚管理层在电话会上, 在开头也讲到说这个二季度的话是利息收入这边主要是融券借券业务这边上涨, 然后还有包括跟存款, 跟闲置资金相关的这方面的利息收入也有所上涨。二季度我们同时也有看到有个 Hibor 的大跌, 对吧? 就是想问一下, 就是说, 为什么二季度好像并没有看到 Hibor 的大跌对二季度的利息收入有明显的影响。您刚刚说在利息支出端的话, 反而融券借券业务的利息支出下降了, 然后 margin financing 相关的利息支出也因为 Hibor 的下跌而下降。现在我们看到三季度的话, Hibor 最近几天其实是有明显的反弹的, 但是相比于 5 月初还是, 5 月初的水平还是有明显的下降。这些因素会对我们三季度的净利息收入有怎样的一个影响? 然后第二个问题是想问一下其他收入这块的, 这块我们发现最近几个季度增长也非常强劲, 二季度环比增长了 42%, 同比的话增长了 176%。你们也提到了说这个主要是跟基金分销业务相关, 还有包括汇兑的相关收入也增长非常强劲。那这块虽然占我们总收入的比重目前只有 8%, 但未来的话我们看这块是否还是能够保持一个比较快的增速, 然后未来对集团的总收入会有一个更大的贡献。我翻译一下我的两个问题。so the first question is about the interest income. it's actually stronger, much stronger than expected. you mentioned that the growth interest income increased mainly due to the increased income from the stock borrowing and lending business, as well as interest income from idle cash. in the second quarter, Hibor dropped a lot. It seems it doesn't impact your interest income a lot. could you tell us what's the reason behind? on the other hand, your interest expense declined due to a lower cost related to the stock borrowing and lending business, as well as a lower Hibor.

why there is a divergence between the trend of the growth interest income and interest expense? what would be the trend in the third quarter for your net interest income? the second question is about other income, which grew very strongly in the second quarter, up 42% quarter over quarter and 176% year over year. you mentioned that it is mainly related to your fund distribution business and FX income business. could you tell us what drives the strong growth behind, and do you expect such strong momentum to continue in the future? Thank you.

好的, Emma, 我来回答一下这两个问题。第一个是有关这个利息收入的。那么虽然在二季度我们能看到香港的这个利率环境, Hibor 是有一个比较明显的一个下降, 但因为整体二季度开始整个市场的多空分歧相对是有一个比较明显的一个加剧, 所以整体我们在一些 hard to borrow 的一些股票方面, 其实获得了非常好的一个借券的一个收入在这个里面。这是第一个原因。第二, 整体的这个市场因为波动增加, 整体我们看到客户有更多的一些止盈, 提高他的现金的, 提高他的现金的这个仓位的这样的一个表现。叠加我们有更多的一些客户的一些入金, 所以虽然利率是在下降, 但是我们能够产生 idle cash 的这个金额, 就是另外一个驱动的因子, 是有一个非常好的一个增长。第二个因子已经把第一个因子所有负面的一个影响, 已经全部抵消掉了。这是这两个原因。这是有关这个利息收入的。 第二个就是我们的这个其他收入呢, 在今年一季度跟二季度相比去年都有一个比较好的一个增长, 主要是两方面的原因。一个就是你刚才提到的财富管理相应的一些收入, 手续费的一些分销, 包括汇兑的这一些收入。这些收入我相信在未来随着我们的财富管理的业务的进一步的增加, 以及我们整个客户资产的一个增加, 包括市场的一个活跃度能够持续的话, 我相信这一些收入, 都是可以持续的。除了这两个以外呢, 今年我们还有一块, 是我们的天津银行提供了一些相应的一些技术的一些输出的一些服务, 所以这里也会有一个技术服务带来的一个增量的一个影响在这里。我简单分享。For

Speaker 6

The first question is 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 lending. Secondly, we see more clients lock in their profit given the markets become more volatile and they want to, you know, take some money off the table. Consequently, the cash positions within their portfolios increase a lot. Therefore, you know, these benefits actually fully offset the negative implications from the yield.

Also, in the third quarter so far, we see a little bit, you know, rebound in the hybrids. At the same time, we also see the cash positions from clients continue to be maintained at relatively high levels. Also, we see a very strong client asset inflow as well. You know, compared with the second quarter, I think the interest income in the third quarter, the momentum will continue. For the second question regarding the other incomes, you are right, we got some benefits, you know, from the FX and also, you know, the management fees arising from our wealth management products. I strongly believe that these two, you know, revenue streams can continue in line with our expenses for our wealth management products. Also, if the market continues to be choppy, actually there will be more consequence demand for the FX, you know, exchange.

Besides these two normal paths, we also record 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.

Speaker 8

Thank you. Very helpful.

Speaker 3

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

Speaker 7

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.

Speaker 3

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