UP Fintech - Earnings Call - Q2 2025

Transcript

Speaker 1

Ladies and gentlemen, thank you for standing by and welcome to the UP Fintech Holding Limited's second quarter 2025 earnings conference call. At this time, all participants are in a 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, August 27, 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.

Speaker 2

Thank you, operator. Hello everyone, and thank you for joining us for the call today. UP Fintech Holding Limited's second quarter 2025 earnings release was distributed earlier today and is available on our website at ir.itigerup.com, as well as Global News Services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and Chief Executive Officer, Mr. John Zeng, Chief Financial Officer, Mr. Huang Lei, CEO of US Tiger Solutions, 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. Now, let me cover the state of the statement. The statement was, "We are about to make content forward-looking statements." Based on the meaning of the U.S.

Private Securities Litigation Reform Act of 1995, a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about factors that could cause actual results to materially differ from those in the forward-looking statements, please refer to our Form 6K furnished today, August 27, 2025, and our annual report on Form 20F filed on April 23, 2025. We undertake no obligation to update any forward-looking statement except as required under applicable law. It is my pleasure to now introduce our Chairman and Chief Executive Officer, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by an English translation. Mr. Wu, please go ahead with your remarks.

Speaker 0

大家好, 非常感谢各位参加南湖国际2025年第二季度财报发布会。

Speaker 2

Hello everyone, thank you for joining the UP Fintech Holding Limited second quarter 2025 earnings conference call.

Speaker 0

our presence in existing markets and expanding our high-quality user base, we have the ability to achieve more stable profitability in a constantly changing market environment.

Speaker 2

In the second quarter, driven by the growth in our user base and client assets, as well as enhancements in product offerings, our total revenue, trading volume, commission income, interest income, and other income all reached record highs. Our total revenue for the quarter reached $139 million, representing a 58.7% year-over-year increase and a 13.1% quarter-over-quarter growth. Trading volume significantly surged both year-over-year and quarter-over-quarter, reaching $284 billion, which contributed to a 90.1% year-over-year increase and an 11.1% quarter-over-quarter increase in commission income, reaching $64.8 million. Meanwhile, the margin financing and securities lending balance further expanded to $5.7 billion, reflecting a 65.3% year-over-year growth, and interest income for the second quarter amounted to $58.7 million, representing a 32.8% year-over-year increase.

Benefiting from expanded user base and the increase in client assets, our net income attributed to UP Fintech for the second quarter was $41.4 million, up 36.2% from the previous quarter and 16 times higher than the same quarter last year. Non-GAAP net income reached $44.5 million, increasing 23.5% sequentially and 8.6 times the number in the same quarter last year. The non-GAAP net profit margin in the second quarter increased to 32%, set another record high, and has increased for four consecutive quarters. Additionally, for the first half of the year, our operating profit and net profit have already exceeded the total of last year, indicating a more stable and healthier business model. Through our growing efforts to penetrate existing markets and expand a high-quality user base, we are better positioned to navigate the market turbulence in a constantly changing environment.

Speaker 0

the quarter, which is a high level.

Speaker 2

In the second quarter, we added 38,900 new funded accounts, with Singapore and Hong Kong being the primary contributing markets. In the first half of the year, we have acquired more than 100,000 new funded accounts, more than two-thirds of our three-year target of 150,000 in 2025. As of the end of the second quarter, the total number of funded accounts reached 1,190,700, representing a 21.4% year-over-year increase. In addition, we are glad to see that the quality of newly funded users continues to improve in the second quarter, with the average net asset inflow of newly acquired clients exceeding $20,000, reaching a historic high. Notably, the average net asset inflow of newly acquired clients in Hong Kong and Singapore is substantially higher at around $30,000.

Speaker 0

Zealand, and United States markets also achieved over 30% quarter-over-quarter growth.

Speaker 2

Regarding total client assets, net asset inflows remain robust, reaching $3 billion in the second quarter, over 70% of which came from retail investors. Coupled with approximately $3.2 billion in the marked market gain, total client assets reached a new record of $52.1 billion, up 13.5% quarter-over-quarter and 36.3% year-over-year, marking 11 consecutive quarters of growth. In the second quarter, all markets saw double-digit sequential increases in client assets, with Hong Kong and Singapore experiencing around 50% and 20% quarter-over-quarter growth, respectively. Additionally, client assets in the Australia, New Zealand, and U.S. market increased by over 30% quarter-over-quarter.

Speaker 0

helping users achieve automatic opening or closing of positions and reducing the need for frequent monitoring.

Speaker 2

In the second quarter, we continued to optimize product features and enhance user experience. In Singapore, we launched the CPF account trading and SRS account trading features in July. These new offerings enable eligible clients to utilize the portion of their CPF ordinary account savings and retirement funds to invest in approved financial products, such as selected Singapore listed stocks, while enjoying tax benefits. We keep investing in option features to better serve our high-value users. We added pending order reminder for expiry date options, alerting users through the app or message when they have unfulfilled orders approaching expiration to prevent unnecessary exercise or forced liquidation in consideration of better user experience. We also introduced conditional market order for single leg options, allowing users to set parameters such as price, time, and underlying conditions.

When triggered, the system automatically submits corresponding single leg market orders to help users build position or close position, reducing the hassles for constant manual monitoring.

Speaker 0

with a total of 663 clients served, a year-over-year increase of 15%.

Speaker 2

Our ToB business also maintains strong momentum. In the second quarter, we underwrote seven Hong Kong IPOs and four U.S. IPOs, helping to boost our other revenue to a new quarterly high. Notable IPOs include Chargy and Joyofu Jewelry, with Chargy becoming the first Nasdaq-listed Chinese tea beverage brand, attracting over 30,000 subscribers, setting a new record for U.S. IPO subscription in the past three years. In our ESOP business, we added 30 new clients in the second quarter, bringing the total to 663, a year-over-year increase of 15%.

Speaker 0

现场请CFO John跟各位汇报一下财务细节。

Speaker 2

Now I would like to invite our CFO, John Zeng, to go over our financials.

Speaker 1

Great. Thanks, Tianhua and Aaron. Let me go through our financial performance for the second quarter. All numbers are in US dollars. We saw encouraging growth in all revenue components this quarter. Commission income was $64.8 million, increased 90% year-over-year and 11% quarter-over-quarter. Interest income was $58.7 million, increased 33% year-over-year and 9% quarter-over-quarter. In line with our sequential increase in margin financing and the securities lending balance, total revenue reached $138.7 million, up 59% year-over-year and 13% quarter-over-quarter. Cash equity takeaway was 6.4 bps this quarter, slightly decreased from 6.7 bps of last quarter, as the U.S. market went up in the second quarter, contributed to a higher average price per share. Weighting commission revenue, about 65% comes from cash equities, 28% from options, and the rest from futures and other products.

Regarding cost, interest expense was $17.3 million, increased 28% year-over-year, in line with the increase in our interest income and margin in the securities lending business. Execution and clearing expense were $5.4 million, increased 92% from the same period of last year, in line with the increase in commission and trading volume. Employee compensation and benefits expense were $35.8 million, an increase of 25% year-over-year due to headcount increase in oversea offices and R&D. Occupancy, depreciation, and amortization expense were $2.7 million, increased 29% year-over-year due to the increase in office space and relevant leasehold improvements. Communication and market data expense were $10.4 million, an increase of 18% year-over-year due to the increase in user base and IT-related service fees. Marketing expense was $9.9 million this quarter, increased 54% year-over-year as we expanded our marketing activities versus a year ago.

General and administrative expense were $6.7 million, a decrease of 67% year-over-year as last year we had a one-time bad debt provision of $13.2 million. Total operating costs were $71 million, an increase of 3% from the same quarter of last year. As a result, bottom line increased on both GAAP and non-GAAP basis. GAAP net income was $41.4 million, up 36% quarter-over-quarter and 15 times higher year-over-year. Non-GAAP net income was $44.5 million, a 24% increase quarter-over-quarter and eight times higher year-over-year. The non-GAAP net profit margin further expanded to 32% in the second quarter. Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

Speaker 3

Thank you. To ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. We will now take the first question from the line of Cindy Wang from China Renaissance, please go ahead.

谢谢Bunny曾给我这个提问的机会, 那也恭喜公司在第二季有一个很亮眼的一个表现。那我这边有两个问题想请问, 第一个就是我们看到公司二季度的一个税前利润环比上升了25%, 但所得税的一个费用却环比下降。那我们看到这个tax rate也是降到了15%左右, 那可以跟我们说一下这个主要的一个下降的原因为何? 然后这个15%是否是有一个可持续性? 然后另外一个就是说其他的业务收入这一块我们也看到环比有一个大幅的上升, 那主要的贡献是来自于投行的业务吗? 那第二个问题是想请教加密货币这一块, 想知道公司现在目前在加密货币的业务发展进度如何? 那我们也有听说公司有引入了这个战略的投资者, 共同打造这一块的领域。那除此之外的话, 就是您现在对这个香港的一个虚拟货币市场的一个发展有什么样的一个规划和看法? 那是否有计划在新加坡和美国这边获得牌照? 那我很快的翻译一下我的问题。 Thanks for taking my questions and congrats for grade two to results. I have two questions here. First, the company's pretax profit increased sequentially, but income taxes expenses decreased sequentially. Also, the effective tax rate dropped to around 15%. What is the reasoning behind it and whether is this sustainable? Also, the other revenue rose strongly. Is it mainly contributed from investment banking business? Second is regarding to the crypto business. How is the company's cryptocurrency business progressing? We've heard that the company has brought in strategic investors to jointly develop this area. What are your plans and views on the development of the Hong Kong crypto market? Do you have any plans to obtain licenses in Singapore and the United States? Thank you.

Speaker 0

好的, 那第一个问题最后回答, 然后我回答第二个问题。好的, 好的, OK。那Cindy, 我感谢你的提问哈。我先回答你的第一个问题, 就是关于effective tax rate下降的原因主要有两个, 一个是二季度呢, 公司各个主体的税前利润呢, 都有所上升, 因此呢, 就降低了那个美国主体在税前利润中的占比。由于美国的所得税呢, 在各个主体里面是最高的嘛, 因此呢, 美国这个占比的降低呢, 就拉低了集团整体的这个这个这个所得税率。第二个原因呢, 就是我们在新加坡申请到了更优惠的税率, 二季度新加坡的所得税率呢, 是从之前的17%降到了13.5%。那关于其他业务收入的大幅增加呢, 确实主要是投行收入的增加。二季度公司成交了4个美股IPO啊, 其中还有两家啊, 是作为唯一组成, 因此呢, economics呢, 相对会比较高一点。除此之外呢, 换汇收入受到市场波动的影响呢, 也有一些环比的上升。财富管理业务呢, 随着AUM的快速提升呢, 这部分收入环比呢, 也上升了70%左右。OK, 那我就简单的翻译一下吧。 There are two primary reasons for the decline in the effective tax rate. First, pre-tax profit rose across all licensed subsidiaries in the second quarter, which reduced the weighting of our U.S. subsidiary in terms of total group profit. Since the U.S. has the highest tax rate, this reduced weighting helped to lower the overall group's tax rate. Another reason is that we secured a more favorable tax rate in Singapore, reducing it from 17% to 13.5% in the second quarter. Regarding the substantial increase in other income, the growth in investment banking was indeed a major contributor. In the second quarter, we underwrote four U.S.

IPOs, out of which two of them were the sole book runner. In addition, foreign exchange income saw a quarter-over-quarter increase due to market volatility. Our wealth management revenue also rose by about 70% due to rapid growth in AUM. Thanks. 谢谢。第二个问题, 我们总来讲这个非常相信数字货币交易会是未来最主流的交易品类之一。那整个公司我们也致力于打造一个一站式的服务平台, 链接传统的金融资产和数字资产, 并且我们也非常重视在数字资产领域的持续的拓展。产品体验也是老虎我们长期成功的最根本的因素。那虽然Web3领域相较于传统的Web2交易还算是一个比较新的领域, 但我们希望在产品功能上依然能保持老虎一贯的高标准。那因此我们引入了在Web3生态中非常资深的战略投资者, 他们也是早期数字货币交易所非常成功的创业者。我们希望能够和这些合作伙伴强强联合, 与公司在Web2的科技证券等方面优势互补, 在数字资产领域打造出在全球市场领先的交易产品。那目前, 这份收入在整个公司整体收入中占比还非常低, 但随着我们在香港市场的不断拓展, 以及在数字货币提存等业界领先功能的体现上限, 那我们也看到老虎香港平台上的数字货币交易量和我们交易所的这个资产托管规模都实现了显著的提升。仅第二季度, 数字资产交易额环比增长约65%, 交易所平台上的托管资产也接近环比的翻倍增长。那此外, 在其他国家和市场方面, 我们已经在美国的14个州取得了数字货币相关的牌照, 那新加坡的牌照申请也在积极的推进。那我们近期会把更多的精力和资源集中在完善交易的相关核心功能, 并支持更多的交易品类, 为用户提供更加全面的服务体验。

Speaker 2

Okay, I'll translate for the second question. We firmly believe that digital assets are now established as a major asset class, and we are committed to expanding our presence in the digital asset market. Our goal is to develop a comprehensive one-stop platform that seamlessly connects traditional financial assets with digital ones. Product experience has always been the key to Tiger's long-term success. While Web3 is still a relatively new area compared to the traditional Web2 trading, we are committed to maintaining Tiger's high standards in product functionalities. To further this effort, we have partnered with seasoned strategic investors in the Web3 ecosystem, who are also pioneers and successful entrepreneurs in the early days of the digital asset exchange. By combining their expertise with our experience in Web2 fintech, we aspire to jointly develop leading-edge digital asset trading products that will stand out in the global market.

Although this business still accounts for only a small part of our total revenue, we are seeing strong growth, especially as we keep expanding in Hong Kong and roll out industry-leading features like digital asset deposit and withdraw. We've seen a significant increase in trading volume on our Hong Kong platform and growth in the digital asset under custody. In the second quarter, digital asset trading volume increased around 65% quarter-by-quarter, and assets under custody are exchanged nearly doubled sequentially. As for the global market, we've got digital asset trading licenses in 14 states in the U.S., and our application in Singapore is actively progressing. Moving forward, we plan to focus more resources on improving our product and supporting more trading features, aiming to offer our users a more comprehensive and seamless trading experience. Thank you. Operator, please move on to the next question.

Speaker 3

Thank you. We will now take the next question. From the line of Judy Zhang from Citigroup Inc., please go ahead.

感谢管理层给我这个提问的机会。我是花旗银行的分析师Judy Zhang, 也恭喜管理层, 就取得了一个非常好的一个业绩哈。我这边主要是两个问题。第一个问题呢, 是想问一下, 公司三季度到现在为止的一个情况, 怎么样, 尤其是, 在这个, 交易量, 客户的资产变化, 还有这个新增入金客户的一个增长这方面哈。然后第二个问题呢, 就想, 请管理层跟我们分享一下香港市场的现在一个拓展的情况, 包括, 二季度, 和三季度到现在为止的一个情况。我们也看到自从, 老虎进入香港市场以来, 这个客户的资产, 从这个本地客户这边增长的也是非常快, 那么, 公司也提到说这个本地香港客户的这个质量非常好, ROI也是非常高, 可否请管理层分享一下, 就是我们未来在香港市场的客户的, 拓展, 还有就是, 这个广告, 这个, 推广这方面的一个情况, 会对我们, 这个, tech这边, 就是, 获客成本这边会带来多大的一个影响, 那我来翻译一下哈, thank you for taking my question. I have two questions. The first question is regarding the company's revenue rate so far in the Q3 quarter to date. Specifically, could you share with us any early trends around trading volume, client assets, and the new paying customers' growth? The second question is, can you update us on your progress in the Hong Kong market expansion during the second quarter and the third quarter to date? We have noticed that since Tiger entering the Hong Kong market, the company's assets from local clients have been rapidly increasing. The company has also mentioned that the quality of the local clients is excellent.

Given this satisfied ROI, what does Tiger plan to enhance the customer acquisition and advertising efforts in Hong Kong? How are they going to impact on the company's tech going forward? Thank you.

Speaker 0

谢谢。我回答第一个问题，这样回答香港这个问题。总体来讲，我们对于第三季度截止到目前的经营表现还是比较满意的。在交易的活跃度的方面，前两个月平台上的月均交易的股数是超过了第二季度的平均水平。由于每股我们也是按照交易股数收取佣金的，所以因此，我们对于这个佣金收入的表现同样也是比较不错的。客户资产的方面，截止目前来看，客户资产相比第二季度末有一个高个位数的增长，其中这个market gain起到了比较大的帮助。进入金的趋势总体来看也是不错的，尤其是来自零售用户的进入金贡献占比比较大。我们也期待9月份能够延续这样的一个势头。入金用户数的方面，公司依然会延续第二季度客户质量和进入金优先的这样的一个获客的策略。我们也高兴的看到截止到三季度末截止到目前香港市场贡献上升较为明显，基本能够和来自新加坡市场的贡献持平。也因为香港地区的用户质量是我们所有牌照里面最高的，因此我们对于三季度入金用户的质量保证还是比较有信心的。

Speaker 2

Okay. Overall, we are quite satisfied with our operating performance quarter to date. In terms of trading activity, the average monthly number of shares traded on our platform in the past two months has been higher than the monthly average in the second quarter. As we earn commissions based on the number of shares traded in the U.S. stock market, commission revenue so far in the third quarter has been on target. Regarding client assets, there has been a high single-digit % increase compared to the end of the second quarter. A significant part of this increase has been driven by marked market gains. The trend in the net asset inflow is also quite positive, especially with retail clients contributing a large portion of this growth. As for the new funded accounts, we remain committed to our second quarter customer acquisition strategy, prioritizing user quality and net asset inflows.

We are glad to see a meaningful improvement in the contribution from the Hong Kong market, which now almost matches the contribution from Singapore. Since the quality of users in Hong Kong is the highest across all the markets we've entered, we are confident in maintaining the user quality of the new funded accounts in the third quarter.

Speaker 0

OK, 我们接着回答你的第二个问题, 就是关于香港。在二季度以及近期在三季度, 我们确实加大了投入的力度, 举行和参与了许多线下的活动和展会, 深入融入到本地的社区。此次市场推广的目标呢, 是提升品牌知名度, 增强客户的参与感, 然后通过这些线上线下的结合, 再加上创新的金融科技解决方案和优惠的开户政策, 我们在香港呢, 成功的触达到了更多的本地的投资者。我们也观察到客户质量和业务规模都实现了进一步的提升, 例如二季度在香港的这个新增入金客户, 当季度平均进入金达到了$30,000美金, 带动整体香港客户资产的规模呢, 环比增长了约50%。然后进入到三季度, 截止目前, 香港新增入金客户数已基本与新加坡市场的增长人数持平。然后呢, 我们在香港呢, 会加快布局, 不仅为公司带来, 可以为公司带来更健康、更可持续的增长结构, 也让我们在港股产品和用户理解方面的积累呢, 得到了显著的提升。过去两年多的深耕呢, 使得我们最近几个月在香港市场还是取得了不错的反馈和成长。未来呢, 我们会继续加快在香港的布局, 大家也会看到老虎在香港呢, 会有更多的活动推出。然后关于在获客成本方面呢, 随着二季度开始加大香港的获客力度, 当季度香港市场的人均获客成本呢, 是在$400, $400美金以上的。我们觉得基于香港的用户质量来讲呢, payback呢, 还是非常的健康。以现在的市场环境来看呢, 基本在两个季度左右就能payback。三季度或者下半年呢, 我们觉得香港的人均CAC会随着动态调整和品牌投入呢, 有所波动, 但基本香港的人均CAC呢, 会保持在这个区间。 In the second quarter and third quarter so far, we stepped up our investment in the Hong Kong market. We organized and participated in numerous offline events and exhibitions, actively engaging with the local community. Our goal is to boost brand awareness and increase customer engagement. Combining offline activities with innovative fintech solutions and incentives, we were able to reach a bigger pie of local investors. We have seen tangible results, both in the user quality and client assets.

For example, in the second quarter, the average net asset inflow per new Hong Kong funded users reached around $30,000, which contributed to a roughly 50% quarter-over-quarter increase in overall client assets in Hong Kong. So far in the third quarter, the number of new funded accounts in Hong Kong has now nearly matched the growth we have seen in Singapore. Our accelerated expansion in Hong Kong not only creates a healthier, more sustainable growth, but also deepens our understanding of the local market. Over the past two years, our dedicated efforts have started to pay off. Going forward, we will continue to speed up our efforts in Hong Kong, and you will see more Tiger events to drive user growth and brand awareness. Regarding CAC, since we started ramping up our customer acquisition in Hong Kong in the second quarter, the average CAC is around $400 plus.

It's relatively higher than other markets, but the payback period remains quite healthy, about two quarters under current market conditions. For the third quarter and the rest of the year, we expect the average CAC in Hong Kong to fluctuate based on our marketing strategy. We anticipate it will stay around this level. Thanks.

Speaker 2

Thank you. Let's proceed to the next question.

Speaker 3

Thank you. We will now take the next question from the line of Denis Bai from UBS Investment Bank, please go ahead.

Speaker 0

好的, 谢谢管理层给我这个提问的机会, 也祝贺公司在二季度的强劲业绩。我是UBS的Denis, 我有两个问题。第一个问题是想请管理层帮忙tag一下二季度新增进入金用户数的在不同市场之间regular breakdown。然后第二个问题呢, 是我们看到二季度新增用户数环比有所下降, 想请管理层分享一下这背后主要的原因是什么。那么未来看的话是怎么看季度和入金用户数的这个未来的增长的? 那我很快翻译一下。 Big congratulations to the set of strong results, and I'm Denis from UBS. I have two questions. The first is about, could you please give a breakdown of the newly added customers with deposits across different regional markets? The second is, we've noticed that the newly added customers with deposits in the second quarter declined quarter-over-quarter. What's the reasons behind? How do you view the growth looking forward? Thank you.

Speaker 2

谢谢。

Speaker 0

from the United States market.

Speaker 2

For the first question about the regional breakdown of new funded accounts, in the second quarter, about 50% of newly funded accounts came from Singapore and Southeast Asia region. Approximately 30% were from Hong Kong and the Greater China area, 15% from Australia and the New Zealand market, and around 5% from the U.S. market.

Speaker 0

we will continue to dynamically adjust our composite strategies with a focus on user quality and client assets. Thank you. In the second quarter, we added nearly 40,000 new users. We believe this number fully meets our expectations, both in terms of annual targets and customer acquisition pace. From another perspective, though the number is a bit lower than the first quarter, the main reason includes the impact of Tier 4 in April, some investor sentiment fluctuates, and most importantly, targeted adjustments were made to our customer acquisition channels. This included shutting down some low quality, low ROI channels and pausing certain online advertisements in Singapore to ensure the high quality user base. Overall, these adjustments have been proved to be effective. We place great emphasis on increasing client assets and maintaining a healthy net asset inflow mix.

As mentioned earlier, the average net asset inflow of newly acquired clients exceeded $20,000, and in Singapore and Hong Kong, it even reached about $30,000. More importantly, the nearly 40,000 new users in Q2 contributed more net asset inflow in that quarter than the over 60,000 new users in the first quarter. Additionally, our overall customer acquisition cost decreased by about 10% compared to the first quarter. Looking ahead, whether from an efficiency perspective or on a profitability standpoint, we plan to continue optimizing and dynamically adjust our customer acquisition strategies by focusing on user quality and client assets. Thanks, Denis. Operator, is there any other questions?

Speaker 3

There's no further questions. I would now like to turn the conference back to Aaron Lee for closing remarks.

Speaker 2

Okay. 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 UP Fintech. 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.

Speaker 3

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

Speaker 2

Thank you.