UP Fintech - Earnings Call - Q3 2025

Transcript

Operator (participant)

Thank you for standing by. Welcome to the UP Fintech Holdings Limited third 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, December 4th, 2025. I would now like to hand the conference over to your first speaker today, Mr. Aaron Lee, the Head of Investor Relations. Thank you. Please go ahead.

Aaron Lee (Head of Investor Relations)

Thank you, Aaron Lee. Hello, everyone. We appreciate you joining us today for UP Fintech Holdings Limited's third quarter 2025 earnings call. The earnings release was distributed earlier today and is available on our Investor Relations website at ir.itigerup.com and through GlobeNewswire. On the call today with us are Mr. Wu Tianhua, Chairman and Chief Executive Officer. Mr. John Zeng, Chief Financial Officer. Mr. Huang Lei, CEO of US Tiger Securities. and Mr. Kenny Zhao, our Financial Controller. Mr. Wu will provide an overview of our business operations and key corporate highlights, followed by Mr. Zeng will discuss our financial results. They will both be available to answer your questions during the Q&A session afterwards. Before we begin, I'd like to address the safe harbor statement. The upcoming remarks will contain forward-looking statements.

As defined by the U.S. Private Securities Litigation Reform Act of 1995, actual results differ materially due to various factors. For more details on these factors, please refer to our Form 6-K filed today, December 4th, 2025, and our annual report on Form 20-F submitted on April 23rd, 2025. We are not obligated to update any forward-looking statement unless required by law. Now, it's my pleasure to introduce our Chairman and CEO, Mr. Wu, who will begin his remarks in Chinese, followed by an English translation. Mr. Wu, please proceed.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

Hello, everyone. Thank you for joining the Tiger Brokers' third quarter 2025 earnings conference call.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

In the third quarter, Tiger once again achieved impressive performance, with all revenue segments and profits showing encouraging growth and reaching new historic highs. Our total revenue reached $175.2 million, representing a year-over-year increase of 73.3% and a quarter-over-quarter increase of 26.3%. We have maintained our strategy of prioritizing user quality and product experience, which has further improved our ROI and laid down a solid foundation for ongoing profit growth. All of our licensed entities achieved profitability in the third quarter, resulting in a net income attributable to UP Fintech of $53.8 million, up 30% from the previous quarter and three times the same quarter last year. Our non-GAAP net profit reached $57 million, growing 28.2% quarter-over-quarter and 2.8 times year-over-year. Non-GAAP net profit hit new historical highs and has maintained double-digit quarter-over-quarter growth for five consecutive quarters.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

In the third quarter, we added 31,500 new funded accounts, with Singapore and Hong Kong being the primary contributing markets. In the first three quarters of this year, we have acquired 132,200 new funded accounts. The total number of funded accounts reached 1,224,200, representing an 18.5% year-over-year increase. As of today, we have already achieved our annual guidance of acquiring 150,000 newly funded accounts. In addition, we are glad to see better brand recognition from Hong Kong users. In the third quarter, for the first time, Hong Kong accounted for over 30% of our quarterly new funded users, becoming a key growth engine alongside Singapore. More importantly, user quality in Hong Kong remains strong, with average net asset inflow for newly acquired clients holding around $30,000 for three consecutive quarters. Meanwhile, ROI-driven acquisition strategy delivered standout results in Singapore.

The average net asset inflow for newly acquired clients in the third quarter surpassed $60,000, a historical breakthrough, and leads group average this quarter to above $30,000 for the first time.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

Regarding total client assets, net asset inflow remained robust, mainly driven by retail investors. Coupled with the mass market gain, total client assets reached a new record of $61 billion, up 17.3% quarter-over-quarter and 49.7% year-over-year, marking 12 consecutive quarters of growth. In the third quarter, all the overseas markets delivered double-digit quarter-over-quarter growth of above 20% in client assets, with Hong Kong and the U.S. increasing by more than 60% and 50% respectively.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

In the third quarter, we continued to refine our product features to make global investing more accessible and convenient. As a leading tech-driven brokerage in Singapore, we constantly enhance the user experience for local investors. To enable more local investors to easily participate in the stock market, Tiger Singapore has waived the Singapore Exchange quarterly custody fee for accounts with no trades, thereby reducing the holding costs for long-term investors. In Hong Kong, we have expanded our product offerings by introducing Japanese market derivative services, such as Nikkei Futures. For the first time in the third quarter, further solidifying our global multi-asset strategy. Additionally, in September, we launched cryptocurrency trading in New Zealand, providing local users with investment services in major cryptocurrencies like Bitcoin and Ethereum.

During the third quarter, Tiger Platform enhanced cryptocurrency-related features by adding unique data such as macro market insights and holdings information for companies, assisting users with recognizing investment opportunities and making better investment decisions. Tiger AI has seen a rapid increase in usage, with user numbers growing nearly fivefold year-over-year and the number of conversations increasing tenfold. Meanwhile, the Intelligent Investment Analysis Tool, TradingFront AI, provides real-time portfolio analysis and market insights for asset management business, helping investment advisors enhance their analysis efficiency and decision-making quality.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

Our ToB business also maintains strong momentum, significantly boosting other revenue by doubling them quarter-over-quarter, achieving a historic high for a single quarter. In the third quarter, we underwrote five U.S. IPOs, all serving as the sole book runners, including LinkHome and Hamilton. Additionally, we underwrote five Hong Kong IPOs and one Hong Kong public follow-on offering, including Gig Plus and Boat Trippies. With the IPO market being active, supported robust growth in our IPO subscription business, with the number of subscribers increasing by 39.3% quarter-over-quarter and subscription amount surging by 121.5%, reflecting our platform's enhanced underwriting capability. In our ESOP business, we added 46 new clients in the third quarter, bringing the total to 709, a year-over-year increase of 19%.

Tianhua Wu (Chairman and CEO)

[Foreign language] CFO John [Foreign language]

Aaron Lee (Head of Investor Relations)

Now I'd like to invite our CFO John to go over our financials.

John Zeng (CFO)

Great. Thanks, Tianhua and Aaron. Let me go through our financial performance for the third quarter. All numbers are in US dollars. We saw encouraging growth in all revenue components this quarter. Commission income was $72.9 million, increased 77% year-over-year and 13% quarter-over-quarter. Interest income was $73.2 million, increased 53% year-over-year and 25% quarter-over-quarter, in line with our sequential growth in margin and securities lending balance. Total revenue reached $175.2 million, up 73% year-over-year and 26% quarter-over-quarter. Cash equity take rate was 7.1 basis points this quarter, increased from 6.4 basis points of last quarter. The uptick in cash equity take rate was mainly due to the increased trading volume of a few low-priced US stocks during the third quarter, as we charged commission per share for US stock trading. Within commission revenue, about 67% comes from cash equities, 29% from options, and the rest from futures and other products.

Now on to cost. Interest expense was $21.9 million, increased 40% year-over-year, in line with the increase in interest income from margin and securities lending business. Execution and clearing expense were $4.5 million, increased 27% from the same period of last year, in line with the increase in commission and trading volume. Employee compensation and benefits expense were $47.2 million, an increase of 64% year-over-year due to the headcount increase to strengthen overseas growth and R&D. Occupancy depreciation and amortization expense were $2.8 million, increased 28% year-over-year due to the increase in office space and relevant leasehold improvements. Communication and market data expense were $11.8 million, an increase of 21% year-over-year due to the increase in user base and IT-related services fees. Marketing expense were $12.9 million this quarter, increased 57% year-over-year as we beef up user acquisition, particularly in Singapore and Hong Kong markets.

General and administrative expenses were $10.3 million, an increase of 49% year-over-year due to an increase in professional service fees. Total operating costs were $89.4 million, an increase of 51% from the same quarter of last year. As a result, bottom line increased on both GAAP and the non-GAAP basis. GAAP net income was $53.8 million, up 30% quarter-over-quarter and three times of last year amount. Non-GAAP net income was $57 million, a 28% increase quarter-over-quarter and 2.8 times the same quarter of last year. The non-GAAP net profit margin further expanded to 33% in the third quarter. Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

Operator (participant)

Thank you. At this time, we will now conduct the question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question will come from Yu Fan from CICC. Your line is now open.

Yu Fan (Research Analyst)

[Foreign language] take rate [Foreign language] blended [Foreign language] cash equity [Foreign language] take rate, [Foreign language] Thank you, management, for taking my question. First, congratulations on the exciting result achieved this quarter. This is Yu Fan from CICC. I have two questions. The first one is regarding the AUM breakdown. So how much is from client net asset inflow and how much from mark-to-market gain? And in terms of the net asset inflow, how much is from retail investors and how much from institutions? The second question is about the take rate. We see both the blended take rate and the cash equity take rate increase a lot this quarter. So could you please share the reasons behind the increasing take rate? That's my two questions. Thank you.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

In the third quarter, client assets saw a meaningful increase of about 17%, reaching a historic high of $61 billion. So of this increase, roughly, 30% were from the net asset inflow and 70% were from the market gain. More than 60% of the net asset inflow came from Singapore and Hong Kong markets, with retail clients being the key contributor.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

For cash equities, the take rate increased from 6.4 basis points in second quarter to 7.1 basis points in the third quarter, primarily due to some US local meme stocks were particularly active in the quarter. Since we charged commission per shares for US stock, this led to an increase in cash equity take rate.

As for the blended take rate, aside from the increase in cash equity commissions, futures trading volume dropped from around 7% in the second quarter to about 4% in the third quarter. As we count notional value for futures trading, the decrease in futures trading volume while increasing commission income contributes to a notable increase in our overall blended take rate. This explains why our stock trading volume showed a quarter-over-quarter increase consistent with the increase in commission income, but the total trading volume was actually down. Thanks.

Yu Fan (Research Analyst)

[Foreign language]

Thank you.

Aaron Lee (Head of Investor Relations)

Thanks. Operator, please move on to the next question.

Operator (participant)

Thank you. And our next question will come from Cindy Wang with China Renaissance. Your line is now open.

Cindy Wang (Director)

[Foreign language] regional breakdown [Foreign language]

Thanks for taking my question. This is Cindy from China Renaissance, and congrats for the great third quarter results. I have two questions here. First, could you give us the breakdown of 31.5 thousand new funding accounts by region in third quarter? And second, customer assets in overseas markets enjoy significant sequential growth in third quarter. Could you please provide details on the onshore user assets quarter-over-quarter change and their contribution in overall client assets in third quarter? Thank you.

Tianhua Wu (Chairman and CEO)

[Foreign language]

Aaron Lee (Head of Investor Relations)

For your first question, in the third quarter, about 40% of newly funded accounts came from the Singapore market, approximately 35% were from the Hong Kong and 20% from Australia and New Zealand market, and the rest 5% from the US market.

Tianhua Wu (Chairman and CEO)

[Foreign language] mark-to-market gain [Foreign language]

Aaron Lee (Head of Investor Relations)

In the third quarter, client assets for the onshore investor also saw a double-digit quarter-over-quarter increase, with both institutional and retail clients experiencing net asset inflow, and mark-to-market gains also boosted the quarter-over-quarter increase. Due to our global expansion over the past few years, the growth pace for client assets in overseas markets has been faster. By the end of the Q3, client assets of onshore retail users as a percentage of our total client assets has dropped to below 15%.

The new account opening rules require onshore investors to hold valid overseas, including Hong Kong, identification to open accounts with us. It has been the same rule across the whole industry. We remain optimistic about the Greater China market because, you know, many high net worth individuals in Greater China already have overseas identities, and the requirement for the Hong Kong quality migrants admission scheme are gradually becoming less, well, I would say stringent. The global asset allocation for investors is just getting started, presenting tremendous market potential. Just by serving this cohort, we will be able to sustain strong growth in client assets and trading volumes. Thanks, Cindy. Operator, let's proceed.

Operator (participant)

Thank you. And our next question will come from Emma Xu from B of A Securities. Your line is open.

Emma Xu (Research Analyst)

[Foreign language]

So the first question is about the operations so far in the fourth quarter. But in particular, could you share any early trends around the trading volume, client assets, and new funded accounts? And the second question is about your clearing cost, which decreased quite significantly in the third quarter. So what are the major reasons behind, and do you believe the current clearing cost is sustainable or has further room for reduction? Thank you.

Tianhua Wu (Chairman and CEO)

[Foreign language]

[Foreign language]

Aaron Lee (Head of Investor Relations)

So regarding trading volume, market remains quite active our trading volume for the first two months of the fourth quarter is already on par with the entire Q3 Partly due to the increase in futures trading volume. Cash equity in trading volume, in the first two months of the fourth quarter is more than two-third of the cash equity in trading volume in the third quarter. In terms of client access, net set inflow quarte today remains robust and expected to be slightly better than the Q3. However some user had mark-to-market loss due to market volatility in the fourth quarter, maybe will have a better year of the total client access movement by the end of December, as for new funded accounts we have already achieved our annual target of occurring 150,000 clients for the year.

The number of new funded accounts in Q4 are expected to be roughly in line with in Q3. We will continue to prioritize user quality, ensuring our growth aligns with healthy business model.

John Zeng (CFO)

Okay, Emma, [Foreign language]

So our commission income increased by 13% quarter over quarter, clearing cost decreased by 17% quarter over quarter, bringing the quarterly clearing cost to a historic low of 6%. The key reason is SEC in May announced that it will no longer charge transaction fee since majority of the trading volume on our platform are in US securities. This change in the SEC fee has largely helped us reduce clearing cost. We believe the current clearing cost rate is quite sustainable as we are self-clearing for all core products. Only a small number of stock and derivatives are cleared by third parties. Thanks.

Aaron Lee (Head of Investor Relations)

Thanks, Emma. Operator, let's move on to the next question, please.

Operator (participant)

Thank you. Our next question will come from Ling Tan from Haitong. Your line is open.

Ling Tan (Analyst)

[Foreign language] I will quickly translate my question. Thank you management for taking my question and congratulations on a very good solid third quarter result. My first question is regarding the overall operating cost and expenses. I noticed that in third quarter there's a notable increase in the overall cost and expenses, particularly in R&D as well as employee compensation, which is higher than the previous guidance of 10%-20% year-over-year growth. Could management explain a little bit on what's the reason behind the increase and looking forward do you expect the overall operating cost and expenses to remain at the current level or do you expect it will gradually go up or trend down? My second question is regarding Hong Kong market. In third quarter, Hong Kong contributed to roughly around 40% of the total new funded account.

Could management explain a little bit more on Hong Kong's contribution regarding net asset inflow, total revenue, as well as net profit? And also looking forward, how do you plan to maintain the strong growth in Hong Kong given Hong Kong is a highly competitive and highly penetrated market?

John Zeng (CFO)

[Foreign language] trading cost. [Foreign language]. The rise in labor cost can be attributed to several factors. First, with our global expansion, the staff count has increased, and we have hired experienced R&D personnel to enhance our product offerings. Second, we have accrued more bonus given the recent performance. In addition, our asset management unit performed well in the third quarter, so we paid performance bonus to our fund managers. As a result, labor costs in the third quarter were higher than normal single quarters. As for G&A expense, the increase is mainly due to as we grow globally, we are required to have more professional services related to AML, audit consulting, and legal services. We anticipate those expenses will remain at this level in the near future.

[Foreign language] In the third quarter, Hong Kong accounts for about 35% of new users and approximately one quarter of net asset inflow, making it another key growth engine alongside Singapore. As for bottom line, Tiger Brokers Hong Kong has been profitable over the past years, though its contribution to group profit was still relatively low. Considering the high user quality in Hong Kong, our current focus is to further improve our product offerings and increase market share, rather than prioritizing profit contribution from the Hong Kong market. We are quite satisfied with the growth pace since entering Hong Kong. Our user base is very diversified, including existing investors using other brokers and the younger generation entering the market. We believe our product experience combined with competitive pricing are fundamental to Tiger's growing presence in Hong Kong and the reasons why different users choose us.

Since entering the Hong Kong market, client assets have consistently seen double-digit growth quarter over quarter, with over 60% increase in the third quarter. The average client asset per user for both new and existing clients exceeded $30,000, and both velocities and ARPU are the highest across all our markets. As we increase our user acquisition in Hong Kong, along with the ongoing enhancement of our product offering like cryptos, we remain optimistic about future growth in this market. It's only a matter of time Hong Kong becomes another major profit contributor for the group. Thanks.

Aaron Lee (Head of Investor Relations)

Okay, thanks, Ling, Operator, let's move on.

Operator (participant)

Thank you. One moment for our next question. And our next question will come from Dennis Bai from UBS. Your line is open.

Aaron Lee (Head of Investor Relations)

[Foreign language] client acquisition cost per head [Foreign language] Thanks for taking my question and congratulations on the strong results. My first question is about client acquisition cost per head (CAC). We've seen an uptrend in 2024, the CAC is about $150, and in the first three quarters, the average CAC is about $250. In Q3, particularly, the CAC exceeds $400, and the company has not expanded into new markets. Could you please break out the Q3 CAC by market and share your outlook for CAC in Q4 and next year? My second question is about the interest income. We saw a sharp QQ increase in Q3, but the margin financing and the stock lending balance remained flat sequentially. Could you please explain what drives the interest income growth and whether this trend is sustainable? Thank you.

John Zeng (CFO)

[Foreign Language] Overall, we prioritize user quality and ROI, dynamically adjusting customer acquisition cost based on market conditions. As a result, average CAC can fluctuate across different periods and for different markets. This year, we have continued to optimize our customer acquisition strategy by eliminating channels that do not meet our ROI standards and focusing on attracting high net worth users, particularly in the Singapore market. As a result, average CAC in Singapore has risen from just over $100 back in 2024 to over $400 this year. At the same time, the quality of new users from Singapore keeps improving, with the average net inflow per new users exceeding $60,000 in the third quarter. From a lifetime value perspective, we believe this will benefit our profitability in the long term.

The Hong Kong market has always been competitive, leading to a higher average CAC, which remains stable in the $300-$400 range. Back in this quarter, it's all it was about like $300. However, due to the high quality of the local users, the payback period is still the shortest among all the markets we entered. In Australia, New Zealand, and the US, we adopt a long-term approach to gradually earn local users' trust, resulting in a relatively stable average CAC around $200. Looking ahead, we will continue to adjust our customer acquisition strategy based on market conditions and competitive dynamics. [Foreign language] So there are two key reasons for this trend: interest income increase but margin balance relatively flat.

So the number one reason is the direct growth of client asset handed to an increase in client idle cash, adding approximately $1 billion from second quarter to third quarter. Additionally, as our profitability expands, our return earnings contribute to an increased cash balance as well. Both of those will boost interest income but not reflected in increasing the margin financing or securities lending balance. The second reason is well, the overall margin and the securities lending balance remain flat from second quarter to third quarter. But the balance of high spread business, such as margin financing and securities lending, increased, while balance of lower spread business like Conduit decreased, results in flat margin and securities lending balance, while interest income had a big jump. Thanks.

Aaron Lee (Head of Investor Relations)

Thanks, Dennis. Operator, let's move on to the next question.

Operator (participant)

Thank you. I'm showing no further questions from our phone lines, and I'd like to pass it back to Aaron Lee for any closing remarks.

Aaron Lee (Head of Investor Relations)

Okay, thanks. I'd like to thank everyone for joining the 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.

Operator (participant)

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