UP Fintech Holding Ltd. Sponsored ADR Class ATIGRNASDAQ
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Operator: Thank you for standing by. Welcome to the UP Fintech Holdings Limited's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, December 4, 2025. I would now like to hand the conference over to your first speaker today, Mr. Aron Lee, the Head of Investor Relations. Thank you. Please go ahead.
Aron Lee: Thank you, operator. Hello, everyone. We appreciate you joining us today for our UP Fintech Holding Limited's Third Quarter 2025 Earnings Call. The earnings release was distributed earlier today and is available on our Investor Relations website at ir.itiger.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 U.S. 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, who 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 Location Reform Act of 1995. Actual results could differ materially due to various factors. For more details on these factors, please refer to our Form 6-K furnished today, December 4, 2025, and our annual report on Form 20-F submitted on April 23, 2025. We are not obligated to update any forward-looking statements 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 English translation. Mr. Wu, please proceed.
Tianhua Wu: [interpreted] Hello, everyone. Thank you for joining the Tiger Brokers' Third Quarter 2025 Earnings Conference Call. In the third quarter, Tiger once again achieved impressive performance, with all revenue segments and profit showing encouraging growth and reaching new historic highs. Our total revenue reached USD 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 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 USD 53.8 million, up 30% from the previous quarter and 3x the same quarter last year. Our non-GAAP net profit reached USD 57 million, growing 28.2% quarter-over-quarter and 2.8x year-over-year. Non-GAAP net profit hit new historical highs and has maintained double-digit quarter-over-quarter growth for 5 consecutive quarters. In the third quarter, we added 31,500 new funded accounts with Singapore and Hong Kong being the primary contributing markets. In the first 3 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've 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 USD 30,000 for 3 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 USD 60,000, a historical breakthrough and leads group average this quarter to above USD 30,000 for the first time. Regarding total current assets, net asset inflow remained robust, mainly driven by retail investors, coupled with the mark-to-market gains, total client assets reached a new record of USD 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 above 20% in client assets, with Hong Kong and U.S. increasing by more than 60% and 50%, respectively. In the third quarter, we continued to refine our product features to make global investing more accessible and convenient. As the leading tech-driven brokerage in Singapore, we constantly enhance the user experience for local investors. To enable more local investors to easily participate in stock market, Tiger Singapore has waived the Singapore Exchange quarterly custody fee for accounts with no [frills], thereby reducing the holding cost for long-term investors. In Hong Kong, we have expanded our product offering 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 cryptocurrency, 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 for 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. Our 2B business also maintained 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 5 U.S. IPOs, all serving as the sole bookrunner, including Linkhome and Yimutian. Additionally, we underwrote 5 Hong Kong IPOs and 1 Hong Kong public follow-on offering, including Geek Plus and Boss Zhipin. 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 ESOP business, we added 46 new clients in the third quarter, bringing the total to 709, a year-over-year increase of 19%. Now I'd like to invite our CFO, John, to go over our financials.
John Zeng: Great. Thanks, Tianhua and Aron. Let me go through our financial performance for the third quarter. All numbers are in U.S. 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 bps this quarter, increased from 6.4 bps of last quarter. The uptick in cash equity take rate was mainly due to the increased trading volume of fewer low-priced U.S. stock during the third quarter, as we charge commission per share for U.S. stock trading. Within commission revenue, about 67% comes from cash equities, 25% 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 the 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 expenses were $12.9 million this quarter, increased 57% year-over-year as we beefed up user acquisition, particularly in Singapore and Hong Kong markets. General and administrative expense 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 non-GAAP basis. GAAP net income were $53.8 million, up 30% quarter-over-quarter and 3x of last [indiscernible]. Non-GAAP net income were $57 million, a 28% increase quarter-over-quarter and 2.8x the same quarter of last year. The non-GAAP net profit margin further expanded to 33% in the third quarter. That has concluded our presentation. Operator, please open the line for Q&A. Thanks.
Operator: [Operator Instructions] And our first question will come from Pu Han from CICC.
Han Pu: First, congratulations on the exciting results achieved this quarter. This is Pu Han from CICC. I have two questions. The first one is regarding the AUM breakdown. So how much is from clients 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 increased a lot this quarter. So could you please share the reason behind the increasing take rate? That's my two questions.
Tianhua Wu: [interpreted] In the third quarter, client assets saw a meaningful increase of about 17%, reaching a historic high of USD 61 billion. So of this increase, roughly 30% were from the net asset inflow and 70% were from the mark-to-market gains. More than 60% of the net asset inflow came from Singapore and Hong Kong markets, with retail clients being the key contributor.
John Zeng: For cash equities, the take rate increased from 6.4 bps in second quarter to 7.1 bps in the third quarter, primarily due to some U.S. local penny stock were particularly active in the quarter. Since we charge commission per shares for U.S. 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, contributed to a notable increase in our overall blended take rate. This expense while 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.
Aron Lee: Operator, please move on to the next question.
Operator: And our next question will come from Cindy Wang with China Renaissance.
Yun-Yin Wang: 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 31,500 new funding accounts by regional in third quarter? And second, customer assets in overseas markets enjoyed 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?
Tianhua Wu: [interpreted] So to 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 U.S. market. So 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 value 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 many high net worth individuals in Greater China already have overseas identities and the requirement for the Hong Kong Quality Migrant Admission Scheme gradually becoming less, 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.
Aron Lee: Operator, let's proceed.
Operator: And our next question will come from Emma Xu from BofA Securities.
Emma Xu: So the first question is about the operations so far in the fourth quarter. 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 you have further room for reduction?
Tianhua Wu: [interpreted] Okay. So regarding trading volume, the market remains quite active. Our trading volume for the first 2 months of the fourth quarter is already on par with the entire Q3, partly due to the increase in futures trading volume. Cash equity trading volume in the first 2 months of the fourth quarter is more than 2/3 of the cash equity trading volume in the third quarter. In terms of client assets, net asset inflow quarter-to-date remains robust, and are expected to be slightly better than the Q3. However, some users had mark-to-market loss due to the market volatility in the fourth quarter, we will have a better idea of the total client assets movement by the end of December. As of new funded accounts, we have already achieved our annual target of acquiring 150,000 clients for the year. The number of new funded accounts in Q4 are expected to be roughly in line with it in Q3. We will continue to prioritize future quality, ensuring our growth aligns with healthy business model.
John Zeng: So our commission income increased by 13% quarter-over-quarter. Clearing costs decreased by 17% this quarter, bringing the quarterly clearing costs 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 U.S. securities, this changes in the asset fee has largely helped us reduce clearing costs. 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.
Aron Lee: Operator, let's move on to the next question, please.
Operator: Our next question will come from Ling Tan from Haitong.
Ling Tan: I will quickly translate my questions. Congratulations on a very good, solid third quarter result. My first question is regarding the overall operating costs and expenses. I noticed that in third quarter, there is 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% to 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 costs 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 -- newly funded accounts. 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: So the rise in labor costs can be attributed to several factors. First, with our global expansion, the staff headcount has increased, and we have higher 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. So 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 expense will remain at this level in the near future. So in the third quarter, Hong Kong accounts for about 35% of new users and approximately 1/4 of net asset inflow, making it a large key growth engine [indiscernible] Singapore. As for bottomline, 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 reason 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 USD 30,000 and both velocity 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.
Aron Lee: Operator, let's move on.
Operator: And our next question will come from Dennis Bai from UBS.
Weizhou Bai: Congratulations on the strong results. My first question is about client acquisition cost, perhaps CAC. We've seen an uptrend. In 2024, the CAC was about USD 150. And in the first 3 quarters, the average CAC is about $250 and in Q3, particularly the CAC exceeds USD 400, and there's no new market entry. Could you please break out the Q3 CAC by market and share your outlook for CAC in Q4 and next year? And my second question is about the interest income. We saw a sharp Q-o-Q increase in Q3, but the margin financing and stock lending balance remained flat sequentially. Could you please explain what drives the interest income growth and whether this trend is sustainable?
John Zeng: So overall, we privatize user quality and dynamically adjusting customer acquisition costs 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 focus on attracting high net worth users, particularly in the Singapore market. As a result, average CAC in Singapore has been rising 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 be for 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 to $400 range. Back in this quarter, it was about USD 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 and New Zealand, and U.S., 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. So there are two key reasons for this interest income increase but margin balance relatively flat. So the #1 reason is the directed growth of client asset handing to an increase in client per cash adding approximately $1 billion from second quarter to third quarter. Additionally, as our profitability expense, our return earnings contributed to an increased cash balance as well. Both of those will boost interest income, but not reflected in increase in the margin financing or securities lending balance. The second reason is that while the overall margin and security lending balance remains flat from second quarter to third quarter, but the balance of high spread business, such as margin financing and the securities lending increased, while balance of lower spread business like [indiscernible] decreased, results in flat margin and security imbalance, while interest income had a big jump. Thanks.
Aron Lee: Operator, let's move on to next question.
Operator: And I'm showing no further questions from our phone lines. And I'd now like to pass it back to Aron Lee for any closing remarks.
Aron Lee: 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: Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. [Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]