UP Fintech Holding Limited Price & Performance (TIGR)

Thank you, operator. Hello, everyone, and thank you for joining us for the call today. Our FinTech Co. Ltd. Fourth quarter and full year twenty twenty four earnings release was distributed earlier today and is available on our IR website at ir.itigeroff.com, as well as Globe Newswear Services. On the call today from UPFintech are Mr. Hu Tianhua, Chairman and CEO Mr. Zheng Zheng, our CFO Mr. Huang Lei, CEO of U. S. Tiger Securities and Mr. Kenny Zhang, our Financial Controller. Mr. Wu will give an overview of our business operations and discuss corporate highlights. Mr. Zheng will then discuss our financial results. They will both be available to answer your questions during the Q and A session followed by remarks. Now, let me cover the safe harbor. The statements we are about to make contain forward looking statements within 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 statements. For more information about factors that could cause actual results to differ materially from those in the forward looking statements, please refer to our Form six K furnished today, 03/18/2025, and our annual report on 20 F filed on 04/22/2024.

We undertake no obligation to update any forward looking statements, except as required under applicable law. It is my pleasure to now introduce our Chairman and CEO, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by English translation. Mr. Wu, please go ahead with your remarks. Hello, everyone. Thank you for joining the Tiger Brokers fourth quarter and full year twenty twenty four earnings conference call. In the fourth quarter, driven by expanded client base, comprehensive product offerings and more active market environment in The U. S. And Hong Kong, Our financial and operating results both grew substantially. Our total revenue for the quarter was US124.1 million dollars making a 22.8% increase quarter over quarter and a 77.3% increase year over year. Both commission and interest income hit record highs, growing by 35.816.3% respectively compared to the previous quarter. For the full year, total revenue reached US391.5 million dollars a 43.7% increase from 2023. We are also pleased to report a significant improvement in profitability for 2024 with GAAP net income reaching US60.7 million dollars and non GAAP net income reaching US70.5 million dollars up 86.565% respectively from 2023. In the fourth quarter, GAAP and non GAAP net profit were US28.1 million dollars and US30.5 million dollars respectively, reflecting a 5851.7% increase quarter over quarter.

We are excited to see record highs in both revenue and profit for Q4 and the full year of 2024. Additionally, our non GAAP net profit margin increased from 20% in the third quarter to 25% in the fourth quarter. In the fourth quarter, we added 59,200 newly funded accounts, a 17.2% increase from the previous quarter. For the full year, the total number of newly funded accounts reached 187,400, surpassing our annual target of 150,000 by the annual. By the end of twenty twenty four, the total number of funded accounts reached 1,090,000, up 20.7% year over year. Year to date, we continue to see strong pay in client growth. We target about 150,000 new funded clients in 2025, while prioritizing user quality. In terms of total client assets, net asset inflows remained strong at US1.1 billion dollars for the quarter, with approximately 80% coming from retail users. Although slightly impacted by mark to market losses, total bank assets grew by 2.4% quarter over quarter and 36.4% year over year, reaching US41.7 million dollars Notably, client assets in Hong Kong increased by about 50% quarter over quarter, growing six times compared to the end of twenty twenty three, making Hong Kong our third largest market in terms of client assets.

Additionally, we are pleased to see that over the past three years, despite shift in market cycle and investor sentiment, we've achieved strong organic growth. The total number of funded accounts and total planned assets have increased at a CAGR of 17.534.7%, respectively. These results highlight the tremendous growth potential the market has entered and the trust our users have placed in us from time to time across different regions. We keep optimizing product features and expanding licenses to enhance user experience. Following Tiger Brokers Hong Kong TechOne license uplift, our cryptocurrency platform, YAX Hong Kong, received license from Hong Kong SFC for TechOne and Tech seven. This officially makes us a licensed virtual asset trading platform in Hong Kong. Recently, we officially upgraded our AI investment assistant, Tiger GPG to Tiger AI and integrated with leading AI models, making us the first brokerage platform globally to incorporate this technology. This upgrade boosts our intelligence investment assistant experience in two dimensions, deep logical deduction and financial data integration, enabling it to analyze market shift more clearly and interpret investment opportunities more effectively, empowering both retail investors and experienced professionals to make more informed decisions in complex market conditions, ultimately driving long term investment value.

Our 2B business continues to perform well. In investment banking business, we underwrote a total of 14 US and Hong Kong IPOs in the fourth quarter, including Mogul Inc. Company, Pony AR Inc, and WeRack Inc, bringing the total number of U. S. And Hong Kong IPOs underwritten for the year to 44. In our e book business, we added 16 new clients in the fourth quarter, bringing the total number of eSock clients served to six thirteen as of the end of twenty twenty four. Now, I'd like to invite our CFO, John, to go over our financials.

Thanks, Ken and Aaron. Let me go through our financial performance for the fourth quarter. All numbers are in US dollars. Total revenue were $124,100,000 this quarter, increase of 22.8% quarter over quarter and 77% year over year. Both commission income and interest income increased on a quarter over quarter and year over year basis. Full year total revenue were $391,500,000 increased 44% compared to last year. Both quarterly and the full year top line reached an all time high in our operating history. Cash equities take rate was 6.9 bps this quarter, increased from 6.4 bps last quarter as trading volumes were less concentrated in higher value names. Within commission revenue, about 70% comes from cash equities, 30% from options and the rest comes from futures and other products. Now on cost. Interest expense was $16,700,000 increased by 5% from the same quarter of last year due to the increase in margin financing and securities lending activities. Execution and clearing expense were $6,100,000 increased 172% from the same quarter of last year, primarily due to an increase in our trading volume. Employee compensation and the benefits expense were $37,200,000 an increase of 41% year over year due to an increase of global headcounts.

Occupancy, depreciation and amortization expense slightly decreased 2% to $2,100,000 Communication and market data expense were $11,800,000 an increase of 38% year over year due to the increase in user base and IT related services. Marketing expense were $9,500,000 this quarter, increased 64% year over year as we increased marketing spending under a more favorable market backdrop. General and administrative expense were $6,400,000 a decrease of 12% year over year due to a decrease in professional service fees. Total operating costs were $73,100,000 an increase of 39% from the same quarter of last year. As a result, in the fourth quarter, GAAP net income was $28,100,000 Non GAAP net income was $30,500,000 increased 5852% quarter over quarter, respectively. For the full year of 2024, total GAAP net income was $60,700,000 and the non GAAP net income was $70,500,000 also an all time high and increased 8765%, respectively, compared to last year. Now, I have concluded our presentation. Operator, please open the line for Q and A. Thanks.

Thank you. We will now begin the question and answer session. We will now take our first question from the line of Cindy Wang from China Renaissance. Please ask your question, Cindy.

So my question is, first one, in 2025, you are targeting to acquire 150,000 new funding clients, which is the same as 2024 guidance. However, new funded clients you acquired in 2024 was much higher than the guidance. So how do we read through this guidance again in 2025 and the mix contribution from each market? The second question is, could you give us new fund decline breakdown by regional in fourth quarter? Thank you.

Okay. I'll translate for the first part. So in 2025, our focus on customer position will prioritize user quality and ROI. We plan to expand our effort to acquire high network user base rather than just pursuing user number growth. Therefore, we are setting a target of 150,000 new friendly users maintaining the same level as in the 2024. However, we do expect to see the improvement in customer quality metrics such as the average client assets and the ARPU for these new users in 2025. Regarding the regional mix, we anticipate that the overall situation will be pretty much in line with the actual breakdown in 2024 with Greater China region being the primary contributor. And in 2025, while ensuring the quality of new users, we have higher expectation for growth in Hong Kong and US market, and we will consider increasing our marketing input, if the market condition is favorable. Well, in the Q4, about 60% of new funded users came from Singapore and Southeast Asia, about 25% were from Greater China area, while around 10% from Australia and New Zealand market and the remaining 5% came from The U. S. Market. Thank you. And operator, please move on to the next question.

Thank you. We will now take our next question from the line of Emma Xu from Bank of America Securities. Please ask your question, Emma.

So the first question is that your compensation expenses have risen more than anticipated and why there has been a notable increase in the effective tax rate sequentially? And the second question is, what are the first quarter run rate for your AUC, the pace of new foundry clients and trading volume? And what's your thoughts on recent volatilities in The U. S. Market on your business?

So the rise in labor cost is mainly due to we added extra employee incentive at the end of the year, which increased the year end bonus accrual. The effective tax rate increased from 14% in the third quarter to 25% in the fourth quarter, primarily due to the increase in profit coming from The U. S. Market, where tax rate is relatively higher. A couple of reasons. First, the market was very active in the fourth quarter, which benefited the margin financing and securities lending activities largely increased in local interest income quarter over quarter. Another reason is related to U. S. Treasury bonds. For calculating tax, the income from T bonds is only realized after maturity. So in Q4, we had several T bonds matured, contributing to the increase in profit from The U. S. Okay. I'll translate. So year to date, we've seen a solid sequential increase in total client assets, thanks primarily to strong net asset inflows. Specifically, net asset inflow year to date has already exceeded the number in the second half of twenty twenty four. While there have been some ups and downs in The US stock market, we are still looking at the market gain in general.

Plus, the number of new users is growing rapidly, keeping up the momentum we noticed in the second half of twenty twenty four. In terms of trading volume, it has been quite active in both Hong Kong and US market this year so far. So the trading volume for Hong Kong stocks have already exceeded what we saw in the fourth quarter of last year. This has balanced out the impact of the recent volatility in The US market. So, overall, the overall trading volume has remained steady versus the fourth quarter of last year. Recently in March, the U. S. Stock market has experienced some volatility due to the various factors like tariffs, geopolitical issues and uncertainty in sideways costs. From our perspective as a broker dealer, we value more on velocity. We believe that some volatility triggered by economic or political events or headline news actually address trading volume. In the first three weeks of March, the average daily trading volume on our platform for both Hong Kong and U. S. Cash equity has been higher than what we saw in the first two months of this year and in the Q4 of last year. Thank you, Emma.

Operator, please move on to the next question.

Thank you. The next question comes from the line of You Fang from CICC. Please ask your question, You. This is Youyou Fan from CICC, and I have two questions here. The first one is about crypto. Since we have gained the VATP license, how well the license contribute to our growth in the crypto sector? And also, would you please give more color on our crypto development in the Hong Kong market in Q4? And the second question is about the interest income. We see the margin finance and the securities lending balance remained flat in Q4, but given the rate cut cycle as the interest income Q on Q grew at double digit pace and way faster than the interest expense growth pace. So what causes this inconsistent trend?

So in terms of VATP, we got the Hong Kong SFC Type one and Type seven licensed before Chinese carrier. So this officially make us a licensed virtual asset trading platform in Hong Kong. With those license, we can now legally offer spot trading and the custody service for major cryptocurrencies like Bitcoin and Ether, as well as tokenized asset. By integrating our crypto service with our broker dealer entity, we can create an ecosystem combining Web2 and Web3 assets. Our goal is to become the bridge between traditional finance and cryptocurrency. Also, an update on our Hong Kong business is my client asset has continued to grow, increasing nearly 50% quarter over quarter and about six times year over year. Hong Kong market has been quite active since fourth quarter. So the trading volume of Hong Kong shares has increased from 10% of our total trading volume to about 15%. Commission income from Hong Kong shares has increased by over 160% quarter over quarter. Tether Broker Hong Kong has achieved breakeven in the fourth quarter, thanks to a significant rise in both commission and interest income, with interest income doubling from the previous quarter. Looking ahead, we will keep investing in Hong Kong to drive the growth.

In terms of our customer acquisition, we continue to focus on attracting high quality users and maintaining a strong ROI. In the fourth quarter, newly funded users had an average net asset inflow of over US30000 dollars the highest among all markets. Average client asset in Hong Kong is around US20000 dollars also the highest among our overseas markets. Our proof on Hong Kong user is also double of the group average. Not only the diagram we're describing is just margin financing balance So although the margin financing balance as a whole remained flat quarter over quarter, but there was a notable shift in the mix in the fourth quarter. High yield segments such as margin and hard to borrow securities lending, we saw an increase in balance compared to the previous quarter, while the balance for lower yield business and treasury management explained a quarter over quarter decrease. This shift contributed to a higher return on our bottom line. In addition, interest income rose by 16% quarter over quarter, significantly outpacing the increase in interest expense for a few reasons. Number one is we negotiate better returns with local banks that help increase our idle cash interest. The second reason is the market has been active and volatile, increasing demand in security lending market, also increased margin activities for U. S. And Hong Kong Trading.

Thanks.

Okay. Operator, let's proceed.

I'm showing no further questions. I'd now like to turn the conference back to Aaron for closing comments.

Thank you. 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 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. Thank you.

Thank you. Thank you.

Well, thank you very much for your participation in today's conference. This does conclude the program. You may now disconnect.