Q1 2020 Earnings Call

May 28, 2020

[music].

Ladies and gentlemen, todays conference call. This due to begin shortly police could you just standby. Thank you for patients.

Once again, ladies and gentlemen, today's conference call. This trip to begin shortly please could you just had by me thinking for patients.

[music].

Ladies and gentlemen, thank you first standing by welcome to the up Fintech Holdings Limited first quarter 2020 earnings conference call. At this time all participants are in listen only mode. There will be a presentation followed by a question and answer session.

This advice you that this conference is being recorded to date Thursday may 22020.

I'd like to had conference over to your first speaker today Mr. Clark Susie. Thank you. Please go ahead.

Thank you Kareena Hello, everyone and thank you for joining us for the call today.

Fin Tech Holdings limited first quarter 2020 earnings release was distributed earlier today and is available on our IR website.

I Tiger dotcom as well as globe Newswire services.

On the call today from Fintech.

Mr. Woo, She has won chairman and Chief Executive Officer.

Mr., John Zone, Chief Financial Officer, Mr. long way CEO of U.S. Tiger Securities and Mr., Kenny Zhao our financial controller.

Mr. Wu will give an overview.

Business operations and discuss corporate highlights Mr. Zones will then discuss financial results. They would both be available to answer your questions. During the Q1 day session that follows their remarks.

Now let me cover the Safe Harbor today's discussion contains forward looking statements within the beginning of the U.S. Private Securities Litigation Reform Act of 1995.

Number of factors could cause actual results to differ materially from those contain any forward looking statements. Some more information about factors that could cause actual results to materially differ from those are the forward looking statements. Please refer to our form 6K published today.

Hey May 28, 2020, <unk> annual report on form 20-F filed on April 29 2020.

We undertake no obligation.

Update any forward looking statements, except as required under applicable law.

It is my pleasure to now introduce our chairman and Chief Executive Officer, Mr. <unk> Mr. Wu will make the marks in Chinese which will be followed by English translation. Mr. Woo. Please go ahead with your remarks.

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Typically nighttime job Noden, Chad already on him and digital I don't have a quick.

Good evening, everyone and thank you very much for attending the Tiger brokers first quarter 2020 earnings conference call.

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Tell me Chan on C.R. Bard, She want me do coaching and even though you want me to increase well me on <unk> knowledge and shown continued you're now turns out to what do you shouldnt.

In the first quarter, despite the severe global impact of the pandemic, we leveraged the strength of our online model and were able to demonstrate solid progress on multiple initiatives are key business metrics showed notable improvement compared to previous quarters.

Total revenue was $23.2 million, a new high and represented an increase of 136.7% on the same period last year.

Yes, the first quarter of 2020 had the fastest quarterly revenue growth since our firm's IPO.

Furthermore, in the first quarter, we reported our first ever GAAP net income of $3 million versus a loss of $2.9 million in the same period last year and $600000 the past quarter achieving positive net income is a.

Major milestone for our first is the result of our commitment to improve efficiency and drive growth somebody diverse range of business segments.

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Did you come back with a woman, maybe going out and trying to be yes, we did in some detail about and Yahoo Doyle.

We are also satisfied to report that as we continue to provide more differentiated products and services more and more clients are placing ever greater trust in our firm in the first quarter, we added 20900.

New accounts with deposits a 2.5 times increase over the same quarter last year in terms of quarterly new account additions.

Hello accounts with deposits also increased 53.1% over the same quarter last year.

I would also like to highlight that in the first quarter when global markets and all asset classes, evidenced extreme volatility our risk control policy was prudent and as of today. There was no material adverse impact to our firm in terms of PNM.

In the first quarter clients entrusted us with more of their assets total account balance reached a new high of $5.5 billion, an increase of 79.7% on the same period last year.

Our clients continue to diversify their trading away from U.S. listed Chinese 80, our Companys Chinese 80 hours only accounted for 25% of our U.S. equity trading volume.

The home equity I've always encourage out yet however would you don't let Jimmy I'm getting off without that couldn't do you want to the cool.

[noise] hard U.S. and Singapore offices are starting to onboard clients I expect to see more offshore clients using our services.

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Moving on to IPO underwriting most of the deals on the street are somewhat delayed due to the pandemic, but our pipeline remains very strong we migrated road shows online from offline by connecting issuers and investors using video.

Conferencing and phone calls and achieved good results for the issuers in the first quarter, we underwrote for U.S., Ipos, including Quasar Holdings, and Joan Trout, Inc.

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Tigers Aesop business continues to grow with good momentum.

In addition to new customers ranked in the top 10 of Chinese Internet companies. We are also adding customers from traditional industries, we keep investing in our system architecture and customer service capabilities and are now able to manage complex aesop plans for multinational firms in gift.

Jurisdictions in the first quarter in total we added eight customers I am confident he so we'll continue to obtain growing numbers of customers.

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He said boy it'll come true stringent and potential <unk> do you don't see when you consider some broader trends show Yorkshire when would you.

I would like to conclude my remarks by giving an update on our wealth management business near the end of the first quarter. We officially launched our fund mall, a new feature of our platform that allows clients to seamlessly invest in global mutual funds the fun ball president.

Offers over 50 funds from top tier global asset managers, including Fidelity, Blackrock Morgan Stanley HSBC and other notable institutions.

Phones offered in the fun mall include fixed income funds and equity funds that span a wide range of currencies and global markets assisting our clients to increase their portfolio diversification.

In the second quarter, we plan to offer over 100 funds as well as launch our internally developed rating system for clients to evaluate phone across a wide range of metrics, including fund income risk size and manager quality. This system will assist our customers.

To increase their knowledge about mutual flows and thus their propensity to invest more of their assets in our funded ball.

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Convenience three years. So you can kind of way go digit already already in yeah. We often yoder did you may see Waco year, where she you've idea if how are you about flat meeting.

Finally I.

I would like to comment on the progress of our share buyback program.

On April 1st 2022 May 26, 2020, we spent approximately $1.5 million to repurchase 508080, yes.

Citizens Samboja all completely about how would you.

[noise] I would now like.

Our CFO Sean to go over our financials.

[noise] [noise] that's people I'm Cook.

A solid first quarter performance as we focus on GAAP basis for the first time.

Total revenue was 23.2 million U.S., the increased over 137% all year over year basis.

Our users Moray worry activity into first quarter, given the while the middle market backdrop come easy increased 125% to 14 point Threemillion interest related income, which combines financing so its fees and interest income increased a 100 can get I personally from the same quarter last year.

Other revenue primarily consists revenue from corporate services, such as IPO underwriting grew 291% year over year to 2.5 million.

Across the street IPO underwriting has slowed down due to Colby liking.

Our deal.

Hi remains very strong we're optimistic more deals will get printed must markets your size to stabilize.

Interest expense increased 357% year over year to 1 billion. This quarter. After interest expense net revenue was 22.2 million U.S. the increased 132% from same quarter last year.

[noise] now switching to expense.

Clearly expense increased to five times to 1.8 billion due to increased the treating trading volume.

Salary expense increased the 34% year over year to 10.5 million in as our headcount grew 37% into sampere.

In 2020, our headcount growth will moderate by the way, we will keep adding key positions.

Occupancy expense almost doubled to 1.2 million due to increased headcount at the office space.

Communication in a market data expense also grew 54% year over year to 1.8 million as we have more users [noise].

[noise] into first quarter, given the more African market sentiment, we increased our marketing spending at a total marketing expense increased 45 person to 2.8 million.

[noise] S. T. I expect slightly increased five percentage point 3 million, primarily due to business expansion of professional services.

Total expense for the first quarter was 20.3 million increase of 45% year over year.

Income before tax was 4.7 unit [noise] letting call extremely U.S.C.N. lung GAAP net income was 4.2 million.

Overall, we are satisfied with our progress into first quarter. We are taking advantage of the short term market volatility higher use acquisition right and starting to see opening and average across our business units.

Having said a pull a volatile market caused by koby liking could have adverse impact on our business out of financials, well closely monitoring the situation and make adjustments when necessary.

This concludes our prepared remarks, Norway and open for question [noise].

[noise], ladies and gentlemen, we will now begin the question and answer session.

If you wish to ask a question. Please press star one on your telephone and wait for names to be announced if you wish to cancel your request lease spreads Japan or hatch.

Once again, if you wish to ask the question. Please press star, one thing or telephone and wait for any she'd be announced.

Your first question comes from the line of.

Sherry Jain from Citi. Please ask your question.

Hi management, Thanks, very much food conditions question I have two questions here are the first like Oh.

So my I know why.

I know that that way down quarter over quarter, <unk> first quarter, and easy mainly due to quite a wide email position or become like a comedy pipe and leverage ratio Oh and why the interest income.

More than.

Alan is there any pricing pressure.

And second question about Oh, Okay.

Michelle Wadi Calvin Klein, <unk> and <unk> structure I Ah why do you feel like we Shouldnt <unk> and how much do you like.

How much management fee I able to share from no major and why do you typically settlement for the phone.

And you have and target Hmm and revenue contribution both anybody thank you.

Asia is actually me answer your first question in regards to Marty and I can't answer. Your second question. So the marching you know about US a was down year over year, because you know I was doing the market downturns people tends to you know hold on.

Cash okay. So it's not that many users or taking on margins. So that's why the total margin dollars a was down so three in the meantime, yes. You know we did we do have already put them like a race control policies will sort of stocks wait to increase maintenance margins. So that's why you see solve those nine marching made the margin.

Hawesville get tighter I'm Lucky you know starts to get back to normal with those.

We are seeing I'm, what people taking on margin to start treating the securities. So to answer. Your question. Yes, you know the market. The bonus was down was due to more most likely the market you know downturn and also have a tighter marching policies for certain stocks.

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Yeah just to answer your question, let me translate isn't I was just started a far more you know by Endo started as a first quarter. So right now we don't have much state. How this year Oh, you comes up Youre pushing on how we split the management fees was the phone companies. We don't really disco spent eight up out of what we will give you some trends once we have more they'd have to share.

Thank you.

[noise] once again, if you wish to ask a question. Please press star one of your telephone and wait for him to be announced.

Once again lead isn't Kelvin if you wish to ask the question. Please press star one on your telephone.

There are no further questions at this time I would like to have conference back to Mr. Clark Susie. These continue.

I would like to thank everyone for joining our call today.

Hi, I'm no closing call on behalf of the management team here at ups and Tech. 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.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating it'd be all disconnect.

[music].

With advice you that this conference is being recorded today Thursday may 22020.

I'd like to have conference over to your first speaker today Mr. Clark Susie. Thank you. Please go ahead.

Thank you Kareena Hello, everyone and thank you for joining us for the call today.

Up Fintech holding limited's first quarter 2020 earnings release was distributed earlier today and is available on our IR website at <unk> IR Dot I Tiger dotcom as well as globe Newswire services.

On the call today from opt fin Tech.

Mr Woo T N Y chairman and Chief Executive Officer.

Mr., John Zone, Chief Financial Officer, Mr., Wong Lang CEO of U.S. Tiger Securities and Mr., Kenny Zhao our financial controller.

Mr. Wu will give an overview about business operations and discuss corporate highlights. Mr. Zone will then discuss our financial results. They would both be available to answer your questions. During the Q1 day session that follows their remarks.

Now let me cover the Safe Harbor today's discussion contains forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

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 are the forward looking statements. Please refer to our form 6K published today.

Hey May 28, 2020, <unk> annual report on form 20-F filed on April 29, 2020, 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 Chief Executive Officer, Mr. <unk> Mr. Wu will make remarks in Chinese which will be followed by an English translation. Mr. Woo. Please go ahead with your remarks.

[noise], but at all.

Similarly, nighttime job no didn't Chad already on Indian Digi, though I'll have a quick.

Good evening, everyone and thank you very much for attending the Tiger brokers first quarter 2020 earnings conference call.

So you know do it could have taken you were seeing caught.

On the digital you wouldn't mill showed how easy it doesn't change out onto the other piece on top of paying job somehow without all getting killed somebody asks why my team that on eastern Gulf between home, she thought and gone up I can G by Sunday, we didn't see.

Or something I couldn't be sensible thing why did you do you don't even know somebody some amazing decent <unk> cameco TV.

Tell me chant on C.R. Bard, she vomiting coaching and even though you want me to increase well me well anything better than.

Oh the teams shown quite you need your now turns out what he said.

In the first quarter, despite the severe global impact of a pandemic, we leveraged the strength of our online model and were able to demonstrate solid progress on multiple initiatives are key business metrics showed notable improvement compared to previous quarters.

Total revenue was $23.2 million, a new high and represented an increase of 136.7% on the same period last year.

The first quarter of 2020 had the fastest quarterly revenue growth since our firm's IPO.

Major milestone for our firm is a result of our commitment to improve efficiency and drive growth somebody diverse range of business segments.

[noise] well me the Pos in sort of how would you don't get indoor tie all the time it rule.

Your window it something though you do you then it would be good yeah my mutual Byron.

And then what is somebody changes to pull me dived into argument, but don't usually tell me Chantal and see you adopt and on the back in Georgia, Sunny digital Kindle should I'll call. It down maybe it'll yourself. So do you bought all over the phone when he seemed on alcohol, causing shushing Yahoo don't put away more not only singled osha we may do.

You can see it off and on the passenger.

Yes.

Did you come back with I want to make <unk>, Tony on trying to be if we didn't junkie Darla Josh crude oil.

We are also satisfied to report that as we continue to provide more differentiated products and services more and more clients, placing ever greater trust in our firm in the first quarter, we added 20900.

New accounts with deposits a 2.5 times increase over the same quarter last year in terms of quarterly new account additions.

Hello accounts with deposits also increased 53.1% over the same quarter last year.

I would also like to highlight that in the first quarter when global markets and all asset classes evidenced extreme volatility.

Our risk control policy was prudent and as of today, there was no material adverse impact to our firm in terms of PNM in the first quarter clients entrusted us with more of their assets total account balance reached a new high of 5.5.

$5 billion, an increase of 79.7% on the same period last year.

Our clients continued to diversify their trading away from U.S. listed Chinese 80, our Companys Chinese 80 hours only accounted for 25% of our U.S. equity trading volume.

The whole may want to tee up always encourage that yet however would you don't get me I'm getting off without I couldn't do you want to the cool.

[noise], our U.S. and Singapore offices are starting to onboard clients I expect to see more offshore clients using our services.

[noise] global macro economy shop. So he was what do you may.

Oh, I don't know how to feed off job diminishing Amit I don't see assembly and told them even more yet no hopping you know could you go older tools and what should have you heard you always seems I can tell me what who don't.

Oh and allocate Halloween, we don't read on all the self will do you need to know himself. The Jami why people always a policy on closing how easy it certainly don't fall short of onto yet. So you don't come boom that looks a bit shop.

Conferencing and phone calls and achieved good results for the issuers in the first quarter, we underwrote for U.S., Ipos, including Quasar Holdings, and Joan Trout, Inc.

You told me, what's your opinion potash thing so cool don't follow their don't go up 10 should weigh on foot. We'll Miss you don't know following the knee it didn't tell handle thinking increasingly without the went out to you when youre.

Digital things and by that answer.

Well, maybe it's just kind of how long you Acone Nuchal pool, when I was jumping July you, what we got something job for condo Heiko.

Tigers Aesop business continues to grow with good momentum.

Jurisdictions in the first quarter in total we added eight customers I am confident Aesop, we'll continue to obtain growing numbers of customers.

When it comes out that digital most downtown La which is how sure. He just other trenching Holden high motion now yesterday, I know shuja change or Jimmy income would you didn't have any sense, yet bubble, Florida, but I do up well not quite phone.

I didn't see she goes the teams hobby P. Mayhem Guy law or are you seeing techint dizzying, who can do you might want closure dwell hotspot paid a suitable yeah. You know laith sando didn't jump out I would you buy just what your point along with young sounds in through your father, Oh Boy to what you didn't <unk> Tony can you show.

[noise] phone ship Greenwald, one year basis.

Absolutely.

Oh, it all country and transfer and potential if you don't see when you consider some broader trends so you're going which is you.

I would like to conclude my remarks by giving an update on our wealth management business.

And with first quarter, we officially launched our fund mall, a new feature of our platform that allows clients to seamlessly invest in global mutual funds. The fun ball presently offers over 50 funds from top tier global asset managers, including Fidelity Blackrock.

Okay, Morgan Stanley HSBC and other notable institutions.

Funds offered in the fun mall include fixed income funds and equity funds that span a wide range of currencies and global markets assisting our clients to increase their portfolio diversification.

In the second quarter, we plan to offer over 100 funds as well as launch our internally developed rating system for clients to evaluate phones across a wide range of metrics, including fund income risk size and manager quality. This system will assist our customers.

To increase their knowledge about mutual funds and thus their propensity to invest more of their assets in our funding the ball.

So commodity type of company go two housekeeping thing, Jeff I'm, hoping you can see you'd see you can kind of way goal.

Yeah, we often the order you do they see Waco, yeah, well. She you idea if how are you about meeting.

Finally.

I would like to comment on the progress of our share buyback program.

On April 1st 2022 May 26, 2020, we spent approximately $1.5 million to repurchase 508080, yes.

Since CFO John can go it's about how we should get.

[noise] I would now like turn by our CFO, Sean to go over our financials.

[noise] [noise], that's why I'm Cook.

A solid first quarter performance as we focus on GAAP basis for the first time.

Total revenue was 23.2 million U.S., the increased over 137% like year over year basis.

Our users where a worry activity into first quarter, given the volatile market backdrop, commies increased 125% to 14.3 million in interest related income, which combines financing. So its fees and interest income increased a 100 hundred I personally from the same quarter last year.

Other revenue primarily consists revenue from corporate services, such as IPO on horizon go to longer like 1% year over year to 2.5 million.

Across the street IPO underwriting has slowed down to two Colby liking our.

Our deal pipeline remains very strong we're optimistic more deals work at printed must markets your size to stabilize.

Interest expense increased 357% year over year to 1 million. This quarter. After interest expense net revenue was 22.2 million you asked the increased 132% from same quarter last year.

[noise] now switching to expense.

Clearly expense increased to five times to 1.8 billion due to increased the treating trading volume.

Salary expense increased the 34% year over year to 10.5 million it as our headcount grew 37% in the same fear.

In 2020, our headcount growth will moderate by the way, we'll keep adding key positions.

Occupancy expense almost doubled to 1.2 million due to increased the headcount office space.

Communication of market data expense also grew 54% year over year to 1.8 million in as we have more users.

[noise] into first quarter, given the more African market sentiment, we increased our marketing spending at a total marketing expense increased 45 person to 2.8 million.

[noise] S. T. I expect slightly increased five percentage point 3 million, primarily due to business expansion of professional services.

Total expense for the first quarter was 20.3 million increase of 45% year over year.

Income before tax was 4.7, Amelia [noise] letting call extremely U.S.C.N. lung GAAP net income was 4.2 million.

Overall, we are satisfied with our progress seem to first quarter.

Taking advantage of the short term market volatility higher use acquisition right and starting to see opening and average across our business units.

That being said Apollo volatile market caused by Colby liking could have adversely impact our business on the financials well closely monitoring the situation and make adjustments when necessary.

This concludes our prepared remarks lowi can open for questions.

[noise], ladies and gentlemen, we will now begin to question and answer session.

If you wish to ask a question. Please press star one on your telephone and wait for needs to be announced if you wish to cancel their request. Please press the pound rehash.

Once again, if you wish to ask a question. Please press star one thing or telephone and wait for named she'd be announced.

Your first question comes from the line of.

Cherry Jain from Citi. Please ask your question.

Hi management, thank very much fool musicians question I have two questions here are the first one oh.

So my I know why margins I know that that way down quarter over quarter in the fourth quarter and easy mainly due to climb on widen their position or because like the company piven leverage ratio, Oh and why the interest income.

More than.

Alan is there any pricing pressure.

And second question about rocket, who met Michelle Wadi Calvin Klein <unk>.

The structure I Ah why do you feel like we shouldnt eat and how much do like all done.

How much management fee able to share bombed managers and why do you typically settlement for the phone.

And you have any target you and revenue contribution both in this would be thank you.

Asia is actually me answer your first question in regards to margin and a 10 what will answer your second question. So the marching you know about US a was down year over year, because you know I have to end the market downturns people tends to you know hold on.

Yes, okay. So it's not that many users or taking on margins. So thats why the total margin dollars a was down so three in the meantime, yes. You know we did we do have already put them like a race control policies will surface stocks way to increase maintenance margins. So that's why you see solve those nine watching the margin.

Hawesville getting tighter Lucky you know starts to get back to normal with those.

Oh Wow, that's how do I live in T O Gintel sure <unk>, a short month digital will come to then people will essentially taking higher you can actually be calling hot once you got that may lie to you never do anemic Dalkon Doughty history, something south <unk>.

Yeah just to answer your question, let me translate isn't I was just started a far more you know by end of sort of first quarter. So right now we don't have much state how the sheer oh he comes up youre pushing on how we split the management fees with stuff on companies. We don't really disco spent eight up out of Blue I'll give you just on trans once we have more they'd have to share.

Thank you.

[noise] once again, if you wish to ask the question. Please press star one of your telephone and wait for him to be announced.

Once again need isn't Kelvin if you wish to ask the question. Please press star one on your telephone.

There are no further questions at this time I would like to have Congress back to Mr. Clark Susie These continue.

I would like to thank everyone for joining our call today.

I have no closing the call on behalf of the management team here at ups and Tech. 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.

Yeah.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may all disconnect.

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