Q2 2020 UP Fintech Holding Ltd Earnings Call
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Gentlemen, Thank you force and buy and welcome to <unk> up in Tech Holdings Limited second quarter 2020 earnings Conference call.
This time all participants are opened in listen only mode. There will be a presentation followed by a question answer session.
Almost had by should that this conference is being recorded today Tuesday August 18, 20 try and.
I would now like you had the conference over to your first the speaker today mystery as hard as <unk>. Thank you. Please go ahead.
Thank you Ross Hello, everyone and thank you for joining us for the call today.
Fintech holding limited's second quarter 2020, <unk> earnings release was distributed earlier today and is available on our IR website I R. I Tiger Dot com as well as globe Newswire services on the call today from up Fintech, our Mr Woo Kent.
Our chairman and Chief Executive Officer, Mr., John Zone, Chief Financial Officer, Mr. long way CEO of U.S. Tiger Securities and Mr. Kenny.
Our financial controller, Mr. Wu will give an overview of our business operations and discuss corporate highlights. Mr. Zone will then discuss our financial results. They will both be available to answer your questions. During the Q and a session at follows their remarks.
Now let me cover the Safe Harbor statements, we're 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.
It was contained in any forward looking statements for more information about factors that could cause actual results to materially differ from those in the forward looking statements. Please refer to our form 6K furnished today August 18th and our annual report on form 20-F.
Filed on April 29, 2020.
We undertake.
Excuse me.
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. Wu Mr. Wu will make remarks in Chinese which will be followed by an English translation Mr. Woo.
Please go ahead with your remarks.
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And.
Good day, everyone and thank you very much for attending the Tiger brokers 2020.
Second quarter earnings Conference call.
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We saw moderated market volatility in the second quarter, but our users remained very active which fueled our strong growth. This quarter total revenue exceeded 30 million U.S. dollars a 122% in.
Chris on the same period last year. This marks the second quarter. This year when revenue growth exceeded 100% on a year on year basis, our operating efficiency and earnings quality keep improving we achieved [noise].
Others with GAAP profits in the second quarter of this year, our company reported operating income and non-GAAP operating income of 5.1 million us dollars and 6.8 million us dollars respectively.
Please refer to our form 6K furnished today August 18th freight reconciliation of non-GAAP financial measures to GAAP financial measures.
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Our improving financials are dependent on the trust and goodwill of our users.
As Tiger continues to grow our business and our brand as well as provide more differentiated services more people and trusted us with their money.
In the second quarter, we added 33800, new accounts with deposits a new quarterly high for our company and total accounts with deposits increased 76.7% from the same quarter last year, we saw strong in.
Flows this quarter.
Total client assets reached a new high of $8.3 billion, 133% higher than the same period last year and a 51% increase on the previous quarter.
I expect that with high growth in client numbers and client assets Tiger will keep delivering good financial performance in the near future.
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Well brokerage is of course, our core business investment banking Aesop and our internationalization efforts continue to develop nicely, our U.S. and Singapore businesses are on the right track they are expanding our customer.
Our acquisition channels, while diversifying our revenue streams.
In addition, we completed our self clearing infrastructure set up and gradually started to self clear U.S. equities.
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Thanks to our growing influence in capital markets as well as our strong retail and institutional client base, our investment banking business continues to grow rapidly in the second quarter Tiger participated in eight U.S. ipos reach.
Recently, we also served as an underwriter for Lee auto solidifying our number one position as the most active 80, our underwriter in terms of deal count.
We were also active in high profile Hong Kong Ipos in the second quarter, we were a joint Bookrunner for net eases Hong Kong listing.
Which demonstrates tiger is an indispensable partner for Chinese companies looking to enter global capital markets.
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In the past half year, our Aesop business has grown rapidly we have invested heavily in this system to gradually improve its functionalities. The system now supports complex plans that span multiple countries and corporate entities.
In the second quarter I am proud to report that we added 16 aesop customers in the first half of this year over 50% of Chinese 80, our issuers have chosen Tigers Aesop's system.
We look forward to continuing to grow our dominant market share and our resolute in our conviction that are outstanding service and comprehensive capabilities will attract more clients to our aesop system.
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[noise] with regards to our wealth management business at the end of the second quarter, we unveiled our proprietary fund analysis system that assists clients analyze the rich range of investments available on our fund the mall, which presently features over.
100 mutual funds from distinguished global asset managers.
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Finally, I would like to provide an update on our share repurchase program.
From April 1st to August 17th we in total repurchased 700000 Ats for an approximate consideration of 2.2 million U.S. dollars.
Gentlemen, favorable job conglomerate about how to do.
I would now like to invite our CFO John to go over our financial results.
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So as mentioned earlier second quarter was a strong quarterly in terms of those operating on a financials.
Was favorable market backdrop increase the user base and trading activities Commission revenue alone up 117, <unk>, a 178% year over year to 18.8 really at this quarter.
Interest related income, which combines financial service fees and interest income well up 69% year over year to 8.8 million tends to increase marketing trading under securities lending activities.
Other revenue also increased 54% year over year to 2.5 million, primarily due to more IPO underwriting.
Total revenue was 30.1 million up 122% front same quarter last year.
Taking all interest expense of 1.9 million total net revenue were 28.2 million increase of 125% from same quarter last year.
Now switching to cost.
So execution on the carrying costs were 2.9 million increased almost four times year over year as we have a much bigger user base and increase the trading volume.
Compensation expense increased to 39% year over year to 11.3 million.
Taking all share based compensation to cash pushing off compensation expense increased 36% year over year.
The increase was due to we keep adding headcount into key positions to support the rapid growth of our business.
Marketing expense increased 48% year over year to 2.9 billion this quarter as market backdrop remains favorable for user acquisition, we likely will keep you must be marketing in the second half.
Okay pacing occupancy depreciation and amortization increased 42% to 1.1 billion SSG and eight increased 43% improved 2.8 million Boes increase value night ways our business expansion.
Yes.
Total operating costs were 23.1 billion, an increase of 52% year over year operating income, which he is a key matrix. We focus on turn on increased to 5.1 billion. This quarter a significant improvement in front of negative 2.6 million in the same quarter last year and 1.9 million the first quarter off this year.
Net income attributes are opting take was 1.1 million compared to a net loss of 1.9 during the same quarter of last year.
One thing I want to elaborate is our effective tax rate of 49% this quarter it looks very high.
The raising its why we started to make profit consolidated group basis. Several of our subsidiaries still don't have profit so deferred tax asset accumulate added those entities cannot applied we expect our effective tax rate to gradually go down as more subsidiaries will make profit and the kind of applied deferred tax asset benefit.
Yes.
That's it for the management presentation, well open for questions.
Thank you so much ladies and Jeff.
Thank you so much ladies and gentlemen, who will now begin to question answer session. As a reminder, if you wish to ask a question you will need to pass through.
And one on your telephone and wait for your name to be announced if you wish to cancel you'll recall, but he's crashed the hash key again its power and one if you wish to ask a question.
Once again, ladies and gentlemen, if you wish to ask a question you will read the press star one on your telephone anyway.
Playing into the I know, if you wish to cancel you'll be crack.
That's the Ashton again, it's it's far in one if you wish to ask your question.
Thank you and your first question comes from the line up definitely <unk> from Citi. Your.
Your line is now open.
Oh, Hi management National T. My question. So my first question.
Oh Youre Commission rate, so we see a meaningful increase.
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Just a can you explain the reasons behind and wants to own going forward and also.
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Right, Okay definitely I mean, let me answer your first two questions.
Regarding the Commission me and also the ideal customer growth then I will attempt to answer your question regarding the offshore you know international expansion. Okay. So our accomplishing a in both in the second quarter, you know actually not our commission has been gradually increasing 90 for the first two quarter this year.
In summary, the is now for several of them more people are treating second thing is night you know Josh.
People are treating more you know diversified product so instead of treating us equities. We have also allow people to treating us options, which relative these out night by higher you know I was a higher margin part of our so thats. What you can see the blended commission. We also goes up okay. So that's that's.
The reason for and that's the answer for the first question. There for the second question is night you know Unfortunately I cannot give you are very clear guidance in terms of the total customer close this year to raising is because you know I'm looking at Mekeel. Our international expansion just started so U.S. started last fourth quarter last year.
And it Sinovel started this year so.
For those two regions. So far the growth has been pretty positive, but right now I still don't have the full question I observe gross potential. So I cannot give you a very clear guidance, but I can show issue at the moment there is pretty strong. So I wanted to tell how to answer your third question.
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So I'm wondering what do you have put under a tree on too much into <unk>.
Right in terms of international expansion. So so far I, we see very promising growth out of you know U.S. and they see the poor. So a nice if you average them up by the international you know new user probably seeing accounts for more than 10% of our quarterly usual goes by into June you know the new user growth.
In the offshore in all regions actually you know grow much faster than the April you know a composition. So overall, we are very positive on the international expansion I think like we have a good brand also user experience and apart all things those regions, so well already where a positive on the gross prospect.
Definitely have other questions.
Oh, Yeah actually if I may I'll tell you actually shades of gray.
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Actual orders for example.
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This is trading.
A kind of dilution going into Q2.
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Over 50% of our trading volume attractive l. against I futures options is far like a lot or 45 person you know that's the total composition of archery anymore.
Okay understood. Thank you.
Thanks.
Thank you so much once again, ladies and gentlemen, if you wish to ask a question, it's far and wide on your telephone keypad.
And your next question comes from the line of Yeah ability.
From.
I see.
Your line is now open.
Oh, Hello management, so firstly conquest doing cleanser financial performance for this quarter and thanks for giving me the chance lots of questions.
So operator open I took a woman thing I'd cards are great question for you today. So first of all I saw the number of accounts with positive increases by approximately on so just 3.8 sold in this quarter and I was wondering I didn't sell regards more information on the geographical distribution of his number so.
What are the specific percentages of this number that out for mainland China, Hong Kong and other regions, which parts of it and striking the right I saw you gradually starting to use moscone buckman cokers and to do to sell doing so I was wondering what is the percentage of transactions are you doing the South Korea.
Self clearing for for right now and the whats the percentage will be in the future and the color less of a year and at a loss or have a local level question, Florida previous question about the into into Illinois Basin.
Above your international business. So earlier I saw on the news study followed by more you like licensing so could you. Please.
Our more equal measure on the whole you we'll plan to you.
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So I will let him answer your first question.
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Right so.
In terms of our new use released deposits in this quarter. So far steel majority comes from the Trc, reaching okay, but like we mentioned already are so our international basis. You know humans are just started a couple of quarters ago about right. Now we have seen positive gross so going forward. They expect more users will come outside of China.
Yes.
Okay to answer your second question regarding Martco. So as you know we acquire Moscow backing US you might took us a year or two you know set up the infrastructure good that system fully integrated and also it did a bunch of testing so in the second quarter you know they finish all the testing and we just did very minimal you know.
Self clearing trades to make sure everybody is in place and the we don't jeopardize any user experience.
Starting the third quarter and first quarter I think will gradually you know putting more trading volume into more scope.
Exactly and percentage, it's hard to say right now, but it might go is you have about like you know 15, 20% you know by distress six third quarter and eventually we have another 30, 40% by the fourth quarter. You know that's our goal depends hot and Muggy goes and how the clearing system works Nino from for our day to day operation.
So to answer is started a question regards to the license. Yes, you know so we have a really strong team in the U.S. They are based in New York and all the guys you used to work for the Bulge bracket firms in the states. So we've got a research license if after the nicest you know if they license you know.
Recently, so are we going to do is you know it's a it's a lottery for us to expand our institutional business because when I think hard up a lot of U.S. institutions, which definitely helps us in terms of getting IPO Mondays and also waste a research you know lysis, we'll be able to issue research on those my IPO IPO deals were.
Underwrote sexual early start to issue research you know on Bloomberg. So if you guys can say for you guys can see the the Tiger piece you know in terms of hobby covered the Chinese 80, our business and also the hot commissioning companies.
So I think overall getting more license in the U.S. will definitely help us to increase our brand and also help us are more users.
Both institutional and retail investors.
Oh.
Thank you so much ladies and gentlemen.
If you wish to ask a question it's star anyone on your telephone keypad.
Again.
It's just starting one on your telephone.
Once again, ladies and gentlemen, its start in wine.
If you wish to ask your question.
Once again, ladies and gentlemen.
Starting one.
If you wish to ask the question on the phone.
There were no further question at this time.
Speakers you may continue.
I would like to thank everyone for joining our call today I am now closing the call on behalf of the management team here at ups in 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.
Thank you.
And.
[music].
And.
[music].
HM.
[music].
[music].
[music].
Ladies and gentlemen, thank you force and by any woken up a clean tech holding a limited second quarter 2020 earnings conference call.
This time, all participants are really listen only mode. There will be a presentation followed by a question answer session.
I must advise you that this conference is being recorded today Tuesday August 18th tiny tiny.
I would now like to had the conference over to your first the speaker today mystery card as so she thank you. Please go ahead.
Thank you Raul Hello, everyone and thank you for joining us for the call today up Fintech holding limited's second quarter 2020, <unk> earnings release was distributed earlier today and is available on our IR website at <unk> IR Dot I Tiger Dot com.
As well as globe Newswire services on the call today from up Fintech are Mr., Wu, Khanfar, Chairman and Chief Executive Officer, Mr., John Zone, Chief Financial Officer, Mr., Huang Lang CEO of U.S. Tiger Securities and Mr. Kenny.
Our financial controller, Mr. Wu will give an overview of our business operations and discuss corporate highlights. Mr. Zone will then discuss our financial results. They will both be available to answer your questions. During the Q and a session at follows their remarks.
Now let me cover the Safe Harbor 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 materially differ from those in the forward looking statements. Please refer to our form six.
Hi, furnished today August 18th and our annual report on form 20-F filed on April 29 2020.
We undertake excuse me.
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. Wu Mr. Wu will make remarks in Chinese which will be followed by an English translation Mr. Woo.
Please go ahead with your remarks.
Oh.
Okay, Great I'm GAAP Noden, Johnny and you don't have will have a quick.
Good day, everyone and thank you very much for attending the Tiger brokers 2020.
Second quarter earnings Conference call.
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We saw moderated market volatility in the second quarter, but our users remained very active which fueled our strong growth. This quarter total revenue exceeded 30 million U.S. dollars a 122% in.
Chris on the same period last year. This marks the second quarter. This year when revenue growth exceeded 100% on a year on year basis, our operating efficiency and earnings quality keep improving.
We achieved consecutive quarters with GAAP profits in the second quarter of this year, our company reported operating income and non cap operating income of 5.1 million us dollars and 6.8 million us dollars respectively.
Please refer to our form 6K furnished today August 18th freight reconciliation of non-GAAP financial measures to GAAP financial measures.
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Our improving financials are dependent on the trust and goodwill of our users.
As Tiger continues to grow our business and our brand as well as provide more differentiated services more people and trusted us with their money.
In the second quarter, we added 33800, new accounts with deposits a new quarterly high for our company and total accounts with deposits increased 76.7% from the same quarter last year, we saw strong in.
Flows this quarter.
Total client assets reached a new high of $8.3 billion, 133% higher than the same period last year and a 51% increase on the previous quarter.
I expect that with high growth in client numbers and client assets Tiger will keep delivering good financial performance in the near future.
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Download because it offers you more sure.
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Well brokerage is of course, our core business investment banking Aesop and our internationalization efforts continue to develop nicely, our U.S. and Singapore businesses are on the right track they are expanding our custom.
Our acquisition channels, while diversifying our revenue streams.
In addition, we completed our self clearing infrastructure set up and gradually started to self clear U.S. equities.
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Thanks to our growing influence in capital markets as well as our strong retail and institutional client base, our investment banking business continues to grow rapidly in the second quarter Tiger participated in eight U.S. Ipos recently, we also served as an underwriter.
For Lee Auto solidifying our number one position as the most active 80, our underwriter in terms of deal count.
We were also active in high profile Hong Kong Ipos in the second quarter, we were a joint Bookrunner for net eases Hong Kong listening.
Which demonstrates tiger is an indispensable partner for Chinese companies looking to enter global capital markets.
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That sounds freedom alone blessing that should help Monroe, almost anything what kind of see going before either for than me.
We've seen can vertical who said that also is home to the Oklahoma.
In the past half year, our Aesop business has grown rapidly we have invested heavily in this system to gradually improve its functionalities. The system now supports complex plans that span multiple countries and corporate entities.
In the second quarter I am proud to report that we added 16 aesop customers in the first half of this year over 50% of Chinese 80, our issuers have chosen Tigers Aesop system.
We look forward to continuing to grow our dominant market share and our resolute in our conviction that are outstanding service and comprehensive capabilities will attract more clients to our aesop system.
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I didn't mention when even housing sounds in how we buy Voyager trend towards an equal messaging.
[noise] with regards to our wealth management business at the end of the second quarter, we unveiled our proprietary fund analysis system that assists clients analyze the rich range of investments available on our fund the mall, which presently features over.
100 mutual funds from distinguished global asset managers.
So when we got from company go too hard to Indian job.
No for years in high single digit buyers to tier redeeming. The Waco, you see slide if how are you out Fleming.
Finally, I would like to provide an update on our share repurchase program.
On April 1st to August 17th we in total repurchased 700000 Ats for an approximate consideration of 2.2 million U.S. dollars.
Jason favorable John can go everybody knows how to do.
I would now like to invite our CFO John to go over our financial results.
[noise] since Caroline Cook.
So as mentioned earlier second quarter was a strong quarter in terms of both operating and financial as well.
It was favorable market backdrop increase the user base and trading activities Commission revenue of one of 117, <unk>, a 178% year over year to 18.8 million this quarter.
Interest related income, which combined financial service fees and interest income well up 69% year over year to 8.8 million tends to increase margin trading and securities lending activities.
Other revenue also increased 54% year over year to 2.5 million, primarily due to more IPO underwriting.
Total revenue was 30.1 million up 122 person from same quarter last year.
Taking all interest expense of 1.9 million total net revenue were 28.2 million increase of 125% from same quarter last year.
Now switching to cost.
So executing on a carrying costs were 2.9 million increased almost four times year over year as we have a much bigger user base and the increase the trading volume.
Compensation expense increased to 39% year over year to 11.3 million.
Taking our share based compensation for cash pushing off compensation expense increased 36% year over year.
The increase was due to we keep adding headcount into key positions to support the rapid growth of our business.
Marketing expense increased 48% year over year to 2.9 billion this quarter as market backdrop remains favorable for user acquisition, we likely will keep investing marketing in the second half.
Okay pacing occupancy depreciation and amortization increased 42% to 1.1 billion SSG and eight increased 43% improved 2.8 million Boes increase our unite ways arby's this expansion.
Yes.
Total operating costs were 23.1 billion, an increase of 52% year over year operating income, which is a key matrix. We focus on internal any increased to 5.1 billion. This quarter a significant improvement from let's say 2.6 million in the same quarter last year and 1.9 million the first quarter off this year.
Net income attribute to asking tech was 1.1 million compared to a net loss of 1.9 during the same quarter of last year.
One thing I want to elaborate is our effective tax rate of 49% this quarter it looks very high.
The resilience, while we started to make profit our consolidated group basis. Several of our subsidiaries still don't have profit so deferred tax asset accumulate added those entities cannot applied we expect our effective tax rate to gradually go down as more subsidiaries will make profit and the kind of upright deferred tax asset benefit.
It's.
That's it for the management presentation, well open for questions.
Thank you so much ladies and Jeff.
Thank you so much ladies and gentlemen, who will now begin to question answer session. As a reminder, if you wish to ask that question you will need to pass through.
Our and one on your telephone and wait for your name to be announced if you wish to cancel you'll recall that he's crashed the hash key again its power and one if you wish to ask a question.
Once again, ladies and gentlemen, if you wish to ask a question are you willing to press star one on your telephone enemy.
Playing into the announce if you wish to cancel you'll be crack.
Thanks hash key again edge Istar in one if you wish to ask your question.
Thank you and your first question comes from the line up definitely <unk> from Citi. Your.
Your line is now open.
Oh, Hi management. Thanks for taking my question. So my first question.
Following your commission way, so we see a meaningful increase.
I feel that conditions may.
The second quarter two about people.
Just a can you explain the reasons behind and what's the outlook going forward and also.
In terms of yours, or a new customer growth and I've seen some very strong.
Momentum here today I'm, just wondering if it's possible to give some color on your full year, no customer growth a little or.
Maybe to run rate in the truck what household.
Also on ASCII ones, who check on your.
Overseas market expansion. So we understand I do not happy to ER for example, the glass backend also these couple Montana.
Since beginning of yeah. So just wondering if your question any congrats Dan for example, the R&D number you high end and also.
Maybe 10 ethnic contribution thank you.
Right, Okay definitely let me answer your first to Cushing.
Yes.
Regarding the commission Ray and also the ideal customer growth then I will attempt to answer your question regarding the offshore you know international expansion. Okay. So our accomplishing a in both in the second quarter you know actually in our commission has been gradually increasing maybe for the first two quarter. This year I think the marine.
Hey, it's nice first off was there are more people treating second thing is night you know there are some people are trading more you know diversified product. So instead of treating us equities. We have also allow people treating us options, which she relative is night, they're higher you know I was a higher margin part of us.
Thats, what you can see the blended commission. We also goes up okay. So thats that that's the reason for and that's the answer for the first question. There for the second question is night you know Unfortunately I cannot give you are very clear guidance in terms of the total customer close this year. The raising is because you know I'm looking at Nike.
Our international expansion just started so you as started last fourth quarter last year and Sinovel started this year. So.
For those two regions. So far the growth has been pretty positive, but when I still don't have the full glass neither of those potential. So I cannot give you a word clear guidance, but I can show issue at the moment there is pretty strong. So I wanted to tailor to answer your third question.
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Right in terms of international expansion. So so far I, we see very promising close out of you know U.S. and missing a poor so a nice if you average them up by the international you know new user by reducing accounts for more than 10% of our quarterly usual goes by into June you know the new user close.
The offshore in all regions actually you know grow much faster than the April you know composition. So overall, we are very positive on the international expansion I think like we have a good brand also user experience and apart offerings. Those regions. So we'll always worry positive on the gross prospect.
Yes.
Definitely have other questions.
Yeah actually is on they are 10, you actually shades of gray.
Opteon.
Trading volume led by isn't.
Others for example.
The submission.
Okay.
Okay, well, you're seeing volumes in Q2.
Sure so the cash equity accounted for.
Over 50% of our trading volume.
R&D relative stay futures options baseball like a lot or 45 person you know that's the total composition of our trading volume.
Okay understood. Thank you.
Thanks.
Thank you so much once again, ladies and gentlemen, if you wish to ask a question, it's far and one on your telephone keypad.
And your next question comes from the line of Yeah ability.
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Oh, Hello management, so theres, a congrats doing positive financial performance for this quarter and thanks for giving me the chance lots of questions.
So ultimately to open as we go Coleman thing I'd cards are great question for you today. So first of all I saw the number of accounts were positive increases by approximately on so just 3.8 sold in this quarter and I was wondering if you can share results more information on the geographical distribution of his number so.
What are the specific percentages of this number that out for mainland China, Hong Kong and the other regions with Bachelor and striking the right I saw your gradually starting to use moscone batsmen cokers and to do it yourself doing so I was wondering what is the percentage of transactions are you doing the South Korea.
Self clearing for for right now and that was the percentage will be in the future and for the rest of the year.
And at a loss Hubbell local level question corridor previous questioner bothering to internalize leasing.
About the our international business. So earlier I saw on the new study called by more you like negative so could you. Please.
There are more equal measure on the whole you will parents, who use these weapons to expand that youre businesses in analysis, and how you view oil producing youre lightspeed insects or to the development of your whole comp yes. Thanks.
And also hockey Okay.
Yep.
Yes.
So I will let him answer your first question.
Oh DRG two is eager to reality you go to now routine I should note. So usually go to what I'm with you choose not sounds somewhat dollar trees are quicklogic I'm weekend nothing on Jan beside Jay Gerlach can you talk that I'm, just she shops, south central I don't see article can do it I should note. So you do it in with Applegate.
Right so.
In terms of our new user is deposits in this quarter. So far steel majority comes from the Trc, reaching okay, but like we mentioned earlier so our international basis, you know, even though just started a couple of quarters ago that right. Now we are seeing positive gross so going forward. They expect more users will come outside of China.
Yes.
Okay to answer your second question regarding Moscow. So as you know we acquire Moscow backing US Tonight took us a year to set up the infrastructure in the system fully integrated and also it did a bunch of testing so in the second quarter you know they finish all the testing and we just did were a minimum you know.
Self clearing trades to make sure everything is in place and we don't jeopardize any user experience starting the third quarter and first quarter I think it will gradually you know putting more trading volumes into Moscow.
Exactly volume percentage, it's hard to say right now but in my goal is to you have about I. You know 15, 20% you know by the state six third quarter and eventually we have another 30, 40% by the fourth quarter, you know Thats article it depends how the market goes and how the clearing system works Nino from far they do they operation.
So to answer startup costs in regards to the license. Yes, you know so we have a really strong team in the U.S. They are based in New York and all the guys you used to work for the Bulge bracket firms in the states. So we've got a research license of opportunity in Isis you know if they licensee.
Recently, so are we going to do is you know it's a it's a lottery for us to expand our institutional business because ran our Ricardo a lot of U.S. institutions, which definitely helps us in terms of getting IPO mandates and also waste a research you know lysis, we'll be able to issue research on those my IPO IPO deals.
Underwrote sexual early start to issue racers, you know on Bloomberg. So if you guys can save you guys can see the the tighter piece you know in terms of hobby colored.
And is 80, our business and also the hunt commissioning companies.
So I think overall getting more license in the U.S. will definitely help us to increase our brand and also help us are more users.
Both institutional and retail investors.
Oh.
Thank you so much ladies and gentlemen.
If you wish to ask a question, it's it's star anyone on your telephone keypad.
Again.
It's just starting wine.
Telephone.
Once again, ladies and gentlemen, it's starting one.
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Once again, ladies and gentlemen.
Starting one.
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I would like to thank everyone for joining our call today I am now closing the call on behalf of the management team here at ups Fintech. We do appreciate your participation in today's call. If youve 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.