Q3 2020 UP Fintech Holding Ltd Earnings Call
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Ladies and gentlemen, today's conference calls a schedule to begin sharply up.
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Ladies and gentlemen, I give a funny well welcome to the up Fintech Holdings Ltd fourth quarter 2020 on Inc.'s Conference call. At this time all participants are in a listen only mode. It will be a presentation followed by a question then onto a session I must advise you that this conference is being caught a today.
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Keith Please go ahead.
Thank you Hello, everyone.
Thank you for joining us for the call today up Fintech holding limited's third quarter 2024 earnings release was distributed earlier today and is available on our IR website at <unk> Dot Hi, Tiger Dot com as well as globe Newswire services on.
The call today from a fintech or Mr. Woo channel, Chairman and Chief Executive Officer, Mr., John Zone, Chief Financial Officer, Mr. Wong led by CEO of U.S. Tiger Securities and Mr., Kenny child or financial controller, Mr., We 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 when a session that follows their remarks now let me cover the safe Harbor statements. We're about to make contains forward looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995 a.
A number of factors could cause actual results to differ materially from those contained in any forward looking statements from.
More information about factors that could cause actual results to materially differ from those in a forward looking statements. Please refer to our form 6K.
Furnished today November 25th at our 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., Wang Mr. Wu will make remarks in Chinese which will be followed by a English translation. Mr. Woo. Please go ahead with your remarks.
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Really nice I'm, John Oettinger, auditing and defense you don't have a a quick.
Hello, everyone and thank you very much for attending our Q3 2020 earnings conference call.
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As a result, a rapid growth in client numbers as well as our strong commitment to continuous upgrade of our trading platform and services operational and financial metrics displayed strong improvement in the third quarter total revenue was up 38 million.
In dollars an increase of 148% from the same period last year and a record high for our from.
Operating income and net income also demonstrated a healthy growth.
Operating income reached $7.4 million and net income reached 3.8 and $5.3 million on GAAP and non-GAAP basis in the third quarter. We added 46800 funded accounts seven times.
The quarterly growth rate in the same period last year and total funded accounts reached 214700, an increase of 110% on the same period last year I am also happy to report that on October 28.
2020, we reached a major milestone as total client accounts reached 1 million. This.
This is especially notable given our five year operating history.
Total account balance continued to grow nicely and reached $10.9 billion. This quarter, a 188% increase over the same period last year.
Average client assets also increased.
37% from $37000 same quarter last year to $50000 this quarter.
As client numbers and assets continue to increase at a healthy pace.
I am confident that our from will continue to produce a satisfactory results for our shareholders.
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In the past half year are from reached three major milestones.
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First and foremost our internationalization strategy is showing good results.
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Today.
We have a license subsidiaries in the U.S., Australia, Singapore, and New Zealand.
Every day, we have investors from these countries choose us to open accounts and trade.
Despite the relative scale or a fun.
We are an international company that enables a global clients to use one account to trade global equities in the U.S., Hong Kong, Singapore, Australia, and China through the connect programs as well as other securities such as futures options and a wide range of mutual funds that invest in equities.
Bonds and currencies overall.
Overseas clients now accounts for over 20% of our newly funded accounts and we are confident this number can increase to more than 50% in the next 12 to 24 months.
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We have a evolves from a pure discount broker to offering more comprehensive services.
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Presently some may harbor, the impression that we are still a discount online broker that facilitates retail clients to trade U.S. and Hong Kong equities of course. This is where we were when we started our business five years ago.
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But as of today, our business model has evolved with brokerage as the core.
Augmented by strong parallel growth in institutional services investment banking Aesop and our international expansion. In addition to serving our highly engaged clients. We also surface institutional investors. In addition to brokerage business. We are also.
A tech investment bank.
Year to date in 2020, we have served as an underwriter in 12 Chinese 80, our Ipos in Q3, we underwrote the ipos of a we auto and X Pung Motors among others in Hong Kong. We were also an international underwriter for new Oriental.
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I would like to express my sincere gratitude for the after a mention firms for placing their trust in Tiger. It is a testament to the strength of our platform and our reputation in a market that after commencing our investment banking business. Just two years ago, we have already become a no.
Number one in the world like deal count for underwriting Chinese 80, our issuers.
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Art ease up management system also continues to demonstrate impressive growth as we lower the barriers and reduce complexity for firms to adopt aesop systems in the third quarter. We added 23, new Aesop clients, we expect that these E.
Sop price will yield a good number of new high quality brokerage clients in the third quarter Aesop clients accounted for 12.6% of our newly funded accounts due to the strong reported we have built with potential issuers, we expect to maintain.
Again, our leading position and further expand our market share.
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Finally, we are gradually moving to self clearing.
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In July of 2019, we acquired Morris called a license U.S. from with over 30 years experience in self clearing this was an important milestone for our from as we can leverage our pipe proprietary technology to fully integrate front.
And to backend infrastructure works, which strengthens our leading position in R&D and financial operations presently over 10% of our users are having their U.S. cash equity trades cleared by Morris County, as well as all new clients acquired by U.S. license subsidiaries.
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Yes.
As I close my remarks, I would like to provide an update on our share buyback program.
April 1st of this year to November 24, 2020, we repurchased 695280 780 S for an approximate consideration of U.S. $2.2 million.
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I would now like to invite our CFO John to go over our financial results.
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Let me break down our financial performance in the third a quarter or numbers a U.S. dollar.
Commissions were like 10.5 million this quarter up more than 200% from the same quarter last year on the back up 1.5 times increase in trading volume a celebrated a user gross.
Blended a commission rate was 3.1 be EPS. This quarter increased from 2.5 years same quarter last year, but a decrease from a hope you've seen the second quarter up this year would be the offer any discount pricing. This quarter. The decrease was primarily due to the increase in trading volume.
Interest rate income increased 26% year over year to Lifepoint aiming in a revenue which includes our IPO underwriting business increased close to six times, you're over a year to a point Amy on him. We have a very active IPO underwriting undergo a U.S. at a hunk IPO seem to sort of quarter and a.
I remember a positive on the income deal pipeline.
Total revenue was 38 million up 140, a person here over here a lot a record high revenue in our operating history.
Now switching to the cost.
Interest expense was 2.9 million increased 110% year over year, primarily due to higher margin dollars.
Clearly a expense was 3.9 billion increased a four times you know I always are a user growth and the increasing trading volume.
Compensation increase that started a 7% year over a year.
We keep adding headcount in key positions to support our business gross.
50% off the salary expense comes from research and product team as we keeping investing in R&D.
Marketing expense.
3.7 million a increase.
Increase up 147% from last year as we keep spending you use a acquisition to take out the wind up advantage up the favorable market back a backdrop.
As our brand becomes more popular among investors will see more organic a gross or a funded accounts acquisition cost actually comes down quarter over quarter from last year.
Occupancy expense increased 13% year over year to 1.2 million to a company our head count gross.
Market data usage expense increased a 52% 52% year over year to support our usual gross.
A C N a increased 68% due to business expansion.
Total cost of about a 27.8 million.
Operating income was 7.4 million.
Net income was 3.8 million compared to a led a loss of 1.3 million last year.
Non-GAAP net income was 5.3 million this quarter a increase of seven times over same period last year.
That concludes our presentation, well open to Q and a thanks.
Thank you.
Ladies and gentlemen, we will now begin a question and answer session to ask a question. Please press star one on a telephone keypad and make money now to cans and then a question any price on or.
Once again to ask a question, it's a one telephone.
Once again, ladies and gentlemen, you May press Star one if you just luck a quick thanks.
Thank you.
We do have a a plus question from the line, a and it's moving from China and Mexico.
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Hi, Thanks for taking my question, a and check she from 10 events on a.
And my question is regarding the solved a business I'd say that a we have very Ah. That's a gross of you saw a business this quarter by adding a take three new customers a oh, we show a clinical a which actually brought up a 13% up.
Up new customers a regarding the paying customer. So a just wondering a can I mentioned a help as a elaborate more about our no business trends.
And our competitive advantage in income business.
And what is the growth of those up for this next day. Thank you.
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Okay a.
Let me just quickly translate so check is asked for the Cushing.
So in time. So you saw a this is a business way up you know a.
Where are you focus a we think its a party for a you know a future gross because a we think you know a for the new emerging companies. Every company has you saw a class so that had a the push a potential market is a super big So that's why we went to U.S. so not a resourcing for this business.
So how it grows very fast in the past couple of years is first of all you know given we have a both a license across different jurisdictions, which give us a lot of a.
Nice you know strength or I would say in a leverage to serve those global companies. For example, a show me you know a they have either employees. I mean, you know 20 or 30 different countries and each country has different a you know jurisdictions tax code to be able to serve those people in a different jurisdictions is actually a pretty.
I'm thinking that you know business, a because we have a licenses in multiple locations will be offer a customized a service to service.
The companys needs under different jurisdictions. That's why you can see in the past year, we're pretty much a dominate the HDR use up is this more than 50% up the issuers chose us to to choose US asked are you saw a provider.
I think going for a you know given we are working on a more cases, especially those complex cases give us a lot more experience to be able to service more future issuers.
In the future you know, we think you know from existing clients and a deal with future clients will be able to add even more east so corporate clients and in very tight you know it will help us to acquire a more high quality for two years.
Yeah.
Hey, when time comes up thank you so much.
Thank you.
Once again, ladies and gentlemen to ask a question. Please press star one on the telephone.
Once again, ladies and gentlemen, my first question you May press star one on the phone.
We have our next question coming from the line up on young Wong from 86 from such please go ahead.
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So let me talk me my questions I have a two questions. So first watching a borrowing on the comes from me. So in my calculation a commission rate and the margins from somebody accused me a was down compared with Q2, so any color on why would be helpful.
My second question is about a license in total we had I mean a plan.
And to apply for a brokerage licensing Hong Kong.
On the following a question on the institutional clients for how many institutional price that we are selling now or what do you. What are the average assets we manage for the excuse you know a investors. Thank you.
How should a high a so I will answer your first question on the take rate and a a interest rate.
Well, a tampa to answer a second after a question. Okay. So on the take rate a like I mentioned earlier. So the thing is friendly <unk> a because the trading a volume has gone up so you know what the blended a commission rate came down you know even in the third quarter. You know our pricing is actually is a same versus not as in the second quarter, So that decrease up to them.
The interest a blended commission was due to the increase in trading volume and.
The marching interest rate a actually you know the sick in that sorta quarters over quite a few big hunk ipos, okay, but they are a current business model in a way way we run our you know a trend parting Hong Kong to provide a funding thats why you know are marching you know a <unk> the.
The margin income, which is a margin the net interest margin was relatively low. This is something we're working on to address in the future.
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So let me try asking a question so if we compare with a.
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Could you help us understand how big the market will be a conserved a institutional investors. Thank you.
So I you want to know how big is the addressable market of the or a potential institutional you must start targets right overall, how big is the site.
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Yes.
So so high and let me let me just elaborate a little bit more so in terms of how big is a market. We think it's very hard to pin down a lot of the exact number because there are a lot of from deal you know a I'm, obviously, a institutional investor coming to the market and a sound them that has growth from small to you know a much bigger size. So what do we think is.
A you know there is a there is a different way a huge needs for <unk> for banks like us or Florida, especially I spoke on a cost to service those nice smaller institutional investors.
And so what are we can service them not just to recap what channel I said earlier is you know we offer a differentiated service for example, a you know they can open a you know a college bigger banks to have a prime and prime brokerage accounts or we can help them to you know a set up the accounts as you know a life you know traders to help them green or the trades.
It also you know help them to grow you know, sometimes we'll help you up on raising EPS mills was at a stuff that can offer a lot to institutional investors.
To your second question on a license.
You know differently I'm, calling is a is a different here a huge market for us as you can see our financial performance and you know a CMS. The same first question. You ask is like you know we left too much money on the table because we don't have to Hong Kong I've seen a year. So differently, we will share the market share once we have progress in this space. Thank you.
Okay. That's true if anything a very helpful. Thank you.
Thank you.
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Oh, Okay. So that's kind of like my classroom well the first class 3000, a investment banking business. So we noted that in these calls here. We have made a quick achievement in assisting Chinese companies to live in the U.S. market. So what kind of assets, we made the investment banking side and.
How to other there's a with our unique advantages.
And the second I'm curious about the international net out a so how do we acquire customers in countries like Singapore, Australia, and New Zealand and is there any difference in customer acquisition cost between these assets and then in China.
HM.
Hi, This is Jay Oh Wow.
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Okay, Let me, let me quickly translate a.
The investment banking question first so so wait wait wait a county that pioneered the U.S. IPO you know distribution service back in 2017.
On the back up our strong demand from retail and the institutional investors as you have seen our investment banking business has been growing very rapidly. Since then you know you within three years to a timeframe we have been working on when a 60.
U.S. and a hunk high Peos, having this year of a healthy and working on pretty much all the big names you know popular a deal axios. So how we carry in a crack into the market went up a lot of competition from traditional international and domestic events from banks because our a principal philosophy is we have to do we want to you know a premium.
Bringing value added service to the sure. So for example, we provide a where a steady you know a defense.
A those demands, especially between the tough market like a last year, Tony lighting has been very helpful to the share to be able to get the IPO down and it you know also you know reply, where a customized a DSP at IR PR services to the issuers, which traditional banks. They don't really you know.
Be active in that kind of space. So this gives us an opportunity to be able to service those new economy issuers class you know, we're helping during the IPO ourself a couple of years ago. So we know what the you know.
Other than a you know stuffs night, a usual potential issuers they have to manage when they are doing the IPO. So that's why you know we have a huge growth in this space and as a investment basis also help us to drive more institutional and retail brokerage business.
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When someone says you can tell a fool someone.
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Okay. So Q1, we are a pick back up you know brokerage company. So this gives us the flexibility to enter into new markets and be really adaptive to service. The local it's a for example, we saw the needs in Singapore and Australia at a similar opportunities nice to have a saw in China, a few years ago.
When we started a business. So we think a there is a huge potential down there and the beauty of international a expansion is the.
Under a conversion rate will be much higher and also you know we can offer you know we're a differentiated a service versus the local brokers. For example, a you know our our commission rates will be much lower than the existing local players and that you know a way helped a local people now the only traded at a low cost stocks and also we help them to share the hunk class.
U.S. you know equities. So we are worried bullish about our international a expansion strategy a which.
We just started up you know international Expensing, you know pretty much in the picking up this year and we are seeing very promising results. So a very comforting that next to up to 12 to 24 months our international from their accounts will account for more than 50 percentage of our European clients.
Thanks.
How about fixing it sounds you financing from Citigroup.
Thank you once.
Once again, ladies and gentlemen to ask a question. Please press star one until a fun.
They do not have any more questions now I would like 10 conference back to a speakers today. Please go ahead.
Hello. This is Clarke I would like to thank everyone for joining our call today I am now closing a call on behalf of the management team here at up Fintech. 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 have a great day.
Thank you.
Mhm, ladies and gentleman that does flow teleconference for today. Thank you for your participation you may all disconnect. Your lines now thank you.
[music].
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Ladies and gentlemen, I give a standing by welcome to the Fintech Holdings Ltd fourth quarter 2020, Onyx Conference call a this.
Fine all participants are in listen only mode.
But some patients followed by the question them off a session.
Advise you that this cost that'd be a caught a today right.
Non much money so up to 2020.
I would not like to have a conference a with your first speak up today Mr. flow Esterhazy. Thank you. Please go ahead.
Thank you Hello, everyone and thank you for joining us for the call today up Fintech holding Limited's third quarter 2020 earnings release was distributed earlier today and is available on our IR website at <unk> Dot <unk> dot com as well.
Globe Newswire services.
On the call today from up Fintech or Mr. Woo Tee up well, chairman and Chief Executive Officer.
Mr., John Zone, Chief Financial Officer, Mr. Lang CEO of U.S. Tiger Securities and Mr., Kenny jobs or financial controller, Mr. 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 Q1. They session that follows that 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 up 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 a forward looking statements. Please refer to our form 6K.
Furnished today November 25th and our 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 introduce our chairman and Chief Executive Officer, Mr., Wang Mr., Wang will make remarks from Chinese which will be followed by a English translation. Mr. Woo. Please go ahead with your remarks.
But all.
Magically nighttime job holding true already holding antisense you don't have a how quick.
Hello, everyone and thank you very much for attending our Q3 2020 earnings conference call.
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I mean, who would've put on dotcom come from.
Any sense either what are your range would you how does how should you talked a lot about it from John.
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They want that but about a one year later, she's got a lot of <unk>.
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Could you go down a one meeting.
Dan you want call it sound with Goldman John would you can always I know, it's not done yet and that's how we got here.
As a result, a rapid growth in client numbers as well as our strong commitment to continuous upgrade of our trading platform and services operational and financial metrics displayed strong improvement.
In the third quarter total revenue was up $38 million and increased a 148% from the same period last year and a record high for arc from.
Operating income a net income also demonstrated healthy growth.
Operating income reached $7.4 million, a net income reached 3.8 and $5.3 million on GAAP and non-GAAP basis in the third quarter. We added 46800 funded accounts.
Seven times, the quarterly growth rate in the same period last year and total funded accounts reached 214700 and increase up.
110% on the same period last year I am also happy to report that on October 28, 2020, we reached a major milestone as total client accounts reached 1 million. This.
This is especially notable given our five year operating history.
Total account balance continued to grow nicely and reached $10.9 billion this quarter a.
188% increase over the same period last year.
Average client assets also increased.
37% from $37000 same quarter last year to $50000 this quarter.
Client numbers and assets continue to increase at a healthy pace I.
I am confident that our from will continue to produce a satisfactory results for our shareholders.
[laughter] seen by men on a one to so many from base [noise].
In the past half year are from reached three major milestones.
[noise], even you from base so it sounds rental.
A lot you what she's done a neutral one other thing John.
First and foremost our internationalization strategy is showing good results.
Thank you know what it says I'm a cool although GAAP.
She doesn't go down so she'll Schneider.
Hey, Jim from don't that's a generic what are you a core trend on like I would tell you. All mentioned are each up would you consider flow.
It's going to a young cool share.
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True and cool quotient non legal.
Well I have a accounts using a whole calkins second it's important that.
Yeah, We do go channel Susan will show up.
And Josh Shaw.
Okay, very nice shard RCB a night.
No more than $10 from visiting the body shop.
Today, we.
We have a license subsidiaries in the U.S., Australia, Singapore, and New Zealand.
Every day, we have investors from these countries choose us to open accounts and trade.
Despite the relative scale or are we.
We are an international company that enables a global clients to use one account to treat a global equities in the U.S., Hong Kong, Singapore, Australia, and China through the connect programs as well as other securities such as futures options and a wide range of mutual funds that invest in equities.
Bonds and currencies.
Overseas clients now accounts for over 20% of our newly funded accounts and we are confident this number can increase to more than 50% in the next 12 to 24 months.
Yes from base.
Only children a shot so we can catch up.
Second.
We have a evolves from a pure discount broker to offering more comprehensive services.
I was wondering if you share junior stay longer you sound kind of hide from you'll die on share your thoughts into a cogen Shaw for Sohu tell you make a home shortly.
As usual on the call me that she did yes, Hello, Winston Salem come from cash flow between class.
Presently.
From May Harbor, the impression that we are still a discount online broker that facilitates retail clients to trade U.S. and Hong Kong equities of course. This is where we were when we started our business five years ago.
Argentina for me Im getting a hold on a door on things relating to your way Cushing. Paul you saw a cook would you watch a doping team has indication.
Holding foreign enjoy a high for good a sequel holds true home video TV deal will magically whole hall.
I'm in a meeting trying to sell a shot GAAP 11, so from a juncture decent people wishing that up when you don't see show up sell from T. shirt, and you need a chiming in for the IPO shop, well my from a sell a single phone weekends I'll share this out.
Got it it sounds a little something on the thing that should go up I should total onto a NIM in two in Philadelphia from cell, Sean Sean Yeah, I mean change OTI share bottles looking like a so from a sound for that from telecom.
But as of today, our business model has evolved with brokerage as the core augmented by strong parallel growth in institutional services investment banking Aesop and our international expansion. In addition to serving our.
Highly engaged clients. We also service institutional investors. In addition to brokerage business. We are also a tech investment bank year to date in 2020, we have served as an underwriter in 12 Chinese 80, our IPO.
Q3, we underwrote the Ipos of Lee Auto and X pump motors, among others in Hong Kong.
We were also an international underwriter for new Oriental Educations, Hong Kong listing.
I would like to express my sincere gratitude for the.
After a mention firms for placing their trust in Tiger. It is a testament to the strength of our platform and our reputation as a market that after commencing our investment banking business. Just two years ago, we have already become number one in the world like Yoko for underwriting.
Trainees 80, our issuers.
You saw a good won't see him once a year over year potash in mobile ordering and some of that information I'm sure you find yourself handle up with what you saw a going Sean I wouldn't count should that be if I need to tell me. So you're seeing that are a send out a cool given what you're going to you and would one day you should see yet Jeff.
If I need a since then it would even go back and just shouted a deal.
Did you follow surety Sony assets and now should also up in dollars or the jumps up.
Our ease up management system also continues to demonstrate impressive growth as we lower the barriers and reduce complexity for firms to adopt aesop systems in the third quarter. We added 23, new Aesop clients, we expect that these E.
GAAP clients will yield a good number of new high quality brokerage clients in the third quarter Aesop clients accounted for 12.6% of our newly funded accounts due to the strong reported we have built with potential issuers, we expect to maintain.
I mean, our leading position and further expand our market share.
Yes, I don't even late 1000 class, although it seems up.
Finally, we are gradually moving to self clearing.
On a leader in Syria, albeit with a Michael Macdonald from a squeeze out your such a somebody should a thought from substantial give.
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Within a meal.
And just so you tell me on the whole day on Mako thoughts from site.
Hi, Jim made what went a little soiled up from young a cool Boeing income will not quoting from sourcing side.
In July of 2019, we acquired Morris call a license U.S. from with over 30 years experience in self clearing this was an important milestone for our from as we can leverage our pipe proprietary technology.
Fully integrate front end to backend infrastructure looks which strengthens our leading position in R&D and financial operations presently over 10% of our users are having their U.S. cash equity trades cleared by Mars growth as well as all new clients acquired by you.
West license subsidiaries.
So it all comes up tell me what would you how it's a contingent.
Let's see a year's cash quake, all digital audio from yen CRC or did you mean equate goal here from tissue idea hopefully with a national imaging.
As I close my remarks, I would like to provide an update on our share buyback program.
From April 1st of this year through November 24, 2020.
We repurchased 695280 780 S for an approximate consideration of U.S. $2.2 million.
[noise] say several job can go from about how we can do.
I would now like to invite our CFO John to go over our financial results.
That's a standby oclock, let me break down our financial performance in the third quarter all numbers are U.S. dollar.
Commissions were like 10.5 million this quarter up.
Well, that's a 100% from the same quarter last year on the back up 1.5 times increase in trading volume a celebrated a user gross.
Blended a commission rate was 3.1 be EPS. This quarter increased from 2.5, Bips same quarter last year, but a decrease profit up you've seen the second quarter up this year, we did offer any discount pricing. This quarter. The decrease was primarily due to the increase in trading volume.
Interest rate a income increased 26% year over year to Lifepoint a million.
Hi, Neil which includes our IPO underwriting business increased close to six times a year over year to a point eightmillion. We've a very active IPO underwriting undergo a us at a hunk IPO seen a third quarter and a way remained where a positive on the income deal pipeline.
Total revenues were $38 million up 148% year over year, a lot a record high revenue in our operating history.
Now switching to the cost.
Interest expense was 2.9 million increased 110% year over year, primarily due to higher margin dollars.
Clearly a expense was 3.9 billion increased a four times in Iowa is our user growth and the increase in trading volume.
Compensation increase that started a 7% year over a year.
We keep adding headcount in key positions to support our business gross.
50% off the salary expense comes from research and product team as we keeping investing in R&D.
Marketing expense was 3.7 million a increase up 147% from last year as we keep spending user acquisition to take advantage up advantage of the favorable market that's a backdrop.
As our brand becomes more popular among investors will see more organic a gross our funded accounts acquisition cost actually comes down quarter over quarter from last year.
Occupancy expense increased 13% year over year to 1.2 million to a company our head count gross.
Mark a data usage expense increased a 50% to 52% year over year to support our user growth.
SDN, a increased 68% due to business expansion.
Total costs were a $27.8 million.
Operating income was 7.4 million.
Net income was $3.8 million compared to a low loss up 1.3 million last year.
Non-GAAP net income was 5.3 million this quarter.
Increase of seven times over same period last year.
That concludes our presentation, well open to Q and a thanks.
Thank you.
Ladies and gentlemen, we will now begin a question and answer session to ask a question. Please press star one on a telephone keypad and wait for me to be catalytic lets you may press the pound.
Hi, Keith.
Once again to up request.
It's a one.
Non.
Once again, ladies and gentlemen, you may put star one if we were struck a question. Thank you.
We do have a question from the line up Eddie Leung from China momentum.
Please go ahead.
According to launch a how oh, a suits and the rents on stuff you should check useful.
National Samsung Shibani on keeping today, usually only that you'd see a would you Daniel equivalent TSMC is actually going to see growth.
A equal but you know.
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Channel.
Hi, Andrew legal channel helix is beyond a.
Hello.
Good day. So I will then you teach you talked a few quite yielded a male.
So let me translate my question.
So thanks for taking my question and check from churn events from.
And my question is regarding the solved a business that we have very rapid gross up you saw a business this quarter by adding three new customers.
We show a plentiful a which actually brought up a 13% up new customers a regarding the paying customers. So I'm just wondering up Ken mentioned a help us.
Great wore a Bob our no business trends.
And our competitive advantage in income business.
And what is the growth although growth of business day. Thank you.
How to hit a.
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Tony you get a tick up in any man pulpwood, a woman Chantilly and the challenge that you see it.
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For the other two things I also so that's a good local a see from being broken value occasionally get on a go forward here when we see a talent without commenting on the only a targeting a harlem Andy.
Our cash and so you don't want a man political shortly on the tick up we're going to get some GAAP woman the force raping woman's actually physically a pilot nishu put on she called up our two year old woman punctured, having a from call it and get into so day you also own fleet, we haven't gone under a sound a you go to a coal how you've done a challenging the GAAP guidance.
Okay, I'm going to hang on a Portland, a content sound ones you can email so on a free from college of you. Two we know there's a good hinting now almost 77 million either to do any man true.
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I would make a typical fleet how that teamed up caylloma you on a put on a constant things and a prudent decision.
[noise], Okay, let.
Let me just quickly translate so Jack is asked for a question.
So in time. So you saw a this is a business way up you know a.
Where a focus a we think its a priority for future growth because we think you know a for the newly emerging companies. Every company has you saw a class so its a tam the push a potential market is super big So thats why we want to use a lot of resourcing for this business.
Solid growth very fast in the past couple of years is first of all you know given we have a.
Most of a license across different jurisdictions, which give us a lot of.
Like you know a strength or I have a say in a leverage to serve those global companies. For example, a show me you know a they have a employees in you know 2030 different countries and each country has different you know jurisdictions tax code to be able to serve those people in different jurisdictions is actually a pretty.
Complicated business.
Because we have a licenses in multiple locations will be offer a customized a service to service.
The companys needs under a different jurisdictions. That's why you can see in the past year, we're pretty much done.
Dominate the HDR is up is this more than 50% of the issuers choose us too.
To to choose assets or use up provider.
So I think going for a you know given that we are working on a more cases, especially those complex cases give us a lot more experience to be able to service more future issuers.
In the future we think you know.
Fine existing clients and a deal future clients will be able to add even more aesop corporate class, adding very tight you know it will help us to acquire more high quality for two years.
Thanks.
Hey went up from here. Thanks, so much.
Thank you.
Once again, ladies and gentlemen to ask a question. Please press star one I'm a telephone.
Once again, ladies and gentlemen, welcome.
You May press star one from upon.
We have our next question coming from the line of Honeywell Wong from 86 thoughts. Please go ahead.
Oh, Yes, you can do a good a you will not be a crap a concealed Angelo gordons together a.
Moving to go into a deal when do you see a going you pick that up.
A centric world a commission or the flow through their own don't turn a little bit jumpy.
Argued to our.
Our whole to go to actually going up.
Oh, yeah, but you're going to take on a dollar a control what range.
Thank you hydrogen from to the Chicago.
Uh huh.
Hi, a follow up a question just quite you took a gold non core that Youve got a cultural.
I think Jim I should hedging gold gold yield people seeking for a long mccann okay.
Thank you Mr. Jacob.
One of them will come back a little bit.
But people cope with a hold from a PK parameters.
Sensors from them.
So let me check me my questions I have.
Two questions. So first watched operating on the commission rate flow in my calculation, a commission rate and the margins moving in Q3.
What down compared with Q2, so any color on why would be helpful.
My second question is about a license in total we had I mean, a pent up high for the brokerage license in Hong Kong.
And followed by a question on the institutional clients for how many institutional accounts that we are selling now.
What is what are the average assets that we manage for B excuse you know our investors. Thank you.
How should a high a so I will answer your first question on the take rate and a.
Interest rate, then I will a tampa to answer a second after a question. Okay. So on the take rate like I mentioned earlier. So the thing is run by a because the trading a volume has gone up so the blended a commission rate came down in.
A third quarter, you know our pricing is actually the same versus not as in the second quarter. So that decrease up depend a interest a blended commission was due to the increasing trading volume.
And the margin interest rate a actually you know the.
The second in the third quarter as over quite a few big Hunk ipos, okay, but they are a current business model in a way way way with our world class imparting Hong Kong to provide a funding thats why you know our margin you know.
The margin income, which is a margin the net interest margin was relatively low this is andy while working on to address in the future.
Oh no. That's helpful. You Jake a homemade it sounds like a whole Chico tick a fortune one of anti.
Element does your current dollar sound GAAP southeast discount so you got $2 hitting the Alcoa sounds hang on to you or me a candle chegg Peachtree check us out in the fish onboard a sound document D.C. documentary series or something to free up so on a dashing sounds a little chicopee onto me all you interesting now you're selling a team John quick easy and so you are a sound.
I'd now like to a Q.
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And I see Youre, Jim good challenging a key coatings, a tiny manchego parts. When we only see on dual fuel shorts is held a meeting or show a physical kind of image you sound a pinch out yet.
Non-GAAP handle cannot be more than total free oncology will change it a full sundry income then the entitlement idle mills are not to a sound jager, a wonderful IB onshore assets.
What's your yield a quarter beyond the channel they see a things at high from younger you should take a call just stay quotes from Yandex still free download a flow freely.
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Kenya, and the free your pulpwood, so eagle on a kilometer chapada on endorsing your guidance.
Free town towards a Canadian see a follow on the IPO wouldn't zone, yeah, we wait to see a bulk core Jacob visual messaging up with his hands into Gen chicken door. The IPO from high hurdle than Tommy up. So you can see on a same trend novelty venue occur from the cigarettes Eagle Ford, you're getting caught up such a show almond.
A question two candidates hometown day, you're going into a way to venture lending shots. You go up in July how is it.
Okay. Let me mention countries. Okay go ahead, a high end housing once a month.
Oh, Thank you sound Okay Todd.
We can take or would you call core adequately growth to sort of get more market share you make some between a girl.
I think I kind of hope.
That's a good people know quite a bit ourselves.
So let me try asking a question so if we compare with a.
Packet broker waste yourself, a like a smoker up off the institutional investors. So.
Could you help us understand how big a market it will be a to serve the institutional investors. Thank you.
So I you want to know how big is the addressable market of the or a potential institutional you must our targets right overall, how big is the size.
Oh, well, mostly non cash.
Certainly read a challenge for your continued to show up in Canada, and all take a single a sitting genie take a comedian dies you guys now low shocks that I'm sure.
Chimenti daunting, which John Legere team, how does it come up again.
Endorse only pay back up a simple and home people show up to tell him a difficulty meeting scenario dishing meeting. So you know I'm glad to change and a push up though from junior tenure, he or she can shop occupancy GAAP Niemeyer your share documents seek open question to tick up.
Hi, good how keynote I can give a mission so a year or leases from yield on average. It's your way you all a quantum he yield without a ban youre doing that it goes up and how youre in a way more so a free hunker down how do you go in Georgetown day cuts in downtown.
Yes.
So let me let me just elaborate a little bit more so in terms of how big is a market. We think it's very hard to pin down a exact number because there are a lot of from deal you know.
I would say institutional investor coming to the market and a south them that has growth from small too much bigger size. So what do we think is not a you know there is a there is a different way a huge needs for you for banks like us or Florida, a specialized spoken a cost to service those nice smaller institutional investors.
So what are we can service them not just to recap what I said earlier is you know we offer a differentiated service for example, a you know they can help a you know a college bigger banks to have a prime prime brokerage accounts or we can help them to set up the accounts as you know life, you know traders to help them or the trades.
And also you know help them to grow up sometimes will help.
Thats on raising EPS wells, which had a staffing and offered more institutional investors assets.
Your second question on a license.
Tiffany oncology is a is definitely a huge market for us as you can see our financial performance and you know CMS. The same first question you ask is like in a way left too much money on the table because we don't have to Hong Kong license here. So differently, we will let the market a once we have progress in this space. Thank you.
Our 2014 it Anita.
Very helpful. Thank you.
Thank you.
We have our next question coming from the line up you from from the ITC. Please go ahead.
Oh I wanted to know how was your line is only going from a financial actual simple consultants.
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Total Mccann open season with them.
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Okay. So let me kind of like my class room, well the first class with a thousand investment banking business. So we noticed that in this quarter. We have made a great achievements in assisting Chinese companies to list in the U.S. markets. So what kind of assets, we made in the investment banking side and.
How to other hubs, there's a what our unique advantages.
And the second class you asked about the international net out a so how do we acquire customers in countries like Singapore, Australia and.
Dylan and is there any difference in customer acquisition cost between adult and then in China.
HM.
Hello Hello.
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Okay, Let me, let me quickly translate.
Investment banking question first so so way way way up how many that pioneered the U.S. IPO you know distribution service back in 2017.
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On the back up our strong demand from retail and the institutional investors as you have seen.
Investment banking business has been growing very rapidly since then within two years. The timeframe, we have been working on more than a 60.
You asked a 105 euros and in this year of a healthy and working on pretty much all the big name a popular a deal axios. So how we can you know crack into the market. When there are a lot of competition from non traditional international and domestic investment banks because our principal philosophy is we have to move on to operating.
Bringing value added service to the sure. So for example, we provide a very steady in our defense.
Those demands, especially between the tough market like a last year, Tony lighting has been very helpful to the share to be able to get the IPO. Tom and you know also you know we provide very customized a DSP add IR PR services to the issuers, which traditional banks. They don't really you know.
Be active in that kind of space. So this gives us an opportunity to be able to service those new economy issuers class.
You know we have been doing the IPO ourself, a couple of years ago, So a though or the you know.
Well done a you know stuff snide the issue a potential issues they have to manage from when they are doing the IPO. So thats why we have a huge growth in this space and as a investment basis also help us to drive more institutional and the retail brokerage business.
How would you elaborate on quite a way part of anti or if we don't have that challenge. The Eagle could you can see room to further should that Jason go a lot within channel two times. So this should mean could you down, causing a may how have you seen some highlights share and a shorter trend geopolitics or the hotter what's your outlook.
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Okay took a long way our tech that you know focused company. So this gives us the flexibility to enter into new markets and be really adaptive to service the local leads.
For example, we saw the needs in Singapore, and Australia at a similar opportunities nice to have a saw in China for a year circle. When we started a business. So we think there is a huge potential down there and the beauty of international.
Expansion is the founder and conversion rate will be much higher and also you know we can offer in a worry differentiate a service versus the local brokers. For example, a you know our our commission rates will be much lower than the existing local players.
And in a way we helped a local people now the only traded at a local stocks and also will help them to share the hunker down a US you know equities. So we're very bullish about our international expansion strategy.
We just started a you know international expensing, you know pretty much in the beginning of this year and we are seeing very promising results. So we're very confident in the next two up 12 to 24 months our international from their accounts will account for more than 50 percentage of our European clients.
Thanks.
How about features we'll see from seem to get a gleason.
Thank you.
Once again, ladies and gentlemen to ask a question. Please press star one until a phone.
We do not have any more questions now I would like turn conference back to a speaker today. Please go ahead.
Hello. This is Clarke I would like to thank everyone for joining our call today I am now closing a call on behalf of the management team here at up Fintech. 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 have a great day.
Thank you.
Thank you, ladies and gentlemen that does flow teleconference for today. Thank you for your participation you may all disconnect. Your lines now thank you.