Q3 2022 UP Fintech Holding Ltd Earnings Call

Okay.

Ladies and gentlemen, thank you for standing by and welcome to the up Fintech holding limited third quarter 2022 earnings Conference call.

This time, all participants someone Edison only boat.

He will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today does that the 23rd 2022, I would not like to hand, the conference over to your first speaker today, Mr. Ivan de <unk> the head of IR. Thank you. Please go ahead.

Thank you operator.

Hello, everyone and thank you for joining us on our call today.

Things like holding Limited's third quarter 2022 earnings release, what gets confusing earlier today.

On our IR website at IR <unk> com.

Like hydro don't call as well as global Newswire services.

On the call today from up Fintech I.

Mr Chairman.

Chairman and Chief Executive Officer.

Johnson, Chief Financial Officer, and Mr. Holland C O U S Tiger Securities.

And Mr. Kenny <unk>, our financial controller.

So who will give an overview of our business operations and discuss corporate highlights.

He will then discuss our financial results both there'll be available to answer your questions. During the Q&A session that follows their remarks.

Now, let me cover the Safe Harbor.

We're not gonna make contains forward looking statements.

Many of the U S private securities.

And I think that's fine.

Oh fantastic root cause actual results to differ materially from those containing any forward looking statement.

Information about factors that could cause actual results to materially differ from those.

Please refer to our form 6K furnished today November 'twenty three 2022.

I know our annual report on form 20-F filed on April 28 22.

Take no obligation to update any forward looking statement.

Acquired under applicable law.

It is my pleasure to now introduce our chairman and Chief Executive Officer.

So we will make remarks in Chinese which will be followed by English translation.

Mr. Oh. Please go ahead with your remarks.

That's all.

Particularly and download.

Already R&M sudden sito, what type of how quick.

Hello, everyone. Thank you for joining us Tiger brokers third quarter 2022 earnings conference call.

Finally in San Diego restaurants.

Somebody someone emailed me some got shot join.

The only main indoor trees assay, you don't consolidate shockwave.

And you can show little promontory alcohol dose without <unk>.

Yeah.

I mean, he's got a lateral where we tend to be arguably automation solution.

Can you just tell me argued to one be helpful. You haven't gotten your Sunday at Neil Cataldi Soundbite because ive.

There you go through your path, but that hasn't been feeling from me lets see here.

Some people away from him onto the lung cancer.

And Josh annuity, our Omnichannel digital he didn't fund.

I know, it's kind of amazing culture. So you don't wait for them also the kind of thing you read some of these you know somebody and yes. She doesn't go away, but you got.

Does that mean, the ones that sort of a shock here uhm won't be conflicting sort of walks out yes. She doesn't take me.

The macro environment, so no significant improvement over the fourth quarter slight tightening.

The increase has slowed down market activity I'm transaction restricts.

Restrict our trading commission and IPO underwriting income.

Income from margin financing unsecured funding.

Due to the higher interest rate.

Total revenue of the third quarter slightly increased by three 6% from the previous quarter to $55 4 million U S. Dollar non-GAAP net income was $6 6 million U S dollar 90.

91, 3% quarter over quarter.

Six.

Year over year.

GAAP net income also turn appropriate bolt at $3 3 million U S dollar compared to a net loss in the first half of this year.

That looks like and the resilience of our business model and prudent capital deployment.

Zero.

Yeah My name since the virus.

Yeah sure so you're starting to get little more cohorts seafood wagon Xiaomi channel inventory.

And you are.

So I don't get a late 18th annual Jim a quick follow up I like it.

Can you see there.

Again to my thinking.

Thank you.

Sure sure I'm clear on it.

And the last thing somebody.

I can do more than just shouting about sure you buy essentially meeting.

And of course, we haven't seen it.

The attrition rate.

But in general the Kingdom quarter, 19 year old COBOL, let's see making.

Turning the corner and you also have you thought about particular shop.

You'll all day long, but it seems like.

We added 22700 funded accounts this quarter total number of funded accounts also exceeded 750000 by the end of the first quarter.

Chris I was 23, 2% from the same quarter last year.

We have acquired over if you felt that you'll find that that call in the fourth quarter. So.

So we are confident to deliver our annual guidance of acquiring wild.

With all that you'll find in our calls this year.

In the third quarter, Mark to market loss still kind of adverse impact on the total client assets.

Chris by 12, 8% to 13 BT in the U S dollar compared with the end of the second quarter.

But the trend of healthy asset flow continues.

Net asset inflows exceeding 700 meeting Mark this quarter funded account retention rate exceeded 98% this quarter, demonstrating gives us confidence and trust with our platform.

But I'm going to get what Twilio Coke, we've been don't hit it we should actually seem to be all signed off your feet.

So it will show out in Sinjar excuse me, what's your name you couldn't even afford to quit Bonnie.

Some people would entail what kind of based on actually operating.

Somebody argued all yotel stronger about mortality, yet until we finish up here.

I'm sure the golfing cutting Bell San Diego was terrible culture, now, let's see what accretion.

Got it.

General Shelton Cotroneo will tell you that the CR.

Seattle, two they need certainty.

San Diego Seattle invented within cohort, so I don't see the convincing routine cowboy Timothy.

Argued orange into what can we do Toyota to shop with us.

T shirts.

Roaming tiers actually got to that.

We're treating thing that's in there.

Do you want me to Carnival, what's funny is that who is selling well you won't treenail com yet taken a house.

We pay a virus potentially I took on quality will not jeopardize our ROI merely for the girl Cafe.

In the third quarter. The overall average CEC was 326 U S dollar a slight decrease from <unk>.

Her due to several pricing.

But remained one of the most efficient way.

We are very glad to see the quality of our newly acquired customer further improved in the third quarter in Singapore, I think simple or complex largest market in terms of in terms of both incremental and it creates some clients.

Average net asset inflows of our newly acquired clients in Singapore exceeding 11000 U S dollar in the third quarter.

The increase from over 9000 U S. Dollar in the second quarter represents our highest peak with X Moto imbalanced from customer acquisition efficiency and of course quality.

I'm sure. He's got I'll tell you if I can on the total HSA He's telling me Oh, you know what yes. So he was a.

Senior fantasy door Chen.

San Antonio ensure the Pea Nieto, Dow team, who you'll file one because he just yourself.

Maybe we can go without somebody talking about I'm, just kind of a defect.

What do you sort of you got the only Omega went to a phone call coaching data center set up where they want to shop.

That said, we do honestly in the Maple syrup, culminating ship turbocharged here.

The Italian car maker politician stockholder, you called Chad vocal Cal the time at all.

That's helpful. I mean, you would draw on Buda and Youll watch anything Glenn you're frugal.

Thank you Jose establishing ourselves in the long term that is happening.

Do you want to go too long Syngo virtual way the gondola.

So that is the only kidding paycheck.

I'm Lee Coucal kidding.

Criteria culture shut down their teams, including tightening could she that holds up and going to the eminent.

We continue to invest in research and development to improve operational efficiency until you have user experience with that.

Clearing and execution and clearing cost as a percentage of trailing commissions also circuit.

The decrease compared with the previous quarter, specifically, the execution and clearing costs as a percentage of the trading commissions for U S equity has come down to only 3%.

As a leading online broker with a comprehensive risk control and self clearing capability.

We have added friction no shares trading for U S equity this quarter and it means we'll provide retail investors with easier access to high quality names.

Meanwhile, nitrogen business will keep optimizing tight cash management products to better serve our user in Singapore, We launched hydro vote, our wealth management platform in the first quarter to help users to diversify their portfolio on the combined cash management and other investment products.

Now that we're here to be you seem more potash at home.

Scott.

Hi, Thomas C equals I'll make like yourself that you don't care, if I'm able to come with him. So he can knowhow.

Yes.

I don't think it would seem to us to how you saw the cohort.

We'll call you back on my door and that.

<unk> been up I'm sure when they go Holla Tricia you thought where you thought that our marketing team.

Karl you've got around you that can go take all based on what you were thinking you have uncles here inside.

When you take that time, you told them one cannot tension in your answer.

Our <unk> business continues to perform well.

Investment banking business.

11, U S and Hong Kong Ipos in the third quarter English we were the lead bank to use materials.

In terms of diesel.

<unk> added 29, New company. So a total of 300 and that he's ready for clients a year to year growth rate of 50%.

Becker recently.

We had hero a reputable evaluation specialist for fairness opinion, how valuation on a close eye on go around financing.

Strategic investors.

[noise] channel.

Competition since the IPO that is going to tell him on the hook uncles. It seems I'm selling below wishy washy on this I'm going to answer it like you don't tell sure I'm golfing Campbell.

Do you have that Jamie is Charlotte.

Hi, sure sometime in Shanghai.

In terms of Hong Kong business, but have improved the capability of our Hong Kong IPO underwriting self clearing efficiency uncompleted the Hong Kong infrastructures updates.

Now very excited to announce that but ready to onboard Hong Kong retail marketing in December of this year.

And you can say for sure it's going to give me a bit about how would you do.

I would like to invite our CFO job took over our financials.

Yes.

Yeah.

South Carolina area.

So let me go through our financial performance for the third quarter all numbers are U S. Dollar.

Total revenue were $55 4 million this quarter.

A decrease of 9% year over year due to a slowdown in market activities, which Jack down comitia and IPO underwriting.

Quarter over quarter basis, total revenue increased 4%, primarily due to a 69 person Johnson <unk> interest related E comm versus last quarter.

Cash equities take rate was about six seven bps this quarter.

Slightly better that $6 five of last quarter.

We think commission revenue above 60% come from cash equities.

80% from options and the rest of trial futures and other products.

Okay.

On cost side interest expense was $4 3 million a slight increase from the same quarter of last year as we still have some margin borrowed to fund your taxi broker.

So the borrowing cost increase the night at least the rate hike.

Execution and clearing expense were $3 2 million decreased 66% from the same quarter of last year.

We expect further reduction clearing expense when they star South Korea, how kind of equities.

Employee compensation increased 11% year over year to $24 2 million this quarter.

As we added headcount during last year to support our global expansion.

It relates to head count increased occupancy expense increased 50% to $2 5 million.

General and administrative expense decreased to 30% year over year to $3 5 million due to some one off professional service fee occurred last year.

Marketing expense were $7 $4 million this quarter.

<unk> to 34% year over year.

Our marketing strategy has been the same for the past few quarters. We don't just chase for the number of new users in states, where he focused on quality of new users and keep a close eye on CST and a payback.

We will dynamics the anti cancer on the marketing strategy based on market environment.

Communication and market data expense for our U S dollar of $66 5 million.

An increase of 23% saw a year ago due to rapid user growth and expanded market data coverage.

Total operating costs were $47 3 million decreased 13% from the same quarter of last year.

As a result, GAAP net income turned to positive 233 million versus a GAAP net loss of <unk> 9 billion last quarter non.

non-GAAP net income increased.

Increased to $6 6 million phosphate 5 million loss last quarter.

Now I have conclude our presentation operator, please open the line for Q&A.

Yeah.

Thank you as a reminder to ask a question that you would need to press star one and one on your telephone and wait for your name to be announced please standby, while we compile the Q&A roster.

Our first question comes from the line of <unk> from CIBC. Please go ahead. Your line is open.

Thanks Oscar.

Ladies and.

Thank you.

Sure.

Hello Devin.

Michelle.

Got it.

Yeah.

Got you.

Catherine.

Thank you Patrick.

Hello, gentlemen.

Yeah.

Yeah.

Sure.

Okay.

Cindy Capobianco since you're actually.

Thank you.

Sure.

Okay.

Okay.

Well next year.

Sure.

Lisa.

No.

Sure.

Thank you.

Okay.

Okay.

Thanks management for taking my call.

From TICC.

Questions.

First of all is that.

Okay.

The interest rate cycle.

How do you evaluate inc.

And how do you make any changes.

The business strategy.

Hi.

We have seen that.

Okay.

Okay.

Tony.

Steve.

Yes.

How would you please introduce ward.

On the strategy.

Sure Michael.

Sure.

Michael.

Okay.

So here you know what I've laid out here, the Eagle and Hugo <unk> camera.

Yeah.

So in terms of your first question regarding the impact from a rate hike.

So as you can see from our third quarter results overall net impact from rate hike is positive.

<unk> interest related income more than offset the decrease in trading companies you underwrite underwriting due to Titan.

<unk> tightened liquidity.

So in terms of business strategy, we will keep investing in our U S business.

Particularly in south clearing infrastructure, so we can better utilize our.

Asset base during this rate hike cycle.

I expect to see more interest related for Hong Kong Israel.

Once they become self clearing.

Don't need to sharing interesting companies are peering partners in Hong Kong.

It's a little bit hard to quantify the impact from Hong Kong yet.

As this will be determined by the growth of our Hong Kong operations.

Okay.

So question number two on Australia undergoes Gina.

Hum.

So it all means.

And you wouldn't go into that.

Yeah, <unk> I think as you can see on a woman.

Court taking back share.

The tightrope on self Watergate since it now.

Hum, but tito.

Third quarter, but some be argued we also tapped out.

<unk> only thing I should.

Well, yes, I Portland, J hook into your quarter Shouldnt see Quad Jay could you tell us English Sean Tony.

That's helpful and I saw that on the calendar.

The PV 10 megawatts.

Yes, sure should all grades that have been going into shock.

Single months with Andy you want for the future.

Sure.

Neither can corral from Damian the pattern.

Hey, T J D can make wholesale telecom and Michelle.

Okay.

Thanks.

We have entered.

It's clearly a market for two full quarters, so nearly 20% of our new funded accounts in the past two quarters were firm, Australia and New Zealand.

And we saw a quarter over quarter decrease you see in Australia during the third quarter.

That being said our.

Especially there it's still early stage, we think the total addressable market is big but to be honest, we haven't found the most effective marketing strategy yet.

We will keep progressing with more user feedback and data analysis.

So in terms of our product offering we have clear competitive advantages compared to local brokers.

<unk> developed infrastructure allow us to be more flexible to meet local needs such as eight point the old version of App with both pro and life MRSA.

Our fractional shares trading function. Thank you.

And how this is giovanni thanks will.

Thank you we will take our next question.

Sure.

Our next question comes from the line of Randy Wang from Citi. Please go ahead. Your line is open.

Got Ya Glenys <unk> hockey Hillenbrand.

Or would you be able now Glenn Johnson yellow anytime D issue Guang holdco.

Mcconnell, San Keytruda or with somebody else with Zynga Johnson <unk> Johnson, Zhang she told us.

<unk>.

And that will be that well.

<unk> Nikko.

Hello, gentlemen, we have omnichannel critical Mckesson, Scott Santi Doshi with Ginkgo who'll go with each either Jan Bema.

Do you already an inch.

Yeah women Jim Mitchell.

J D.

Thank you Dan.

I'll translate my questions.

First question is about our overall average customer acquisition cost as we see increased in the quarter and it will light management you elaborate a bit Oh reason behind and also how do we expect Tac trend in future the.

The second question is the regional breakdown of the new funded accounts in the quarter and how do you management expect the breakdown of total funded accounts by end of 2020. Thank you.

Okay.

[noise] Oh I'll tell you what it is.

Timmy SMT, though.

<unk> maintains or your.

Sandy arguably hotel for the Shandong.

Uhm anti Tau and <unk> road in shootings in leasing it up to my board.

It was all in San Julin and interesting.

Dolby side.

Terawatt Mitchell Silicon, Don I am fortunate to withhold against that so that's all being <unk> sure the <unk> corridor.

<unk> jellyfish tight.

This should all go towards without a full short anecdote on ash chops now total J P. I forget what you call guarantee that in June quarter.

Sure my teams or you're selling DRG Tau gene sat.

Sat down with me if I can just shout it out.

Now let me ask you can achieve to J Jill Savi.

Sadly that telecom choices al-qaeda, John year, Homeaway say, Shanghai, and Tianjin, Shanghai and total so LNG hoard comment I'd say kind of hopefully also a photo.

John I'm Harping, Chen CEO , Tony to weigh that against our ship when we got here.

Well the average Stacy with around 326 U S dollar.

The increase from last quarter.

The increase was primarily due to our focus.

High School Football club.

We will take place in December they.

The agreement they will be Tiger broker first hybrid partnership with Southeast Asia flagship International football competition.

We will see the form become the tournaments official online trading platform for stock options.

In futures.

Help us better reach out to potential users in the region of Southeast Asia.

If we deduct this branding expense to average so you see with around 175 U S dollars decreased.

<unk>, 5% compared to about 200 U S dollars in the second quarter.

In the next few quarters.

Mike go up after we start to.

<unk>.

It's very normal to incur more branding expense after entering a new market.

I'll now turn especially of balancing user quality and capital deployment will remain the same.

<unk> claims you could achieve that breaks up.

And <unk>, placing qualify your project since it <unk> mean in general should the oil I think Seattle would issue.

Excuse me my Gosh, and I'd say, we're seeing should add Joshua bichon, let's see.

Well, maybe easing in <unk> I'd say, you could you should've been sampling, which was him Joe that the board of <unk>.

So I just sat with Xiaomi Haier should die suddenly changing so John Yes, Shelby you said, we'll be able to call downside.

Jamie you also asked it yet.

Okay. So regarding the question about the original breakdown of our new funded account.

Our International Division is progressing well in the third quarter above 20% of funded accounts came from mainland China more than 60 came from Singapore, and nearly 40% or form Australian and New Zealand.

We expect the trend of regional breakdown, we will remain fairly consistent in the fourth quarter and we will expect to see more users from halal region next year. Thank you.

Yes.

Thank you we will take our next question.

Okay.

Our next question comes from the line of Cindy Wang from China Renaissance. Please go ahead. Your line is open.

Hey, good morning, gentlemen.

Now I'll ask a question with your vendor same day.

No one does it income chief financial one Charles Schoenbaum data just with Janssen.

<unk> sure you pass your question comes from the lines are there to ensure the Copel now warehousing.

Sure.

Well now go to engender called <unk>, Shandong and belly flop at Yahoo.

And one final thing I will call it that way now.

<unk>, John Chipping Hangzhou, Zhengzhou Ho de coupled with Gen Z wave Shechem, Suzanne Keybanc accordion mandate.

The other <unk> <unk>, Sean Thank you.

<unk> Zhang.

Michael Johnson with.

With Goldman <unk>.

That portion of the <unk> campaign a bomb.

Women Dante George ourselves further shlomi.

Now what does it Dan.

Sure.

So ah congrats on completing the infrastructure update in Hong Kong and ready to onboard Hong Kong retail <unk> charged in December .

So my question answering to your bottom line has shown.

That's a good trend over the past two quarters.

How do you balance all customer acquisition cost in Hong Kong and the company's profit margin in the next few quarters.

The second question is related to your product upgrades. So could you provide more color at all.

Sure so for your livestock and Tiger involved a wealth management platform in Singapore. Thank you.

Sure.

Hey, this is Cindy.

Diesel in Shanghai.

One quick question on <unk>.

Got it.

So in terms of Hong Kong, So hung of course, yes.

He is a very important market for.

Why.

So.

I think a lot of it.

People already know 90, only half the Hong Kong license, we Couldnt onboard Hong Kong clients.

Would you slow down our user growth. It also hard dollar profitability, because we had excuse me by a certain party for execution.

Unconstitutional.

So once we start seeing our retail service in Hong Kong, where it looks Washington teams on both sides.

Starting next year.

So our customer acquisition strategy in Hong Kong is the same lease all of our strategies.

So we are focused on user quality ROI and payback.

I have comfort there and we can earn their cost of Hong Kong users with comprehensive product offerings, and the user experience and a high quality training securities.

We understand it's very competitive.

No you did.

Short term with more marketing spending or branding campaigns, we may see some fluctuation.

But we will stick to our core marketing strategy and Andy to answer Accordingly. These multi times are you seeing any user feedback.

Switching final question number.

But in general.

So grateful I am able to say with Douglas.

We will see with Goldman <unk>.

Turning to slide and Jim will make with the total Manhattan, Tom Egan with Keybanc.

Pasco County, <unk> now so it is that two things on the complete tool. So I'm gonna look real hard to ensure we had said goldman called for potential potential.

In the third quarter U.

U S fractional share trading function.

This fractional share city will make high quality names such as Amazon when Tesla more affordable for retail investors.

You're investing this name the slab instead of paying few hundred photos with.

Using our in house friction, frankly know Sarah execution, and clearing infrastructure, where it can be innovative and proud offerings to better serve global retail users.

Yeah.

So how does that gas as it would seem you have florian.

<unk> Chan Cindy Ray type abroad.

With increased show at Adobe Summit sensing certain critical piece here to commentary <unk>.

Local Avenue.

Tommy Holger.

Zinc gladly.

Al you want me to your core.

Finally, I realized site closeout oncology Zhengzhou <unk> Park shopping center.

1000 <unk>.

That's all can daughter came on with HIFU.

Corporate and wholesale official telecom Kantar thoughtful go out in time.

In Singapore, we also upgraded our cash management products to Tiger vote, and more comprehensive platform combines <unk> with different creative product with fed tightening or two on the horizon.

Rollout more wealth management product for users with different risk appetite to have some diversified pure equity.

Equity investment thank you.

Thank you Victoria.

That seems to be no further questions at this time I would like to turn it back to Evan Li for closing remarks.

Thank you operator.

I would like to thank you everyone for joining our call today and now close this call on behalf of the management team here at Heidrick.

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.

This concludes today's conference call. Thank you all for participating you may now disconnect.

Speakers please standby.

Okay.

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Okay.

Okay.

[music].