Q1 2023 UP Fintech Holding Limited Earnings Call

to the OPF FinTech Holding Limited first quarter 2023 earnings conference call. At this time all participants are in listen-only mode. There will be a presentation followed by question and answer session.

I'm a satisfaction that this conference is being recorded today May 30th 2023

I would now like to hand the conference over to your first speaker today, Mr Aaron Lee, the Head of IR. Thank you. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us to the call today. Upstream Tech Coding Limited's fourth quarter 2023 earnings release was distributed earlier today and is available on our IR website at IR.iFiberUp.com, as well as Global Use-Well Avapters.

On the call today from PASPintech, Mr. Wu Deng Hua, Chairman and Chief Executive Officer, Mr. Zhang Zeng, Chief Financial Officer, Mr. Huang Lei, CEO of US Tiger Securities, and Mr. Candy Zhao, our financial controller.

Mr. Wu will give an overview of our business operations and discuss corporate highlights. Mr. Zeng will then discuss our financial results. They will both be available to answer your questions during the Q&A session that follows a physical CBR darkest solution as Romano promised in the remarks schools you have not seen or heard of, and tell no longer everyone familiar with the remark.

Now let me cover the safe harbor. The statement we're about to make...

contain fore-looking statements within the meaning of the U.S. Private Security

please refer to our Form 6K Furniture today, May 30, 2023, and our annual report on Form 28, filed on April 26, 2023. We undertake no application to update any forward-looking statement 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 English translation. Mr. Wu, please go ahead with your remarks. Mr. Wu, please go ahead with your remarks.

Hello everyone. Thanks for joining the Tiger Broker full-scolier 2023 earliest conference call.

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Thank you for your attention.

In the fourth quarter, we saw a moderate rebound in the market condition. However, the high inflation expectation in the U.S. and continuous flat tightening still hampered investor confidence and market activities.

Under this market backdrop, we remain committed to our internationalization strategy and optimizing our revenue mix and expense management. In the first quarter, commission income and interest-related income further improve sequentially. The total revenue increased by 3.9% quarter over quarter and 26% year over year.

reaching $66.3 million.

GAAP and non-GAAP net profits attributable to up-spin tax were $8 million and $10.3 million US dollars respectively, an increase of 541% and 129% compared to the previous quarter, and a big turnaround compared to the net loss in the same quarter of last year.

Now gas bottom line in the fourth quarter was the highest in the past two years.

Demonstrating our execution strategy can weather challenging market conditions and regulatory health issues.

we celebrate the

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I would like to thank the Chinese government for their support of the Chinese government. Thank you for your support.

Thank you for your attention.

Thank you for your attention. Please remember to check the description of the video. Please check the description of the video. Please check the description of the video.

I hope you enjoyed this video. Please subscribe to my channel. Thank you for watching. Please like and share this video. See you next time. Thank you for watching.

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In the fourth quarter, we added 30,392 new funded accounts, increased 11.2% quarter-over-quarter. We are confident to deliver our annual guidance of acquiring at least 1,000 new funded accounts in 2023. Total number of funded accounts at the end of the fourth quarter reached 810,000.

We're presenting a growth of 15.4% compared to the same quarter of last year. In terms of total client assets, the trend of asset inflow remains strong, with net inflows nearly US$1.2 billion in the fourth quarter, mainly contributed from Singapore and mainland China. With the market recovery leading to market-to-market gains, the growth of the asset inflow is a limit.

Total plant assets in the first quarter increased by 15.2% compared to the last quarter, reaching 16.1 billion US dollars.

In addition, we are very glad that we can keep acquiring high-quality users while optimizing our customer acquisition costs.

The overall average net asset inflow of newly acquired retail clients exceeded US$70,000 per post-quarter. An average CEC in the post-quarter was US$171, a 37% drop over quarter. This indicates our underlying international expansion effort.

have been recognized by local investors in various regions and ROI remains at the industry leading level, giving us flexibility to dynamically adjust our customer experience strategy while maintaining reasonable unit economics.

Thank you for watching.

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We continue to invest in research and development to improve operational efficiency and to enhance user experience. By defeating from set clearing capability in the US, our set clearing efficiency has consistently maintained at a leading level in the industry. In the fourth quarter, the execution and clearing expenses as a percentage of the commission

further decreased from 16.1% in the previous quarter to 9.6% as we started to clear more Hong Kong activities since February .

In addition, we launched beta tags of Tiger GPT. This feature based on the underlying model of Check GPT, combined with financial, industrial information and market data accumulated by Tiger brokers over the years. It allows experienced users to quickly extract and analyze investment related data to help them with their investment research.

Also, significantly reduces the learning curve for new users.

In wealth management business, following the Singapore market, we launched TigerVault, our wealth management product in Hong Kong in April , to help users diversify their portfolio and enhance energy by combining cash management and other investment products.

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Part 2B business continues to perform well. In investment banking, we underloof eight U.S. and Hong Kong ideals in the fourth quarter, including Contacting Group Limited and YH Entertainment Group. In our ethos business, we added 29 new clients in the fourth quarter.

Bring the total number of people clients served to 448 by end of the post-COVID of 2023. Improves by 43% year over year.

Thank you. Thank you. Now I would like to invite our special John to go over our financials.

Thank you. Now I would like to invite our special John to go over our financials.

Okay, it's time to stand by Aaron. Let me go through our financial performance for the first quarter. All numbers are in US dollar.

Total revenue were $66.3 million this quarter, an increase of 26% year-over-year and 3.9% quarter-over-quarter primarily due to a 13% jump in interest-related income versus last quarter.

Cash equity take rate was 6.3 bits this quarter, slightly decreased from 6.9 bits last quarter. Rating commission revenue, about 60% comes from cash equities, 30% from options, and the rest from futures and other products.

Now on to cost. Interest expense was 8.4 million, increased by 130% from the same quarter of last year, as interest expense and securities lending expense both increased in line with the rate hike.

Execution and the clearing expense were 2.4 million, decreased to 46 percent from the same period of last year, primarily due to more efficiency in self-clearing for U.S. and Hong Kong securities.

Given we only started to move Hong Kong equities positions to Tiger Brook and Hong Kong this February , we expect cash equity clearing expense as percentage of commission put variable down.

only started to move Hong Kong equities positions to tiger both on Hong Kong this February . We expect cash equity clearing expense as percentage of commission could very well go down. If you value elevate Black balancing

We are at 24.4 million, a decrease of 11.2% year over year. As we adjusted our headcount in response to challenging market conditions,

Occupancy, depreciation, and amortization expense increased 19% to 2.4 million due to an increase in overseas office space and relevant fiscal improvements.

Communication and market data expense were 7 million and increase of 9.2% year-over-year due to the increase in user base.

Marketing expense were 5.2 million this quarter, decreased to 48% year over year. Average CAC dropped 37% quarter over quarter from 271 to 171. We focus on quality of new users. Don't see current market conditions suitable for major marketing campaign. So we scale that market spending.

That being said, we will dynamically adjust our marketing strategy based on the marketing sentiment in different regions. CNC could go up at night with the paybacks from the ODR query users. We will be able to adjust our marketing strategy based on the marketing sentiment in different regions.

General and administrative expenses were $4.5 million, planned year over year.

Total operating costs were 46 units, decreased by 16% from the same quarter of last year. As a result, bottom line increased on both gap and long gap basis.

Gap in late income turned positive to $8 million versus a gap late loss of $5.9 million in the same quarter of last year. Long gap late income also turned positive to $10.3 million from a long gap late loss of $1.9 million in the same quarter of last year.

Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

Thank you, sir. As a reminder to ask a question, you need to press star one and one on your telephone and wait for your name to be announced to withdraw your question. Please press star one and one again. Once again, please press star one and one. If you have any questions or comment, we are now going to proceed with our first question.

And the questions come from Ralan of You fan from CICC, Pizalski question.

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Okay, I will translate. Thanks management and congratulations on the results achieved this culture. This is YoYoFan from CICC and I have three culture to help. The first one is on the regional breakdown of the newly added funded account in this culture.

And the second one is about the clients in Singapore. We know that Tiger has been in many positions since entering the market. So how is the current net asset inflows and the average asset balance of the clients in Singapore? And after ramping up for over three years, how is the asset balance of the clients that we acquired early when we first entered the market?

And the third question is on the progressing on the Hong Kong retail market. Will the management give us more color on this? At least in my classroom. Thanks.

Hello, the first question is about this breakdown. We have been using the latest ARUD? for six months, and we have been using the latest ARUD? for five hundred years. The latest ARUD? for six hundred years, and the latest ARUD? for five hundred years.

In the fourth quarter, around 60% of the nearly funded accounts came from Singapore, about 15% from Australia and in New Zealand, about 20% from the United States and nearly 5% from Hong kongdown. cloing up more janls now with on. Now to into.

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For Singapore, where we have the most existing and new users, we are touched great importance to the user experience and solidify our market position. Also, $1.2 billion US dollars net asset income in the first quarter, about 2.3 trillion from Singapore. At the end of the first quarter, the average plan asset of all funded accounts in the...

of 4th quarter of 2023, which shows that 324 times increase compared to the 4th spandisk Meaning it may look gives down 10 again. Add moreüh

There seems to be quite a lot, and since soon we start recovered, we will assume we are faster. This is a long-term situation here. The current market is still more advanced, so we don't want to spend much money on it.

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Couple reasons. First, we didn't want to spend too much when market backdrop is still weak. We want to make sure you and you remain so attractive and within our internal hurdle.

Second is we are still testing your customer acquisition strategies and find between those strategies based on user feedback. In the second quarter, we will do more flight campaigns to celebrate high-tech nice year anniversary, which might increase CAC in the short-term and we will keep close eye on payback.

And then in the second quarter, we start to transform more producing customized NID to PIPER. So you can see it has more producing on the type of vocal Hong Kong.

Mo Han Han equity trades are clear through Tiger Broker Hong Kong. Health total clearing expense as a percentage of commission decreased from 16% in the fourth quarter to 9.1% in the first quarter.

We expect further reduction in clearing expense for Hong Kong cash equities.

We also launched TycoRoll, our watch management platform in April . We will add more watch management products to TycoRoll to increase user stickiness and offer value-added services. Thanks.

I have a very interesting question. Can you tell us a little about? I will remind you once again, if you have any questions or comments at this time, please press star one and one on your telephone and wait for your name to be announced. Once again, it's star one and one, if you have any questions or comments.

We are now going to proceed with our next question.

And the questions come from the line of Cindy Wang from China Renaissance. Please ask your question.

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of cleaning efficiency. So for customer acquisition cost, they drop in first quarter sequentially. So however, we see the number of the new customers with deposits actually up a quarter of a quarter. So could management provide some color how to achieve this result? And will customer as a passenger call to?

to maintain at the same level for the next few quarters in 2023. And for the self-cleaning efficiency, we see it actually increased quite a lot in first quarter. So how should we expect for clearly expensive in the second quarter on vote?

Is there still room for further decline? Thank you.

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Thank you for listening. Please like and subscribe to our channel. Please like and subscribe to our channel. Please like and subscribe to our channel. Please like and subscribe to our channel.

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The first thing I would like to say is that we are very happy to have you here. We are very happy to have you here. We are very happy to have you here. We are very happy to have you here.

Okay, thank you very much.

Regarding the fourth question about Tegra GTT, we think the AI technology can significantly improve productivity in many aspects of our lives and work, such as programming, copywriting, design and more.

So our mission is to make investment better through technology, and we have always paid close attention to the synergy between technology and finance. We have high expectations for TechArtivity's language interaction capability in improving user experience. For more information, visit www.techartivity.com

While our app offers excellent market data and information, but many users may not know just exactly where to find them, so Tiger GPT can help users improve their efficiency in this scenario.

We are glad to have this opportunity to become the fourth technology-oriented broker to launch GPT functionality.

Taggartivity is a product dedicated to answering questions in the field of financial investment. It can act like the bridge between user inquiries and targets numerous investment content and pay-to-market data.

So this product can help our users greatly improve information collecting efficiency, including market data, industry insights, third-party market data, individual stock options, and financial knowledge.

It can also greatly reduce the learning cost for new users by adapting various functions of our app. We believe that TegraGPT will become a differentiated function that optimizes the user experience and will contribute accordingly to user acquisition and retention.

Currently, this product is still in the internal testing phase and we expect to open it to more market users by the end of the second quarter of this year. As for the cost, subscriptions only serve the financial sector instead of being a general purpose modo.

The cost is very controllable and will not have significant impact on our P&L.

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We hope you will enjoy this video. Please subscribe to our channel and click the bell icon. We hope you will enjoy this video. Thank you for watching.

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We are glad to see the number of new funding accounts increased while every CEC job is substantially over-coded after CSRC's last days on December 30. Couple of reasons. Firstly, with our brand being better received by the local user in Singapore market and attracting more organic traffic from overseas, could save us some customer acquisition costs. Secondly, we have re-evaluated our cooperation with partner vendors.

into new markets such as our recent launch Hong Kong market, while maintaining a healthy unit economics.

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When you are closing the regulation decomobeying and relationships begin to step up, you will no longer meet the metrics of foreign rule. Thank you very much.

Thank you for watching.

Thank you for watching.

Thanks to our set clearing capability in the US stock market, the clearing cost as a percentage of total competition for US cash equity was around 3-5%, keeping our overall set clearing efficiency at an industry-leading level.

Since late February of this year, we have gradually set clear more Hong Kong stocks that are launched in the local retail market. Let the clearing costs as a percentage of commission income drop to below 10% in the fourth quarter.

Future clearing costs will be affected by factors such as market volatility and user trading behavior, but we expect that our overall clearing efficiency will further improve along with fully set clearing of Hong Kong stocks. Thank you.

We are now going to proceed with our next question.

And the questions come from the line of Judy Zhang from Citi. Please ask a question.

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I have two questions. The first question is regarding the take rate. We saw the US stock market rebound but the take rate decreased.

Can you explain the key reason behind? And also, we saw the interest income increased continuously during the rate hike cycle. What is the breakdown of the interest income? And the second question is regarding the regulation. We saw Tiger APP has been removed from the App Store. How can we understand the current situation? How much will it impact on the existing customers?

Also, did regulator give us any further clarification on what kind of criteria the onshore investors need to meet to open the overseas brokerage account? Thank you.

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But, what we said is important that you should know which Finland motion you are using is still lockdown so fast. Thank you.

during the first quarter. As we charge conditions per share for U.S. stock trading, the trading volume increased and not least the market rebound, resulting in a decrease in cash able to dictate raise.

As for the interest income, around 30% came from customers' idle cash and the rest were from the margin financing and the securities and lending business. Thank you. Thank you. Bye.

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We have touched importance to compliance and regulatory requirements globally and maintain direct communication with regulators. Recently, regulators have clarified some guidelines.

Firstly, allowing onshore users who leave a work overseas to open new accounts with us.

Secondly, for offshore users who can prove that they already opened brokerage accounts offshore, they will be considered as existing clients of the industry. Therefore, we can accept this investor to open new accounts with us or transfer their existing securities to us. The third one is done.

allowing us to keep supporting teams and R&D facilities and systems within main China to serve our existing onshore investors. And the last one is recently requested to remove our app from the onshore application market to ensure we don't have onshore incremental clients apart from the aforementioned scenarios.

These guidelines provide clarity to industry regulations, promoting long-term and orderly development while preventing bad money from being dressed as good. Following the announcement by CAI Trustee on December 30th of last year, they have immediately stopped accepting new offshore clients from Med China in full support and cooperation of this regulatory requirement.

The recent request to remove our app from the Chinese application market is essentially an implementation of the aforementioned announcement since May 18, 2023. We have removed our app from the onshore application market while providing detailed instructions for existing users to download and update the app.

This adjustment does not affect existing clients and we will continue to provide quality services and keep our clients' money safe.

We hope to see you in the next video. Thank you for watching.

We have also noticed that compared to the end of last year, the total client assets of onshore clients increased by about 10% with the trend of net asset inflows in the fourth quarter of this year. Besides, the trading volume and commission income contributed by onshore clients has also slightly increased sequentially. These numbers indicate that our existing clients have rational understanding.

Thank you, our polluter.

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 TIGER. We do appreciate your participation into this 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.

I am now closing the call on behalf of the management team here at TIGER. We do appreciate your participation in today's call. If you have any further questions, please reach out to our investor relations team. This concludes the call and thank you very much for your time. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you.