Earnings Call Transcript - FUTU Q4 2024

Operator, Operator

Hello, ladies and gentleman. Welcome to Futu Holdings Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only-mode. After management prepared remarks, there will be a Q&A session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO, Head of Strategy and IR at Futu. Please go ahead, sir.

Daniel Yuan, Chief of Staff to CEO, Head of Strategy and IR

Thanks, Operator, and thank you for joining us today to discuss our fourth quarter and full year 2024 earnings results. Joining me on the call today are Mr. Leaf Li, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Xu, Senior Vice President. As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside the company's control. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual report. With that, I will now turn the call over to Leaf. Leaf will make his comments in Chinese, and I will translate.

Leaf Li, Chairman and CEO

Thank you all for joining our earnings call today. Client acquisitions accelerated across all markets amid an eventful quarter. We exceeded our full year guidance by a wide margin, adding 215,000 paying clients in the fourth quarter alone. As of year-end, total paying clients was over 2.4 million, a 41% year-over-year increase. Year to date, we have observed robust paying client growth across markets and are guiding for 800,000 new paying clients in 2025. In the fourth quarter, the Hong Kong market was the top growth driver for new paying clients as we implemented targeted marketing initiatives to capitalize on the momentum across different asset classes. In Singapore, we maintained quality growth. With more paying clients added, there were also higher average assets. We further solidified our position as a leading one-stop investment platform in Malaysia and recorded another quarter of strong paying client growth with our increasingly localized product experience and strengthening brand equity. In Japan, new paying clients grew double digits quarter over quarter as our superior U.S. stock trading experience gained traction amid a bullish U.S. market backdrop. In 2024, we delivered 209 iterations of our mobile app and desktop clients and added 7,762 new features, up 37% and 32% year-over-year respectively. Product velocity remained high in the fourth quarter. In Japan, we launched U.S. margin trading with increasing adoption rates, which improved throughout the quarter. In the U.S., we unveiled the Options Strategy Builder on our desktop version to better help traders navigate various options trading strategies. As we continue to refine our options trading products, in the fourth quarter, the number of options traders in the U.S. more than doubled year-over-year, while the number of options contracts traded more than tripled compared to the same quarter last year. In Hong Kong and Singapore, we established a bond trading desk to help our clients execute large and complex bond orders. For our clients in Australia and Canada, we launched recurring investment plans for local stocks. We built a pullback in China equity in the second half of the quarter weighed on the valuation of our clients' assets; however, it was more than offset by net asset inflow across markets. Further client assets were at HK$743 billion, up 43% year-over-year and 7% quarter-over-quarter. Overseas markets recorded the highest quarterly net asset inflow, almost equivalent to the full year 2023 inflow. Total client assets in Singapore grew by 19% quarter-over-quarter, marking the 10th consecutive quarter of sequential growth, thanks to robust net asset inflow into U.S. equities and money market funds. The U.S., Canada, and Australia markets also witnessed sequential growth in average client assets for four consecutive quarters. As our clients took on more leveraged positions, margin financing and securities planning balances increased by 25% sequentially to a record HK$51 billion. Total trading volume jumped by 202% year-over-year and 52% quarter-over-quarter to HK$2.89 trillion. In the fourth quarter, our clients diversified their investments to include more crypto and AI names. As a result, U.S. stock trading volume grew by 36% sequentially to a historic high of HK$2.08 trillion. Notably, several AI-focused companies, previously less familiar to our clients, emerged as top trading U.S. stocks in 2024, driven by their remarkable performance and the rising narrative around AI's transformative potential. Hong Kong's stock trading volume grew exponentially by 117% sequentially to HK$755 billion. The renewed enthusiasm in Hong Kong equity starting from September led to a substantial rebound in trading velocity. Clients showed a meaningful pickup of interest in many technology names, as well as leveraged inverse ETFs. Additionally, total client assets in wealth management increased by 93% year-over-year and 14% quarter-over-quarter, to HK$111 billion. Money market funds continue to hold strong appeal for our clients, even with moderately lower yields in the fourth quarter, and drove the bulk of the sequential growth in wealth management AUM. In Hong Kong and Singapore, we expanded our structured product offerings to better address the investment needs of our high-net-worth clients. Total client assets in wealth management accounted for 15% of total client assets, up from 12% in the same quarter last year. We have 482 IPO distributions in our clients, up 16% year-over-year. In 2024, we underwrote 40 Hong Kong IPOs, ranking first among all brokers for the third consecutive year, according to Wind. The new digital IPO settlement platform, FINI, introduced by the Hong Kong Stock Exchange, eliminates multi-account subscriptions, shortens the settlement period, reduces the required lock-up capital, and lowers funding costs through the new pre-funding model. We believe that this new system improves the retail IPO subscription experience, encourages more retail participation, and favors market consolidation. We swiftly adapted our subscription process based on the new framework and achieved notable gains in market share. Next, I'd like to invite our CFO Arthur to discuss our financial performance.

Arthur Chen, CFO

Thanks, Leaf and Daniel. Please allow me to walk you through our financial performance in the fourth quarter. All the numbers are in Hong Kong dollars unless otherwise noted. Total revenue was HK$4.4 billion, up 87% from HK$2.4 billion in the fourth quarter of 2023. We concluded a strong year with full-year revenue growing to HK$13.6 billion, up 36% year-over-year. Brokerage commission and handling charge income was HK$2.1 billion, an increase of 128% year-over-year and 35% quarter-over-quarter. The year-over-year and quarter-over-quarter increase were both driven by higher trading volume, partially offset by the decline in blended commission rate. We adopted a per contract and per share pricing model for U.S. options and U.S. stock trading, respectively. As a result, brokerage income will grow at a slower rate than trading volume, where our clients trade high-priced stocks and options. Interest income was HK$2 billion, up 52% year-over-year and 19% quarter-over-quarter, both driven by higher interest income from our securities borrowing and lending business, as well as higher interest from banking deposits. Other income was HK$353 million, up 157% year-over-year and 69% quarter-over-quarter. The year-over-year and quarter-over-quarter increase were both primarily attributed to higher fund distribution income and currency exchange income. Our total cost was HK$776 million, an increase of 79% from HK$434 million in the fourth quarter of 2023. Brokerage commission and handling charge expenses were HK$112 million, up 90% year-over-year and 38% quarter-over-quarter. The quarter-over-quarter increase was roughly in line with the movement of our brokerage commission and handling charge income. Interest expenses were HK$513 million, up 90% year-over-year and 24% quarter-over-quarter. The year-over-year increase was driven by high interest expenses associated with our securities borrowing and lending business. The quarter-over-quarter increase was mainly due to higher margin financing interest expenses as a result of higher funding costs for Hong Kong dollars. Processing and servicing costs were HK$151 million, up 45% year-over-year and 16% quarter-over-quarter. The increase was largely due to higher market information and data fees for new products with higher system usage fees. As a result, total gross profit was HK$3.7 billion, an increase of 89% from HK$1.9 billion in the fourth quarter of 2023. Gross margin was 82.5% as compared to 81.7% in the fourth quarter of 2023. Operating expenses were up 57% year-over-year and 33% quarter-over-quarter to HK$1.4 billion. Funding expenses were HK$399 million, up 10% year-over-year and 4% quarter-over-quarter. This increase was partially due to costs related to organizational restructuring in the fourth quarter of 2024. Selling and marketing expenses were HK$464 million, up 154% year-over-year and 48% quarter-over-quarter. The year-over-year increase was due to a triple-digit year-over-year increase in net new paying clients, partially offset by lower client acquisition costs. The quarter-over-quarter increase was in line with the growth of our new paying clients. General and administrative expenses were HK$576 million, up 55% year-over-year and 51% quarter-over-quarter. The year-over-year increase was primarily due to an increase in general and administrative headcount. The quarter-over-quarter increase was mainly due to higher bonuses accrued for general and administrative personnel and, to a lesser extent, costs related to organizational restructuring. As a result, income from operations increased by 117% year-over-year and 28% quarter-over-quarter to HK$2.2 billion. Operating margin increased to 50% from 43.1% in the fourth quarter of 2023, mostly due to strong top-line growth and operating leverage. Our net income increased by 113% year-over-year and 42% quarter-over-quarter to HK$1.9 billion. The net income margin expanded to 42.2% in the fourth quarter as compared to 36.9% in the same quarter last year. Our effective tax rate for the quarter was 16.1%. That concludes our prepared remarks. We'd now like to open the call to questions. Operator, please go ahead.

Operator, Operator

We will now take the first question from Emma Xu from Bank of America Securities. Please proceed.

Emma Xu, Analyst

So, congratulations on the very strong result. I have two questions. The first question is about the new paying clients. You guided 800,000 new paying clients for this year, around 100,000 more than last year. But last year, you had two new markets, Malaysia and Japan. However, this year, previously, you guided that you don't have new market plans. So, I am just wondering why you are able to guide such a strong new paying client target. And the second question is about the Client Acquisition Cost (CAC). It increased moderately in the fourth quarter last year, despite being in an active market. In an active market, in general, CAC should be lower, thanks to the natural flows. So, I am just wondering, is it due to the change in the market, the mix of the new paying client market, or due to a change in the channels that led to the increase of the CAC? And what's your target for CAC for this year? Thanks.

Arthur Chen, CFO

Thanks, Emma. I will take these two questions. Let me translate. In terms of your first question regarding our new guidance for 2025, this 800,000 new paying clients does not include any new markets we will enter or not in 2025. So, this is all for the existing seven markets. The reason for this very strong guidance is, number one, we think these two new markets, such as Malaysia and Japan, which we entered last year, still provide a very meaningful and robust growth outlook in 2025. Not to mention these relatively mature markets, such as Singapore and Hong Kong, where we still see very good upside in client acquisitions, thanks partly due to the Chinese asset rating that we witnessed from the early days of this year. And in terms of the second question regarding the client acquisition cost, we roughly target HK$2,500 to HK$3,000 CAC for this year. From the end of last year and going forward, we will spend more money on some brand equities in order to enhance our long-term user loyalty on our platform. Thank you.

Emma Xu, Analyst

Thank you. Very clear.

Operator, Operator

Thank you. We will now take the next question from the line of Cindy Wang from China Renaissance. Please go ahead.

Cindy Wang, Analyst

Thanks for taking my question, and congrats on a very strong result in Q4. I have two questions here. My first question is: recently, we noticed that the U.S. and the Hong Kong market overall market trading volume has shown very strong quarter-over-quarter performance in the first quarter to date. So, can management give us a little bit of color based on the current run rate? What is the trading volume, trading velocity, net asset inflow, and the margin financing and securities lending guidance? My second question is related to the new product pipeline. We know that Futu has a lot of product pipelines every year. Can you provide us roughly a pipeline on the equity derivatives and crypto products? Thank you.

Arthur Chen, CFO

So first of all, I will give some color on the quarter-to-date operating metrics. We've seen this year that there have been a lot of trading opportunities in both the Hong Kong and U.S. stock markets. Our retail investors continue to be very highly engaged. Year-to-date, based on the current run rate, we forecast higher net new paying clients as compared to the fourth quarter last year. We've also seen higher net asset inflows, which coupled with the appreciation of China equities have led to a very meaningful sequential increase in total client assets. Based on this current run rate, we also forecast our total trading volume to further increase on top of the high base last quarter. Clients remain highly engaged with a very high risk tolerance year-to-date. Regarding our product plan, this year for all of our overseas markets, we have a very rich product pipeline in order to satisfy client demand for different risk rewards. In Japan, for example, we'll continue to enhance our product trading capabilities around Japanese equities and at the same time, continue to optimize and extend our leadership in U.S. trading. In Malaysia, we will also have a number of product innovations and iterations based on local clients' needs. In the U.S., we plan to roll out crypto trading in the next couple of months. In terms of wealth management, we plan to continue expanding our offerings, including more structured notes for our retail and high net worth clients. Thank you.

Cindy Wang, Analyst

Thank you. Very clear.

Operator, Operator

We will now take the next question from Chiyao Huang from Morgan Stanley. Please go ahead.

Chiyao Huang, Analyst

So, basically two questions. One is what areas of the business does management think have the most potential to integrate AI models like DeepSeek, and what kind of efficiency gains do you expect? How should that strengthen the product offerings and services? The second question is regarding crypto offerings. Is there any update on the licensing process or what can be done to accelerate client penetration or investor education on the marketing side regarding the crypto business in Hong Kong and Singapore? What will be the most differentiated offering from Futu’s crypto office compared to peers? Thank you.

Arthur Chen, CFO

Thank you, Chiyao. Leaf will answer your first question, and my colleague, Robin, will answer your second question regarding crypto. Thank you.

Leaf Li, Chairman and CEO

In the past couple of years, we've made a number of explorations in AI based on different usage scenarios. We believe corporate AI capabilities can improve both our internal operations and client-facing capabilities, and we are also doing local deployment of DeepSeek. Internally, we've found that AI helps us to meaningfully increase our efficiency in areas like market use, data generation, content filtering in our social community, and designing graphics, etc. In terms of client-facing user experiences, in Hong Kong, we've launched a new synthesis function for individual stocks, twice a day, in the morning and at night. We also have an automatic interpretation of corporate announcements and analysis of financial results. These are all based on the AI model, which we believe helps our clients to quickly understand market dynamics and reduces the time needed for them to make investment decisions. We are also conducting extensive studies and research on how to better incorporate AI to empower more applications for retail investors. We believe that using AI to assist in decision-making increases the requirements for the timeliness and accuracy of the information generated. The unpredictable quality of the responses may increase the investment thresholds for retail investors and prolong the time needed for them to make effective investment decisions, thereby affecting their overall experience. We hope to make thorough preparations to ensure that the information generated through AI across different usage scenarios is highly accurate. Simultaneously, we need to conduct cautious assessments and comprehensive testing to balance user experience, compliance, and technological innovation, maximizing our investors' benefits and safeguarding their needs.

Operator, Operator

We will now take the next question from the line of Charles Zhou from UBS. Please go ahead.

Charles Zhou, Analyst

So I have two questions. First, we understand the company plans to develop its wealth management business in both Hong Kong and Singapore. What is your expectation for the total addressable market size? How does Futu differentiate itself from competitors such as private banks or insurance companies? Can you talk about your competitive advantage regarding product distribution, etc.? Do you believe this business will be scalable? My second question is, following the strong trading volume in Q4 last year, U.S. stocks corrected sharply over the past month. How did this impact your trading volume in Q1, and if the sales momentum continues in the U.S., will the client AUM decline? Will this also affect trading volume overall in the rest of this year and in 2025? Thank you.

Arthur Chen, CFO

In terms of trading volumes, despite seeing some setbacks in the U.S. stock market in the first quarter, we're finding that these market setbacks are creating more volatility, which motivates more clients to engage in trading opportunities. Meanwhile, trading volumes in Hong Kong have seen a huge spike due to the attractiveness of Chinese assets and a lot of DeepSeek-related scenarios. On a collective basis, as Daniel mentioned before, we see overall trading volumes remain robust in the first quarter. Now I hand over to Robin.

Robin Xu, Senior Vice President

I'll first translate about the crypto updates, and then I'll also touch on Wealth Management. So in the fourth quarter, the crypto market received a significant boost, which lifted our clients' trading interest and sentiments. We saw that in November and December, the crypto trading volume on our platform grew exponentially, reaching nearly five times what we encountered in October. Our daily trading volume surpassed $35 million. We’ve observed a similar growth rate in our number of crypto traders on the platform. In the first quarter, crypto prices experienced a pullback. At the same time, we've had a lot of trading opportunities in both the Hong Kong and U.S. stock markets. We've seen strong interest in crypto trading on our platform, but both trading volumes and crypto traders remain at relatively high levels. Currently, in Hong Kong, we offer four trading pairs to our retail investors, and six trading pairs in Singapore. In the future, we plan to allow more mainstream trading pairs. We're also focused on enhancing our management of capital efficiency, liquidity, and security while lowering costs for our clients moving funds in and out. We believe this approach will facilitate client conversion and deepen penetration into crypto trading. Most retail investors in Hong Kong and Singapore are still in the early stages of building their awareness of this asset class. We think there's a lot of room for further penetration, and we hope to leverage investor education materials to address each client's concerns regarding this relatively new asset class. As the regulatory framework clarifies in both markets, Futu—being one of the earliest players in this retail space—will benefit from an early mover advantage in establishing user mindshare, especially concerning compliant operations, which will support our position as crypto assets become more mainstream in these markets. We are also planning to roll out crypto trading in the U.S. this year, expecting a higher penetration of crypto among our U.S. client base compared to what we've seen in Hong Kong and Singapore so far. Regarding our vApp license, we received conditional approval from the SEC, and we are currently working on product development. We do not have a very specific timeline for our official launch yet, but we look forward to providing more updates in the future. Now, regarding Wealth Management, we've entered a rate cut cycle this year; however, we still believe that money market fund yields will remain attractive for our clients in the foreseeable future. Additionally, we've provided very seamless automatic subscription and redemption functions for our money market funds, maximizing our clients' capital efficiency. This ensures that they can seize trading opportunities in the market while earning yields on their idle cash. Generally, we expect outperformance in fixed-income-related assets during a rate cycle, and we have built a comprehensive set of products in this space in Hong Kong and Singapore. We believe these offerings will help our clients navigate different investment cycles and achieve long-term capital appreciation. As previously mentioned, we also intend to enrich our Wealth Management product offerings further, including more structured notes for both retail and high net worth clients, and we remain optimistic about AUM growth for our Wealth Management division. To add to what Robin just said about Wealth Management, I think our key competitive advantages in this space are: first, we provide our clients with a seamless experience navigating across various asset classes on our platform, whether equities, Wealth Management, or crypto, etc. This is a significant competitive advantage. We not only lead in one specific asset class but offer a very seamless experience for clients to switch between asset classes easily and cross-navigate different cycles. Second, we adopt a platform model that benefits our high-net-worth clients in Wealth Management. For instance, related to structured products, we onboard offerings from multiple private banks, allowing our clients to compare returns and performance, and select the best asset class on our platform. This neutrality allows us to provide our clients with the most attractive investment opportunities.

Operator, Operator

We will now take the next question from the line of You Fan from CICC. Please go ahead.

You Fan, Analyst

This is You Fan from CICC, and I have two questions. The first one is regarding the AUM breakdown in Q4. How much of this is from client net asset inflow and how much from market-to-market impact? What’s the original breakdown of the client assets? My second question: we see the active Hong Kong IPO subscription recently. What is the impact on our income statement, and what's the contribution to our new paying clients and net asset inflow?

Arthur Chen, CFO

In terms of the net asset inflow breakdown in the fourth quarter, as we mentioned before, the market-to-market implications in the fourth quarter were actually a negative number. Therefore, the client asset inflow was much larger than the movement of the balance between two quarters. Among the 24% of the asset inflow came from Greater China areas, which is an improvement from the 21% seen a year ago. This indicates strong engagement from our overseas markets. The direct revenues from Hong Kong IPOs contributed low single digits to our total revenue, given that we've been further diversifying our revenue streams over the past four to five years. Also, due to the new mechanisms in Hong Kong, such as FINI, the settlement duration and leverage financing duration have both shortened. This negatively impacts all brokers' direct commissions and interest income; however, it also encourages clients to participate in the markets, enhancing market liquidity and increasing retail client interest—so on a net basis, it's still very positive for our business. Thank you.

Operator, Operator

We will now take the next question from the line of Peter Zhang from JP Morgan. Please go ahead.

Peter Zhang, Analyst

Many thanks for giving me the opportunity to ask questions. This is Peter Zhang from JP Morgan. I have two questions. First, regarding operating expense: we noticed that sequentially, the G&A expense increased by over 50% Q-on-Q in the fourth quarter, while R&D expenses only moderately picked up by 4%. We wish to understand what's driving this divergent trend for the two different operating expenses in the fourth quarter? What's your outlook for 2025 regarding headcount growth and your R&D and expense growth? My second question relates to other income. We noticed that other income grew by 69% Q-on-Q to a record quarterly high in the fourth quarter. We wish to understand what's driving this increase and what's the outlook into 2025?

Arthur Chen, CFO

For your two questions: the increase in G&A Q-on-Q expenses is mainly due to three reasons. First, our year-end bonus payouts, especially for overseas market management. Second, some one-off professional expenses related to new license applications and new market feasibility studies. Third, some one-off organizational restructuring costs. Looking forward to 2025, we expect our headcount to continue increasing in the mid to low single digits compared to the situation in 2024. Regarding the key drivers of the other income, this mainly comes from two factors. First, revenues derived from Wealth Management, which includes funds distribution and increased fees from structured products like structured notes and T-bills. Second, it relates to foreign exchange fees, partly due to the divergent market performance between the U.S. and Hong Kong markets in the fourth quarter. We observed more clients attempting to switch their assets between these two markets. Thank you.

Operator, Operator

We will now take the next question from the line of Zoey Zong from Jefferies. Please go ahead.

Zoey Zong, Analyst

Thank you, management for taking my questions, and congratulations on the strong results. I have two questions. First, we have seen the blended trading commission rate declined both year-over-year and sequentially in Q4. However, the trading volume contribution from HK stock actually increased in Q4. So, excluding the structural impact, what's the reason for the commission rate decline? My second question is about capital return. We had a $500 million share buyback program, which takes effect for the period ending December this year. May I ask how much is remaining in this quarter, and what's your capital return plan this year? Also, do we have any considerations for regular dividends? Thank you.

Arthur Chen, CFO

In terms of the blended commission rate, the quarter-over-quarter decrease was mainly due to product mix changes. In the fourth quarter, more clients traded high-value nominal U.S. stocks and high nominal value U.S. options, which resulted in a Q-over-Q decline in the blended take rates. However, our take rate has remained stable throughout the fourth quarter. Regarding shareholder returns, we have not yet utilized our share repurchase program, which is set to expire at the end of 2025. We still believe these new markets and business lines are in a high growth stage, and there’s substantial room for deploying capital toward these ventures. That said, we understand that a portion of our shareholders are interested in cash dividends. We will revisit and evaluate our dividend payout policies when the full year of 2025 concludes and consider appropriate measures to reward our long-term shareholders. Thank you.

Operator, Operator

We will now take the next question from the line of Hanyang Wang from 86Research. Please go ahead.

Hanyang Wang, Analyst

Thanks, management for taking my questions. This is Hanyang from 86Research. I have one single question regarding derivatives trading. What is approximately the percentage of derivatives in the total trading volume in the fourth quarter? Considering the recent increase in market volatility, do you see an increase in the proportion of derivatives trading on our platform in Q1? Thank you.

Arthur Chen, CFO

In terms of derivative commissions, they accounted for roughly one-third of our total trading commissions in the fourth quarter, slightly down from historical highs in the past. So far in the first quarter, we have not witnessed any material change in that ratio. Thank you.

Operator, Operator

We will now take the next question from the line of Alan Chan from Citi. Please go ahead.

Alan Chan, Analyst

Thanks management for giving me the chance to ask questions. This is Alan from Citibank. Can you give us some breakdown of the interest income in terms of cash interest income versus margin financing and securities lending income? If management can share, what was the prevailing interest rate on Futu’s clients' idle cash in Q4? Also, since September last year, we have already seen the Fed cutting the Fed rate by 100 basis points. I'm wondering how much of that 100 basis points Fed rate cut has already reflected in the clients' other cash interest rates?

Arthur Chen, CFO

In terms of the breakdown of interest income, roughly 40% to 45% was derived from idle cash deposits, while the remaining came from margin financing and securities lending. The impact of the interest rate cut: if we use the fourth quarter end client assets numbers to make projections, every 25 basis points cut by the Fed will negatively impact our monthly pretax profit by HK$8 million to HK$10 million. Thank you.

Operator, Operator

We will now take the last question from the line of Jian Wang from Goldman Sachs. Please go ahead.

Jian Wang, Analyst

My first question is: do we have a regional breakdown of the new paying client growth in Q4? For 2025, what proportion of the 800,000 new paying clients is expected to come from new markets and what proportion from mature markets? My second question is: do we have guidance for AUM client growth in 2025? Will it be diluted as paying client growth is rapid, with a majority from a new market? In the long run, what levels do we expect the AUM per client to reach in each region? Thank you.

Arthur Chen, CFO

In terms of the breakdown of net client acquisitions by geographic location, for mature markets like Hong Kong and Singapore, together they contributed approximately 40% to 45% of our total new paying clients acquired in the fourth quarter. The remaining countries in Asia and Australia contributed roughly 40% as well, with the last 20% coming from North America. Thank you.

Daniel Yuan, Chief of Staff to CEO, Head of Strategy and IR

Let me briefly translate. First of all, I want to comment on net asset inflow. In 2024, we saw a very meaningful step-up in net asset inflow compared to 2023, and we forecast a similar very robust net asset inflow in 2025 as well. As you understand, average client assets are influenced by our new client mix across different markets and also impacted by market-to-market trends. Both of these factors are less controllable compared to net asset inflows, making it difficult to predict how average client assets will trend for 2025. Concerning average client assets in various markets, some markets, such as Hong Kong and Singapore, will naturally have higher average client assets due to clients possessing higher investable income. Therefore, they'll have more capital to deploy on Futu's platform. Notably, we found super encouraging trends, as all of our markets experienced substantial growth in average client assets quarter-over-quarter during the fourth quarter. We expect this trend to continue, as we onboard more products, creating numerous cross-selling opportunities. We believe our existing clients have ample opportunities to invest more assets onto our platform. As our product capabilities and brand equity enhance, we expect to attract more high-quality clients, including high-net-worth individuals across many of these markets. Thank you.

Operator, Operator

Thank you. I would now like to turn the conference back to Daniel Yuan for closing remarks.

Daniel Yuan, Chief of Staff to CEO, Head of Strategy and IR

Well, that concludes our earnings call. On behalf of the Futu management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you, and goodbye.

Operator, Operator

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