Earnings Call Transcript - TIGR Q3 2025

Aron Lee, Head of Investor Relations

Thank you, operator. Hello, everyone. We appreciate you joining us today for our UP Fintech Holding Limited's Third Quarter 2025 Earnings Call. The earnings release was distributed earlier today and is available on our Investor Relations website at ir.itiger.com and through GlobeNewswire. On the call today with us are Mr. Wu Tianhua, Chairman and Chief Executive Officer; Mr. John Zeng, Chief Financial Officer; Mr. Huang Lei, CEO of U.S. Tiger Securities; and Mr. Kenny Zhao, our Financial Controller. Mr. Wu will provide an overview of our business operations and key corporate highlights, followed by Mr. Zeng, who will discuss our financial results. They will both be available to answer your questions during the Q&A session afterwards. Before we begin, I'd like to address the safe harbor statement. The upcoming remarks will contain forward-looking statements as defined by the U.S. Private Securities Litigation Reform Act of 1995. Actual results could differ materially due to various factors. For more details on these factors, please refer to our Form 6-K furnished today, December 4, 2025, and our annual report on Form 20-F submitted on April 23, 2025. We are not obligated to update any forward-looking statements unless required by law. Now it's my pleasure to introduce our Chairman and CEO, Mr. Wu, who will begin his remarks in Chinese, followed by English translation. Mr. Wu, please proceed.

Tianhua Wu, Chairman and CEO

Hello, everyone. Thank you for joining the Tiger Brokers' Third Quarter 2025 Earnings Conference Call. In the third quarter, Tiger once again achieved impressive performance, with all revenue segments and profit showing encouraging growth and reaching new historic highs. Our total revenue reached USD 175.2 million, representing a year-over-year increase of 73.3% and a quarter-over-quarter increase of 26.3%. We have maintained our strategy of prioritizing user quality and product experience, which has further improved our ROI and laid a solid foundation for ongoing profit growth. All of our licensed entities achieved profitability in the third quarter, resulting in a net income attributable to UP Fintech of USD 53.8 million, up 30% from the previous quarter and three times the same quarter last year. Our non-GAAP net profit reached USD 57 million, growing 28.2% quarter-over-quarter and 2.8 times year-over-year. Non-GAAP net profit hit new historical highs and has maintained double-digit quarter-over-quarter growth for five consecutive quarters. In the third quarter, we added 31,500 new funded accounts with Singapore and Hong Kong being the primary contributing markets. In the first three quarters of this year, we have acquired 132,200 new funded accounts. The total number of funded accounts reached 1,224,200, representing an 18.5% year-over-year increase. As of today, we've already achieved our annual guidance of acquiring 150,000 newly funded accounts. In addition, we are glad to see better brand recognition from Hong Kong users. In the third quarter, for the first time, Hong Kong accounted for over 30% of our quarterly new funded users, becoming a key growth engine alongside Singapore. More importantly, user quality in Hong Kong remains strong with average net asset inflow for newly acquired clients holding around USD 30,000 for three consecutive quarters. Meanwhile, our ROI-driven acquisition strategy delivered standout results in Singapore. The average net asset inflow for newly acquired clients in the third quarter surpassed USD 60,000, marking a historical breakthrough and leading the group average this quarter to above USD 30,000 for the first time. Regarding total current assets, net asset inflow remained robust, mainly driven by retail investors, coupled with the mark-to-market gains, resulting in total client assets reaching a new record of USD 61 billion, up 17.3% quarter-over-quarter and 49.7% year-over-year, marking twelve consecutive quarters of growth. In the third quarter, all the overseas markets delivered double-digit quarter-over-quarter growth above 20% in client assets, with Hong Kong and the U.S. increasing by more than 60% and 50%, respectively. In the third quarter, we continued to refine our product features to make global investing more accessible and convenient. As the leading tech-driven brokerage in Singapore, we constantly enhance the user experience for local investors. To enable more local investors to easily participate in stock markets, Tiger Singapore has waived the Singapore Exchange quarterly custody fee for accounts with no frills, thereby reducing the holding cost for long-term investors. In Hong Kong, we have expanded our product offering by introducing Japanese market derivative services, such as Nikkei futures, for the first time in the third quarter, further solidifying our global multi-asset strategy. Additionally, in September, we launched cryptocurrency trading in New Zealand, providing local users with investment services in major cryptocurrencies like Bitcoin and Ethereum. During the third quarter, the Tiger platform enhanced cryptocurrency-related features by adding unique data such as macro market insights and holdings information for companies, assisting users in recognizing investment opportunities and making better investment decisions. Tiger AI has seen a rapid increase in usage with user numbers growing nearly fivefold year-over-year and the number of conversations increasing tenfold. Meanwhile, the intelligent investment analysis tool, TradingFront AI, provides real-time portfolio analysis and market insights for asset management business, helping investment advisors enhance their analysis efficiency and decision-making quality. Our business-to-business segment also maintained strong momentum, significantly boosting other revenue by doubling it quarter-over-quarter, achieving a historic high for a single quarter. In the third quarter, we underwrote five U.S. IPOs, all serving as the sole bookrunner, including Linkhome and Yimutian. Additionally, we underwrote five Hong Kong IPOs and one Hong Kong public follow-on offering, including Geek Plus and Boss Zhipin. With the IPO market being active, it supported robust growth in our IPO subscription business, with the number of subscribers increasing by 39.3% quarter-over-quarter and subscription amount surging by 121.5%, reflecting our platform's enhanced underwriting capability. In our ESOP business, we added 46 new clients in the third quarter, bringing the total to 709, a year-over-year increase of 19%. Now I'd like to invite our CFO, John, to go over our financials.

John Zeng, Chief Financial Officer

Great. Thanks, Tianhua and Aron. Let me go through our financial performance for the third quarter. All numbers are in U.S. dollars. We saw encouraging growth in all revenue components this quarter. Commission income was $72.9 million, increased 77% year-over-year and 13% quarter-over-quarter. Interest income was $73.2 million, increased 53% year-over-year and 25% quarter-over-quarter in line with our sequential growth in margin and securities lending balance. Total revenue reached $175.2 million, up 73% year-over-year and 26% quarter-over-quarter. Cash equity take rate was 7.1 bps this quarter, increased from 6.4 bps of last quarter. The uptick in cash equity take rate was mainly due to the increased trading volume of fewer low-priced U.S. stocks during the third quarter, as we charge commission per share for U.S. stock trading. Within commission revenue, about 67% comes from cash equities, 25% from options and the rest from futures and other products. Now on to costs. Interest expense was $21.9 million, an increase of 40% year-over-year in line with the increase in interest income from margin and the securities lending business. Execution and clearing expense were $4.5 million, an increase of 27% from the same period of last year, in line with the increase in commission and trading volume. Employee compensation and benefits expense were $47.2 million, an increase of 64% year-over-year due to the headcount increase to strengthen overseas growth and R&D. Occupancy, depreciation and amortization expense were $2.8 million, an increase of 28% year-over-year due to the increase in office space and relevant leasehold improvements. Communication and market data expense were $11.8 million, an increase of 21% year-over-year due to the increase in user base and IT-related services fees. Marketing expenses were $12.9 million this quarter, increased 57% year-over-year as we beefed up user acquisition, particularly in Singapore and Hong Kong markets. General and administrative expenses were $10.3 million, an increase of 49% year-over-year, due to an increase in professional service fees. Total operating costs were $89.4 million, an increase of 51% from the same quarter of last year. As a result, the bottom line increased on both GAAP and non-GAAP basis. GAAP net income was $53.8 million, up 30% quarter-over-quarter and 3x the same quarter last year. Non-GAAP net income was $57 million, a 28% increase quarter-over-quarter and 2.8x the same quarter of last year. The non-GAAP net profit margin further expanded to 33% in the third quarter. That has concluded our presentation. Operator, please open the line for Q&A. Thanks.

Operator, Operator

And our first question will come from Pu Han from CICC.

Han Pu, Analyst

First, congratulations on the exciting results achieved this quarter. This is Pu Han from CICC. I have two questions. The first one is regarding the AUM breakdown. So how much is from clients' net asset inflow and how much from mark-to-market gain? And in terms of the net asset inflow, how much is from retail investors and how much from institutions? The second question is about the take rate. We see both the blended take rate and the cash equity take rate increased a lot this quarter. So could you please share the reason behind the increasing take rate? That's my two questions.

Tianhua Wu, Chairman and CEO

In the third quarter, client assets experienced a significant increase of approximately 17%, reaching a historic high of USD 61 billion. Of this increase, around 30% resulted from net asset inflow, while 70% came from mark-to-market gains. More than 60% of the net asset inflow was attributed to the Singapore and Hong Kong markets, with retail clients being the primary contributors.

John Zeng, Chief Financial Officer

For cash equities, the take rate increased from 6.4 bps in the second quarter to 7.1 bps in the third quarter, primarily due to some U.S. local penny stocks being particularly active in the quarter. Since we charge commission per share for U.S. stock, this led to an increase in cash equity take rate. As for the blended take rate, aside from the increase in cash equity commissions, futures trading volume dropped from around 7% in the second quarter to about 4% in the third quarter. As we count notional value for futures trading, the decrease in futures trading volume, while increasing commission income, contributed to a notable increase in our overall blended take rate. This expense, while our stock trading volume showed a quarter-over-quarter increase consistent with the increase in commission income, but the total trading volume was actually down. Thanks.

Aron Lee, Head of Investor Relations

Operator, please move on to the next question.

Operator, Operator

And our next question will come from Cindy Wang with China Renaissance.

Yun-Yin Wang, Analyst

This is Cindy from China Renaissance and congrats for the great third quarter results. I have two questions here. First, could you give us the breakdown of 31,500 new funding accounts by region in the third quarter? And second, customer assets in overseas markets enjoyed significant sequential growth in the third quarter. Could you please provide details on the onshore user assets quarter-over-quarter change and their contribution to overall client assets in the third quarter?

Tianhua Wu, Chairman and CEO

In the third quarter, about 40% of newly funded accounts came from Singapore, approximately 35% from Hong Kong, 20% from Australia and New Zealand, and the remaining 5% from the U.S. Client assets for onshore investors also saw a significant quarter-over-quarter increase, with both institutional and retail clients experiencing net inflows and mark-to-market gains contributing to this growth. Our global expansion over the past few years has led to faster growth in client assets in overseas markets. By the end of Q3, the percentage of client assets from onshore retail users dropped to below 15%. The new rules require onshore investors to hold value overseas, which includes needing Hong Kong identification to open accounts with us, and this regulation applies industry-wide. We remain optimistic about the Greater China market as many high net worth individuals already have overseas identities, and the requirements for the Hong Kong Quality Migrant Admission Scheme are becoming less stringent. The global shift in asset allocation for investors is just beginning, presenting significant market opportunities. By serving this group, we can continue to see strong growth in client assets and trading volumes.

Aron Lee, Head of Investor Relations

Operator, let's proceed.

Operator, Operator

And our next question will come from Emma Xu from BofA Securities.

Emma Xu, Analyst

So the first question is about the operations so far in the fourth quarter. In particular, could you share any early trends around the trading volume, client assets, and new funded accounts? And the second question is about your clearing cost, which decreased quite significantly in the third quarter. So what are the major reasons behind it? And do you believe the current clearing cost is sustainable, or do you have further room for reduction?

Tianhua Wu, Chairman and CEO

Regarding trading volume, the market remains quite active. Our trading volume for the first two months of the fourth quarter is already on par with the entire third quarter, partly due to the increase in futures trading volume. Cash equity trading volume in the first two months of the fourth quarter is more than two-thirds of the cash equity trading volume in the third quarter. In terms of client assets, net asset inflow quarter-to-date remains robust and is expected to be slightly better than the third quarter. However, some users experienced mark-to-market losses due to the market volatility in the fourth quarter, and we will have a better understanding of the total client assets movement by the end of December. We have already met our annual target of acquiring 150,000 clients for the year in new funded accounts. The number of new funded accounts in the fourth quarter is expected to be roughly in line with that in the third quarter. We will continue to prioritize future quality, ensuring our growth aligns with a healthy business model.

John Zeng, Chief Financial Officer

So our commission income increased by 13% quarter-over-quarter. Clearing costs decreased by 17% this quarter, bringing the quarterly clearing costs to a historic low of 6%. The key reason is the SEC in May announced that it will no longer charge transaction fees. Since the majority of the trading volume on our platform is in U.S. securities, this change in the asset fee has largely helped us reduce clearing costs. We believe the current clearing cost rate is quite sustainable as we are self-clearing for all core products, and only a small number of stock and derivatives are cleared by third parties.

Aron Lee, Head of Investor Relations

Operator, let's move on to the next question, please.

Operator, Operator

Our next question will come from Ling Tan from Haitong.

Ling Tan, Analyst

I will quickly translate my questions. Congratulations on a very good, solid third quarter result. My first question is regarding the overall operating costs and expenses. I noticed that in the third quarter, there is a notable increase in the overall cost and expenses, particularly in R&D as well as employee compensation, which is higher than the previous guidance of 10% to 20% year-over-year growth. Could management explain a little bit on what's the reason behind the increase? And looking forward, do you expect the overall operating costs and expenses to remain at the current level, or do you expect it will gradually go up or trend down? My second question is regarding the Hong Kong market. In the third quarter, Hong Kong contributed to roughly around 40% of the total newly funded accounts. Could management explain a little bit more on Hong Kong's contribution regarding net asset inflow, total revenue as well as net profit? And also, looking forward, how do you plan to maintain the strong growth in Hong Kong, given that Hong Kong is a highly competitive and highly penetrated market?

John Zeng, Chief Financial Officer

The increase in labor costs is due to several factors. First, our global expansion has led to a higher headcount, and we have more experienced R&D personnel to enhance our product offerings. Additionally, we have issued more bonuses due to our recent performance, and our asset management unit performed well in the third quarter, prompting us to pay performance bonuses to fund managers. As a result, labor costs in the third quarter were above the typical levels for a single quarter. For G&A expenses, the rise is primarily because as we expand globally, we need more professional services related to anti-money laundering, audit consulting, and legal services. We expect these expenses to stay at this level in the near future. In the third quarter, Hong Kong represented about 35% of new users and around a quarter of net asset inflows, making it a significant growth driver alongside Singapore. Regarding profitability, Tiger Brokers Hong Kong has been profitable over the past years, but its contribution to overall group profit remains relatively modest. Given the high quality of users in Hong Kong, our current focus is more on enhancing our product offerings and increasing market share rather than on profit contribution from this market. We are pleased with the growth since entering Hong Kong. Our user base is diverse, consisting of seasoned investors from other brokers and younger market entrants. We believe that our product experience, combined with competitive pricing, is key to Tiger's growing presence in Hong Kong, which is why many users choose us. Since entering the Hong Kong market, client assets have consistently experienced double-digit growth quarter-over-quarter, with a more than 60% increase in the third quarter. The average client asset per user, for both new and existing clients, surpassed USD 30,000, with the highest velocity and ARPU across all our markets. As we enhance our user acquisition in Hong Kong and improve our product offerings such as cryptocurrencies, we are optimistic about future growth in this market and believe it will soon become another major profit contributor for the group.

Aron Lee, Head of Investor Relations

Operator, let's move on.

Operator, Operator

Our next question will come from Dennis Bai from UBS.

Weizhou Bai, Analyst

Congratulations on the strong results. My first question is about client acquisition cost, perhaps CAC. We've seen an uptrend. In 2024, the CAC was about USD 150. In the first 3 quarters, the average CAC is about $250, and in Q3, particularly the CAC exceeds $400, and there's no new market entry. Could you please break out the Q3 CAC by market and share your outlook for CAC in Q4 and next year? My second question is about the interest income. We saw a sharp quarter-over-quarter increase in Q3, but the margin financing and stock lending balance remained flat sequentially. Could you please explain what drives the interest income growth and whether this trend is sustainable?

John Zeng, Chief Financial Officer

So overall, we prioritize user quality and dynamically adjust customer acquisition costs based on market conditions. As a result, average CAC can fluctuate across different periods and for different markets. This year, we have continued to optimize our customer acquisition strategy by eliminating channels that do not meet our ROI standards and focusing on attracting high net worth users, particularly in the Singapore market. As a result, average CAC in Singapore has been rising from just over $100 back in 2024 to over $400 this year. At the same time, the quality of new users from Singapore keeps improving with the average net inflow per new user exceeding $60,000 in the third quarter. From a lifetime value perspective, we believe this will be favorable for our profitability in the long term. The Hong Kong market has always been competitive, leading to a higher average CAC, which remains stable in the $300 to $400 range. Back in this quarter, it was about USD 300. However, due to the high quality of the local users, the payback period is still the shortest among all the markets we entered. In Australia and New Zealand and the U.S., we adopt a long-term approach to gradually earn local users' trust, resulting in a relatively stable average CAC around $200. Looking ahead, we will continue to adjust our customer acquisition strategy based on market conditions and competitive dynamics. So there are two key reasons for this interest income increase but margin balance remaining relatively flat. The first reason is the directed growth of client asset, handing to an increase in client per cash adding approximately $1 billion from the second quarter to third quarter. Additionally, as our profitability increases, our retained earnings contributed to an increased cash balance as well. Both of those will boost interest income, but are not reflected in an increase in the margin financing or securities lending balance. The second reason is that while the overall margin and securities lending balance remains flat from second quarter to third quarter, but the balance of high spread business, such as margin financing and the securities lending increased, while the balance of lower spread business decreased, results in flat margin and security imbalance while interest income had a big jump. Thanks.

Aron Lee, Head of Investor Relations

Operator, let's move on to the next question.

Operator, Operator

I'm showing no further questions from our phone lines. I would now like to hand it over to Aron Lee for any closing comments.

Aron Lee, Head of Investor Relations

Thanks. I'd like to thank everyone for joining the call today. I'm 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.

Operator, Operator

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