Yahoo Finance UP Fintech Holding Limited (NASDAQ:TIGR) Q1 2024 Earnings Call Transcript
UP Fintech Holding Limited (NASDAQ:TIGR) Q1 2024 Earnings Call Transcript June 5, 2024
UP Fintech Holding Limited misses on earnings expectations. Reported EPS is $0.09 EPS, expectations were $0.1.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the UP Fintech Holding Limited First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I must advise you that this conference is being recorded today June 5th, 2024. I would now like to hand the conference over to your first speaker today, Mr. Aaron Li, the Head of Investor Relations. Thank you. Please go ahead.
Aaron Li: Thank you, operator. Hello everyone and thank you for joining us for the call today. UP Fintech Holding Limited's first quarter 2024 earnings release was distributed earlier today and is available on IR website at ir.itigerup.com, as well as GlobeNewswire services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and Chief Executive Officer; Mr. John Zeng, Chief Financial Officer; Mr. Huang Lei, CEO of US Tiger Securities; and Mr. Kenny 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 their remarks.
Now let me cover the Safe Harbor. The statements we are about to make contain forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about factors that could cause actual results to materially differ from those in the forward-looking statements, please refer to our Form 6-K furnished today, June 5th, 2024 and our Annual Report on Form 20-F filed on April 22nd, 2024. We undertake no obligation 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.
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Tianhua Wu: [Foreign Language] Hello, everyone. Thank you for joining the Tiger Brokers' First Quarter 2024 Earnings Conference Call. [Foreign Language] In the first quarter, we saw a moderate rebound in market backdrop. Our total revenue reached US$78.9 million, the highest quarter in the past three years, increased 12.8% sequentially and 19% year-over-year. Our bottom line, benefiting from the optimization of the company's revenue structure and increase in operating efficiency, the profitable momentum was back on track. GAAP net income turned positive to US$12.3 million and up 55% year-over-year. Non-GAAP net income was US$14.7 million, 13.9 times that of the previous quarter and up 42% year-over-year. The non-GAAP net profit margin rebounded to nearly 20%.
Going forward, we will further leverage fixed costs through the growth of user base and ARPU improvement, brought by product diversification, thereby achieving health care and more sustainable profitability. [Foreign Language] In the fourth quarter, we added 28,800 new fund accounts and the total number of funding accounts reached 933,400 as of end of the first quarter, an increase of 15% year-over-year. In the first two months of the second quarter, we've already acquired more than 35,000 new branded clients, and we are confident in achieving our full year guidance of acquiring at least 150,000 new funded accounts in 2024. In terms of total client assets, building from a historic high in net asset inflows in the fourth quarter of last year, the strong momentum continued in the first quarter of this year, with net asset inflows of US$5.3 billion, mainly contributed by Singapore users and institutional users.
After neutralizing the impact of mark-to-market loss, the total client assets reached US$32.9 billion for the end of the first quarter, an increase of 7% sequentially and 104% year-over-year. [Foreign Language] Our strategy to keep acquiring high-quality clients to ensure long-term profitability remains unchanged. In Singapore, where our headquarter located, our brand advantage continues to attract high-quality organic traffic to onboard our platform. With an average net asset inflows of over US$14,000 from newly acquired retail clients in the first quarter. Also, we are glad to see the average net asset inflow of newly acquired clients from the Hong Kong market in the first quarter exceeded US$18,000, demonstrating we have gained more recognition from the local high-quality users, and we are committed to grow our Hong Kong presence.
[Foreign Language] In addition, the average customer acquisition cost was around US$150 in the first quarter. And with the further improvement to our Hong Kong and Singapore shares clearing efficiency, the overall clearing fee as a percentage of commission income has dropped to a historical low of only 8%, both of which are industry-leading low levels, indicating that we keep reducing our variable costs and improve profitable efficiency, while ensuring user quality and product experience through our brand advantages and R&D strength over the years. [Foreign Language] In the fourth quarter, we rolled out numerous localized feature across different markets to better serve our users and also gain more licenses to diversify our product offerings.
In the Singapore market, we collaborated with a local license partner to launch the Tiger Vault debit card in February, which is the first debit card in Singapore that allows users to earn fractional shares reward from their daily spending. This product connects users everyday consumption to stock ownership and more naturally onboarding local users into US stock investing. Additionally, catering to local Singapore's needs and the local credit system, we launched the cash boost accounts featured in April. The Tiger Brokers cash boost account operates on countertrading strategy without an initial deposit required. Tiger brokers were the first Fintech broker in Singapore to offer contract facilities. [Foreign Language] In Hong Kong, we uplifted our Type 1 license to include virtual asset billing services for professional investors in the first quarter and officially launched this feature in April, making us as well as the first mainstream online brokerage firm in Hong Kong to provide cryptocurrency trading services to professional investors.
Also, we opted a Type 9 license in March so that we can provide asset management services to investors. [Foreign Language] Apart from those, we rolled out two major product upgrades to better meet investor needs. Firstly, we launched the overnight trading feature, which allows users, particularly in the Asia Pacific region to treat US stocks and ETFs during local market hours and capture more market opportunities. Secondly, we have upgraded our auction trading capabilities by introducing the US option early access or do not access features. This allows our clients to better mitigate potential volatility risk of the in-the-money options and the liquidity challenges of deep in the money options before expiration. [Foreign Language] Our 2B business continues to perform well.
In Investment Banking, we underwrote five US and Hong Kong IPOs in the first quarter, including Concord Healthcare Group and Lianlian Digitech. In our ESOP business, we added 22 new clients in the first quarter, bringing the total number of ESOP clients served to 557 at the end of the first quarter of 2024, an increase of 24% year-over-year. [Foreign Language] Now I'd like to invite our CFO, John, to go over our financials.
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John Fei Zeng: All right. Thanks, Tianhua and Aron. Let me go through our financial performance for the first quarter. All numbers are in US dollar. As Tianhua mentioned earlier, we did see market sentiment improving this quarter versus last quarter. Commission income was $27.8 million, increased 9% year-over-year and 27% quarter-over-quarter. Interest income was $43.8 million, increased 27% year-over-year and 10% quarter-over-quarter. Please note we reclassified the interest income generated from US TBO from nonoperating gain or loss to interest income in the top line. We see this revenue going forward as part of our routine business, so it should be reflected in our operating income. Together, total revenue reached $78.9 million this quarter, an increase of 19% year-over-year and 13% quarter-over-quarter.
Cash equity take rate was 6.3 bps this quarter, slightly decreased from 6.5 bps from last quarter. Within commission revenue, about 65% comes from cash equities, 30% from options and the rest from futures and other products. Now switching to cost. Interest expense was $14.8 million, increased by 70, sorry, increased by 76% from same quarter of last year, in line with the high interest rate environment. Execution and clearing expense were $2.2 million, decreased 8% from the same period of last year primarily due to more efficiency in self-clearing for Hong Kong and Singapore securities. We have gradually moved Hong Kong equity position to Tiger Broker Hong Kong since we onboard Hong Kong retail market. And we have seen cash equity clearing expense and productivity of commission went down from time to time during the past year.
Employee compensation and benefit expense were $27.8 million, an increase of 14% year-over-year due to head count increase to strengthen overseas growth and R&D. Occupancy, depreciation and amortization expense decreased 12% to $2.1 million. Communication and market data expense were $8.6 million, an increase of 23% year-over-year due to the increase in user base and the IT-related services. Marketing expense were $4.4 million this quarter, decreased 15% year-over-year as we keep optimizing our marketing channel and strategy. General and administrative expenses were $5.7 million, an increase of 26% year-over-year due to an increase in professional service fees. Total operating costs were $50.8 million, an increase of 11% from the same quarter of last year.
As a result, bottom line increased on both GAAP and a non-GAAP basis. GAAP net income turned positive to $12.3 million versus a GAAP net loss of $1.8 million in the previous quarter and an increase of 55% year-over-year. Non-GAAP net income was $14.7 million, increased 42% compared to the same quarter of last year. Now I have concluded our presentation. Operator, please open the line for Q&A.
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