Daniel Yuan Chief of Staff and Head of Investor Relations
Leaf Li Chairman and Chief Executive Officer
Arthur Chen Chief Financial Officer
Robin Xu Senior Vice President
Bella Zhang TH Capital
Katherine Liu Morgan Stanley
Zoey Zong Jefferies
Call transcript
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Hello, ladies and gentlemen, welcome to Futu Holdings Third Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. After the management's 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. Futu. to conference conference of call, Head IR like host to Staff now of today's for Daniel at would turn over the your and I Yuan, Chief Please go ahead, sir.

Daniel Yuan

XXXX joining and Operator, to third thank for earnings Thanks, us results. you discuss today our quarter

Executive Robin Joining Chief Xu, President. call Senior Chairman the Chief Chen, on are Mr. Vice Arthur me Li, Financial Leaf today and Officer; Officer; and

forward-looking their statements, future As are which the a may reminder, are regarding by today's company's company's and events, certain include which the control. nature call not belief of represent outside

We Forward-looking factors you statements involve to contained inherent risk actual cause forward-looking a and differ important uncertainty. of any from those caution in number results materially that could statements.

refer registration company's including more the SEC, with statement. to the the information uncertainties, For about its filings potential risks please and

that, with make will will comments So, call the will turn Leaf. translate. I over and Leaf to in I Chinese his now

Leaf Li

all we seventh to paying In X.X acquired [Foreign where paying were today. clients This Language] [about] us net you of XX% over bringing quarter total organically. clients clients, the was XXX,XXX for paying million. added Thank our joining quarter, consecutive [Ph] third new our new

client In client [dampening] acquisition consistent our Language] retention between client higher retention and slipped Our quarter, quarterly incentives budget and Singapore, client sentiment. and optimize strategy. due We rate performance third asset to inflow efficiency. to allocation we cohorts. brand slightly paying In we XX% [Ph] continue to across overseas to rate marketing on [Foreign market the execute observed iterated on

in were of with and success due a user client Average end, Language] we entering Language] our robust top-of-mind into and competitive client broker commercial account [Foreign and already was Kong. quarter time trustworthy of factors brand, into close include As because Hong infrastructure, We warrants, lower sequential assets of quarter-over-quarter increase, and and Despite to the young subscriptions, XXX% the impact broker new population, penetrate by in pullback Singapore are we and as stocks, was the players end-to-end asset to relationships though population our to launching our economy all billion, experience, are of which remain a new and intend been Hong tech-savvy users key extend the Kong We leadership has capital a confident IPO by lie. mark-to-market a market, retail which continue dropped base. the superior to banks, HK$XXX alleviated well in which not balance that The trading crowded Kong, base, strong was offerings represented Kong one-third year-over-year to cultivate, the fund adult always proprietary position decrease. take decrease client [Foreign expand strengths sharp total are the products. space, Hong dragged this expand HK$XXX,XXX, the believe largely net demographics further in markets. asset Hong into of by structured XX% currently Chinese representing to number balance we constituted our In some product the very U.S. new where inflow.

up backdrop, total and XX% client spite in market both the increased Singapore XX%, However, average of assets in challenging sequentially, respectively. and

us, share to XXX by IPO clients of Companies XX. online including Meanwhile, Arthur, opened bringing have market managers our business By trillion, [BYD XXX% and trading, trading. prominent U.S. renown X% the to funds leaned XX% billion. Hong for Over and [HeyTea clients, Schroders XXX tech of clients, [indiscernible] and volume and tripled. HK$XX.X partners products net in held companies to was Pop asset managers, [Foreign quarter, including onboarding Language] stock HK$X.X quarter. high-net-worth Language] offer we Yogurt] established inflow like Language] would up For year-over-year U.S. services management XXX% to up third ESOP the client Simple came updates. asset wealth Health, use XX% quarter-over-quarter. acquired the paying we [HK$XXX and [Ph] trading adopted enterprise service billion] in XX% Trading of asset In quarters into enterprise IR our [alternative] Auto] futures volume community [Ph] market and gain to options JD As About balance reached due their XXX% clients post I and [Ph], performance. to down our with companies Language] partnerships the XXX discuss lower ESOP invite year-over-year. we north over new quarter-over-quarter more including and of with from up our account CFO, HK$XX well billion, average third total to turnover [Ph], that with XXX and listed account prior, end, capitalization curated assets [Foreign as [Foreign XX% [Foreign end to or continue with two with stocks. trading retail clients quarter Kong third asset Carlyle, quarter, further Mart, and management working financial accounts We wealth of Plus our positions. as in Money both total and investors Love Next, started year-over-year. solutions workshops. have management

Arthur Chen

Please performance the otherwise Daniel. noted. third me numbers walk financial Hong through and dollar unless in Kong allow quarter. our Leaf Thanks, All the to in are you

q-on-q. was U.S. price derivatives charge XX% the in adopt support they trading commission-per-share X.X higher blended and by IPO down very relationship underwriting due trading, decrease X% decrease q-on-q. mainly and exchange The up share year-over-year driven and a HK$XXX of enterprises year-over-year HK$XXX fee offset commission point. by average Our partially charge was of there's income X% our securities blended revenue was a q-over-q rate. XXX% income the commission and public increase Higher primarily year-over-year increase from XX% XX% lower q-over-q contribution volume resulting for trading expansion. in an Other an Interest service XX% income fees stock currency the most The Since the increase was up and to and the lending financing both was decrease total rate market. stock the and XX% also The active IPO of The million, basis in was total our clients HK$XXX and in year-over-year to in margin higher and by handling growth subscription pricing up million, was the year-over-year income. increase of driven financing IPO income income model trade, was a the q-on-q. year-over-year year-over-year, and and XX% of increase higher commission interest million, commission increase rate billion, HK$X.X service q-over-q. income Brokerage income. due

down fees. grow and charge XXXX. with our XX% offset expenses in X% handling in up HK$XX U.S. of million, business the higher mix million, security upgraded was Processing up quarter cost million, year-over-year was process our due year-over-year didn't margin and fees HK$XXX line servicing funding sources. increase and package IPO with expenses million, of interest usage expenses were XX% higher year the system a the lower over towards q-on-q. our and expenses financing HK$XX of to XXX% partially to and brokerage commission of costs The shift number q-on-q. handling Interest clearinghouse though increase Our the total charge crowded HK$XXX in cost increase lower million a service expense The interest. commission was The q-over-q. XX% in IPO was increase and Interest subscription funding expenses to income HK$XXX due the higher and with decrease to due year, fees trades. from lower associated was third Brokerage and and an XX% as an increase we and year-over-year concurrent didn't service line borrowing primary lending increasingly by increase with interest financing income our XX%

increase was in as total margin As third XX% HK$XXX compared gross third XX% quarter profit million of in XX% from HK$X.XX was XXXX. our the of billion, Gross to an of result, quarter XXXX. a the

Our was q-over-q. expenses year-over-year million, total XX% up XXX% operating and HK$XXX

of We R&D was XX% were expenses costs over in q-over-q. continue XX% we operating and to and XX% up year-over-year invest to markets. international overseas estimate million, HK$XXX devoted markets our

add year-over-year and to headcount markets, The international support for and to the XX% Selling expenses and our primary overseas million, in In customization was personnel. our marketing q-on-q. and in U.S. due approximately increase HK$XXX spending year-over-year higher client writing HK$XXX The expenses offering branding product expenses X% the continue and of approximately new q-on-q. G&A increase personnel headcounts in and We the capabilities were product G&A quarter, were driven marketing in R&D of million, marketing U.S. our XXX% the XX% of [indiscernible]. an clearing for up increase XXX% by expenses third to and to were selling spent on were Singapore acquisition. was XX% particular. dedicate

Operator, income our concludes remarks. net That ahead. go the As the now questions. HK$XXX was you. our a please non-GAAP We result, quarter q-on-q Thank with non-GAAP increased for to open net by margin and like million XX% XX% adjusted to XX%. year-over-year call the to prepared


Thank Please Bella you. of of [Operator Zhang line Our the Capital. from first Instructions] is TH ahead. question

Bella Zhang

of the for million the management. have new two impacts [you [Ph] especially well, mainly is, over about taking Cyberspace users. tech data two. with first cybersecurity Kong, Administration the I There're leasing for China companies requires Thanks assessment in a actually, for my question. know, regulation from draft] Hi, one Hong one

And are is, our you terms is slowed of of regulations expect negative my in in fourth offshore And be by CAC? online new any because So, the customer pipeline on brokers. lot? do impacts will next your or acquisition. the and about concerns quarter of actually trading one year the pace IPO There -- second question should see legality from a some the IPO down we

Just wondering to myself. Well, China, that account light translate government regulation, hesitate customer Mainland well, additionally, on to acquisition new will the [Foreign some concerns. Let share me affect under for regulatory you Language] especially if the people due open strategy? impacts can know, feel may customer in acquisition your management

Arthur Chen

take to question first Thank colleague, you. Leaf. my I the the will will first. question I second leave

to think the will best In do. terms prejudge what of are the regulator the China not regulations, I we position in

[Ph] outflows share recent headline which China] also across Definitely, that what's manageable. positions for gauge helpful we how I China shot-term the impacts mid-October [indiscernible] and the a to From think Overall we can in to think, our our so client the areas situation positions think [Ph] of client our think mid-November, the X% areas clients little the implication net certain than [Great more on [impacts] very total among client is less is of I the my because outflows asset thought, be the concerns the bit humble for the normal the due analysts investors I speaking, may see In manageable. from [negative] asset Great the assets. reports. in colors media news, over back last us. impacts worst already and far, to accounts to behind week. board. And started I the the [Ph]

with situation and for also create with the market is course, QX, rate overall But Of across within that, the in the enhance headline existing acquisition think control. definitely attrition our speaking, alongside some seasonality you. this we the challenges together client effect clients, for news new the the in still board near-term. volatility Thank paying

Leaf Li

[Foreign our business is nothing usual and Futu, as Language] business are here new. we model at Yes,

business there been size So, whole our has before business for is our small the years. industry. relative this And to inception,

clients access model And we set [identical] and other regulations. business are that how in overseas brokers laws our international of Kong [Ph] same to Hong our a the operating the [indiscernible] we banks and under Kong lot China are and trading. help Chinese-based serve So, and of Hong

And dependent these new to as there You on the a if will available to be technology differences us. the the been there regulations as we comparison pipeline into timely by abide both And possible. have attach very we market a whether update are as on influenced, cybersecurity regulators. welcome out, coming to whole. actively anticipate user company, from high And importance embracing and invest add environment feel industry kind guidance regulatory the compliance. as transparently peers, to any question new more we guidances I and innovation. experience. And set IPO more we about and your in a then, and information we listed soon regulations, IPO And think of to our pipeline more overall us Yes, investigations. heavily on are the always to like could that we is also the than we'll the have the and and communicating operational the with And more we of for regulators standards

I turn largely in including we couple the direction market. that, want Hong our of overall point to how achieve IPO of will through like out on also, financing So, revenue in the of fees and the IPO Kong the just pipeline single-digit I IPO subscription the out will be margin next dependent income. think quarters And businesses historically, IPO-related high

material lot further for levers Hong it's there our Kong we more into, and we impact as think have our on we mentioned in you. and including the international Thank that still significant entered, pull business. U.S. tap a huge markets have a remark, Singapore growth. allow don't under-penetrated And to that a we could growth. So, population in offer the think runway the we to And we opening is our


you. Thank

is Stanley. question ahead. from of go the line of Katherine Please Liu Morgan next Our

Katherine Liu

for giving two me much opportunity ask you I just Language] questions will [Foreign to for translate so from very me. myself. this question, Thank

just the in and the First, assets] can you. give And the cetera? guidance the to the for some quarter quarter-to-date of operational to overseas Futu? us terms as such can then fourth et analyze data velocity, help wondering how growth management Thank company the question for room [Ph], is, [client growth or view the trend, second us opportunity market

Arthur Chen

me I supplement answer will question. before to Okay, just for question Leaf. the Still, first sure. your let I leave Katherine, mentioned the second

warming investor in fourth up activities, of think sentiment client quarter. terms we I the in the is see

long some the run we the course, on based we in trading Christmas. face and take volume expect be effect If rate. we similar holiday as the such holiday national out quarter, for holidays, also fourth in Of current to may do QX QX, overall

continue recently. do In our of last mentioned in of Leaf outflows will on assets our to the in products, our of and total client such to markets, since in I basis in what a our assets markets, jumped far which least absolute in got And some Singapore. expect increase strong be on terms you. we wealth news client start situation on growth back also asset see our may on of XX% further also q-on-q mentioned normal But the top Singapore I a top another think up. still we as week. see headline will Thank achieved management overseas has negative at we offering the resilience an XX% continue on In we assets, in and because encouraging average more signals QX. do of before, management demonstrated our segment go particular, as we to a AUM product opening Singapore that, to we so already terms q-on-q that QX, very see launched And wealth definitely to in drive basis. remark,

Leaf Li

our region, XX users In in for X.X in population Language] million every age about the this user one over is five meaning XX out of of adults about had of penetration population this we age of product. three Hong now. group every XX%, Kong and of rate that among XX% Hong our And meaning XX Hong is about accounting uses [Foreign between in Kong one QX, that Kong about our the out

that million see Asian groups countries underpenetrated brokerage young of that XX Kong while of will think we Asian female Singapore, population, well. in And broadening region. SCA between the also the high market, in XX incumbents focusing further see into the approximately and strikes And user-friendly we in on based as middle X.X advanced believe aged benefiting and Asian brokers million acquiring penetration the a initiatives in lag are many a their client Southeast on least, the user client approximately going and on representing we Within I gap cetera. such between IP take Southeast maintain for Singapore rate product U.S. the the the population target users. basis, a potential penetration. great future and fill assuming for acquisition capabilities retail on dynamics market international of Chinese growth in are high And strong market among tech service existing we'll about the whom NiuNiu terms market in We internet countries QX adjust we to And but clients potential in people well features NiuNiu other of converts delicate the as and et similar Language] balance groups. Futu's our has Futu our strategy, client there experience. design in are countries savvy and And to expand Hong this Thank our mobile our not a meaningfully as a strategy and And our headquarter as very population forward, have Southeast users, a is that recognition account, we lot part groups, address adult sequential and [Foreign further already. And there think increased like of built them other in the million the XX% brokerage investors people in U.S. about and reach our last channels. you. that million market the acquisition based Singapore, of to X.X brand


Thank you.

Zoey next Our Zong question from of is of ahead. Jefferies. the line Please

Zoey Zong

Thanks. I [Foreign question. have Thank management Language] my two you, for questions. taking

my customer how second newly also Kong, mix come could the and cost. in color million clients? about XXX,XXX the like you regarding X.X And for company much opening Hong that U.S. please Could QX. question clients you some acquisition a provide noted paying user the we First, from Swiss share makes added also please is and Singapore

in customer costs acquisition HK$X,XXX around QX. the entire So, towards

we year? So, the you. Thank expect next should how

Arthur Chen


take So, both questions. I will

Great The in general and of breakdown areas in acquired accounts the new U.S. market belongs clients the remaining the the expanding. XX% accounts the for question also quarter. XX% acquired one XX% new terms for and of number remaining in think Singapore second and paying clients roughly QX roughly XX% for China for your for the to I

number, paying a internally because conviction, transition be q-on-q -- we go increased impacted market quantitative have in CAC a is competitors channels fourth more a it the the cost Therefore, focus but third you attrition in a for Mainly, high growth. as the be monitor care, by ratio. because I our what time you things due see see, difficult higher. more, in think I number we temporary it's basis. slightly user versus always rate can the ARPU imagine, basis, give other users are the the to -- on from CAC the the us to the on quarter numbers I the or closed CAC heavily we Definitely the to which on other can think you our a guidance make more goes for justifiable. engagement will conditions, unit average to which is It CAC let market economics we our to important from is Therefore the for most up you Definitely very very basis. conditions will, basis, focus threshold. still think q-on-q

this if think, Singapore look client our years. increased already now, we back there numbers, at one clients paying And be fourth in number use by around period if we our that at see But payback another instance, for quarter. asset average also XX%. time, chunk For can the quarter, do I our core you our expect also number our we X.X and will XX% is year, second the CAC to Singapore quarter after

after who Thank economics enhance into from rate. So, confidence more will become to fundings and the unit further trust inject on accounts, make provide the the we offerings will you. the you. time Thank sense, a take and gain users more at we their will [Foreign more more existing Language] more also same on and forward-looking our perspective, for


is Thank [Charles ahead. Please from of Credit next of go the line you. question Zoe] The Suisse. [Ph]

Unidentified Analyst

I Okay, translate by Language] [Foreign myself. will

The mentioned clarify just just about outflow. I want X%, first to question, the you

maybe You that? on by the is mean color you just which risk Greater us China, and mentioned you just the process, also also more question, period? do diligence what due Can little seen give a that as the Second management banks. that? you mentioned So, onboarding

here. private you bank I also more mean commercial So, or account? famous for have that do brokerage a your bank security two questions

policy, we zero-commission has one first The a many do. competitors understand Futu adopted not is like

So, and we either zero-commission that treating code, opening seen offered afterwards. have a some promotion by account a coupons promotion using redeeming or

So, about going the about as we in far is one AUM? the current the Singapore, forward share think Last buyback. as monetization Hong of Kong, also how do theories

us also So, and can color your back, shares buyback? already like by you. you Thank many at more maybe you price have say, give share how what

Arthur Chen

Sure, Charles.

You asked four questions.

take the just first. question second me four number question the also one, leave and I Leaf. Let to third number the Still, will

share in reason before, -- because of back, the that news. hairline headline very just we or the implications It to of colors because the But month, I as statistics, clients our number attribute some have outflow. do look just think as of or from from we is the you client outflows give latest one as because if other of the as reasons. I use past simple outflows I weather mentioned some to recent of very terms difficult want terms to in

of third in of I the quarter. total current range to balance at think the roughly asset is X% end the of amount X% our the

not according conduct share to period. have any any is so result you. we buyback to definitely just months blackout in also this some and for give will I and also share share buyback So, the XX we Thank yet. the share you the [Foreign -- Therefore, we terms number actually, of the conducted Language] programs think, sense buyback, the SEC regulations, during cannot far, buyback

Leaf Li

Sure, yes.

earlier, procedures AML, KYC of our abide et we laws mentioned of terms the regulations opening same set in cetera. and and by we As account

think banks what So, do in we don't we that and with do, line in are other brokers we there what Hong Kong is currently believe differences. they

Unidentified Analyst

Language] [Foreign

Leaf Li

in opening I with between much think for And, strengths areas. years. market. developed really strong for the fact happening war low all stocks number competitors And environment and in banks. And mentioned stamp these has price from the competitive as end in our Hong the we brand, is Kong commission, this of a don't We develop. a our we trustworthy of close changed this the commercial base in been to competitive has relationships also We is understand superior take trading has a strong very include X X time these that in experience, infrastructure, And broker a Hong Futu capital success believe relatively the remark, currently to proprietary majority to the of which end key factors a trading cause Kong And duty, comparison is coming currently which bps bps. charge stamp duty cost. user that

feel our or results may pricing. feel Language] [Foreign the don't wall change competitors pull our see when the short-term, And don't they the have and don't to affected pressure. we in is the if they lot much a we So, operational enter financial market. can has price plans lever, they only If of pricing like into


you. Thank

reached end remarks. like of continue. now have hand to I'd And the closing for our Please back Mr. conference We the Yuan to question-and-answer session.

Daniel Yuan

of call team, joining would like today. for us That thank management concludes our on And behalf you to I today. Futu

questions, and or further representative. to other any have goodbye. you, please do any contact you Investor hesitate not If Relations me Thank


and today thank our concludes That for conference for participating. you. you Thank

You disconnect. may all now