UP Fintech Holding Limited (NASDAQ:TIGR) Q3 2023 Earnings Call Transcript
UP Fintech Holding Limited (NASDAQ:TIGR) Q3 2023 Earnings Call Transcript November 27, 2023
UP Fintech Holding Limited beats earnings expectations. Reported EPS is $0.08, expectations were $0.03855.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to UP Fintech Holdings Limited Third Quarter 2023 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 today's conference is being recorded today, November 27, 2023. I'd now like to hand the conference over to your first speaker today, Mr. Aaron Li, the Head of IR. 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 third quarter 2023 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 U.S. 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. Some statements we are about to make contain forward-looking statements within the meaning of the U.S. 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, November 27, 2023 and our annual report on Form 20-F filed on April 26, 2023. 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.
Tianhua Wu: [Foreign Language] Hello, everyone. Thank you for joining the Tiger Brokers' third quarter 2023 earnings conference call. In the third quarter, we saw improvement in both commission and interest-related income. As a result, total revenue was USD70 million, an increase of 6.2% quarter-over-quarter and 26.6% year-over-year. On the bottom line, as we started to see more operating leverage, net income attributable UP Fintech was USD13.2 million, a slight increase from the previous quarter and approximately 4x that of the same quarter of last year. Non-GAAP net income attributable to UP Fintech was USD16 million, up 4.3% from second quarter of this year and an increase of 141% from the same quarter of last year. We are glad to see a consistent quarter-over-quarter in the company's bottom line for all three quarters this year.
Total non-GAAP net income of the first three quarters of this year was USD41 million, already exceeding the combined full-year non-GAAP net income of 2021 and 2022. We are confident in our business model to be adaptable in different market environments and regulatory framework. In the third quarter, we added 24,604 new funded accounts, bringing the total number of new funded accounts in the first three quarters of this year to over 84,000. Total number of funded accounts at the end of the third quarter reached 865,000 representing a growth of 15% compared to the same quarter of last year. In terms of total current assets, the trend of asset inflow remains strong, with net inflow over USD1.5 billion in the third quarter. After neutralizing the impact from market loss, total current assets in this quarter increased by 9.3% quarter-over-quarter and 45.4% year-over-year, reaching USD18.9 billion.
Specifically, in the Singapore market, net inflow from local users remains stable and strong. In Singapore, the average net asset inflows of our newly acquired clients in the third quarter was approximately USD10,000, and we see similar trends in terms of net asset inflow from previous quarterly cohort groups. This demonstrates our ability to attract high-quality new users in Singapore and solidify our leading position in the local market. We continue to add new products to our platform to enhance user experience, which we believe is the key to our long-term success. In the third quarter, the Tiger community introduced the Trading Sparks feature. Users can follow best-performing traders on our platform and leverage their trading ideas for investment opportunities.
Additionally, on the wealth management business, following the launch of the U.S. dollar and Hong Kong dollar money market fund on [Tiger Bolt] earlier this year, we recently added U.S. Treasury to our wealth management platform in Singapore. We anticipate the launching of this new feature for Hong Kong users in December. Our 2B business continues to perform well. In investment banking, we underwrote four U.S. and Hong Kong IPOs in the third quarter, including Earlyworks and Keep. In our ESOP business, we added 27 new clients in the third quarter, bringing the total number of ESOP clients served to 505 for the end of the third quarter of 2023, increased by 29% year-over-year. Now, I would like to invite our CFO, John, to go over our financials.
John Zeng: Hello, everyone. Thanks, Tianhua and Aaron. Let me go through our financial performance for the third quarter. All numbers are in U.S. dollar. Total revenue was $70.1 million this quarter, increased 6.2% quarter-over-quarter and 26.6% year-over-year. Both commission income and interest-related income saw a sequential increase this quarter. Cash equity take rate was 6.1 bps this quarter, slightly decreased from last quarter. Within commission revenue, about 60% comes from cash equities, 30% from options, and the rest comes from futures and other products. Now on cost, interest expense was $12.1 million, increased 182% from the same quarter of last year, in line with the rate hike. Execution and clearing expense were $2.4 million, decreased 26% from the same period of last year, primarily due to more self-clearing in U.S. and Hong Kong securities.
Employee compensation and benefits expense were $26 million, an increase of 8% year-over-year due to an increase in global headcounts. Depreciation expense decreased 10% to $2.2 million as the depreciation of the headquarters office declaration expense has been completed. Communication and market data expense were $7.6 million, an increase of 16% year-over-year due to the increase in user base. Marketing expense were $5.2 million this quarter, decreased 30% year-over-year as we remain prudent with our marketing approach in the third quarter. General and administrative expense were $5.4 million, an increase of 55% year-over-year due to increase in professional service fees. Total operating expense were $48.8 million, slightly increased 3.1% from the same quarter of last year.
As a result, both GAAP and non-GAAP bottom line increased quarter-over-quarter and year-over-year. GAAP-related income was $13.2 million, slightly increased 1% from the previous quarter and about 4x that of the same quarter of last year. Non-GAAP-related income was $16 million, up 4% from the previous quarter and increased 141% versus the same quarter of last year. Now we have concluded our presentation. Operator, please open the line for Q&A. Thanks.
Operator: [Operator Instructions] First question comes from the line of Han Pu from CICC. Please go ahead.
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