Futu Holdings Limited (NASDAQ:FUTU) Q2 2025 Earnings Call Transcript

Futu Holdings Limited (NASDAQ:FUTU) Q2 2025 Earnings Call Transcript August 20, 2025

Futu Holdings Limited beats earnings expectations. Reported EPS is $2.4, expectations were $2.13.

Operator: Hello, ladies and gentlemen. Welcome to Futu Holdings Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Today’s conference call is being recorded. If you have any objections, you may now 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: Thanks, operator, and thank you for joining us today to discuss our Second Quarter 2025 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 of 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 contained in 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.

Hua Li: [Foreign Language]

Daniel Yuan: Thank you all for joining our earnings call today. As of quarter end, total funded accounts reached approximately 2.9 million, representing a 41% increase year-over-year and an 8% rise quarter-over-quarter. We’ve reached a key milestone in our international expansion, which is, as of quarter end, over 50% of funded accounts are from clients outside of Futu Securities Hong Kong. Singapore and the U.S. are our largest international markets, followed by the rapidly expanding Malaysia and Japan, while Australia and Canada showed robust growth momentum. This expanding international footprint is a testament to our vision of becoming an influential global financial services platform.

Hua Li: [Foreign Language]

Daniel Yuan: [Interpreted] During the quarter, we acquired 204,000 new funded accounts, up 32% from a year earlier. Hong Kong continued to lead all markets in new funded accounts for the third straight quarter. Elevated market volatility from trade tensions in early April, followed by a sharp rebound from trade routes as well as the wave of high-profile IPOs in May, spurred retail participation. Our U.S. business also delivered robust growth. In the second quarter, we became the official sponsor of the New York Mets, a partnership that will continue to broaden our brand reach in the U.S. and internationally. We also launched cryptocurrency trading in most of the states in June, reinforcing our value proposition as a one-stop trading platform.

Hua Li: [Foreign Language]

Daniel Yuan: [Interpreted] In Malaysia, we further localized our offerings by introducing IPO financing services for local listings and the Malaysian stock earnings calendar. In Japan, we partnered with NASDAQ and the Japan Exchange Group to host our inaugural offline investment event, MooFest Japan, which attracted over 12,000 Tokyo investors to sign up, strengthening our brand recognition in Japan. Building on the successful debut of Futubull AI in Hong Kong, we rolled out moomoo AI across all international markets, equipping investors worldwide with smarter tools for more efficient investing. Client engagement remains strong across regions. Our funded account quarterly retention rate was once again well above 98%, reflecting the high level of loyalty and satisfaction among our global client base.

Hua Li: [Foreign Language]

Daniel Yuan: [Interpreted] By the end of the second quarter, total client assets hit a record HKD 974 billion, up 68% year-over-year and 17% quarter-over-quarter. Notably, net asset inflow in the first half of 2025 nearly doubled compared to the same period last year. Thanks to robust net asset inflow and favorable mark-to-market depreciation from Hong Kong and U.S. equities, average client assets across all markets registered a sequential increase. In Singapore, average client assets and total client assets rose 19% and 26% quarter-over- quarter, respectively. The group’s margin financing and securities lending balance remained stable at HKD 51.4 billion by quarter end. While clients initially deleveraged amid the sharp market downturn in early April, a gradual recovery in risk appetite fostered a rebound in margin financing activity.

Hua Li: [Foreign Language]

Daniel Yuan: [Interpreted] In the second quarter, total trading volume reached HKD 3.59 trillion, representing 121% year-over-year and 12% quarter-over-quarter growth. During the quarter, volatility stemming from trade talks drove unprecedented spikes in daily trading volume, while renewed enthusiasm in the cryptocurrency space further accelerated trading momentum. U.S. stock trading volume went 20% sequentially to HKD 2.7 trillion led by EV and crypto stocks. Hong Kong stock trading volume contracted 9% quarter-over- quarter to HKD 833.5 billion, primarily due to tempered interest in the technology sector, partially offset by higher turnover in new consumption names.

Hua Li: [Foreign Language]

Daniel Yuan: [Interpreted] Wealth management client assets were HKD 163.2 billion as of quarter end, up 104% year-over-year and 17% quarter-over-quarter. In Hong Kong and Singapore, we strengthened our fixed income offerings with Hong Kong dollar and RMB- denominated bonds as well as floating rate bonds. In Hong Kong, we launched principal protected structured products, becoming the first online broker to offer retail-facing structured products. We also became the first and only online brokerage platform in Hong Kong to distribute China AMC Hong Kong’s tokenized money market funds, solidifying our position at the forefront of digital asset innovation.

Hua Li: [Foreign Language]

Daniel Yuan: [Interpreted] As of quarter end, we had 517 IPO distribution and IR clients, up 15% year-over-year. Hong Kong IPO market gained further momentum from the first quarter with increased deal volume and rising investor participation. During the quarter, we acted as joint book runners through multiple prominent listings. Notably, in the Haitian Flavouring and Food IPO, we attracted a record 102,000 subscribers, ranking first among all brokers in both number of subscribers and total subscription amounts. In the first half of 2025, we partnered with 6 of the 10 largest Hong Kong IPOs by fundraising size and facilitated over HKD 10 billion in subscription amount for 12 IPOs each, underscoring our unparalleled retail distribution capabilities.

Hua Li: [Foreign Language]

Daniel Yuan: [Interpreted] Next, I’d like to invite our CFO, Arthur, to discuss our financial performance.

Yu Chen: Thank you, Leaf and Daniel. Please allow me to walk you through our financial performance in the second quarter. All the numbers are in Hong Kong dollars, unless otherwise noted. Total revenue was HKD 5.3 billion, up 70% from HKD 3.1 billion in the second quarter of 2024. Brokerage commission and handling charge income was HKD 2.6 billion, an increase of 87% year-over-year and 12% Q-over-Q. The year-over-year increase was driven by higher trading volume, partially offset by the decline in blended commission rate. We adopt per share and per contract pricing model for U.S. stocks and U.S. option trading, respectively. As a result, brokerage income will grow at a slower rate than trading volume when our clients trade higher-priced stocks and options.

The Q-over-Q increase was mainly driven by the sequential growth in trading volume. Interest income was HKD 2.3 billion, up 44% year-over-year and 11% Q-over-Q. The year-over-year increase was driven by higher interest income from security borrowing and the lending business, bank deposits and margin financing. The Q-over-Q increase was driven by higher interest income from security borrowing and the lending business as well as higher interest income from bank deposits, partially offset by lower margin financing income due to sequential decline in daily average margin financing balance. Other income was HKD 444 million, up 176% year-over-year and 41% Q-over-Q. The year-over-year and the Q-over-Q increase was primarily attributable to higher fund distribution service income and the currency exchange income.

Our total costs was HKD 671 million, an increase of 13% from HKD 574 million in the second quarter of 2024. Brokerage commission and handling charge expenses was HKD 161 million, up 84% year-over-year and 12% Q-over-Q. Both the year-over-year and the Q-over-Q increase was roughly in line with the movement of our brokerage commission and handling charge income. Interest expenses was HKD 378 million, flat year-over-year and down 20% Q-over-Q. The year-over-year increase in interest expenses associated with our security borrowing and the lending business was offset by the year-over-year decrease in margin financing interest expenses. The Q-over-Q decrease was mainly due to lower interest expenses associated with our security borrowing and the lending business as well as lower margin financing interest expenses because of the HIBOR rate decline.

Processing and servicing costs was HKD 133 million, up 21% year-over-year and down 2% Q-over-Q. The year- over-year increase was largely due to higher data transmission fees and market information and data fees. The Q-over-Q decline was mainly driven by lower market information and the data fee as well as lower cloud service fees. As a result, total gross profit was HKD 4.6 billion, an increase of 82% from HKD 2.6 billion in the second quarter of 2024. Gross margin was 87.4% as compared to 81.6% in the second quarter of 2024. Operating expenses was up 21% year-over-year and 3% Q- over-Q to HKD 1.3 billion. R&D expenses was HKD 442 million, up 18% year-over-year and 14% Q-over-Q. The year-over-year and Q-over-Q increase was mainly driven by greater investments in AI capabilities.

Selling and marketing expenses was HKD 429 million, up 27% year-over-year and down 7% Q-over-Q. The year-over-year increase was mainly attributable to higher new fund accounts, partially offset by lower client acquisition cost per unit. The Q-over-Q decrease was due to sequential decrease in new fund accounts, partially offset by higher client acquisition cost per unit. General and administrative expenses were HKD 425 million, up 17% year-over-year and 2% Q-over-Q. The year-over-year increase was primarily due to an increase in general and administrative headcount. As a result, income from operations increased 126% year- over-year and 25% Q-over-Q to HKD 3.3 billion. Operating margin increased to 63% from 47.3% in the second quarter of 2024, mostly due to strong top line growth and operating leverage.

Our net income increased by 113% year-over-year and 20% Q-over-Q to HKD 2.6 billion. Net income margin expanded to 48.4% in the second quarter as compared to 38.6% in the same quarter last year. Our effective tax rate for the quarter was 18.4%. That concludes our prepared remarks. We’d now like to open the call to questions. Operator, please go ahead. Thank you.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Cindy Wang from China Renaissance.

Yun-Yin Wang: [Foreign Language] Congrats for the very good results in the second quarter. And I have 2 questions here. First one is the net asset inflow was very strong in the first half of this year and almost double compared to last year. So what’s the reason behind it? And do you address any marketing content to attract assets inflow? And how do you maintain the momentum in second half? Second question is crypto trading has launched in Hong Kong, Singapore and U.S. Can you give us some color on the number of clients and trading volume in the second quarter or the first half and also July? And any new product or market will launch in second half?

Yu Chen: [Foreign Language] In terms of very strong asset inflow in the first half, I think alongside the benefit we got from the market itself, given that the U.S. market and the Hong Kong markets performed quite well in the first half, which definitely is a positive implications to the client asset inflows. Internal-wise, on the product side, we further enriched our product offering, especially in the first half, a lot of new products in terms — in the areas of wealth management, crypto and fixed income actually provide — further enrich our positions as a one-stop investment platform to our users. This will definitely be a positive for our clients’ engagement and also new client asset inflows. On the marketing, branding-wise and operational-wise, we also put a lot of efforts, especially in the overseas markets such as the U.S., our collaborations with Mets in the second quarter bear a very strong fruit in terms of the new client acquisition in the U.S. and also the brand implication further expands to other overseas markets as well.

In particular, in the second quarter, all the assets inflows from the overseas markets outside of Greater China, the amount almost exceed the absolute amount what we acquired from similar markets in 2024, which was very, very impressive. I think in the second half, we will continue to enhance our brand acquisitions in terms of, for instance, there will be more physical stores rollout in different markets in the second half. And also, there will be some new product offering in the wealth management and in the crypto side as well in the second half. For instance, we do have the plans to provide crypto transfer in and transfer out functionalities for overseas markets alongside the Hong Kong markets as well. And secondly, for — specific for the crypto tradings, in terms of the momentum, we saw a very strong Q-on-Q momentum in terms of crypto asset holding and also the trading velocity.

For instance, the asset value of the cryptos at the second quarter end reached HKD 4 billion compared with the first half, which recorded over 40% Q-on-Q increase. And I do see — I do believe that the numbers will continue to see a very strong robust in the third quarter as well, thanks to further penetration in our paying clients to engage crypto tradings. In the second half, we also — there will be some new product pipelines in the crypto trading as well. Besides that, we are also doing some new feasibility studies for certain new markets, which we want to acquire the exchange license as well. Thank you.

Operator: Next, we have Chiyao Huang from MS.

Chiyao Huang: [Foreign Language] Let me briefly translate 2 questions basically. One is on crypto. I’m just wondering what’s the mid- to long-term strategic views on crypto business in terms of licensing products and also the potential for monetization. And in particular, I was wondering what’s the strategic upside coming from the crypto exchange license in Hong Kong? And the second question is regarding the Japan market as the company has been in Japan market for almost 2 years. I guess what’s the understanding about the market? Any change in the understanding, especially regarding the competitive landscape and the major competitive strength of the incumbents, how Futu is dealing with the competition? What’s our key value add at the moment? And what’s our targeted clients there versus the incumbents?

Yu Chen: [Foreign Language] In my personal view, I think our narrative for the whole group in the crypto side can be — consists of 4 aspects. I will summarize — I call it the RACE, R-A-C-E. The R means the real-world assets because we have a very strong position in terms of the traditional finance. So there will be a lot of bargaining powers or positions in the traditional asset product offerings. For instance, we have a very strong position in the wealth management segment. We have already partnerships with over 80 world-class fund manager companies. For instance, recently, we just do a collaboration with China Asset Management in Hong Kong, to be the first and exclusive retail distributors for their first tokenized money market funds.

Down the road, I think such kind of collaborations in the fund distributions, how to connect traditional finance from Web3s from the offline to on-chain will be definitely a very interesting areas to explore. Secondly, the A means advanced technologies. I think this is a very important part to set us apart from our partners or from our peers because we always emphasize the safety as the first parameters when we do Web3 products. Not to mention, there will be more integrations for our AI capabilities, how to further utilize our AI capabilities to — in the Web3 segment as well. Thirdly, C is the convergence between the traditional finance and the crypto native in terms of the new clients referrals and also the cross-selling opportunities. For instance, a couple of days ago, we just launched the product offerings for the Solana tradings to all Hong Kong retail investors.

And we do have the plans to provide paper trading for Solana tradings in a very short time in order to further engage the newcomers to the crypto universe. The last word E means exchange. As you said, we are in the Phase 2 of VATP license application in Hong Kong, and we are doing the feasibility studies for more license applications in other markets. Exchange will definitely will be a gateway to connect crypto native and also traditional finance and also in terms of monetizations, despite now the monetization more comes from the trading itself. But in the long term, I think VATP will, number one, will save our upstream costs to further enhance our user experience to provide a seamless user experience to our clients. And secondly, our client target will not only be the retail investor for ourselves, we may also to expand our offerings to other peers or institutional clients as well.

Thirdly, as you can see, a lot of new initiatives mentioned by Hong Kong regulators. For instance, they mentioned Aspire initiative this year, which was quite encouraging. I think there will be a lot of new monetization potentials such as the derivatives, the staking. So these are all incremental revenues in the long term, which will benefit from the regulatory for sure.

Daniel Yuan: Chiyao, this is Daniel. And I will take the second question. I’ll take your second question on Japan. I think I’m going to first share about our understanding of the competitive landscape, market dynamics, and then I’m going to talk about what we have done in 2Q accordingly. So in terms of the competitive landscape, as we all know, it’s been a pretty steady market structure over the past couple of years, SBI and Rakuten consistently have 80% of the market share in terms of retail investors, and they have both constructed a very robust ecosystem of one-stop financial services and even beyond financial services and create a lots of very sticky touch points with the end clients. That being said, we think moomoo still has a very unique value proposition, especially for self-directed investors interested in the U.S. markets, whether it’s our pricing or market data or trading experience or our social community, these are all very friendly and super competitive for our self-directed investors.

So we’re thinking there is a real gap in the market for us to fill. And on top of that, what we have come to realize and also something we’ve shared before is that branding is super important in Japan. It takes time to win the trust of the Japan retail investors. So accordingly, we have done lots of branding events, whether it’s advertising or hosting events with some of the other very prominent financial institutions or organizations in Japan. And back to what we have done in the second quarter, based on these understandings, so we continue to optimize our U.S.-related trading capabilities and to streamline that investing experience. In the second quarter, we launched U.S. options trading, and we have seen that the penetration of U.S. options as well as the revenue contribution from U.S. options has been coming up steadily month- over-month.

We also started to support the deposits and the outflow of U.S. dollars, so before our clients need to exchange that into Japanese yen. So by doing that, we reduced the friction in this currency exchange. We have also seen very high engagement and turnover in the second quarter in Japan. And in fact, the total trading volume in Japan went up by over 50% quarter-over-quarter. And we have seen a sequential increase in both the trading turnover of U.S. stocks and Japan stocks. And the average client assets as of quarter end also registered double-digit sequential growth. So we think these are all super encouraging signs and data points. And going forward, we’ll continue to optimize our trading experience for both the U.S. stocks and Japan stocks.

And in the second quarter, we also launched some AI-related capabilities in Japan. And what we have seen is that the penetration or adoption rate of AI chatbot is actually the highest in Japan among all of our international markets. And the customer satisfaction rate consistently stayed above 90%, which shows that there are a sizable number of self-directed Japanese investors who are interested in doing their own research and help — and use these tools to help them make informed investment decisions. And we want to leverage AI leveraged financial technology to continue to lower the barrier of investing for U.S. stocks. And we think that there is a growing demand for U.S. stocks for us to cater to. And also in terms of brand building, we’ve also done a fair amount.

In the second quarter, we partnered with NASDAQ in the Japan Stock Exchange to host the MooFest event. Over 12,000 retail investors in Tokyo signed up, which we think is quite sizable crowd. And we think that over the past couple of quarters, we’ve really been able to elevate our brand recognition and trust among the retail investors in Japan. And let me translate for myself. [Foreign Language]

Operator: Next, we have You Fan from CICC.

You Fan: [Foreign Language] This is You You Fan from CICC, and I have 2 questions, here. The first one is, can you please give more color on the third quarter regarding like the client acquisition, the net asset inflow and also the trading volume? And the second question is about the U.S. market. We see solid growth achieved this year. So would you please share more data? And also what’s the plan and target for the U.S. market?

Daniel Yuan: Well, thank you You for these 2 questions. This is Daniel. I will take both of these questions. First of all, in terms of the third quarter quarter-to-date trend. Based on the run rate, we expect a steady Q-on-Q net new funded accounts. So it’s pretty steady compared to the last quarter. We’ve also seen a positive mark-to-market impact, which coupled with net asset inflow should continue to push total client AUM to grow sequentially. We’ve also seen very active trading behaviors. And based on the current run rate, if the market sentiment is able to persist, we think there is a chance that our trading volume could have another Q-on-Q increase on top of the very high base in the second quarter. And in terms of our development in the U.S. market, a couple of data points we could share.

Well, first of all, we’ve really seen the positive flywheel, thanks to the continued product development and our strengthening brand equity. The net new adds in terms of funded accounts in the U.S. continue to contribute very meaningfully to the group. And in the second quarter, we’ve also seen the number of options traders as well as the total number of options contracts traded reached historic high. And in fact, both numbers registered 5 consecutive quarters of sequential increase. So we think these are super encouraging. And in the second quarter, as we shared earlier, we strike this partnership with the New York Mets, and we’ve been deeply embedded in this ecosystem of New York Mets. We think this strategic partnership help us elevate our brand image among the teams — tens of millions of fans in the U.S., but also we really get our name out there internationally, thanks to the sports team’s international influence.

Besides building our brand, we’ve also iterated on our product. In June, we launched cryptocurrency trading in most states in the U.S., and we now support over 30 mainstream crypto trading pairs, and we’ve seen a continuous increase in adoption rate among our U.S. clients. We’ve also launched moomoo AI, including AI chatbots, AI-empowered stock investment tools and lots of technical charts and stock-related fundamental data. We also — in the future, we plan to launch kind of AI stock screeners to help our investors better sit through the thousands of stocks. So yes, lots of product innovation as well. And overall, we are very optimistic about the growth prospects in the U.S. market. And let me translate. [Foreign Language]

Operator: Next, we have Charles Zhou from UBS.

Cheng Zhou: [Foreign Language] So I have 2 questions. So first, can you maybe give us a little bit more information about the regional mix of the client acquisition in the second quarter? And also, we noticed that on a Q-on-Q basis, there’s a sequential slowdown for the customer acquisition. Meanwhile, we also noticed some news report about more stringent onboarding of the Mainland Chinese clients in Hong Kong in June. So what will be the potential impact to your client acquisition looking forward? And also any potential change to your full year guidance of 800,000?

Yu Chen: [Foreign Language] In terms of the new clients, new paying client fund accounts we acquired in the second quarter, Hong Kong and Malaysia collective basis accounts for over 50% of the new client acquisitions in the second quarter. Then the remaining part was mainly come from Singapore, U.S. and also Japan. In total, for the first half of this year, we have already achieved 460,000 new fund accounts, which accounts for over 50% of our annual 800,000 new fund accounts target. We remain very confident to achieve our full year target nowadays. And there, we do not see any meaningful implications for the new regulations in terms of the new client onboardings in Hong Kong. So far, all the new clients acquisition across different markets remain very healthy and robust. So I personally feel very confident to achieve our full year target. Thank you.

Operator: Next, we have Emma Xu from BofA Securities.

Emma Xu: [Foreign Language] So the first question is about the interest income. It’s actually stronger — much stronger than expected. So you mentioned that the gross interest income increased mainly due to the increased income from the stock borrowing and lending business as well as interest income from idle cash. But in second quarter, HIBOR dropped a lot. It seems it doesn’t impact your interest income a lot. So could you tell us what’s the reason behind? But on the other hand, your interest expense declined due to lower cost related to the margin — to the stock borrowing and lending business as well as lower HIBOR. So why there is a divergence between the trend of the gross interest income and interest expense? And what would be the trend in the third quarter for your net interest income?

And the second question is about other income, which grew very strongly in the second quarter, up 42% quarter-over-quarter and 176% year-over-year. You mentioned that it is mainly related to your fund distribution business and FX income business. So could you tell us, do you expect — could you tell us what drives the strong growth behind? And do you expect such strong momentum to continue in the future?

Yu Chen: [Foreign Language] For the first question, regarding the interest income, despite we see a very meaningful HIBOR declines, which may have some certain negative implications to our interest income. But thanks to some positive factors. Number one is, given the markets become more volatile and people — the investors take different opinions, then the interest for the short — on the short side has increased a lot in the second quarter. In particular, we got a lot of benefit from some hard-to-borrow stocks from the securities lendings. Secondly is we see more clients to lock in their profit given the markets become volatile and they want to take some money off the tables. Consequently, the cash positions within their portfolios increased a lot.

Therefore, these benefits actually fully offset the negative implications from the yield. And also in the second — in the third quarter so far, we see a little bit rebound in the HIBORs. And at the same time, we also see the cash positions from clients continue to be maintaining a relatively high levels. And also, we see a very strong client asset inflow as well. So compared with the second quarter, I think the interest income in the third quarter, the momentum will continue. Then for the second question, regarding the other income, you’re right, we got some benefit from the FX and also the management fees arising from our wealth management products. And I strongly believe that these 2 revenue streams can continue in line with our expansions for our wealth management products.

And also if the market continues to be choppy, actually, there will be more consequent demand for the FX exchange. So besides these 2 normal parts, also we record certain technology service fee incomes from our technology service provided by [indiscernible] Bank in the second quarter as well. Thank you.

Operator: Thank you for all the questions. I will now pass back to Daniel for closing remarks.

Daniel Yuan: That concludes our call today. 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: This concludes today’s conference call. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]