FUTU(FUTU) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Total revenue increased by 30% year-over-year to HK$3.4 billion, driven by growth in brokerage commission, interest income, and other income [16] - Brokerage commission and handling charge income rose by 52$1.5 billion, supported by a 75% increase in total trading volume [17] - Interest income grew by 13% year-over-year to HK$1.7 billion, primarily due to higher margin financing income and bank deposit interest income [18] - Net income increased by 21$1.3 billion, with a net income margin of 38.4%, down from 41.2% in the same quarter last year due to unrealized foreign exchange losses [26] Business Line Performance - Total paying clients reached approximately 2.2 million, up 33% year-over-year, with 154,000 net new paying clients added in Q3 [6] - Wealth management client assets grew by 87% year-over-year and 22% quarter-over-quarter to HK$97 billion, with 27$693 billion, driven by strong net asset inflows and market appreciation, particularly in China equities [10] - U.S. stock trading volume grew by 23% quarter-over-quarter to HK$1.53 trillion, fueled by heightened volatility and interest in technology stocks and leveraged ETFs [11] Strategic Direction and Industry Competition - The company continues to iterate on client acquisition strategies and expand product offerings, including U.S. stock Dividend Reinvestment Plan in Hong Kong, NISA savings accounts in Japan, and U.S. options trading in Malaysia [9] - The company is committed to enhancing its brand image in Malaysia and broadening product offerings to strengthen its value proposition as a one-stop investment platform [7] Management Commentary on Operating Environment and Future Outlook - Management highlighted resilient growth in established markets and strong momentum in newer markets, expecting full-year client growth to exceed guidance [6] - The company remains optimistic about the sustainability of net asset inflows from overseas markets, particularly Hong Kong and Singapore [51] Other Important Information - The company announced a special cash dividend of US$0.25 per ordinary share or US$2 per ADS, totaling US$280 million, representing 7.8% of total net equity as of Q3 2024 [27] - The company is in the process of obtaining a VATP license in Hong Kong, with its crypto business already launched and showing meaningful growth in trading volumes [33] Q&A Session Summary Question: Hong Kong stock trading volume and ADR trading volume in Q4 - Hong Kong stock and ADR trading volumes surged in late September and early October, contributing over 50% of total trading volume at one point, but later pulled back due to market conditions [34] - U.S. stock trading volume has seen a meaningful sequential increase in Q4, driven by strong performance around the U.S. election [34] Question: Crypto business and VATP license update - The company's crypto business in Hong Kong has seen significant growth, with daily average trading volumes ranging between US$10 million to US$20 million [33] - The VATP license is still under review, with updates expected in the near future [33] Question: Special dividend and shareholder return plans - The special dividend is part of the company's commitment to shareholder value, with no negative implications expected for client acquisition or operations [42] - Future dividend policies will be revisited based on market conditions and business development [43] Question: Sales and marketing expense breakdown - Over 50% of sales and marketing expenses are salary-related and fixed, with the remainder being variable and dependent on client acquisition [44] - The company expects disciplined headcount growth and will provide more guidance in the next earnings call [44] Question: AUM breakdown and interest income sensitivity - Over half of client asset growth in Q3 came from market appreciation, particularly in China equities, with robust net asset inflows across markets [50] - Interest income is primarily driven by idle cash (40-45%) and margin financing, with no significant impact from U.S. rate cuts observed in Q3 [49] Question: Special dividend rationale and other costs - The company uses a combination of share buybacks and dividends to cater to different shareholder preferences, with no fixed preference for one over the other [57] - Other costs in Q3 were primarily due to unrealized foreign exchange losses, which are expected to reverse in Q4 [58] Question: Strategy in major markets and investor behavior - The company has tailored strategies for each market, focusing on unique product pipelines and client operations, leading to improved client quality and asset growth [63] - Investor behavior has been influenced by macro events, with increased trading activity in U.S. technology stocks and virtual assets around the U.S. election [62]