Futu Announces First Quarter 2024 Unaudited Financial Results

Futu Announces First Quarter 2024 Unaudited Financial Results

HONG KONG, May 28, 2024 (GLOBE NEWSWIRE) — Futu Holdings Limited (“Futu” or the “Company”) (Nasdaq: FUTU), a leading tech-driven online brokerage and wealth management platform, today announced its unaudited financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Operational Highlights

  • Total number of paying clients1 increased 23.5% year-over-year to 1,887,270 as of March 31, 2024.
  • Total number of registered clients2 increased 15.4% year-over-year to 3,812,326 as of March 31, 2024.
  • Total number of users3 increased 12.3% year-over-year to 22.5 million as of March 31, 2024.
  • Total client assets increased 11.2% year-over-year to HK$517.9 billion as of March 31, 2024.
  • Daily average client assets were HK$480.0 billion in the first quarter of 2024, an increase of 6.0% from the same period in 2023.
  • Total trading volume in the first quarter of 2024 increased by 9.5% year-over-year to HK$1.3 trillion, in which trading volume for U.S. stocks was HK$1.0 trillion, trading volume for Hong Kong stocks was HK$280.4 billion, and trading volume for stocks under the Stock Connect was HK$9.5 billion.
  • Daily average revenue trades (DARTs)4 in the first quarter of 2024 increased 7.0% year-over-year to 549,854.
  • Margin financing and securities lending balance increased 8.9% year-over-year to HK$37.6 billion as of March 31, 2024.

First Quarter 2024 Financial Highlights

  • Total revenues increased 3.7% year-over-year to HK$2,592.5 million (US$331.3 million).
  • Total gross profit decreased 3.9% year-over-year to HK$2,122.2 million (US$271.2 million).
  • Net income decreased 13.1% year-over-year to HK$1,035.1 million (US$132.3 million).
  • Non-GAAP adjusted net income5 decreased 11.6% year-over-year to HK$1,121.1 million (US$143.3 million).

Mr. Leaf Hua Li, Futu’s Chairman and Chief Executive Officer, said, “New paying clients jumped by 330.8% year-over-year to 177 thousand, the third highest quarterly growth in history, thanks to strong market performance and solid execution in new markets. This paying client growth represented over 50% of the full-year guidance we gave out during the last earnings call. We ended the first quarter with around 1.9 million paying clients, up 23.5% year-over-year and 10.4% quarter-over-quarter. Given the year-to-date momentum, we would like to raise our full-year new paying client guidance to 400 thousand for now.”

“In the first quarter, new paying clients from Hong Kong and Singapore both recorded strong double-digit growth sequentially, but their total contribution to overall client growth dipped to around one-third given triple-digit sequential new paying client growth in other markets. Our recent launch in Malaysia far exceeded our expectations. With industry-leading product experience and high brand recognition thanks to our presence in Singapore, we attracted over 100,000 registered clients within six weeks of brokerage business launch and became the most downloaded financial app in Malaysia. Though growth decelerated in the second quarter, we still expect robust paying client addition in Malaysia for the rest of the year. In Japan, we continued to streamline the account opening process, refine product experience and launch targeted marketing initiatives. As a result, both new paying clients and average client assets increased meaningfully. Despite rapid client base expansion, our quarterly paying client retention rate remained above 98%.”

“While market depreciation of several technology names posted negative impact on client holdings, we saw exceptionally strong net asset inflow across all markets during the quarter, especially in March, when market sentiments in Hong Kong improved. Total client assets were HK$517.9 billion, up 11.2% year-over-year and 6.7% quarter-over-quarter. In Singapore, total client assets and average client assets recorded 25% and 15% sequential growth, respectively, driven by robust net asset inflow into equities and cash management products.”

“Total trading volume increased by 40.0% quarter-over-quarter to HK$1.3 trillion. As clients chased the Hong Kong market rally, Hong Kong stock trading volume rebounded 18.0% sequentially to HK$280.4 billion. Clients showed heightened interests in technology and high-dividend names as well as leveraged and inverse ETFs. The frenzy around crypto and AI-themed stocks drove a 48.1% sequential surge in U.S. trading volume to HK$1.0 trillion. Margin financing and securities lending balance increased by 13.7% sequentially to an all-time high of HK$37.6 billion.”

“Total client assets in wealth management were HK$64.0 billion, up 72.8% year-over-year and 11.1% quarter-over-quarter. Driven by strong demand for U.S. treasury bills, bond holdings increased by 21.3% sequentially. In Singapore, wealth management asset balance grew by 37.1% quarter-over-quarter as money market funds continued to gain traction.”

“We had 430 IPO distribution and IR clients, up 21.8% year-over-year. As of quarter end, over 1,200 companies have set up enterprise accounts in our social community to interact with retail investors.”

First Quarter 2024 Financial Results

Revenues

Total revenues were HK$2,592.5 million (US$331.3 million), an increase of 3.7% from HK$2,499.9 million in the first quarter of 2023.

Brokerage commission and handling charge income was HK$1,082.1 million (US$138.3 million), an increase of 0.3% from the first quarter of 2023. Brokerage income grew at a slower pace than trading volume due to a decrease in blended commission rate from 8.8bps to 8.1bps.

Interest income was HK$1,354.2 million (US$173.0 million), an increase of 4.6% from the first quarter of 2023. The increase was mainly driven by higher margin financing income due to an increase in daily average margin balance and higher interest income from bank deposits.

Other income was HK$156.2 million (US$20.0 million), an increase of 23.7% from the first quarter of 2023. The increase was primarily attributable to higher fund distribution service income.

Costs

Total costs were HK$470.2 million (US$60.1 million), an increase of 61.7% from HK$290.8 million in the first quarter of 2023.

Brokerage commission and handling charge expenses were HK$60.3 million (US$7.7 million), a decrease of 16.5% from the first quarter of 2023. Brokerage expenses didn’t move in tandem with brokerage income mainly due to cost savings from our U.S. self-clearing business.

Interest expenses were HK$312.8 million (US$40.0 million), an increase of 139.1% from the first quarter of 2023. The increase was primarily due to higher expenses associated with our securities borrowing and lending business.

Processing and servicing costs were HK$97.1 million (US$12.4 million), an increase of 10.7% from the first quarter of 2023. The increase was primarily due to higher cloud service and data transmission fees for new markets.

Gross Profit

Total gross profit was HK$2,122.2 million (US$271.2 million), a decrease of 3.9% from HK$2,209.0 million in the first quarter of 2023. Gross margin was 81.9%, as compared to 88.4% in the first quarter of 2023.

Operating Expenses

Total operating expenses were HK$929.5 million (US$118.8 million), an increase of 15.6% from HK$804.1 million in the first quarter of 2023.

Research and development expenses were HK$335.5 million (US$42.9 million), a decrease of 5.5% from the first quarter of 2023. The decrease was due to stricter cost control.

Selling and marketing expenses were HK$292.7 million (US$37.4 million), an increase of 107.1% from HK$141.3 million in the first quarter of 2023. This was driven by a 330.8% year-over-year increase in net new paying clients, offset by lower client acquisition costs.

General and administrative expenses were HK$301.3 million (US$38.5 million), a decrease of 2.1% from the first quarter of 2023. The decrease was primarily due to lower professional service fees.

Income from Operations

Income from operations decreased by 15.1% to HK$1,192.7 million (US$152.4 million) from HK$1,405.0 million in the first quarter of 2023, mostly due to higher marketing expenses. Operating margin declined to 46.0% from 56.2% in the first quarter of 2023.

Net Income

Net income decreased by 13.1% to HK$1,035.1 million (US$132.3 million) from HK$1,191.8 million in the first quarter of 2023. Net income margin for the first quarter of 2024 declined to 39.9% from 47.7% in the year-ago quarter.

Non-GAAP adjusted net income decreased by 11.6% to HK$1,121.1 million (US$143.3 million) from the first quarter of 2023. Non-GAAP adjusted net income is defined as net income excluding share-based compensation expenses. For further information, see “Use of Non-GAAP Financial Measures” at the bottom of this press release.

Net Income per ADS

Basic net income per American Depositary Share (“ADS”) was HK$7.53 (US$0.96), compared with HK$8.54 in the first quarter of 2023. Diluted net income per ADS was HK$7.46 (US$0.95), compared with HK$8.44 in the first quarter of 2023. Each ADS represents eight Class A ordinary shares.

Conference Call and Webcast

Futu’s management will hold an earnings conference call on Tuesday, May 28, 2024, at 7:30 AM U.S. Eastern Time (7:30 PM on the same day, Beijing/Hong Kong Time).

Please note that all participants will need to pre-register for the conference call, using the link
https://register.vevent.com/register/BId660c7b39e644d93a175d1316d925493.

It will automatically lead to the registration page of “Futu Holdings Ltd First Quarter 2024 Earnings Conference Call”, where details for RSVP are needed.

Upon registering, all participants will be provided in confirmation emails with participant dial-in numbers and personal PINs to access the conference call. Please dial in 10 minutes prior to the call start time using the conference access information.

Additionally, a live and archived webcast of this conference call will be available at https://ir.futuholdings.com/.

About Futu Holdings Limited

Futu Holdings Limited (Nasdaq: FUTU) is an advanced technology company transforming the investing experience by offering fully digitalized financial services. Through its proprietary digital platforms, Futubull and moomoo, the Company provides a full range of investment services, including trade execution and clearing, margin financing and securities lending, and wealth management. The Company has embedded social media tools to create a network centered around its users and provide connectivity to users, investors, companies, analysts, media and key opinion leaders. The Company also provides corporate services, including IPO distribution, investor relations and ESOP solution services.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP adjusted net income, a non-GAAP measure, as a supplemental measure to review and assess its operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines non-GAAP adjusted net income as net income excluding share-based compensation expenses. The Company presents the non-GAAP financial measure because it is used by the management to evaluate the operating performance and formulate business plans. Non-GAAP adjusted net income enables the management to assess the Company’s operating results without considering the impact of share-based compensation expenses, which are non-cash charges. The Company also believes that the use of the non-GAAP measure facilitates investors’ assessment of its operating performance.
Non-GAAP adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using non-GAAP adjusted net income is that it does not reflect all items of expense that affect the Company’s operations. Share-based compensation expenses have been and may continue to be incurred in the business and are not reflected in the presentation of non-GAAP adjusted net income. Further, the non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance.

For more information on this non-GAAP financial measure, please see the table captioned “Unaudited Reconciliations of Non-GAAP and GAAP Results” set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain HK dollars (“HK$”) amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from HK$ to US$ were made at the rate of HK$7.8259 to US$1.00, the noon buying rate in effect on March 29, 2024 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the HK$ or US$ amounts referred could be converted into US$ or HK$, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the quotations from the management team of the Company, contain forward-looking statements. Futu may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Futu’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Futu’s goal and strategies; Futu’s expansion plans; Futu’s future business development, financial condition and results of operations; Futu’s expectations regarding demand for, and market acceptance of, its credit products; Futu’s expectations regarding keeping and strengthening its relationships with borrowers, institutional funding partners, merchandise suppliers and other parties it collaborates with; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Futu’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Futu does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor inquiries, please contact:

Investor Relations
Futu Holdings Limited
ir@futuholdings.com

                                                  

The number of paying clients refers to the number of clients with assets in their trading accounts with Futu.
The number of registered clients refers to the number of users with one or more trading accounts with Futu.
The number of users refers to the number of user accounts registered with Futu.
The number of Daily Average Revenue Trades (DARTs) refers to the number of average trades per day that generate commissions or fees.
5 Non-GAAP adjusted net income is defined as net income excluding share-based compensation expenses.


FUTU HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

  As of December 31,   As of March 31,
  2023   2024   2024
  HK$   HK$   US$
ASSETS          
Cash and cash equivalents 4,937,538   6,643,541   848,917
Cash held on behalf of clients 44,369,310   45,559,208   5,821,593
Restricted cash 1,232   1,179   151
Term deposit 5,540   5,200   664
Short-term investments 3,114,613   3,269,084   417,726
Securities purchased under agreements to resell 133,039   178,413   22,798
Loans and advances-current (net of allowance of HK$45,949 thousand and HK$41,441 thousand as of December 31, 2023 and March 31, 2024, respectively) 32,528,421   37,592,073   4,803,546
Receivables:          
Clients 293,505   2,433,652   310,974
Brokers 5,189,155   6,363,276   813,105
Clearing organizations 4,244,793   2,821,118   360,485
Fund management companies and fund distributors 151,691   222,871   28,479
Interest 268,504   248,317   31,730
Prepaid assets 54,691   66,737   8,528
Other current assets 135,479   177,395   22,668
Total current assets 95,427,511   105,582,064   13,491,364
           
Operating lease right-of-use assets 224,092   204,663   26,152
Long-term investments 238,556   235,162   30,049
Loans and advances-non-current 18,934   18,959   2,423
Other non-current assets 1,226,754   1,290,500   164,901
Total non-current assets 1,708,336   1,749,284   223,525
Total assets 97,135,847   107,331,348   13,714,889
           

LIABILITIES          
Amounts due to related parties 69,018     130,804     16,714  
Payables:          
Clients 48,762,263     49,032,693     6,265,438  
Brokers 15,648,286     24,590,217     3,142,158  
Clearing organizations 24,096     1,729,714     221,024  
Fund management companies and fund distributors 175,575     173,917     22,223  
Interest 44,109     66,352     8,479  
Borrowings 5,651,565     3,730,044     476,628  
Securities sold under agreements to repurchase     104,000     13,289  
Lease liabilities-current 114,682     111,309     14,223  
Accrued expenses and other current liabilities 1,939,004     1,874,506     239,526  
Total current liabilities 72,428,598     81,543,556     10,419,702  
           
Lease liabilities-non-current 123,335     107,665     13,757  
Other non-current liabilities 12,183     11,534     1,474  
Total non-current liabilities 135,518     119,199     15,231  
Total liabilities 72,564,116     81,662,755     10,434,933  
           
           
SHAREHOLDERS’ EQUITY          
Class A ordinary shares 71     71     9  
Class B ordinary shares 27     27     3  
Additional paid-in capital 18,456,438     18,547,608     2,370,029  
Treasury Stock (5,199,257 )   (5,199,257 )   (664,365 )
Accumulated other comprehensive loss (49,433 )   (78,839 )   (10,074 )
Retained earnings 11,360,890     12,399,028     1,584,360  
Total shareholders’ equity 24,568,736     25,668,638     3,279,962  
           
           
Non-controlling interest 2,995     (45 )   (6 )
Total equity 24,571,731     25,668,593     3,279,956  
Total liabilities and equity 97,135,847     107,331,348     13,714,889  
           


FUTU HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except for share and per share data)

  For the Three Months Ended
  March 31,
2023
  March 31,
2024
  March 31,
2024
  HK$   HK$   US$
Revenues          
Brokerage commission and handling charge income 1,079,311     1,082,107     138,273  
Interest income 1,294,260     1,354,166     173,036  
Other income 126,282     156,186     19,958  
Total revenues 2,499,853     2,592,459     331,267  
Costs          
Brokerage commission and handling charge expenses (72,246 )   (60,301 )   (7,705 )
Interest expenses (130,840 )   (312,842 )   (39,975 )
Processing and servicing costs (87,724 )   (97,103 )   (12,408 )
Total costs (290,810 )   (470,246 )   (60,088 )
Total gross profit 2,209,043     2,122,213     271,179  
           
Operating expenses          
Research and development expenses (354,899 )   (335,487 )   (42,869 )
Selling and marketing expenses (141,278 )   (292,664 )   (37,397 )
General and administrative expenses (307,893 )   (301,335 )   (38,505 )
Total operating expenses (804,070 )   (929,486 )   (118,771 )
           
Income from Operations 1,404,973     1,192,727     152,408  
           
Others, net (7,732 )   31,741     4,056  
           
Income before income tax expense and share of loss from equity method investments 1,397,241     1,224,468     156,464  
           
Income tax expense (201,701 )   (185,641 )   (23,721 )
Share of loss from equity method investments (3,695 )   (3,694 )   (472 )
           
Net income 1,191,845     1,035,133     132,271  
           
Attributable to:          
Ordinary shareholders of the Company 1,192,043     1,038,138     132,655  
Non-controlling interest (198 )   (3,005 )   (384 )
  1,191,845     1,035,133     132,271  
                 

Net income per share attributable to ordinary shareholders of the Company          
Basic 1.07     0.94     0.12  
Diluted 1.06     0.93     0.12  
           
Net income per ADS          
Basic 8.54     7.53     0.96  
Diluted 8.44     7.46     0.95  
           
Weighted average number of ordinary shares used in computing net income per share          
Basic 1,116,767,496     1,102,929,775     1,102,929,775  
Diluted 1,129,538,989     1,114,429,420     1,114,429,420  
           
Net income 1,191,845     1,035,133     132,271  
Other comprehensive income/(loss), net of tax          
Foreign currency translation adjustment 111,435     (29,441 )   (3,762 )
Total comprehensive income 1,303,280     1,005,692     128,509  
           
Attributable to:          
Ordinary shareholders of the Company 1,303,475     1,008,732     128,897  
Non-controlling interests (195 )   (3,040 )   (388 )
  1,303,280     1,005,692     128,509  
                 


FUTU HOLDINGS LIMITED

UNAUDITED RECONCILIATIONS OF NON-GAAP AND GAAP RESULTS

(In thousands)

  For the Three Months Ended
  March 31,
2023
  March 31,
2024
  March 31,
2024
  HK$   HK$   US$
           
Net income 1,191,845   1,035,133   132,271
Add: Share-based compensation expenses 76,110   85,938   10,981
Adjusted net income 1,267,955   1,121,071   143,252
           

Non-GAAP to GAAP reconciling items have no income tax effect. 

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