Futu Holdings (FUTU) Q2 2026 earnings call transcript

Thanks, operator. Thank you for joining us today to discuss our second quarter 2026 earnings results. Joining me on the call today are Mr. Leif 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 filing with the SEC, including its annual report.

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

Thank you all for joining our earnings call today. In the second quarter, we acquired 252,000 net new funded accounts, up 23.7% year-over-year and 12.2% quarter-over-quarter. Total funded accounts reached approximately 3.84 million, representing an increase of 33.6% year over year, and 7% quarter over quarter.

I will now turn the call over to the Futu Holdings Ltd earnings conference call. I will now turn the call over to the Futu Holdings Ltd earnings conference call. Goyang acquisition in Hong Kong accelerated sequentially during the quarter, supported by a robust local IPO pipeline and strong performance in U. S. equities. In Singapore, registered users surpassed the 2 million milestone, further solidifying our leadership among local retail investors. The average revenue per new client in both markets improved sequentially, underpinned by our ongoing investor education initiatives across multiple asset classes, reinforced by our sustained investment in brand equity.

In Malaysia, our targeted marketing campaign centered around local IPOs and the AI-driven rally catalyzed a record quarter of client acquisitions, leading all markets in not new funded accounts for the third consecutive quarter. In the US, Mimu's prediction markets garnered significant traction, driving incremental new client acquisition, and helping improve overall client engagement on our platform.

As of quarter end, total client assets still at 1.4 trillion HKD, up 43.6% year-over-year, and 14.5% quarter-over-quarter. The growth was mainly attributable to higher market valuation of client stockholdings, and to a lesser extent, net asset inflow. Period end margin financing and securities lending balance rose 31% quarter over quarter to HK$95.1 billion, supported by an active Hong Kong IPO market, along with broader positive market sentiment that encouraged clients to take on more leverage.

The Futu Holdings Ltd earnings conference call. I will now turn the call over to management for the Futu Holdings Lt. Thanks to favorable market conditions, total trading volume rose 78.8% year-over-year and 54.6% quarter-over-quarter to HK$6.42 trillion, setting a new record high. U. S. stock trading volume grew 67.2% sequentially to HK$5.02 trillion, driven by client interest in AI-related names. Hong Kong stock trading volume increased by 15.9% quarter over quarter to 1.17 trillion Hong Kong dollars, largely attributable to heightened trading activity in semiconductor, China internet, and newly listed companies.

In June, Futu Securities became the first and today only broker in Hong Kong to launch securities-backed margin financing for virtual assets, under an upgraded Type 1 license approval from the SFC. We are also exploring extending our unified buying power framework to cover virtual asset holdings, further enhancing capital efficiency across traditional and digital asset markets. This is a great deal. Wealth management client assets were HK$180.2 billion, up 10% year-over-year and 1% quarter-over-quarter.

During the quarter, we observed a shift in client preference from money market funds toward equity funds on the back of strong equity market performance. In Hong Kong, we held our first offline fund role show for retail investors, centered on the commercial space theme. Amid heightened investor interest, the event drew a full on-site audience and several hundred live stream participants, translating into meaningful follow-on subscriptions. We concluded the quarter with 683 IPO distribution in IRQs.

Next, I would like to invite our CFO Arthur to talk about the Futu Holdings Ltd. We discuss our financial performance.

Thank you, Li and Michelle. 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 $7.2 billion, up 36% from $5.3 billion in the second quarter of 2025. Brokerage commission and handling charging income was $3.4 billion, up 30% year-over-year and 27% Q-for-Q. Total trading volume grew on both year and a Q basis while the lender commission rate declined due to stronger trading activities in higher U stocks and options during the quarter Interest income was billion of 37 EOV and 18 QVQ Both the EOV and QVQ increase was mainly driven by high interest income from margin financing, bank deposits, and security lending.

Other income was $718 million of 61% EOV and 27% QVQ. Both year-over-year and the Q-over-Q increase was primarily driven by higher currency exchange income and IPO financing service income. Our total costs were $985 million of 47% compared to the second quarter of 2025. Brokerage Commission handling charge expenses were $248 million of 54% year-over-year and 50% Q-over-Q. Both the year-over-year and the Q-over-Q increase was mainly due to higher trading volume. Interest expenses were $513 million of 36% year-over-year and 24% Q-for-Q. Both the year-over-year and the Q-for-Q increase was mainly driven by higher interest expenses associated with our margin financing business. Processing and servicing costs were $225 million of 70% year-over-year and 32% Q-for-Q. Both the year-over-year and the Q-for-Q increase were primarily driven by higher product service fees.

As a result, total gross profit was $6.2 billion, an increase of 34% from $4.6 billion in the second quarter of 2025. Growth margin was 86.3% as compared to 87.4% in the same quarter of 2025.

Operating expenses were $1.8 billion, up 35% year-over-year and 11% Q-over-Q. To break it down, IND expenses were $501 million of 13% year-over-year and 5% Q-over-Q. The year-over-year and the Q-over-Q increase was primarily driven by the increased investments in strategic initiatives like AI and Web3. Selling and marketing expenses were $657 million of 53% year-over-year and 18% Q-over-Q. The year-over-year and the Q-over-Q increase was mainly driven by the increase of new fund accounts.

GNA expenses was $593 million of 40% year-over-year and 10% Q over Q. The year-over-year increase was primarily due to an increase in GNA personnel and the professional fees. As a result, income from operations was $4.5 billion of 34% year-over-year and 26% Q over Q. Operating margin of 62% is largely flat compared to the second quarter of 2025. Our net income increased by 42% year-over-year to $3.6 billion. Net income margin expanded to 50.6% in the second quarter compared to 48.4% in the same quarter last year. Our effective tax rate for this quarter was 16.1%. That concludes our prepared remarks. We now like to open the call to questions.

Thank you for your time. I will now turn the call over to management for prepared remarks. Thank you. Thank you. And I will now turn the call over to management for a different time. So, the big-time management company has been reported as a different-time management company. The big-time management company has started to have a bad-time management company, a lot of the big-time management companies have been identified by the government. So the U. S. customers' flow is in the 6th of the year of the year of the year. So we can see that the 8th of the year of the year of the year, it's a clear-to-date. So the second year of the year of the year of the year, the U. S. customers' flow rate is still high.

The U. S. market market is still higher. The U. S. market market is still more stable. We will continue to put the power and growth into our international community. Thank you.

And I will translate for Leif.

So Futu places very strong emphasis on the compliance, and we are committed to meeting all of the applicable regulatory requirements. So following the release of the new rules, we promptly implemented the relevant compliance measures, and we have maintained ongoing communication with the regulators.

As for the cumulative asset outflows since the new regulations, the outflows were about mid-single-digit percentage of our total client assets, and we believe the bulk of the impact has already been absorbed in Q2. And the outflows came from both our mainland and Hong Kong client base, and the two are roughly about the same. The mainland outflows were primarily compliance-driven And the Futu Holdings Ltd earnings conference will be a little bit more than a few months after the announcement, which reflects some risk-off sentiment as the market digested the news. And most of the mainland client outflows happened in June and July after we implemented the restrictions on our app. And the pace of client attrition started to moderate in August.

And for Q2, our Hong Kong client retention rate stayed above 98%, and the retention across our overseas market remains stable quarter over quarter. And we continue to see steady growth in overseas new client additions. And going forward, we'll keep directing our resources and the growth focus toward advancing our international business. I will now turn the call over to the second question. The market is a huge market for the market. The market is a huge market for the market. The market is a huge market for the market. We can continue to get some high-quality market customers, and support the entire company's growth. From the market's number, I will now turn the call over to the Futu Holdings Ltd earnings conference call.

I will now turn the call over to management for the Futu Holdings Ltd earnings conference call. We are now in the foreign countries in the foreign countries. In Singapore, it was already been a big deal. And regardless of the total value of the total value of the Futu Holdings, it is still increasing. We can see the same effect in Singapore I am very happy to share with you The market in over to management for the market On the quality of new fund accounts, the average revenue per newly funded accounts improved sequentially across multiple markets in the overseas, in particular like US, Singapore, and Hong Kong all posted double-digital growth.

We think this both reflect a structural upshift in fund account quality in growing markets like the U. S. , and also continued acquisitions of higher-value clients in mature markets like Hong Kong and Singapore, together supporting overall revenue growth. Then, on the client asset perspective, often the accounts in overseas markets, including Malaysia, Australia, and New Zealand, and Canada, grow double digits sequentially in second quarter.

And actually, you know, the average client asset rose Q over Q across every overseas market we have the operations, showing that we are growing not just in the number of clients, but also the wallet share. Our recent securitizations of the Thailand license also give us a very additional important anchor for our ASEAN footprint down the road. In terms of profitability, our overseas markets are at different stages of maturities. For instance, Singapore has already passed a break-even a couple of years ago, and the absolute level and also the net profit margin continue to expand thanks to the operating leverage benefit kicking. And I'm also very happy to share Malaysia has recently achieved a break-even in the operation levels as well.

While our other overseas markets are still building out their client and asset base, a rising average client's assets and the client retentions, we think the groundwork for our long-term probabilities for the overseas market will be very likely. Thank you. Thank you. They are very helpful.

Thank you.

好的,谢谢 Qiyo. 那第一个问题我请我的同事Robin来回答。 我来回答第二个问题。谢谢。 好的,感谢提问。 首先,泰国是东南亚的第三大经济铁,本地投资者的数字化程度是比较高的,对全球的资产配置和数字化投资工具的需求也在持续的增长。根据泰国证券交易所的数据,截止到2026年上半年,泰国通过线上开户的投资者已经达到450万人。 So, we can see the Futu Holdings Ltd earnings conference. And I will translate. So Thailand is the third largest economy in Southeast Asia, and the local investors there are quite digitally savvy with growing demand for global asset allocation as well as digital investing tools. And according to the Stock Exchange of Thailand, as of the first half of 2026, over 4.5 million investors have opened accounts online. So for Moomoo, entering Thailand is really a natural next step in the Southeast Asia market after Singapore and Malaysia, and it allows us to leverage the infrastructure and the operations that we have already built in that region. So Moomoo has already obtained the Type A securities license from the TIE SEC, and combined with our licensed operations in other overseas markets, this reflects the ongoing recognition from regulators of our ability to operate compliantly across multiple jurisdictions, and the overall pace of our overseas expansion remains steady.

And as for the timing of the official launch, we still need to go through the regulators' readiness inspection to receive final approval. So we don't really have a specific timeline to share at this point. We'll continue to work closely with the local regulator and make sure all the pre-launch preparations are thoroughly in place. The second question is about the Futu Holdings Ltd earnings conference. The Futu Holdings Lt is not a good deal with any of the Futu Holdings Lt. But the First, there was no any price manual change in the second quarter across all of our markets. So the take rate change Q on Q is mainly driven by our customers' behavior.

Number one is the contribution from the derivative in the second quarter compared with the first quarter slightly down Q over Q. But on the absolute levels, the contribution is still very healthy. Secondly is more clients are trading the U. S. stocks in the second quarter with a very high concentration on some high-value AI themes and the tech leading names, which let our implied commission rate down a little bit. Thank you.

Thank you Charles. The first question I ask my friends. I will answer the second question. At the Futu Holdings Ltd earnings, the Futu Holdings Ltd earnings will be affected by the Futu Holdings Lt. The Futu Holdings Lt is still in the Futu Holdings Lt. The Futu Holdings Lt is affected by the Futu Holdings Lt. So in the second quarter, the blended tech rose sequentially to around 2006. We have a total of 600 HKD, which is still within our full year guidance range of 2,500 to 3,000 HKD. And the quarter on quarter increase in CAC for Q2 was mainly driven by the relatively lower net new funded accounts as a result of the regulatory development. And at the same time, we maintain a certain level of brand investment to support the long-term growth and the higher client lifetime value across our markets.

And additionally, the tech trended higher in July relative to Q2. 好的,那有关第二个问题就是各个市场的一些 breakdown. This is a very important thing to see in the market. We have a lot of money in the world. The market is more than 50% of the new fund accounts. Malaysia has led all markets in terms of new fund accounts growth for three consecutive quarters, followed by Hong Kong. Together, these two markets make up for more than 50% of net new fund accounts acquired in this quarter. In this quarter, with Singapore being the next largest source among the remaining markets. By the end of the second quarter, Mu Mu's share of total funder accounts has increased to nearly 60%, led by Singapore, Malaysia, and the U. S. Thank you.

The first question is to ask my同事. I will answer the second question. According to our 3QQQQR rate, the trend rate is due to the market. The trend rate shows a small percentage of the trend. The trend rate of the 2QQQQ is a little bit lower. And from the interest rate, according to Q3 run rate, the market and the international market have been restored to a more normal level. And the market is a little bit lower, which also affects the Q3 market market market. The Q3 is slightly lower than the Q3 run rate. So on the Q3 quarter to date run rate basis, our key metrics are trending modestly softer Again, the backdrop of market volatility.

So the net addition of funded accounts moderated compared with Q2. And as for net asset inflow, so in Hong Kong and our overseas markets, net asset inflows have returned to a normalized level. And as for the trading volume, so total trading volume was down modestly sequentially. So this is primarily reflecting a cooling of the retail sentiment in the Q3 quarter today relative to the previous quarter. Thank you. Thank you. MUMU in the United States, I think it's a two-point goal. One is to ensure that we can be able to develop the opportunity for the future. The other one is to ensure that we can be able to build our product and management management and management management and management management.

We got a license in May from, you know, FCM license from CFTC, and MoMo US officially launched the protection market trading service for our retail clients in the U. S. in early June. The number of the event contracts as Lee mentioned in opening remarks, trade exceeds $200 million within one month of the launch, reflecting a very strong demand from the U. S. retail investors for prediction markets products. And the event contrast has delivered great results in our observation in both acquiring new clients and the driving engagement with clear cross-sell synergy with our core brokerage business. For instance, users who trade event contracts are more active in security trading, showing that event contracts are not substituted for security trading, but rather a drive of it.

The purpose for our U. S. production market rollout, I think, serves two purposes. Number one is definitely to capture the near-term opportunity as production markets took off locally. But more importantly, it lets us build up the product design, operational, and the risk management expertise that will support our ability to bring prediction markets to other regions we have the operation down the road. Thank you.

Thank you.

Thank you, and I would now like to hand the conference back over to Michelle Lee for closing remarks. So that concludes our call today. And on behalf of the Futu Management Team, I would like to thank you all for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor representatives. Thank you and goodbye.