UP Fintech Holding Ltd. Sponsored ADR Class A Stock

Ladies and gentlemen, thank you for standing by, and welcome to UP FinTech Holdings Limited Second Quarter 2036 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, August 26, 2026.

I would now like to hand the conference over to your speaker today, Mr. Aron Lee, the Head of Investor Relations. Thank you. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us for the call today. UP Fintech Holding Limited Second Quarter 2026 earnings release was distributed earlier today, and this is available on our IR website at ir.itiger.com as well as GlobeNewswire services.

On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and CEO; Mr. John Zeng, our CFO, and Mr. Wang Lei, CEO of U.S. Tiger Securities. 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 and follows their remarks.

Now let me cover the safe harbor. The statements we are about to make contain forward-looking statements within the meaning of the U.S. Private Securities and Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information, please refer Thank you Form 6-K furnished today and our annual report on Form 20-F on April 24, 2026. We undertake no obligation to update any forward-looking statements except as required under applicable law.

It is my pleasure to now introduce our CEO and Chairman, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by English translation. Mr. Wu, please go ahead with your remarks.

[Interpreted] Hello, everyone. Thank you for joining the Tiger Brokers Second Quarter 2026 Earnings Conference Call. In the second quarter, we saw a meaningful improvement in both commission income and interest-related income compared with the previous quarter and the same period last year.

Our total revenue for the quarter reached USD 182 million at all time high, representing a sequential increase of 17.7% and a year-over-year growth of 31.4%. Operating profit reached USD 56.8 million, an 18.5% quarter-over-quarter and 12.6% year-over-year. GAAP and non-GAAP net income attributable to UP Fintech reached USD 39.4 million and USD 42.8 million, respectively, returning to profitability from net loss in the previous quarter. Excluding the impact of approximately USD 59.7 million one-off penalty incurred in the first quarter. Second quarter GAAP and non-GAAP net income attributable UP Fintech both increased about 20% quarter-over-quarter.

We added 32,600 new funding accounts this quarter, up 12.7% quarter-over-quarter, with the great majority coming from the Singapore and Hong Kong market. As of the end of the second quarter, our total funded accounts reached USD 1.32 million, a year-over-year increase of 10.3%. And in terms of plant assets, retail users in markets such as Singapore and Hong Kong continue to contribute solid net asset inflows, exceeding USD 1.5 billion this quarter.

At the same time, fueled by mark-to-market gains, total client assets stood at USD 60.7 billion at the end of the second quarter, up 3.1% quarter-over-quarter and 16.7% year-over-year. We are glad to see that client assets grew over quarter across all the markets we operate in this quarter, indicating strong growth resilient and tremendous market potential. In the Hong Kong market, we rolled out more off-line promotion activities and expanded our brand exposure, driving local [indiscernible] up by nearly 30% quarter-over-quarter and extending the rapid sustained growth in client assets we have delivered since entering the Hong Kong retail market.

Land assets in the Australia, New Zealand market and the U.S. market grew by more than 30% and nearly 50% quarter-over-quarter, respectively. This clearly demonstrates us as the global brokerage with internationalization as a core of our strategy and powered by the diversified development of our core business -- we continue to earn the trust and recognition of both new and existing users across all the markets, give us strong confidence in our growth perspectives ahead.

In the second quarter, we continued to focus on localized functions and enhance the user experience while setting on our brand exposure to deepen user awareness. In the Singapore market, we further strengthened our local life trading capability by launching fractional share tree for Singapore listed stocks and rates, which effectively lowers the trading entry barriers, making local investment more accessible and friendly to beginners.

In addition to simplify users' compliance costs and reduced complexity of tax declaration, we rolled out a dedicated tax reporting to Hong Kong, Singapore and New Zealand. The upgrade to optimize end-to-end tax filing experience enabling users to directly view and download annual tax reference documents through our app and official website, comprehensively covering key tax data, including trading profits and losses dividend income as well as interest and coupon earnings.

In the Hong Kong market, we scaled up our brand investment and localized operations during the second quarter. Our flagship marketing campaign of the quarter was filed around State Act, amplifying our brand voice through an integrated mix of out-of-home advertising, social media, exclusive new user rewards and advertising placements at Hong Kong Airport. At the same time, we launched CPO index option trading in Hong Kong and hosted a dedicated launch event for Tiger X CBOE index option alongside a series of investor education initiatives. Further enriching the range of trading profit available to local investors.

Our [indiscernible] business continued to strong momentum in the second quarter of 2026. On the investment banking side, in Hong Kong, we underwrote 14 [indiscernible] during the quarter, continue to cover key sectors such as AIS and Heartec, including major AI deals like Money Cor, DeZand, Bangui and participating in the offering of intelligent manufacturing and automotive semiconductor companies such as semi, robotphoneix and CF. Further consolidating our market influence in listing services, technology and innovation companies. Meanwhile, we continue to expand our AH listing business, participating in Hong Kong list of leading companies such as parking technology and senior technology, spanning key industries, including smart hardware, new energy materials and consumer electronics.

On the U.S. side, we participated in the distribution of 4 U.S. IPOs, including DSC Holdings, a digital platform from China automotive industry and [indiscernible] Japan automotive software company. Our [indiscernible] business delivered steady growth during the quarter with 50 new class ideas. As as of June 30, 2026, our total -- reached 840.

Now I'd like to invite our CFO, John, to go over our financials.

All right. Thanks, Tianhua and Aron. Let me go through our financial performance for the second quarter. All numbers are in U.S. dollar.

Commission income was $78.3 million increased 21% year-over-year and 17% quarter-over-quarter. Interest income was $79.8 million, increased 36% year-over-year and 24% quarter-over-quarter. Together, total revenue reached $182 million, setting an all-time high up 31% year-over-year and 18% quarter-over-quarter. Cash equity take rate was 3.6 bps this quarter, down from 5.9 bps a quarter ago. The main driver was a quarter-over-quarter increase of roughly $15 billion in trading volume from Tiger Broker U.S. However, most of this uptick in trading volume didn't change into commission revenues. As in the U.S., we offer 0 commission to local users.

Within commission revenue, about 71% comes from cash equities, 24% from options and the rest from futures and other products. Loan to cost. Interest expense was $21.5 million, increased 19% quarter-over-quarter and 24% year-over-year, in line with the increase in interest income. Execution and clearing expense were $6.8 million an increase of 25% from the same period last year, in line with the increase in commission income. Employee compensation and benefits expense were $50 million, an increase of 39% year-over-year primarily due to the severance costs associated with the group's rework of business units. Occupancy, depreciation and amortization expense were $2.8 million, a slight increase of 3% year-over-year.

Communication and market data expense were $16.2 million, an increase of 56% year-over-year due to the increase in user base and IT-related service fees. Marketing expense were $18.4 million this quarter, increased 87% year-over-year as we focused on acquiring high-quality users and accelerate the expansion of our wealth management business. General and administrative expenses were $9.8 million, increased 45% year-over-year due to an increase in professional service fees.

Total operating costs were $103.9 million, an increase of 47% from the same quarter of last year. As a result, our bottom line increased on both GAAP and non-GAAP basis quarter-over-quarter. GAAP net income was $39.4 million, and non-GAAP net income was $42.8 million versus a net loss in the previous quarter and up 20% quarter-over-quarter after excluding the impact of the one-off penalty in the first quarter. As of the close of the U.S. market yesterday, we have cumulatively repurchased approximately USD 5 million worth of ADS under our buyback plan announced on June 2, 2026. We may continue to execute repurchase from time to time under the $50 million share repurchase program on [Langston] June 2, 2026.

Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

[Operator Instructions] First question comes from the line of Han Pu of CICC.

This is [indiscernible] from CICC. I have 2 questions. Firstly, we have delivered a strong revenue growth and started operating profit expansion in Q2. But we noted that we also has a loss of over 2 million under the option [indiscernible] item. So what's the reason behind and how it would be going forward. And we also see that the income tax expense was a little bit high in Q2 with effective tax rate at now 28%. So what was the reason behind and what should we expect as the normalized effective tax rate going forward? .

My second question -- can you share the run rate of our operating trends since Q3, including metrics like trading velocity, client assets and new funded accounts users. These 2 questions.

[Interpreted] First, on the roughly USD 2 million loss in the other line item this was mainly an FX loss driven by the continued appreciation of the RMB and the corresponding depreciation of the U.S. dollar during the second quarter. It's a long cash item. On income tax, first of all, we believe our normalized effective tax rate is in the 10% to 15% range. The second quarter tax expense was notably above that level for 2 reasons. Number 1 is there is a noncash deferred tax adjustment had to employ share-based compensation -- share-based award, we regret to employees, amortized quarterly on a gross basis as part of our compensation costs occurring both vested and unvested portions. .

For tax purpose, however, only the amortization of the vested award is deductible. The expense from unvested award is nondeductible and gives rise to a deferred tax asset. When our share price dropped after May 22, the value of the unvested employee stock put declined, thus the previous recognized deferred tax asset came down accordingly. As a result, we wrote down about like USD 1 million of deferred tax asset this quarter which was recorded as income tax expense. This is a noncash item and if the share price recovers going forward, it will reverse and reduce tax expense in that period.

The second reason is tied to the onetime penalty from May 22 rectification. We are still assessing this and for now purely out of prudence, we have treated the entire penalty as a nondeductible expense in the second quarter, which added about USD 6 million to income tax expense this quarter. For now, this is a noncash item. Looking ahead, we expect to keep optimizing our tax arrangement in line of the profitability across the group's various regions and were consistent with the rules, we will aim to gradually reverse this against the income tax expense in the second half.

[Interpreted] Okay. I will translate regarding the run rate of our third quarter. First, on client assets -- to-date, quarter to date both net inflow and mark-to-market gains have each contributed more than USD 1 billion. So an asset has kept up a heady growth. Quarter-to-date, we've seen a high single-digit quarter-over-quarter increase in current assets compared to the end of the second quarter.

And second, on trading activity. Quarter-to-date trading volume and commissions are running slightly below the same point in Q2. This mainly reflects the high base from a strong second quarter when the market really cap trading activity elevated -- with some pullback in the market heading into Q3, activities has eased accordingly.

And last, on new funded accounts, Hong Kong and Singapore remain our key contributors. We expect the number of new defended users to come in flat or increase versus Q2. As we stepped up our brand activity in both Hong Kong and Singapore in the second quarter and the result has looking good so far in Q3. On [indiscernible], it's worth noting that -- so far in Q3, the average net asset inflow for new funded user has risen further versus Q2 to around USD 25,000, which is in line with our quality-first approach to client acquisition. Thank you.

Our next question comes from the line of Cindy Wang of China Renaissance.

[Foreign Language] I have 2 questions. First, I would like to follow up the regulatory update after May 22. First, are there any other new policy changes. And then second is whether Mainland clients have stabilized, such as trading activity, customer turns and asset outflow. And currently, have you seen any significant changes in the percentage of customer assets and revenue from an retail clients? .

The second question is on the company's overall blended take rate has remained relatively stable, but the cash equity take rate has decreased significantly compared to the previous quarter. Could you explain the reasons behind this? And what the trend looks like?

[Interpreted] Okay. Let me take this from 2 angles, the policy and the client behavior. First, on policy. We moved quickly and are in full compliance with the regulator's requirement. And on June 12, we build out the necessary monitoring mechanism to restrict onshore activities by million users, such as opening positions and making deposits. Since then, we haven't received any further policy changes or adjustments from regulators.

Second, on client behavior. Broadly speaking, the impact was contributed in the second quarter and has largely been reflected at this point. Mainland retail users saw a net asset inflow of about USD 500 million in the second quarter most of them between May 22 and June 12. This is a high single-digit percentage of this user's total client assets before the regulatory update. So [indiscernible] and heading into the second quarter, the pace of outflow has been gradually easing. So with those net asset inflows, Mainland retail users now account for under 10% of our total plant asset done further from before, and their revenue contribution has come down from the 20 to 25 branch in full year '25 and Q1 to a 15% to 20% range in Q2.

So that being said, the outflow impact from regulatory change has largely run cost. More importantly, our core growth engine is our global business. In the second quarter, plant assets grew quarter-over-quarter across every market we operate in. So based on the number and the actual results we are seeing so far, this matter has had no meaningful impact on the medium- to long-term fundamentals of our global business.

[Interpreted] As I mentioned earlier, cash equity takerate went down from 5.9 bps in the first quarter to 3.6 bps in the second quarter. For several reasons, number one, in the second quarter, AI and the semi sector trading volume accounted for a larger share on our platform. Stocks like MyClient [indiscernible] were treated a high share price, which take rate of well below 1 bps which dragged down the overall U.S. cash equities take rate.

In addition, the NASDAQ Index rose sharply in the second quarter, up more than 20%, pushing up the average trading price of individual stocks. Since we charge commission on a per share basis, a higher trading price translates into lower take rate. The third reason is on high-frequency users were trading through our U.S. subsidiaries in the second quarter, which lifted the trading volume since we charge 0 commission for local U.S. clients, this also drives down cash equity take rate.

The first 2 factors are market-driven. So the change is hard to predict, let's say, quarters today, in the third quarter, we have seen some pullback in share price, which should be positive for the cash equity take rate. We expect the cash equity take rate to recur somewhere in the third quarter. As for the blended take rate stayed relatively stable quarter-over-quarter, mainly because the share of future trading decline while cash equity and option trading went up. Since future trading volume is calculated on a notional basis, lower future treating volume due to depleted take rate.

Okay. So operator, let's proceed to the next question.

The next question comes from the line of Emma Xu of Bank of America Securities.

[Foreign Language] So the first question is, could you break down the geographic mix of the new founded account in the second quarter? Second, we noticed a notable sequential rise in the marketing expense, including the -- could you elaborate on the key drivers behind this increase, specifically, what is the split between user acquisition versus engagement spend? And in which markets have you ramped up investment please also share your outlook for the approximate range of CSC in the second half of this year.

[Interpreted] I think the new funded accounts were added in the second quarter, Singapore and Hong Kong together accounted for over 70% roughly even between these 2. Australia and New Zealand contributed around 25% with the rest coming from the U.S. market.

[Foreign Language] So let me break down the increase in our marketing spending and average CAC in the second quarter in 3 parts. First of all, some marketing expense for FCM rebates not really tied to user acquisition. Excluding the ex rate base, marketing spending was up about USD 2.5 million quarter-over-quarter. An average CAC rose from around USD 420 in Q1 to about USD 450 in Q2. Under split client acquisition, including branding, accounted for roughly 60% to 70% of our total marketing expense. The incremental spending was mainly into brand building in Hong Kong and Singapore, and it's clearly bringing high-quality users.

Average net asset inflow per new funded account from under USD 20,000 in the first quarter to over USD 25,000 in the second quarter. In Hong Kong, our client assets have now grown double digits for 5 straight quarters up nearly 30% quarter-over-quarter and roughly triple year-over-year in Q2. We launched a space acting campaign during its IPO to emtify our brand awareness through different values and channels. In Singapore, we kept reinforcing our brand and marketing leadership through a mix of online and off-line campaigns from taking part in [indiscernible] 2026 the city's largest outdoor film and musical festival to rolling out our -- where is your next step campaign with local running and applicable communities to work our TV advertising.

Those campaigns helping us stay close to our user base, especially the younger ones and build a warmer higher, more trusted brand connection that go beyond traditional financing marketing. Looking beyond the second quarter, we will keep out adjusting our acquisition spending based on the market condition based on what we have seen so far, we expect the average CAC to be around USD 450 to 550...

At this time, there are no further questions on the line. I would like to hand the call back to Mr. Aron Lee for closing.

Thank you. I'd like to thank everyone for joining our call today. And now closing the call on behalf of the management team here at Tiger. We do appreciate your participation in today's call. If you have any further questions, please reach out to our IR team. This concludes the call, and thank you very much for your time.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by, and welcome to the UP Fintech Holding Limited First Quarter 2026 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, June 2, 2026.

I would now like to hand the conference over to your first speaker today, Mr. Aron Lee, the Head of Investor Relations. Thank you. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us on the call today. UP Fintech Holding Limited's first quarter 2026 earnings release was distributed earlier today and is available on our IR website at ir.itigerup.com as well as GlobeNewswire services.

On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and CEO; Mr. John Zeng, our CFO; Mr. Wang 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. The 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 statements. For more information, please refer to our Form 6-K furnished today and our annual report on Form 20-F filed on April 24, 2026. We undertake no obligation to update any forward-looking statements, except as required under applicable law.

It is my pleasure to now introduce our Chairman and CEO, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by English translation. Mr. Wu, please go ahead with your remarks.

[Interpreted] Hello, everyone. Thank you for joining the Tiger Brokers First Quarter 2026 Earnings Conference Call. In the first quarter of 2026, benefiting from our diversified offering and steady expansion of core operations, we achieved solid year-over-year growth in total revenue and key operating metrics.

Our total revenue for the quarter reached USD 155 million, representing a 26.3% increase year-over-year. Operating profit reached USD 47.6 million, up 17.5% from the same period last year. We onboarded 28,900 new funded accounts this quarter. Singapore and Hong Kong market are the primary contributors. As of the end of the first quarter, the number of our total funded accounts reached 1.28 million, a year-over-year increase of 11.3%. In terms of client assets, we saw net asset inflow of USD 2.9 billion in the first quarter. In particular, net asset inflow from retail users and the consolidated accounts exceeded USD 2 billion for the first time in our history. This fully demonstrates that our strategy prioritizing user quality has delivered tangible results with our user profile and credit quality seeing further improvement.

Due to the market turbulence in the first quarter, our client assets experienced mark-to-market losses of USD 4.9 billion. As a result, total client assets at quarter end slightly down 3.2% quarter-over-quarter, yet maintained robust year-over-year growth of 28.4%, reached USD 58.9 billion at the end of the first quarter. Looking into the second quarter, Nasdaq has started to rebound and all mark-to-market losses on client assets recorded in the first quarter have been fully recovered on a quarter-to-date basis.

Additionally, we are glad to see that despite notable market pullbacks, which led to substantial mark-to-market losses on client assets, healthy net asset inflow drove a quarter-over-quarter increase in client assets across all the overseas markets. U.S. client assets rose nearly 40% quarter-over-quarter, while Australia, New Zealand and Hong Kong posted high single-digit and double-digit quarter-over-quarter growth, respectively.

We keep building out features updates to enhance users' overall investment experience. This quarter, we delivered a major upgrade to Tiger AI with a brand-new multi-agent architecture with functions, including market search, market analysis and risk control into stand-alone AI agents, which has greatly boosted the accuracy of our AI-driven insights. We also officially launched a dedicated AI agent for futures. It delivers more reliable, practical analysis and improves our user interact with our future tools.

Besides, Tiger AI has upgraded from our original dual-model framework to a 3-model collaborative system by integrating with Claude model, marking a substantial improvement in our intelligent service capability. For derivative features, we rolled out Hong Kong index option trading and option TWAP orders, helping investors execute better trading strategies under volatile markets.

Our 2B business continued to perform well. In the first quarter, we underwrote 10 Hong Kong IPOs, covering leading AI companies, including MiniMax and Zhipu AI. We also successfully completed 2 large-scale U.S. SPAC IPOs. In addition, demand for Hong Kong IPO subscription remains robust. Year-to-date, the total subscription amount for Hong Kong IPOs on our platform has exceeded HKD 1 trillion. As for our ESOP business, we added 42 new clients in the first quarter. As of the end of March 2026, our total ESOP clients served reached 790, indicating a sustained strong market demand for professional ESOP services and digital management solutions.

To demonstrate our confidence in the company's long-term growth and our commitment to delivering shareholder value, our Board of Directors has approved a share repurchase program of up to USD 50 million to be implemented over a 12-month period from June 1, 2026 to June 1, 2027.

Now I'd like to invite our CFO, John, to go over our financials.

All right. Thanks, Tianhua and Aron. Let me go through our financial performance for the first quarter. All numbers are in U.S. dollar.

Commission income was $67.2 million, increased 15% year-over-year and decreased 5% quarter-over-quarter. Interest income was $64.5 million, increased 20% year-over-year, while decreased 10% quarter-over-quarter. Together, total revenue reached $155 million, up 26% year-over-year and down 12% quarter-over-quarter.

Cash equity take rate was 5 bps this quarter, down from 6.4 bps a quarter ago. The main driver was a quarter-over-quarter increase of roughly $10 billion in trading volume in U.S. Tiger. However, this uptick didn't translate into commission revenue as in the U.S., we offer 0 commission pricing for local users. Within commission revenue, about 67% comes from cash equities, 25% from options and the rest from futures and other products.

Now on to cost. Interest expense was $18.1 million, decreased by 5% quarter-over-quarter, in line with the decrease in interest income and increased 21% compared to the same quarter last year. Execution and clearing expense were $5 million, a decrease of 6% from the same period last year due to more self-clearing of U.S. and Hong Kong securities. Employee compensation and benefits expense were $46.8 million, an increase of 39% year-over-year due to the headcount increase to strengthen [indiscernible] R&D.

Occupancy, depreciation and amortization expense were $2.7 million, increased 25% year-over-year due to the increase in office space and relevant leasehold improvements. Communication and market data expense were $13.6 million, an increase of 39% year-over-year due to the increase in user base and IT-related service fees. Marketing expense were $14 million this quarter, increased 29% year-over-year as we focus on acquiring higher-quality users and accelerating the expansion of our wealth management products. General and administrative expense were $7 million, increased 37% year-over-year due to an increase in professional service fees. Total operating costs were $89.2 million, an increase of 33% from the same quarter of last year.

On May 22, we received a regulatory penalty notice totaling approximately RMB 411 million. We have fully accounted for this amount in our first quarter results as [indiscernible] this is a one-time nonrecurring charge and will not have material impact on our core business and overall financial health. As a result, net loss and non-GAAP net loss were $26.9 million and $23.8 million. Operating profits were $47.5 million, increased 17% year-over-year.

Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

[Operator Instructions] And our first question comes from the line of Peter Zhang from JPMorgan.

This is Peter Zhang from JPMorgan. I have 2 questions. First is, how do you interpret the new regulatory rules released on May 22? And what will be the impact on your business? Also, could you share the Mainland retail clients' share of your total client assets as of end first quarter as well as their contribution to the total revenue in first quarter?

Second, management has mentioned that the quarterly net asset inflow from retail client has reached a record high in first quarter. Can we have some color on the regional breakdown?

[Interpreted] On May 22, China securities regulator, together with multiple ministries rolled out a new industry-wide regulation governing cross-border securities, futures and fund trading by Mainland investors. These new rules apply to the entire industry, not only our firm. We took this new regulation very seriously, with swift response.

First, regarding the fine, this is a one-time penalty totaling approximately RMB 410 million, equivalent to around USD 60 million. Given our current profitability and cash reserves, this fine will not materially affect our core operation for long-term development. Second, on the regulatory overhaul and its business impact. The core shift here is the regulatory approach, moving from user identity verification to territory-based oversight. Therefore, the 2-year rectification period is not about closing all existing PRC client accounts, but to restrict trading activities when they are onshore in Mainland of China.

This new regulation targets onshore operation of all industry players. Under this new rule, brokers and banks cannot market cross-border investment services within Mainland of China and are required to close down Mainland-focused official websites and to remove relevant apps from local app stores. We've already completed all this requirement rectification back in May 2023.

It is important to note that policy changes have no impact on users offshore. As of the end of the first quarter, Mainland retail investors' client assets under consolidated accounts accounted for roughly 10% of our total client assets and contributed between 20% to 25% of our total net revenue. Since the new rules were announced, we saw some uptick in asset outflow from Mainland retail accounts. We believe this is a normal short-term market reaction, and we expect outflow to stabilize soon. Our retail users in other overseas markets remain unaffected and still record net asset inflows [indiscernible] throughout the period.

For your second question, roughly 90% of our total net asset inflow from omnibus retail accounts this quarter came from markets outside of Mainland China. By region, Singapore contributed over 1/3 of the total net asset inflow. Australia and New Zealand plus U.S. combined for around another 1/3 and the remainder came from Hong Kong retail users. Thanks, Peter.

And our next question comes from the line of Cindy Wang from China Renaissance.

I have 2 questions here. First one is, we noticed that the first quarter take rate decreased sequentially, especially for the stock commission rate. Can you let us know what's the reasoning behind it?

Second, this quarter, the company was affected by the one-off penalty resulting in a quarterly loss, but income tax expense increased sequentially. So what are the reasons for this? And how should we expect the effective tax rate going forward?

So total trading volume and equity trading volume both increased quarter-over-quarter, but the commission revenue fell roughly 5%, leading to a lower blended take rate.

There are 2 key -- main factors. Number one is Hong Kong trading volume made up a larger share of total stock trading volume in the first quarter. We offer 0 commission for Hong Kong users trading Hong Kong stock and the take rate for Hong Kong stock is about 2 bps lower than that of the U.S. stock. A higher proportion of Hong Kong's trading volume will drag down the overall [indiscernible] take rate. Another reason is Tiger U.S. onboarded some active users this quarter and saw an uptick in total trading volume. But in the U.S., we follow market practice and offer 0 commissions, which further compressed the stock take rate.

Beyond those 2 factors, revenue from futures trading rose around 6% in the fourth quarter to roughly 8% in first quarter. Since future volume is calculated based on notional value, the enlarged total trading volume caused a decrease in blended commission rate. [indiscernible] before the penalty. The primary reason of this income tax rate increase was due to a noncash tax adjustment linked to employee stock incentives. We amortized share-based compensation expense this quarter for accounting purpose, covering both vested and unvested stock -- employee stocks for tax purpose. However, only amortization related to vested award is tax deductible. Nondeductible amortization on unvested shares is factored in deferred tax asset.

As our share price declined in first quarter, which reduced the fair value of unvested employee stock incentives, this led to a write-down of prior deferred tax asset of around USD 4 million, and this amount was recorded as an increase in income tax expense. Conversely, a future share price rebound will also boost deferred tax asset and reduce tax expense accordingly. Excluding this one-time noncash impact, we expect our effective tax rate to stay below 20% going forward. Thanks.

And our next question comes from the line of You Fan from CICC.

This is You Fan from CICC. I have 2 questions. Firstly, could you share more on our run rate since Q2? What's the trend of the new funded clients' trading velocity and client AUM?

Second question is on the net new funded accounts in Q1. What's the regional breakdown? And it seems that the number of the new added clients have not met the pace required for the full year guidance. So will you invest more in client acquisition or adjust the full year guidance?

[Interpreted] Your first question about our run rate in the second quarter, for the number of new users, we expect the number to stay stable quarter-over-quarter with Hong Kong and Singapore remaining our top contributing markets. Trading activity has picked up notably in the second quarter -- quarter-to-date. Both [ starts ] and commission income are higher than the Q1 level. U.S. stock trading activities saw the most significant improvement with Q2-to-date U.S. cash equity trading volume already matching the full Q1 total.

Regarding client assets, quarter-to-date, we have fully recovered the nearly USD 5 billion mark-to-market losses recorded in the first quarter. Retail net asset inflow remained healthy so far in the second quarter. Assuming no material shifts in the market conditions through June, we expect total client assets to post a solid quarter-over-quarter increase.

For new funded accounts in the first quarter, Singapore and Hong Kong together accounted for over 75% of the total, split almost evenly between these 2 markets. Australia and New Zealand contributed around 20% with the rest coming from the U.S. Even with the headline news on May 22, we are confident about our full year guidance and our global expansion. Market volatility has affected investor sentiment so far this year. We are optimistic that easing geopolitical tensions and improved inflation expectations in the second half will drive stronger user growth.

In addition, it's noteworthy to point out that when evaluating customer acquisition, where indicators like average TAC or ROI are important, our strategic priority is user quality with client assets and net asset inflow as our core KPIs. Therefore, we view the ratio of customer acquisition cost to quarterly retail net asset inflow as a more relevant measure of acquisition efficiency. The other work is just how much net asset inflow we can generate per dollar spent on the client acquisition. This ratio was at roughly USD 170 in the first quarter compared to around USD 150 over the past 4 quarters and approximately USD 120 in the year before that. This shows that our customer acquisition strategy is indeed effective in acquiring high-quality users.

There are no further questions at this time, so I'll hand the call back to Aron for closing remarks.

Thanks. I'd like to thank everyone for joining our call today. I'm now closing the call on behalf of the management team here at Tiger. We do appreciate your participation in today's call. If you have any further questions, please reach out to our Investor Relations team. This concludes the call, and thank you very much for your time.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by. Welcome to UP Fintech Holdings Limited Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]. I must advise you that this conference is being recorded today, March 19, 2026. I'd now like to hand the conference over to your first speaker today, Mr. Aron Lee, the Head of Investor Relations. Thank you. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us on the call today UP Fintech Holding Limited Fourth Quarter and Full Year 2025 Earnings Release was distributed earlier today and is available on our IR website at ir.itigerup.com as well as Globe Newswire services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and CEO; Mr. John Zeng, our CFO; Mr. Wang 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. The 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, please refer to our Form 6-K furnished today and our annual report on Form 20-F filed on April 23, 2025. We undertake no obligation to update any forward-looking statements, except as required under applicable law.

It is my pleasure to now introduce our Chairman and CEO, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by English translation. Mr. Wu, please go ahead with your remarks.

[Interpreted] Hello, everyone, and thank you for joining Tiger Brokers Fourth Quarter and Full Year 2025 Earnings Conference Call.

In 2025, supported by growth in our user base and client assets, continued enhancement of product offerings and localization as well as supportive market environment, we delivered a substantial improvement in both financial and operating performance. Full year total revenue reached USD 612.1 million, up 56.3% compared with 2024. We are also glad to see further improvement on profitability.

For the full year, GAAP net income attributable to Fintech was USD 170.9 million and non-GAAP net income was USD 186.5 million, both set record high, up 81.4% and 164.7% year-over-year, respectively. In the fourth quarter, total revenue was USD 175.6 million, an increase of 41.5% year-over-year. Fourth quarter GAAP and non-GAAP net income attributable to Fintech were USD 45.2 million and USD 48.9 million, up 61.3% and 60.5% year-over-year, respectively.

In the fourth quarter, we added 29,700 newly funded accounts as the total number of newly funded accounts reaching 161,900 for full year 2025, surpassing our annual target of 150,000. As of the end of 2025, total funded accounts surpassed 1.25 million, representing a 14.8% increase from the end of 2024. Year-to-date, we continue to see healthy paying client growth.

We target to acquire 150,000 new funded clients in 2026 while prioritizing user quality. Our net asset inflow remained strong. For the full year 2025, net asset inflows exceeded USD 10 billion with over $3 billion of net inflow in the fourth quarter alone. Hong Kong was the largest contributor to our retail net asset inflow in the fourth quarter.

Despite the impact of mark-to-market losses on client assets, total client assets at the end of fourth quarter remained stable quarter-over-quarter. at USD 80.8 billion, up 45.7% year-over-year. We are very pleased that over the past year, Tiger's platform has continued to win the trust and recognition of both new and existing users across our markets and client assets in all regions have increased meaningfully.

In particular, client assets in Singapore and the Australia and New Zealand market delivered strong double-digit and even more than doubling year-over-year growth. Hong Kong was a standout. client asset there more than tripled year-over-year. Even in the fourth quarter, marked by a pullback in the Hong Kong stock market, client assets from Hong Kong still increased by more than 20% quarter-over-quarter.

This performance benefited from our continued investment in the local client acquisition as well as the high-quality user base in Hong Kong. Notably, the quality of newly funded users continued to improve in the fourth quarter in Hong Kong with the average net asset inflow of newly acquired clients exceeding USD 43,000, reaching a historic high. We also remain focused on enriching our product offerings and enhancing user experience.

In the fourth quarter, we made an important upgrade to our options combo trading feature by adding support for combined orders involving options and underlying cash equities. This allows investors to deploy more sophisticated strategies to navigate market volatility, while real-time combination codes significantly improve order execution fill rate when users trade based on a combination price movements.

As our presence in the Australian market has expanded in recent years, our user base and investment appetite there have become more diversified. In response, in the fourth quarter, we launched market accounts in the Australian market. This has significantly strengthened our product competitiveness locally and further completed our trading service ecosystem.

Our 2B business continues to perform well. In the investment banking business, we underwrote a total of 22 U.S. and Hong Kong IPOs in the fourth quarter, including Pony AI, Inc. and HashKey, bringing the total number of U.S. and Hong Kong IPO underwritten for the year to 47. In our ESOP business, we added 39 new clients in the fourth quarter, bringing the total number of ESOP clients served to 848 as of the end of 2025.

Now I'd like to invite our CFO, John, to go over our financials.

Great. Thanks, Tianhua and Aron. Let me go through our financial performance for the fourth quarter. All numbers are in U.S. dollars. Total revenue for this quarter reached $175.6 million, reflecting a year-over-year increase of 42% and a slight quarter-over-quarter increase of 0.2%. For the full year, total revenue were $612.1 million, increase of 56% compared to the previous year.

Both quarterly and full year top line reached an all-time high in our operating history. The cash equity take rate this quarter was 6.4 bps, down from 7.1 bps in the previous quarter as the figure normalized in Q4 due to less mini stock trading compared to the third quarter. Within commission revenue, about 65% comes from cash equities, 29% from options and the rest comes from futures and other products.

Regarding costs, interest expense was $19 million, increased by 14% from same quarter last year due to the increase in margin financing and securities lending activities. Execution and clearing expense were $5.3 million, decreased 13% from the same period of last year, primarily due to lower SEC regulatory fees.

Employee compensation and benefits expense were $50.3 million, an increase of 35% year-over-year due to an increase of global headcount. Occupancy, depreciation and amortization expense increased 34% to $2.9 million due to the increase in office space and relevant leasehold improvements. Communication and market data expense were $14.5 million, an increase of 23% year-over-year due to the increase in user base and IT-related services.

Marketing expense were $15.8 million this quarter, increased 67% year-over-year as we increased marketing and branding spending under a more favorable market backdrop. General and administrative expense were $14 million, an increase of 118% year-over-year due to uncollectible underwriting fee and an increase in professional service fees. Total operating costs were $102.9 million, an increase of 41% from the same quarter of last year.

As a result, in the fourth quarter, GAAP net income at $45.2 million, non-GAAP net income at $48.9 million, both increased 61% year-over-year. For the full year of 2025, total GAAP profit was $171.2 million and non-GAAP net income was $186.8 million. Both are all-time high and increased 182% and 165%, respectively, compared to last year. Now I have concluded our presentation.

Operator, please open the line for Q&A. Thanks.

[Operator Instructions] Our first question comes from the line of Dennis Bai from UBS.

[Interpreted] This is Dennis from UBS. Congratulations on the solid results. I have 2 questions. First, regarding the 150,000 client acquisition guidance for 2026, could you please break down the expected contribution by market? Does this include any plans to enter new markets this year? Also, could you please share a market breakdown of new client acquisition in the fourth quarter of last year?

Second question, does the company have a clear plan for the convertible bonds maturing around the end of the first quarter this year, conversion or repayment? And could this create any pressure on your cash flow or capital?

[Interpreted] First, in terms of our full year target, starting from 2025, our acquisition strategy has been set with a clear focus on quality and ROI. We've been putting more emphasis on expanding our high net worth client base rather than merely pursuing user numbers. And we have executed firmly with this strategy.

In 2025, full year net asset inflow exceeded USD 10 billion and the majority of which came from retail clients. Net inflow from retail users doubled compared with 2024 and reached an all-time high on a full year basis. This helped total client assets jump from a USD 40 billion range at the end of 2024 to a USD 60 billion range by the end of 2025, which in turn has made our overall profitability more resilient.

So when we set this 150,000 new funded user target for 2026, we are following the same strategy and principles. We are confident that in terms of asset contribution and volatility, the quality of newly acquired users in the coming year will remain constant with what we saw in 2025. For the regional breakdown of new funded accounts in the fourth quarter, Singapore and Hong Kong each contributed 35%. The Australia and New Zealand market contributed around 25% and the remaining roughly 5% came from the U.S. market. And looking at the 150,000 new funded user target for 2026, excluding any impact from the new markets, we expect the regional mix to be similar to what we saw in the Q4 with Hong Kong and Singapore as the main contributor.

We issued USD 155 million private CB back in 2021. All of this will mature by April. Two strategic investors have agreed to extend their holding around USD 50 million for another 2 years. We will repay the rest of $100 million to investors. Given our current financial profile, we don't think the repayment of the CB will have a meaningful impact on our liquidity or business operations.

The next question comes from the line of Emma Xu of Bank of America Securities.

[Interpreted] The first question is that how has the operating performance been since the first quarter including the number of new funded customers, client assets and trading activities.

The second question is about the CAC. Your average customer acquisition cost rose significantly in the fourth quarter. What are the reasons behind this increase? And what is the target average customer acquisition cost for 2026?

[Interpreted] Okay. Your first question on the number of new funding accounts. The recent market volatility did not have a lot of impact on our acquisition pace. We expect Q1 new funding accounts to be roughly flat versus Q4. On user activity, we are seeing the following trends so far in Q1. Due to market volatility and geopolitical factors, the U.S. equity turnover has declined slightly compared with Q4. In contrast, after previous pullback, Hong Kong equity has seen a pickup in trading activity and trading volume.

The Q1 quarter-to-date, Hong Kong share trading volume has already exceeded Q4 entire trading volume. With about 2 weeks remaining in the quarter, we will continue to monitor closely. As for the land assets, both U.S. and Hong Kong equity markets have continued to pull back in Q1 which will lead to some mark-to-market losses in client assets.

That said, in the first 2 months, we saw strong net asset inflow driven by client position covered, especially from retail users. In addition, our continued marketing and branding input in 2025 have brought in more high net worth clients. As a result, at the end of February, client assets have remained relatively stable quarter-over-quarter, and we are closely monitoring market activity throughout March.

So total marketing expense increased around USD 4 million quarter-over-quarter, primarily due to the below 3 reasons. First, in Singapore, we stepped up campaigns and advertising in the fourth quarter around New Year and Christmas. For example, we partnered with [indiscernible] to promote healthy commuting and further embedded Tiger into local daily life.

To deepen connection with the local community, we hosted our flagship Tiger Trade Experience 2025 event at year-end, which attracted more than 4,000 local users and received very positive feedback. Tiger Singapore also coorganized its first charity fundraising event with local nonprofit organization, Google Plus, rising funds to support youth development programs that benefit over 400 local teenagers.

From investment service to community initiative, Tiger is integrating into local communities through a different angle and expand our brand influence. In Hong Kong, we continue to increase marketing activities, including local community events and referral-based acquisition programs. As we mentioned before, Hong Kong clients are of very high quality and the payback period there is the shortest across our licensed markets.

Even though Hong Kong market experienced pullback in Q4, our acquisition pace was not slowed down. Hong Kong contributed about 35% of the group's newly funded accounts in the quarter, and the user quality further improved with the average net asset inflow of newly acquired clients rose from around USD 30,000 to a record high of about USD 43,000. In addition, our wealth management business has also developed very well over the past quarter.

To attract more high-level clients to Tiger platform, we have been partnering with high-quality channels, which led to higher channel rate based cost in the fourth quarter. At the same time, the number of newly funded users in Q4 was slightly lower than in the third quarter. Those factors combined result in a significant increase in average CAC. Looking ahead in the first quarter, we expect both marketing expense and the number of new users to be quite stable quarter-over-quarter.

Therefore, the average CAC -- we expect to remain at the same level, but we are comfortable with the payback period and user quality. Looking forward, we will adjust our strategy based on market conditions to ensure that our ROI remains healthy.

Our next question comes from Cindy Wang of China Renaissance.

[Interpreted] I have 2 questions here. First, 4Q 2025 top line has been quite flattish, but the bottom line dropped 70% quarter-over-quarter. As we've seen cost increased a lot in this quarter. What is the reason behind it? And any guidance for case this year?

Second, we have seen a significant increase in other revenue since second half of last year. So mainly contributed by wealth management and IPO service. So could management share some color on the wealth management business development and our current AUM and as well as the progress of the investment banking business. Thank you.

[Interpreted] So revenue was roughly flat quarter-over-quarter, while our bottom line declined by around USD 10 million. In addition to the roughly USD 4 million impact from higher marketing expense mentioned earlier, there are 2 factors behind the profit decline. Number one, in the fourth quarter, communication and market data expense increased by about $2.6 million quarter-over-quarter.

This was mainly due to the upgrades we made to the crypto market data and the additional R&D costs for improving the interaction and experience of Tiger AI. We also had some expense related to overseas cloud services we purchased at the end of the year. The quarter-on-quarter increase in G&A is primarily due to we booked around USD 3 million in bad debt provision in the quarter.

This relates to IPO underwriting deals from the previous years when revenue had already been recognized, but the counterparty has not yet paid. we are doing all the necessary collection procedures. This is a one-off impact. And if we recover the payment in the future, the amount will offset expense in the period when it's received. So those 2 items together with higher marketing expense added up to about USD 10 million in additional costs. So bottom line declined quarter-over-quarter, while top line is flat.

So for your second question, our other revenue have increased from only a few million U.S. dollars quarterly to around USD 25 million to USD 30 million per quarter in the past 2 quarters. ESOP business has certainly contributed. Since we launched the ESOP business in 2018, we have served around 750 companies and built a solid reputation in the industry. The main drivers of this step-up is in other revenue, however, is our wealth management and investment banking business.

For the investment banking, Tiger has long been among the industry leaders in the U.S. IPO underwriting in terms of both deal count and size. Over the past year, as the popularity of Hong Kong IPO subscription has increased, our Hong Kong IPO pipeline has also expanded steadily. We have offered users more attractive and inclusive terms in financing rates and subscription experience.

And through IPO subscriptions, many more Hong Kong users have become familiar with our platform. In Q4, Hong Kong IPOs continue to perform strongly on our platform. Total IPO subscription amount doubled quarter-over-quarter, while the number of subscribers increased by about 80% quarter-over-quarter. For full year 2025, total subscription amount reached HKD 1.2 trillion, surpassing the trillion mark for the first time and setting a new record.

As for our wealth management business, User penetration is ramping quite fast. Currently, among every 5 new funded clients in our licensed markets, one uses our wealth management services, driven mainly by Hong Kong and Singapore. In Q4, both AUM for mutual funds and assets in cash management tools such as Tiger Vault delivered close to double year-over-year growth. Our structured note feature has also entered a rapid growth phase.

Trading volume in Q4 increased by more than 50% quarter-over-quarter. The number of trading accounts grew several fold year-over-year and product coverage continues to expand. In terms of product capabilities, we launched our strategy generation engine, Smart Fund AI. This tool helps fund manager quickly create investment suggestions based on fund selection criteria and clients' risk preference. significantly reducing our research times and aligning more accurately with clients' investment goals. Thank you.

That concludes the Q&A session today. I would like to hand the call back to management for closing. Thank you.

Thank you. I'd like to thank everyone for joining our call today. I'm now closing the call on behalf of the management team here at Tiger. We do appreciate your participation in today's call. If you have any further questions, please reach out to our Investor Relations team. This concludes the call, and thank you very much for your time. Bye-bye.

That concludes today's conference call. Thank you for your participation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Thank you for standing by. Welcome to the UP Fintech Holdings Limited's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, December 4, 2025. I would now like to hand the conference over to your first speaker today, Mr. Aron Lee, the Head of Investor Relations. Thank you. Please go ahead.

Thank you, operator. Hello, everyone. We appreciate you joining us today for our UP Fintech Holding Limited's Third Quarter 2025 Earnings Call.

The earnings release was distributed earlier today and is available on our Investor Relations website at ir.itiger.com and through GlobeNewswire.

On the call today with us 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 provide an overview of our business operations and key corporate highlights, followed by Mr. Zeng, who will discuss our financial results. They will both be available to answer your questions during the Q&A session afterwards.

Before we begin, I'd like to address the safe harbor statement. The upcoming remarks will contain forward-looking statements as defined by the U.S. Private Securities Location Reform Act of 1995. Actual results could differ materially due to various factors. For more details on these factors, please refer to our Form 6-K furnished today, December 4, 2025, and our annual report on Form 20-F submitted on April 23, 2025. We are not obligated to update any forward-looking statements unless required by law.

Now it's my pleasure to introduce our Chairman and CEO, Mr. Wu, who will begin his remarks in Chinese, followed by English translation. Mr. Wu, please proceed.

[interpreted] Hello, everyone. Thank you for joining the Tiger Brokers' Third Quarter 2025 Earnings Conference Call.

In the third quarter, Tiger once again achieved impressive performance, with all revenue segments and profit showing encouraging growth and reaching new historic highs. Our total revenue reached USD 175.2 million, representing a year-over-year increase of 73.3% and a quarter-over-quarter increase of 26.3%. We have maintained our strategy of prioritizing user quality and product experience, which has further improved our ROI and laid a solid foundation for ongoing profit growth.

All of our licensed entities achieved profitability in the third quarter, resulting in a net income attributable to UP Fintech of USD 53.8 million, up 30% from the previous quarter and 3x the same quarter last year. Our non-GAAP net profit reached USD 57 million, growing 28.2% quarter-over-quarter and 2.8x year-over-year. Non-GAAP net profit hit new historical highs and has maintained double-digit quarter-over-quarter growth for 5 consecutive quarters.

In the third quarter, we added 31,500 new funded accounts with Singapore and Hong Kong being the primary contributing markets. In the first 3 quarters of this year, we have acquired 132,200 new funded accounts. The total number of funded accounts reached 1,224,200, representing an 18.5% year-over-year increase. As of today, we've already achieved our annual guidance of acquiring 150,000 newly funded accounts.

In addition, we are glad to see better brand recognition from Hong Kong users. In the third quarter, for the first time, Hong Kong accounted for over 30% of our quarterly new funded users, becoming a key growth engine alongside Singapore. More importantly, user quality in Hong Kong remains strong with average net asset inflow for newly acquired clients holding around USD 30,000 for 3 consecutive quarters. Meanwhile, ROI-driven acquisition strategy delivered standout results in Singapore. The average net asset inflow for newly acquired clients in the third quarter surpassed USD 60,000, a historical breakthrough and leads group average this quarter to above USD 30,000 for the first time.

Regarding total current assets, net asset inflow remained robust, mainly driven by retail investors, coupled with the mark-to-market gains, total client assets reached a new record of USD 61 billion, up 17.3% quarter-over-quarter and 49.7% year-over-year, marking 12 consecutive quarters of growth. In the third quarter, all the overseas markets delivered double-digit quarter-over-quarter growth above 20% in client assets, with Hong Kong and U.S. increasing by more than 60% and 50%, respectively.

In the third quarter, we continued to refine our product features to make global investing more accessible and convenient. As the leading tech-driven brokerage in Singapore, we constantly enhance the user experience for local investors. To enable more local investors to easily participate in stock market, Tiger Singapore has waived the Singapore Exchange quarterly custody fee for accounts with no [frills], thereby reducing the holding cost for long-term investors.

In Hong Kong, we have expanded our product offering by introducing Japanese market derivative services, such as Nikkei futures, for the first time in the third quarter, further solidifying our global multi-asset strategy. Additionally, in September, we launched cryptocurrency trading in New Zealand, providing local users with investment services in major cryptocurrency, like Bitcoin and Ethereum. During the third quarter, Tiger platform enhanced cryptocurrency-related features by adding unique data such as macro market insights and holdings information for companies, assisting users for recognizing investment opportunities and making better investment decisions.

Tiger AI has seen a rapid increase in usage with user numbers growing nearly fivefold year-over-year and the number of conversations increasing tenfold. Meanwhile, the intelligent investment analysis tool, TradingFront AI, provides real-time portfolio analysis and market insights for asset management business, helping investment advisors enhance their analysis efficiency and decision-making quality.

Our 2B business also maintained strong momentum, significantly boosting other revenue by doubling them quarter-over-quarter, achieving a historic high for a single quarter. In the third quarter, we underwrote 5 U.S. IPOs, all serving as the sole bookrunner, including Linkhome and Yimutian. Additionally, we underwrote 5 Hong Kong IPOs and 1 Hong Kong public follow-on offering, including Geek Plus and Boss Zhipin. With the IPO market being active, supported robust growth in our IPO subscription business with the number of subscribers increasing by 39.3% quarter-over-quarter and subscription amount surging by 121.5%, reflecting our platform's enhanced underwriting capability.

In ESOP business, we added 46 new clients in the third quarter, bringing the total to 709, a year-over-year increase of 19%.

Now I'd like to invite our CFO, John, to go over our financials.

Great. Thanks, Tianhua and Aron. Let me go through our financial performance for the third quarter. All numbers are in U.S. dollars.

We saw encouraging growth in all revenue components this quarter. Commission income was $72.9 million, increased 77% year-over-year and 13% quarter-over-quarter. Interest income was $73.2 million, increased 53% year-over-year and 25% quarter-over-quarter in line with our sequential growth in margin and securities lending balance. Total revenue reached $175.2 million, up 73% year-over-year and 26% quarter-over-quarter.

Cash equity take rate was 7.1 bps this quarter, increased from 6.4 bps of last quarter. The uptick in cash equity take rate was mainly due to the increased trading volume of fewer low-priced U.S. stock during the third quarter, as we charge commission per share for U.S. stock trading. Within commission revenue, about 67% comes from cash equities, 25% from options and the rest from futures and other products.

Now on to cost. Interest expense was $21.9 million, increased 40% year-over-year in line with the increase in interest income from margin and the securities lending business. Execution and clearing expense were $4.5 million, increased 27% from the same period of last year, in line with the increase in commission and trading volume. Employee compensation and benefits expense were $47.2 million, an increase of 64% year-over-year due to the headcount increase to strengthen overseas growth and R&D. Occupancy, depreciation and amortization expense were $2.8 million, increased 28% year-over-year due to the increase in office space and relevant leasehold improvements.

Communication and market data expense were $11.8 million, an increase of 21% year-over-year due to the increase in user base and IT-related services fees. Marketing expenses were $12.9 million this quarter, increased 57% year-over-year as we beefed up user acquisition, particularly in Singapore and Hong Kong markets. General and administrative expense were $10.3 million, an increase of 49% year-over-year, due to an increase in professional service fees.

Total operating costs were $89.4 million, an increase of 51% from the same quarter of last year. As a result, bottom line increased on both GAAP and non-GAAP basis. GAAP net income were $53.8 million, up 30% quarter-over-quarter and 3x of last [indiscernible]. Non-GAAP net income were $57 million, a 28% increase quarter-over-quarter and 2.8x the same quarter of last year. The non-GAAP net profit margin further expanded to 33% in the third quarter.

That has concluded our presentation. Operator, please open the line for Q&A. Thanks.

[Operator Instructions] And our first question will come from Pu Han from CICC.

First, congratulations on the exciting results achieved this quarter. This is Pu Han from CICC. I have two questions. The first one is regarding the AUM breakdown. So how much is from clients net asset inflow and how much from mark-to-market gain? And in terms of the net asset inflow, how much is from retail investors and how much from institutions?

The second question is about the take rate. We see both the blended take rate and the cash equity take rate increased a lot this quarter. So could you please share the reason behind the increasing take rate? That's my two questions.

[interpreted] In the third quarter, client assets saw a meaningful increase of about 17%, reaching a historic high of USD 61 billion. So of this increase, roughly 30% were from the net asset inflow and 70% were from the mark-to-market gains. More than 60% of the net asset inflow came from Singapore and Hong Kong markets, with retail clients being the key contributor.

For cash equities, the take rate increased from 6.4 bps in second quarter to 7.1 bps in the third quarter, primarily due to some U.S. local penny stock were particularly active in the quarter. Since we charge commission per shares for U.S. stock, this led to an increase in cash equity take rate. As for the blended take rate, aside from the increase in cash equity commissions, futures trading volume dropped from around 7% in the second quarter to about 4% in the third quarter. As we count notional value for futures trading, the decrease in futures trading volume, while increasing commission income, contributed to a notable increase in our overall blended take rate.

This expense while our stock trading volume showed a quarter-over-quarter increase consistent with the increase in commission income, but the total trading volume was actually down. Thanks.

Operator, please move on to the next question.

And our next question will come from Cindy Wang with China Renaissance.

This is Cindy from China Renaissance and congrats for the great third quarter results. I have two questions here. First, could you give us the breakdown of 31,500 new funding accounts by regional in third quarter? And second, customer assets in overseas markets enjoyed significant sequential growth in third quarter. Could you please provide details on the onshore user assets quarter-over-quarter change and their contribution in overall client assets in third quarter?

[interpreted] So to your first question, in the third quarter, about 40% of newly funded accounts came from the Singapore market, approximately 35% were from the Hong Kong and 20% from Australia and New Zealand market and the rest 5% from the U.S. market. So in the third quarter, client assets for the onshore investor also saw a double-digit quarter-over-quarter increase with both institutional and retail clients experiencing net asset inflow and mark-to-market gains also boosted the quarter-over-quarter increase.

Due to our global expansion over the past few years, the growth pace for client assets in overseas markets has been faster. By the end of the Q3, client assets of onshore retail users as a percentage of our total client assets has dropped to below 15%. The new account opening rules require onshore investors to hold value overseas, including Hong Kong identification to open accounts with us. It has been the same rule across the whole industry. We remain optimistic about the Greater China market because many high net worth individuals in Greater China already have overseas identities and the requirement for the Hong Kong Quality Migrant Admission Scheme gradually becoming less, I would say, stringent.

The global asset allocation for investors is just getting started, presenting tremendous market potential. Just by serving this cohort, we will be able to sustain strong growth in client assets and trading volumes. Thanks, Cindy.

Operator, let's proceed.

And our next question will come from Emma Xu from BofA Securities.

So the first question is about the operations so far in the fourth quarter. In particular, could you share any early trends around the trading volume, client assets and new funded accounts? And the second question is about your clearing cost, which decreased quite significantly in the third quarter. So what are the major reasons behind? And do you believe the current clearing cost is sustainable or you have further room for reduction?

[interpreted] Okay. So regarding trading volume, the market remains quite active. Our trading volume for the first 2 months of the fourth quarter is already on par with the entire Q3, partly due to the increase in futures trading volume. Cash equity trading volume in the first 2 months of the fourth quarter is more than 2/3 of the cash equity trading volume in the third quarter.

In terms of client assets, net asset inflow quarter-to-date remains robust, and are expected to be slightly better than the Q3. However, some users had mark-to-market loss due to the market volatility in the fourth quarter, we will have a better idea of the total client assets movement by the end of December. As of new funded accounts, we have already achieved our annual target of acquiring 150,000 clients for the year. The number of new funded accounts in Q4 are expected to be roughly in line with it in Q3. We will continue to prioritize future quality, ensuring our growth aligns with healthy business model.

So our commission income increased by 13% quarter-over-quarter. Clearing costs decreased by 17% this quarter, bringing the quarterly clearing costs to a historic low of 6%. The key reason is SEC in May announced that it will no longer charge transaction fee. Since majority of the trading volume on our platform are in U.S. securities, this changes in the asset fee has largely helped us reduce clearing costs. We believe the current clearing cost rate is quite sustainable as we are self-clearing for all core products, only a small number of stock and derivatives are cleared by third parties.

Operator, let's move on to the next question, please.

Our next question will come from Ling Tan from Haitong.

I will quickly translate my questions. Congratulations on a very good, solid third quarter result. My first question is regarding the overall operating costs and expenses. I noticed that in third quarter, there is a notable increase in the overall cost and expenses, particularly in R&D as well as employee compensation, which is higher than the previous guidance of 10% to 20% year-over-year growth. Could management explain a little bit on what's the reason behind the increase? And looking forward, do you expect the overall operating costs and expenses to remain at the current level? Or do you expect it will gradually go up or trend down?

My second question is regarding Hong Kong market. In third quarter, Hong Kong contributed to roughly around 40% of the total new -- newly funded accounts. Could management explain a little bit more on Hong Kong's contribution regarding net asset inflow, total revenue as well as net profit? And also looking forward, how do you plan to maintain the strong growth in Hong Kong, given Hong Kong is a highly competitive and highly penetrated market?

So the rise in labor costs can be attributed to several factors. First, with our global expansion, the staff headcount has increased, and we have higher experienced R&D personnel to enhance our product offerings. Second, we have accrued more bonus given the recent performance. In addition, our asset management unit performed well in the third quarter, so we paid performance bonus to our fund managers. So as a result, labor costs in the third quarter were higher than normal single quarters.

As for G&A expense, the increase is mainly due to -- as we grow globally, we are required to have more professional services related to AML, audit consulting and legal services. We anticipate those expense will remain at this level in the near future.

So in the third quarter, Hong Kong accounts for about 35% of new users and approximately 1/4 of net asset inflow, making it a large key growth engine [indiscernible] Singapore. As for bottomline, Tiger Brokers Hong Kong has been profitable over the past years, though, its contribution to group profit was still relatively low. Considering the high user quality in Hong Kong, our current focus is to further improve our product offerings and increase market share rather than prioritizing profit contribution from the Hong Kong market. We are quite satisfied with the growth pace since entering Hong Kong.

Our user base is very diversified, including existing investors using other brokers and the younger generation entering the market. We believe our product experience combined with competitive pricing are fundamental to Tiger's growing presence in Hong Kong and the reason why different users choose us. Since entering the Hong Kong market, client assets have consistently seen double-digit growth quarter-over-quarter with over 60% increase in the third quarter. The average client asset per user for both new and existing clients exceeded USD 30,000 and both velocity and ARPU are the highest across all our markets.

As we increase our user acquisition in Hong Kong, along with the ongoing enhancement of our product offering like cryptos, we remain optimistic about future growth in this market. It's only a matter of time Hong Kong becomes another major profit contributor for the group.

Operator, let's move on.

And our next question will come from Dennis Bai from UBS.

Congratulations on the strong results. My first question is about client acquisition cost, perhaps CAC. We've seen an uptrend. In 2024, the CAC was about USD 150. And in the first 3 quarters, the average CAC is about $250 and in Q3, particularly the CAC exceeds USD 400, and there's no new market entry. Could you please break out the Q3 CAC by market and share your outlook for CAC in Q4 and next year? And my second question is about the interest income. We saw a sharp Q-o-Q increase in Q3, but the margin financing and stock lending balance remained flat sequentially. Could you please explain what drives the interest income growth and whether this trend is sustainable?

So overall, we privatize user quality and dynamically adjusting customer acquisition costs based on market conditions. As a result, average CAC can fluctuate across different periods and for different markets. This year, we have continued to optimize our customer acquisition strategy by eliminating channels that do not meet our ROI standards and focus on attracting high net worth users, particularly in the Singapore market. As a result, average CAC in Singapore has been rising from just over $100 back in 2024 to over $400 this year. At the same time, the quality of new users from Singapore keeps improving with the average net inflow per new users exceeding $60,000 in the third quarter.

From a lifetime value perspective, we believe this will be for our profitability in the long term. The Hong Kong market has always been competitive, leading to a higher average CAC, which remains stable in the $300 to $400 range. Back in this quarter, it was about USD 300. However, due to the high quality of the local users, the payback period is still the shortest among all the markets we entered. In Australia and New Zealand, and U.S., we adopt a long-term approach to gradually earn local users' trust, resulting in a relatively stable average CAC around $200. Looking ahead, we will continue to adjust our customer acquisition strategy based on market conditions and competitive dynamics.

So there are two key reasons for this interest income increase but margin balance relatively flat. So the #1 reason is the directed growth of client asset handing to an increase in client per cash adding approximately $1 billion from second quarter to third quarter. Additionally, as our profitability expense, our return earnings contributed to an increased cash balance as well. Both of those will boost interest income, but not reflected in increase in the margin financing or securities lending balance.

The second reason is that while the overall margin and security lending balance remains flat from second quarter to third quarter, but the balance of high spread business, such as margin financing and the securities lending increased, while balance of lower spread business like [indiscernible] decreased, results in flat margin and security imbalance, while interest income had a big jump. Thanks.

Operator, let's move on to next question.

And I'm showing no further questions from our phone lines. And I'd now like to pass it back to Aron Lee for any closing remarks.

Thanks. I'd like to thank everyone for joining the call today. I'm now closing the call on behalf of the management team here at Tiger. We do appreciate your participation in today's call. If you have any further questions, please reach out to our Investor Relations team. This concludes the call, and thank you very much for your time.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.

[Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]