Futu Hldgs (NASDAQ:FUTU) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.

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Summary

Futu Holdings reported a significant increase in net new funded accounts, with a 23.7% year-over-year growth, reaching 3.84 million total funded accounts.

Total client assets rose to 1.4 trillion HKD, a 43.6% increase year over year, driven by higher market valuations and net asset inflow.

Second quarter revenue was 7.2 billion HKD, up 36% from the previous year, with a notable rise in brokerage commission and interest income.

Futu Securities launched securities-backed margin financing for virtual assets in Hong Kong, marking a strategic expansion into digital asset markets.

The company maintained a strong presence in overseas markets, with significant client acquisition in Malaysia and a new entry into the Thai market.

Net income for the quarter was 3.6 billion HKD, a 42% increase year over year, with a net income margin of 50.6%.

Management noted that client attrition due to regulatory changes has stabilized, and overseas markets continue to show growth potential.

The launch of prediction markets in the U.S. has been successful, contributing positively to client acquisition and engagement.

Full Transcript

OPERATOR

Welcome to Futu Hldgs second quarter 2026 earnings conference call. At this time all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Michelle Lee, Investor Relations Manager at Futu Hldgs. Please go ahead.

Michelle Lee, Investor Relations

Thanks, operator. Thank you for joining us today to discuss our second quarter 2026 earnings results. Joining me on the call today are Mr. Leaf Li, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Hsu, Senior Vice President. As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual report, and with that I will now turn the call over to Leaf. Leaf 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. Client 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 net new funded accounts for the third consecutive quarter.

In the U.S., moomoo'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 stood 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 clients' stock holdings and, to a lesser extent, net asset inflow. Period-end margin financing and securities lending balance rose 31% quarter over quarter to 95.1 billion Hong Kong dollars, supported by an active Hong Kong IPO market along with broader positive market sentiment that encouraged clients to take on more leverage. Thanks to favorable market conditions, total trading volume rose 78.8% year over year and 54.6% quarter over quarter to 6.42 trillion Hong Kong dollars, setting a new record high. U.S. stock trading volume grew 67.2% sequentially to 5.02 trillion Hong Kong dollars, driven by client interest in AI-related names. Hong Kong stock trading volume increased by 15.9% quarter over quarter to 1.17 trillion HKD, 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. Wealth management client assets were 180.2 billion HKD, 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 roadshow for retail investors centered on the commercial space theme amid heightened investor interest. The event drew a full on-site audience and several hundred livestream participants, translating into meaningful follow-on subscriptions. We concluded the quarter with 683 IPO distribution and IR clients, up 32% year over year.

The Hong Kong IPO market sustained strong momentum in the second quarter, with nearly 60% of newly listed companies choosing to partner with Futu. We served as joint bookrunners for multiple high-profile listings, including those of Star Sports Medicine, Liteligence and Metis TechBio. Next, I'd like to invite our CFO, Arthur, to discuss our financial performance.

Arthur Chen, Chief Financial Officer

Thank you, Leaf 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 charge income was $3.4 billion, up 30% year over year and 27% quarter over quarter. Total trading volume grew on both year-over-year and quarter-over-quarter bases, while blended commission rate declined due to stronger trading activities in higher-priced U.S. stocks and options during the quarter. Interest income was $3.1 billion, up 37% year over year and 18% quarter over quarter. Both the year-over-year and the quarter-over-quarter increases were mainly driven by higher interest income from margin financing, bank deposits and securities lending. Other incomes was $718 million, up 61% year over year and 27% quarter over quarter. Both the year-over-year and the quarter-over-quarter increases were primarily driven by higher currency exchange income and IPO financing service income.

Our total cost was $985 million, up 47% compared to the second quarter of 2025. Brokerage commission and handling charge expenses were $248 million, up 54% year over year and 50% quarter over quarter. Both the year-over-year and the quarter-over-quarter increases were mainly due to higher trading volume. Interest expenses were $513 million, up 36% year over year and 24% quarter over quarter. Both the year-over-year and the quarter-over-quarter increases were mainly driven by higher interest expenses associated with our margin financing.

Business processing and servicing costs were $225 million, up 70% year over year and 32% quarter over quarter. Both the year-over-year and the quarter-over-quarter increases were primarily driven by higher cloud 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. Gross 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% quarter over quarter.

To break it down, R&D expenses were $501 million, up 13% year over year and 5% quarter over quarter. The year-over-year and the quarter-over-quarter increases were primarily driven by the increased investments in strategic initiatives like AI and Web3. Selling and marketing expenses were $657 million, up 53% year over year and 18% quarter over quarter; the year-over-year and quarter-over-quarter increase was mainly driven by the increase of new funded accounts.

G&A expenses were $593 million, up 40% year over year and 10% quarter over quarter; the year-over-year increase was primarily due to an increase in G&A personnel and professional fees. As a result, income from operations was $4.5 billion, up 34% year over year and 26% quarter over quarter. 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 would like to open the call to questions. Operator, please go ahead.

OPERATOR

Thank you. As a reminder, to ask a question, please press star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again. We ask that you please limit yourself to one question and one follow-up. One moment while we compile our Q&A roster. Our first question is going to come from the line of Emma Xu with BofA Securities. Your line is open. Please go ahead.

Emma Xu, Analyst at BofA Securities

So thank you for giving me the opportunity to ask the first question. Congratulations on the strong second quarter results. Since the release of the new regulations on May 22, 2020, have you seen material changes in managed client share across funded account, AUM and revenue contribution? Have you observed meaningful outflow of account or client assets? The second question is, against the regulatory backdrop, the group delivered resilient revenue and profit in the second quarter, so could management please share an update of the overseas market development and their contribution to the group?

Thank you.

Michelle Lee, Investor Relations

I will translate for Leaf. So Futu places very strong emphasis on compliance and we are committed to meeting all of the applicable regulatory requirements. 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.

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 adjustments under the new rules, while the Hong Kong outflows were more concentrated in the early period right after the announcement, which reflects some risk-off sentiment as the market digested the news. 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.

For Q2, our Hong Kong client retention rate stayed above 98%, and the retention across our overseas markets remained stable quarter over quarter. 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.

Robin Hsu, Senior Vice President

On the quality of new funded accounts, the average revenue per newly funded account improved sequentially across multiple markets in the overseas. In particular, the U.S., Singapore and Hong Kong all posted double-digit growth. We think this reflects both a structural upshift in funded account quality in growing markets like the U.S. and 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, funded accounts in overseas markets including Malaysia, Australia and New Zealand, and Canada grew double digits sequentially in the second quarter. The average client assets rose quarter over quarter across every overseas market where we have operations, showing that we are growing not just in the number of clients, but also their wallet share. Our recent securitization of the Thailand license also gives us a very important additional anchor for our ASEAN footprint down the road.

In terms of profitability, our overseas markets are at different stages of maturity. For instance, Singapore has already passed 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 in. I'm also very happy to share Malaysia has recently achieved break-even at the operating level as well. While our other overseas markets are still building out their client and asset base, with the rising average client assets and client retention, we think the groundwork for long-term profitability for the overseas markets will be very likely.

Thank you.

Emma Xu, Analyst at BofA Securities

Thank you. They are very helpful.

OPERATOR

Thank you, and one moment for our next question. Our next question will come from the line of Chiao Huang with Morgan Stanley. Your line is open. Please go ahead.

Chiao Huang, Analyst at Morgan Stanley

Thanks. Let me briefly translate. The first question is regarding Thailand. What's the strategic thinking about choosing this market, and when do we expect to officially launch the business here? And do we see any synergy among the ASEAN markets we are already in? Second question is about the commission rate, which is dropping a little bit quarter on quarter. So what kind of structural changes are we seeing behind this drop? Thank you.

Michelle Lee, Investor Relations

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. According to the Stock Exchange of Thailand, as of the first half of 2026, over 4.5 million investors had opened accounts online. 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.

Moomoo has already obtained the Type A securities license from the Thai 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. As for the timing of the official launch, we still need to go through the regulator's 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.

Arthur Chen, Chief Financial Officer

First, there was not any price manual change in the second quarter across all of our markets. So the take rate change quarter on quarter is mainly driven by our customers' behavior. Number one is the contribution from derivatives in the second quarter compared with the first quarter slightly down quarter over quarter, but on the absolute levels the contribution is still very healthy. Secondly, more clients are trading U.S. stocks in the second quarter, with a very high concentration on some high-value AI themes and tech leading names, which led our implied commission rate down a little bit.

Thank you.

OPERATOR

Thank you, and one moment for our next question. Our next question is going to come from the line of Charles Zhao with UBS. Your line is open. Please go ahead.

Charles Zhao, Analyst at UBS

So first of all, congrats to the management on the very excellent results and also things also strong beat to the market consensus. This is Charles Ro from UBS and I have two questions. First, can we maybe get some colors on the trajectory of your CAC in the second quarter and what the key drivers were? How should we think about the CAC in coming quarters? My second question is also could you maybe provide some breakdown on the newly added funded accounts and the period-end funded accounts by markets, in particular the contribution mix from your overseas markets?

Thank you.

Michelle Lee, Investor Relations

So in the second quarter the blended CAC rose sequentially to around 2,600 HK dollars, which is still within our full-year guidance range of 2,500 to 3,000 Hong Kong dollars. 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 maintained a certain level of brand investment to support the long-term growth and the higher client lifetime value across our markets.

Additionally, the CAC trended higher in July relative to Q2.

Robin Hsu, Senior Vice President

Malaysia has led all markets in terms of new funded account growth for three consecutive quarters, followed by Hong Kong. Together, these two markets make up more than 50% of net new funded accounts acquired in this quarter, with Singapore being the next largest source among the remaining markets. By the end of the second quarter, moomoo's share of total funded accounts has increased to nearly 60%, led by Singapore, Malaysia and the U.S. Thank you.

OPERATOR

Thank you and one moment for our next question. Our last question is going to come from the line of Yoyo Fan with CICC. Your line is open, please go ahead.

Yoyo Fan, Analyst at CICC

Thanks for taking my questions, and congratulations on the outstanding results. This is Yoyo Fan from CICC and I have two questions. Firstly, would you please share more color on our Q3 trend, such as the run rate of the new funded accounts, the trading flow and also the client AUM? Secondly, since moomoo has launched the prediction markets in the U.S., can you share more on this business trend and how to view the future monetization and growth opportunities of prediction markets?

Thank you.

Michelle Lee, Investor Relations

So on the Q3 quarter-to-date run-rate basis, our key metrics are trending modestly softer against a backdrop of market volatility. The net addition of funded accounts moderated compared with Q2. As for net asset inflow, in Hong Kong and our overseas markets, net asset inflows have returned to a normalized level. As for trading volume, total trading volume was down modestly sequentially. This is primarily reflecting a cooling of the retail sentiment in the Q3 quarter to date relative to the previous quarter.

Robin Hsu, Senior Vice President

We got an FCM license from the CFTC in May, and moomoo U.S. officially launched the prediction market trading service for our retail clients in the U.S. in early June. The number of the event contracts, as Michelle mentioned in the opening remarks, traded exceeds 200 million within one month of the launch, reflecting a very strong demand from the U.S. retail investors for prediction markets products. The event contracts have delivered great results in our observation in both acquiring new clients and driving engagement, with clear cross-sell synergy with our core brokerage business.

For instance, users who trade event contracts are more active in securities trading, showing that event contracts are not a substitute for securities trading but rather a driver of it. The purpose for our U.S. prediction market rollout serves two purposes: number one is definitely to capture the near-term opportunity as prediction markets took off locally, but more importantly it lets us build up the product design, operational and risk management expertise that will support our ability to bring prediction markets to other regions where we have operations down the road.

Thank you.

Yoyo Fan, Analyst at CICC

Thank you.

OPERATOR

Thank you. And I would now like to hand the conference back over to Michelle Lee for closing remarks.

Michelle Lee, Investor Relations

So that concludes our call today. And on behalf of the Futu Hldgs 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 relations. Thank you and goodbye.

OPERATOR

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.