UP Fintech Holding (NASDAQ:TIGR) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below.

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Summary

UP Fintech Holding reported a record total revenue of $182 million in Q2 2026, a 31.4% year-over-year increase, with operating profit reaching $56.8 million.

The company returned to profitability with GAAP net income of $39.4 million, recovering from a net loss in the previous quarter, partially due to a $59.7 million one-off penalty in Q1.

Significant growth in client assets was noted, particularly in Hong Kong, Australia/New Zealand, and the U.S., signaling strong market potential and resilience.

Strategic initiatives included launching fractional share trading in Singapore, a tax reporting tool in multiple regions, and expanding marketing efforts in Hong Kong.

B2B business momentum continued with underwriting 14 Hong Kong IPOs and participation in 4 U.S. IPOs, strengthening the company’s influence in the tech and innovation sectors.

The company experienced a decrease in cash equity take rate due to market-driven factors but expects a recovery in Q3.

Future outlook indicates continued growth in client assets and a stable acquisition cost range, with ongoing optimization of tax arrangements.

Full Transcript

OPERATOR

Ladies and gentlemen, thank you for standing by. Welcome to UP Fintech Holding Ltd. second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. There will be a presentation followed by a question-and-answer session. I must advise you that this conference is being recorded today, August 26, 2026. I would now like to hand the conference over to our first speaker today, Mr. Aaron Lee, the Head of Investor Relations.

Thank you. Please go ahead.

Aaron Lee, Head of Investor Relations

Thank you, operator. Hello everyone, and thank you for joining us for the call today. UP Fintech Holding's second quarter 2026 earnings release was distributed earlier today and is available on our 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. Zheng Zheng, our CFO; and Mr. Huang Lei, CEO of US Tiger Securities. Mr. Wu will give an overview of our business operations and discuss corporate highlights.

Mr. Zheng 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 24, 2026. We undertake no obligation to update any forward-looking statement 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.

Wu Tianhua, Chairman and CEO

Hello everyone. Thank you for joining the Tiger Brokers second quarter 2026 earnings conference. In the second quarter, we saw 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 US$182 million, an all-time high, representing a sequential increase of 17.7% and a year-over-year growth of 31.4%. Operating profit reached US$56.8 million, up 19.5% quarter over quarter and 12.6% year over year.

GAAP and non-GAAP net income attributable to UP Fintech reached US$39.4 million and US$42.8 million, respectively, returning to profitability from a net loss in the previous quarter. Excluding the impact of approximately US$59.7 million one-off penalty incurred in the first quarter, second quarter GAAP and non-GAAP net income attributable to UP Fintech both increased about 20% quarter over quarter. We added 32,600 new funded accounts this quarter, up 12.7% quarter over quarter, with the great majority coming from the Singapore and Hong Kong markets.

As of the end of the second quarter, our total funded accounts reached 1.32 million, a year-over-year increase of 10.3%. In terms of client assets, retail users in markets such as Singapore and Hong Kong continue to contribute solid net asset inflows exceeding US$1.5 billion this quarter. At the same time, fueled by mark-to-market gains, total client assets stood at US$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 quarter over quarter across all the markets we operate in this quarter, indicating strong growth resilience and tremendous market potential. In the Hong Kong market, we rolled out more offline promotional activities and expanded our brand exposure, driving local client assets 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.

Client 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 that, as a global brokerage with internationalization at the 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, giving us strong confidence in our growth prospects ahead.

Indeed, in the second quarter we continued to focus on localized functions and enhance the user experience while stepping up our brand exposure to deepen user awareness. In the Singapore market, we further strengthened our localized trading capability by launching fractional share trading for Singapore-listed stocks and REITs, which effectively lowers the trading entry barriers, making local investment more accessible and friendly to beginners. In addition, to simplify users’ compliance costs and reduce the complexity of tax declaration, we rolled out a dedicated tax reporting tool in Hong Kong, Singapore, and New Zealand.

The upgrade is to optimize the 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 built around SpaceX, amplifying our brand voice through an integrated mix of out-of-home advertising, social media, exclusive new-user rewards, and advertising placement at Hong Kong Airport. At the same time, we launched CBOE index options trading in Hong Kong and hosted a dedicated launch event for TigerX CBOE index options alongside a series of investor education initiatives, further enriching the range of trading products available to local investors. Our B2B business continued its strong momentum in the second quarter of 2026. On the investment banking side in Hong Kong, we underwrote 14 Hong Kong IPOs during the quarter, continuing to cover key sectors such as AI and hard tech, including major AI IPOs like MoneyCore, Deep Zero, and Vanguard AI, and participating in the offering of intelligent manufacturing and automotive semiconductor companies such as Semi Robot, Robot Phoenix, and Sear, further consolidating our market influence in listing services for technology and innovation companies. Meanwhile, we continue to expand our A+H listing business, participating in Hong Kong listings of leading companies such as Huaqing 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 four U.S. IPOs, including DSC Holdings, a digital platform from China’s automotive industry, and Maguire, a Japan automotive software company. Our ESOP business delivered steady growth during the quarter with 50 new clients. As of June 30, 2026, our total ESOP clients served reached 840. Now I'd like to invite our CFO to go over our financials.

Zheng Zheng, CFO

All right, thanks Tianhua and Aaron. Let me go through our financial performance for the second quarter. All numbers are in U.S. dollars. Commission income was US$78.3 million, increased 21% year over year and 17% quarter over quarter. Interest income was US$79.8 million, increased 36% year over year and 24% quarter over quarter. Together, total revenue reached US$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 US$15 billion in trading volume from Tiger Broker U.S. However, most of this uptick in trading volume didn't translate into commission revenues, as in the U.S. we offer zero commission to local users. Within commission revenue, about 71% comes from cash equities, 24% from options, and the rest from futures and other products.

Down to cost: interest expense was US$21.5 million, increased 19% quarter over quarter and 24% year over year in line with the increase in interest income. Execution and clearing expenses were US$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 US$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 US$2.8 million, a slight increase of 3% year over year. Communication and market data expense were US$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 US$18.4 million this quarter, increased 87% year over year, as we focused on acquiring high-quality users and accelerated the expansion of our wealth management business.

General and administrative expense were US$9.8 million, increased 45% year over year due to an increase in professional service fees. Total operating costs were US$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 bases quarter over quarter. GAAP net income was US$39.4 million and non-GAAP net income was US$42.8 million versus the 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 US$5 million worth of ADS under our buyback plan announced on June 2, 2020. We may continue to execute repurchases from time to time under the US$50 million share repurchase program in 2026. Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

OPERATOR

Thank you. We will now begin the question-and-answer session. If you would like to ask questions, please press star 1 and 1 and wait for your name to be announced. One moment for our first question. First question comes from the line of Yoyo Fan of CICC. Your line is open. Please go ahead.

Yoyo Fan, Analyst at CICC

Thanks for taking my questions. This is Yoyo Fan from CICC. I have two questions here. Firstly, we have delivered a strong revenue growth and solid operating profit expansion in Q2, but we noticed that there was also a loss of over 2 million under the other SNAT item. So what’s the reason behind and how it would be going forward? And we also see that income tax expense was a little bit high in Q2 with effective tax rate at nearly 28%. So what's the reason behind and what should we expect as the normalized effective tax rate going forward?

My second question: Can you share the run rates of our operating trend since Q3, including metrics like trading velocity, client assets, and new funded account users? These two questions. Thank you.

Zheng Zheng, CFO

First, on the roughly US$2 million loss in the other line item, this was mainly an FX loss driven by the continual appreciation of the RMB and the corresponding depreciation of the U.S. dollar during the second quarter. It's a non-cash item. On taxes, first of all, we believe normalized effective tax rate is in the 10% to 15% range. The second quarter tax expense was notably above that level for two reasons. Number one, there is a non-cash deferred tax adjustment tied to employee share-based compensation.

The share-based awards we grant to employees amortize quarterly on a gross basis as part of our compensation cost, covering both vested and unvested portions. For tax purposes, however, only the amortization of the vested awards is deductible. The expense from unvested awards is non-deductible and gives rise to a deferred tax asset. When our share price dropped after May 22, the value of the unvested employee stock pool declined. Thus, the previously recognized deferred tax asset came down accordingly.

As a result, we wrote down about US$1 million of deferred tax assets this quarter, which was recorded as income tax expense. This is a non-cash item, and if the share price recovers going forward, it would reverse and reduce tax expense in that period. The second reason is tied to the one-time penalty from the May 22 rectification. We are still assessing this and, for now, purely out of prudence, we have treated the entire penalty as a non-deductible expense in the second quarter, which added about US$6 million to income tax expense this quarter.

For now, this is a non-cash item. Looking ahead, we expect to keep optimizing our tax arrangement in light of the profitability across the group's various regions, and where consistent with the rules, we will aim to gradually reverse this against income tax expense.

Aaron Lee, Head of Investor Relations

Okay, I'll translate. Regarding the run rate of our third quarter: First, on client assets, Q3 quarter to date, both net asset inflow and mark-to-market gain have each contributed more than US$1 billion, so client assets have kept up their steady growth. Quarter to date, we've seen a high single-digit quarter-over-quarter increase in client assets compared to the end of the second quarter. 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 rally kept trading activity elevated. With some pullback in the market heading into Q3, activities have eased accordingly. And last, on new funded accounts, Hong Kong and Singapore remain our key contributors. We expect the number of newly funded users to come in flat or increase vs. Q2, as we stepped up our brand activity in both Hong Kong and Singapore in the second quarter and the results are looking good so far in Q3.

On top of that, it's worth noting that so far in Q3, the average net asset inflow per new funded user has risen further versus Q2 to around US$25,000, which is in line with our quality-first approach to client acquisition. Thank you. Operator, please move on to the next question.

OPERATOR

One moment for our next question. Our next question comes from the line of Cindy Wang of China Renaissance. Please ask your question.

Cindy Wang, Analyst at China Renaissance

Thanks for taking my call. I have two questions. First, I would like to follow up on 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 churn, and asset outflow. And currently, have you seen any significant changes in the percentage of customer assets and revenue from mainland retail clients? Second, 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.

So could you explain the reasons behind this and what the trend looks like? Thank you.

Zheng Zheng, CFO

Okay, let me take this from two angles: the policy and the client behavior. First, on policy, we moved quickly and are in full compliance with the regulators’ requirements, and on June 12, we rolled out the necessary monitoring mechanisms to restrict onshore activities by mainland 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 concentrated in the second quarter and has largely been reflected at this point.

Mainland retail users saw net asset outflow of about US$500 million in the second quarter, most of it between May 22 and June 12. This is a high single-digit percentage of these users’ total client assets before the regulatory update, so we think it's still manageable. And heading into the third quarter, the pace of outflow has been gradually easing. Mainland retail users now account for under 10% of our total client assets, down further from before, and their revenue contribution has come down from the 20% to 25% range in full year 2025 and Q1 to a 15% to 20% range in Q2.

That being said, the outflow impact from regulatory change has largely run its course. More importantly, our core growth engine is our global business. In the second quarter, client assets grew quarter over quarter across every market we operate in. Based on the numbers 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. As I mentioned earlier, cash equity take rate 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 Micron and SanDisk were traded at high share prices with take rates 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 some high-frequency users were trading through our U.S. subsidiaries in the second quarter, which lifted the trading volume, but since we charge zero commission for local U.S. clients, this also dragged down the cash equity take rate. The first two factors are market-driven, so the trend is hard to predict. That said, quarter to date in the third quarter, we have seen some pullback in share prices, which should be positive for the cash equity take rate.

We expect the cash equity take rate to recover somewhere in the third quarter. As for the blended take rate, it stayed relatively stable quarter over quarter mainly because the share of futures trading declined while cash equity and options trading went up. Since futures trading volume is calculated on a notional basis, a lower futures trading volume leads to a higher blended take rate. Thanks.

Aaron Lee, Head of Investor Relations

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

OPERATOR

Thank you. One moment for our next question. The next question comes from the line of an analyst at Bank of America Securities. Please go ahead.

UNKNOWN Analyst at Bank of America Securities

So the first question is, could you break down the geographic mix of the new funded accounts in the second quarter? Second, we noticed a notable sequential rise in the marketing expense including the CAC. Could you elaborate on the key drivers behind this increase? Specifically, what is the split between user acquisition versus re-engagement spend and in which markets have you ramped up investment? Please also share your outlook for the approximate range of CAC in the second half of this year.

Thank you.

Aaron Lee, Head of Investor Relations

The new funded accounts added in the second quarter: Singapore and Hong Kong together accounted for over 70%, split roughly even between these two. Australia and New Zealand contributed around 25%, with the rest coming from the U.S. market. So let me break down the increase in our marketing spending and average CAC in the second quarter in three parts. First of all, some marketing expenses were FCN rebates not really tied to user acquisition. Excluding the FCN rebates, marketing spending was up about US$2.5 million quarter over quarter, and average CAC rose from around US$420 in Q1 to about US$450 in Q2. Under the split, client acquisition including branding accounted for roughly 60% to 70% of our total marketing expense.

The incremental spending went 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 rose from under US$20,000 in the first quarter to over US$25,000 in the second quarter. In Hong Kong, our client assets have now grown double digits for five straight quarters, up nearly 30% quarter over quarter and roughly triple year over year. In Q2, we launched a SpaceX-themed campaign during its IPO to amplify our brand awareness through different videos and channels.

In Singapore, we kept reinforcing our brand and marketing leadership through a mix of online and offline campaigns, from taking part in Gastrobiz 2026, the city's largest outdoor food and music festival, to rolling out our "Where Is Your Next Step?" campaign with local running and applicable communities to World Cup TV advertisements. Those campaigns are helping us stay close to our user base, especially the younger ones, and build a warmer, more trusted brand connection that goes beyond traditional financial marketing.

Looking beyond the second quarter, we will keep 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 the US$450 to US$550 range. Thanks.

OPERATOR

Thank you for the questions. At this time, there are no further questions on the line. I'd like to hand the call back to Mr. Aaron Lee for closing.

Aaron Lee, Head of Investor Relations

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 this 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. Bye-bye.

OPERATOR

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

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.