Futu Holdings Limited (“Futu” or the “Company”) (Nasdaq:
FUTU), a leading tech-driven online brokerage and wealth
management platform, today announced its unaudited financial
results for the first quarter ended March 31, 2022.
First Quarter 2022 Operational
Highlights
- Total number of paying
clients1 increased 67.9% year-over-year
to 1,326,163 as of March 31, 2022.
- Total number of registered
clients2 increased 48.7% year-over-year
to 2,910,995 as of March 31, 2022.
- Total number of
users3 increased 27.1% year-over-year to
18.1 million as of March 31, 2022.
- Total client
assets declined 16.5% year-over-year to HK$386.0 billion
as of March 31, 2022.
- Daily average client
assets were HK$388.2 billion in the first quarter of 2022,
an increase of 0.9% from the same period in 2021.
- Total trading volume in the
first quarter of 2022 declined 41.0% year-over-year to
HK$1.3 trillion, in which trading volume for US stocks was HK$848.3
billion, trading volume for Hong Kong stocks was HK$447.8 billion,
and trading volume for stocks under the Stock Connect was HK$27.6
billion.
- Daily average revenue
trades (DARTs)4 in the first quarter of
2022 declined 34.0% year-over-year to 595,992.
- Margin financing and
securities lending balance declined 6.8% year-over-year to
HK$25.5 billion as of March 31, 2022.
First Quarter 2022 Financial Highlights
- Total revenues decreased 25.6% year-over-year
to HK$1,641.0 million (US$209.5 million).
- Total gross profit decreased 19.8%
year-over-year to HK$1,413.0 million (US$180.4 million).
- Net income decreased 50.8% year-over-year to
HK$571.8 million (US$73.0 million).
- Non-GAAP adjusted net income5 decreased 47.2%
year-over-year to HK$622.2 million (US$79.4 million).
Mr. Leaf Hua Li, Futu’s Chairman and Chief
Executive Officer, said, “As of quarter end, total paying clients
surpassed 1.3 million, representing a 67.9% growth year-over-year.
During our fourth quarter 2021 earnings call, we guided for 200
thousand net new paying clients in 2022. In the first quarter, we
added approximately 82 thousand paying clients and we are confident
to deliver on our prior guidance. Over 80% of the new paying
clients in the past quarter were from Hong Kong and other overseas
markets, and organic growth contributed to over 50% of new paying
clients for the ninth consecutive quarter. Client acquisition in
Hong Kong accelerated on the back of increasing market
consolidation as a number of small-and-medium-sized brokers
suffered from muted client engagement. Quarterly paying client
retention rate bounced back to over 98% as the negative impact from
the headline news on client sentiment is largely behind us.”
“Total client assets declined 16.5%
year-over-year and 5.3% quarter-over-quarter to HK$386.0 billion
due to sharp mark-to-market losses of our clients’ holdings.
However, we are encouraged to see the highest net asset inflow
since the first quarter of 2021. Total client assets in Singapore
continued to climb 15.1% sequentially despite market headwinds,
thanks to inflow of higher-quality clients and robust net asset
inflow across client cohorts. Meanwhile, market correction weighed
on margin financing balance, though partially offset by increased
securities lending activities.”
“Total trading volume was HK$1.3 trillion, up
8.2% quarter-over-quarter. U.S. and Hong Kong stock trading volumes
were HK$848.3 billion and HK$447.8 billion, up 9.2% and 11.1%
sequentially. We saw higher trading turnover in China new economy
companies and leveraged and inverse ETFs as clients seized trading
opportunities amid heightened market volatility. In the first
quarter, we continued to enrich our trading product offerings
across markets. We launched VIX futures in Hong Kong, two new types
of algo order for accredited investors in Singapore, as well as
U.S. and Australian stocks and ETPs in Australia.”
“Total client assets in wealth management were
HK$20.9 billion, representing a 59.1% growth year-over-year and
11.1% growth quarter-over-quarter. Client assets in bonds increased
by 55.5% sequentially. In the first quarter, BNY Mellon Investment
Management and E Fund (HK) offered model portfolio services on our
platform to provide diversified asset allocation strategies. In
Singapore, we continued to expand partnerships and fund offerings,
including money market funds and dividend funds. As of quarter end,
over 13% of our paying clients held wealth management
positions.”
“Futu I&E had 258 IPO and IR clients as well
as 459 ESOP clients as of quarter end, up 69.7% and 129.5%
year-over-year. During the quarter, we expanded our enterprise
service footprint in Singapore by participating in several
high-profile ETF IOPs.”
First Quarter 2022 Financial Results
Revenues
Total revenues were HK$1,641.0 million (US$209.5 million), a
decrease of 25.6% from HK$2,204.6 million in the first quarter of
2021.
Brokerage commission and handling charge income was HK$967.5
million (US$123.5 million), a decrease of 27.0% from the first
quarter of 2021. Trading volume declined 41.0% from the high base
in the year-ago quarter when market peaked, but was partially
offset by an increase in the blended commission rate from 5.9bps to
7.3bps.
Interest income was HK$575.2 million (US$73.4 million), a
decrease of 12.7% from the first quarter of 2021. The decrease was
mainly due to lower interest income from securities borrowing and
lending business as well as lower IPO financing interest
income.
Other income was HK$98.3 million (US$12.6
million), a decrease of 55.5% from the first quarter of 2021. The
decrease was primarily due to lower IPO financing service charge
income, currency exchange service income and underwriting fee
income.
Costs
Total costs were HK$228.0 million (US$29.1
million), a decrease of 48.6% from HK$443.2 million in the first
quarter of 2021.
Brokerage commission and handling charge
expenses were HK$96.0 million (US$12.3 million), a decrease of
55.1% from the first quarter of 2021. Brokerage commission expenses
declined by a wider margin than brokerage commission income
primarily due to an upgraded service package with our U.S. clearing
house.
Interest expenses were HK$39.2 million (US$5.0
million), a decrease of 76.6% from the first quarter of 2021. The
decrease was due to lower margin and IPO financing interest
expenses and lower interest expenses associated with our securities
borrowing and lending business.
Processing and servicing costs were HK$92.7
million (US$11.8 million), an increase of 49.8% from the first
quarter of 2021. The increase was primarily due to higher cloud
service fees to support overseas market expansion and process a
higher number of concurrent trades.
Gross Profit
Total gross profit was HK$1,413.0 million
(US$180.4 million), a decrease of 19.8% from HK$1,761.4 million in
the first quarter of 2021. Gross margin was 86.1%, as compared to
79.9% in the first quarter of 2021.
Operating Expenses
Total operating expenses were HK$748.3 million
(US$95.5 million), an increase of 52.8% from HK$489.8 million in
the first quarter of 2021.
Research and development expenses were HK$282.4
million (US$36.1 million), an increase of 105.5% from the first
quarter of 2021. The rise was primarily due to an increase in
research and development headcount to build U.S. clearing
capabilities and support new product offerings in existing and new
markets.
Selling and marketing expenses were HK$288.1
million (US$36.8 million), an increase of 4.9% from HK$274.6
million in the first quarter of 2021. Higher expenses from an
increase in selling and marketing personnel were largely offset by
lower marketing spending amid dampened market sentiments.
General and administrative expenses were
HK$177.7 million (US$22.7 million), an increase of 128.4% from the
first quarter of 2021. The increase was primarily due to an
increase in general and administrative personnel.
Net Income
Net income decreased by 50.8% to HK$571.8
million (US$73.0 million) from HK$1,162.3 million in the first
quarter of 2021. The decrease was mainly due to lower topline and
operating deleverage. Net income margin for the first quarter of
2022 was 34.8%, as compared to 52.7% in the year-ago quarter.
Non-GAAP adjusted net income decreased by 47.2%
to HK$622.2 million (US$79.4 million) from the first quarter of
2021. Non-GAAP adjusted net income is defined as net income
excluding share-based compensation expenses. For further
information, see "Use of Non-GAAP Financial Measures" at the bottom
of this press release.
Net Income per ADS
Basic net income per American Depositary Share
(“ADS”) was HK$3.88 (US$0.50), compared with HK$8.17 in the first
quarter of 2021. Diluted net income per ADS was HK$3.85 (US$0.49),
compared with HK$8.02 in the first quarter of 2021. Each ADS
represents eight Class A ordinary shares.
Conference Call and Webcast
Futu's management will hold an earnings
conference call on Monday, June 6, 2022, at 7:30 AM U.S. Eastern
Time (7:30 PM on the same day, Beijing/Hong Kong Time).
Please note that all participants will need to
pre-register for the conference call, using the
link http://apac.directeventreg.com/registration/event/8178914.
It will automatically lead to the registration page of "Futu
Holdings Ltd First Quarter 2022 Earnings Conference Call", where
details for RSVP are needed. When requested to submit a participant
conference ID, please enter the number "8178914".
Upon registering, all participants will be
provided in confirmation emails with participant dial-in numbers,
Direct Event passcodes and unique registrant IDs to access the
conference call. Please dial in 10 minutes prior to the call start
time using the conference access information.
A telephone replay will be available after the
conclusion of the conference call through 9:59 AM U.S. Eastern
Time, June 14, 2022. The dial-in details are:
International: |
+61-2-8199-0299 |
US: |
+1-646-254-3697 |
Hong Kong: |
+852-3051-2780 |
Passcode: |
8178914 |
Additionally, a live and archived webcast of
this conference call will be available at
https://ir.futuholdings.com/.
About Futu Holdings Limited
Futu Holdings Limited (Nasdaq: FUTU) is an
advanced technology company transforming the investing experience
by offering a fully digitalized brokerage and wealth management
platform. The Company primarily serves the emerging affluent
population, pursuing a massive opportunity to facilitate a
once-in-a-generation shift in the wealth management industry and
build a digital gateway into broader financial services. The
Company provides investing services through its proprietary digital
platforms, Futubull and moomoo, each a highly integrated
application accessible through any mobile device, tablet or
desktop. The Company's primary fee-generating services include
trade execution – which allows its clients to trade securities,
such as stocks, ETFs, warrants, options and futures across
different markets – as well as margin financing and securities
lending. Futu has also embedded social media tools to create a
network centered around its users and provide connectivity to
users, investors, companies, analysts, media and key opinion
leaders.
Use of Non-GAAP Financial
Measures
In evaluating the business, the Company
considers and uses non-GAAP adjusted net income, a non-GAAP
measure, as a supplemental measure to review and assess its
operating performance. The presentation of the non-GAAP financial
measure is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with U.S. GAAP. The Company defines non-GAAP adjusted
net income as net income excluding share-based compensation
expenses. The Company presents the non-GAAP financial measure
because it is used by the management to evaluate the operating
performance and formulate business plans. Non-GAAP adjusted net
income enables the management to assess the Company's operating
results without considering the impact of share-based compensation
expenses, which are non-cash charges. The Company also believes
that the use of the non-GAAP measure facilitates investors'
assessment of its operating performance.
Non-GAAP adjusted net income is not defined
under U.S. GAAP and is not presented in accordance with U.S. GAAP.
This non-GAAP financial measure has limitations as analytical
tools. One of the key limitations of using non-GAAP adjusted net
income is that it does not reflect all items of expense that affect
the Company's operations. Share-based compensation expenses have
been and may continue to be incurred in the business and is not
reflected in the presentation of non-GAAP adjusted net income.
Further, the non-GAAP measure may differ from the non-GAAP
information used by other companies, including peer companies, and
therefore their comparability may be limited.
The Company compensates for these limitations by
reconciling the non-GAAP financial measure to the nearest U.S. GAAP
performance measure, all of which should be considered when
evaluating the Company's performance.
For more information on this non-GAAP financial
measure, please see the table captioned "Unaudited Reconciliations
of Non-GAAP and GAAP Results" set forth at the end of this press
release.
Exchange Rate Information
This announcement contains translations of
certain HK dollars (“HK$”) amounts into U.S. dollars ("US$") at
specified rates solely for the convenience of the reader. Unless
otherwise stated, all translations from HK$ to US$ were made at the
rate of HK$7.8325 to US$1.00, the noon buying rate in effect on
March 31, 2022 in the H.10 statistical release of the Federal
Reserve Board. The Company makes no representation that the HK$ or
US$ amounts referred could be converted into US$ or HK$, as the
case may be, at any particular rate or at all.
Safe Harbor Statement
This announcement contains forward-looking
statements. These statements are made under the "safe harbor"
provisions of the United States Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar
statements. Among other things, the quotations from the management
team of the Company, contain forward-looking statements. Futu may
also make written or oral forward-looking statements in its
periodic reports to the SEC, in its annual report to shareholders,
in press releases and other written materials and in oral
statements made by its officers, directors or employees to third
parties. Statements that are not historical facts, including
statements about Futu's beliefs and expectations, are
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: Futu's goal and strategies; Futu's expansion plans;
Futu's future business development, financial condition and results
of operations; Futu's expectations regarding demand for, and market
acceptance of, its credit products; Futu's expectations regarding
keeping and strengthening its relationships with borrowers,
institutional funding partners, merchandise suppliers and other
parties it collaborate with; general economic and business
conditions; and assumptions underlying or related to any of the
foregoing. Further information regarding these and other risks is
included in Futu's filings with the SEC. All information provided
in this press release and in the attachments is as of the date of
this press release, and Futu does not undertake any obligation to
update any forward-looking statement, except as required under
applicable law.
For investor inquiries, please
contact:
Investor RelationsFutu Holdings
Limitedir@futuholdings.com
FUTU HOLDINGS LIMITEDUNAUDITED CONDENSED
CONSOLIDATED BALANCE
SHEETS(In thousands, except for share and per share data) |
|
|
As of December 31 |
|
As of March 31 |
|
2021 |
|
2022 |
|
2022 |
|
HK$ |
|
HK$ |
|
US$ |
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
4,555,096 |
|
5,923,068 |
|
756,217 |
Cash held on behalf of
clients |
54,734,351 |
|
59,390,361 |
|
7,582,555 |
Restricted cash |
2,065 |
|
2,146 |
|
274 |
Short-term investments |
1,169,741 |
|
1,566,182 |
|
199,959 |
Securities purchased under
agreements to resell |
106,203 |
|
103,214 |
|
13,178 |
Loans and advances (net of
allowance of HK$12,258 thousand and HK$20,579 thousand as of
December 31, 2021 and March 31, 2022, respectively) |
29,587,306 |
|
24,704,507 |
|
3,154,102 |
Receivables: |
|
|
|
|
|
Clients |
469,577 |
|
1,069,862 |
|
136,593 |
Brokers |
7,893,927 |
|
9,023,071 |
|
1,152,004 |
Clearing organization |
1,961,121 |
|
1,826,126 |
|
233,147 |
Fund management companies and fund distributors |
72,340 |
|
91,020 |
|
11,621 |
Interest |
50,829 |
|
58,324 |
|
7,446 |
Prepaid assets |
18,306 |
|
20,450 |
|
2,611 |
Other current assets |
81,594 |
|
87,907 |
|
11,223 |
Total current
assets |
100,702,456 |
|
103,866,238 |
|
13,260,930 |
|
|
|
|
|
|
Operating lease right-of-use
assets |
243,859 |
|
226,301 |
|
28,893 |
Long-term investments |
23,394 |
|
23,483 |
|
2,998 |
Other non-current assets |
568,805 |
|
1,074,979 |
|
137,246 |
Total non-current
assets |
836,058 |
|
1,324,763 |
|
169,137 |
Total
assets |
101,538,514 |
|
105,191,001 |
|
13,430,067 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Amounts due to related parties |
87,459 |
|
|
99,690 |
|
|
12,728 |
|
Payables: |
|
|
|
|
|
Clients |
59,127,439 |
|
|
65,589,256 |
|
|
8,373,987 |
|
Brokers |
7,599,233 |
|
|
12,115,427 |
|
|
1,546,815 |
|
Clearing organization |
393,782 |
|
|
603,739 |
|
|
77,081 |
|
Fund management companies and fund distributors |
56,690 |
|
|
47,835 |
|
|
6,107 |
|
Interest |
15,359 |
|
|
11,859 |
|
|
1,514 |
|
Borrowings |
6,357,405 |
|
|
3,732,990 |
|
|
476,603 |
|
Securities sold under
agreements to repurchase |
4,467,861 |
|
|
1,056,713 |
|
|
134,914 |
|
Lease liabilities -
current |
96,860 |
|
|
92,026 |
|
|
11,749 |
|
Accrued expenses and other
current liabilities |
2,176,213 |
|
|
1,329,363 |
|
|
169,723 |
|
Total current
liabilities |
80,378,301 |
|
|
84,678,898 |
|
|
10,811,221 |
|
|
|
|
|
|
|
Lease liabilities -
non-current |
163,719 |
|
|
149,997 |
|
|
19,151 |
|
Other non-current
liabilities |
10,935 |
|
|
9,580 |
|
|
1,223 |
|
Total non-current
liabilities |
174,654 |
|
|
159,577 |
|
|
20,374 |
|
Total
liabilities |
80,552,955 |
|
|
84,838,475 |
|
|
10,831,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY |
|
|
|
|
|
Class A ordinary shares |
58 |
|
|
58 |
|
|
7 |
|
Class B ordinary shares |
38 |
|
|
38 |
|
|
5 |
|
Additional paid-in
capital |
17,935,752 |
|
|
17,991,410 |
|
|
2,297,020 |
|
Treasury Stock |
(1,178,755 |
) |
|
(2,483,575 |
) |
|
(317,086 |
) |
Accumulated other
comprehensive income |
75,994 |
|
|
120,283 |
|
|
15,357 |
|
Retained earnings |
4,152,472 |
|
|
4,724,312 |
|
|
603,169 |
|
Total shareholders'
equity |
20,985,559 |
|
|
20,352,526 |
|
|
2,598,472 |
|
Total liabilities and
shareholders' equity |
101,538,514 |
|
|
105,191,001 |
|
|
13,430,067 |
|
|
|
|
|
|
|
FUTU HOLDINGS LIMITEDUNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In
thousands, except for share and per share data) |
|
|
For the Three Months Ended |
|
March 31,2021 |
|
March 31,2022 |
|
March 31,2022 |
|
HK$ |
|
HK$ |
|
US$ |
Revenues |
|
|
|
|
|
Brokerage commission and handling charge income |
1,324,941 |
|
|
967,466 |
|
|
123,519 |
|
Interest income |
658,605 |
|
|
575,222 |
|
|
73,440 |
|
Other income |
221,057 |
|
|
98,316 |
|
|
12,552 |
|
Total
revenues |
2,204,603 |
|
|
1,641,004 |
|
|
209,511 |
|
Costs |
|
|
|
|
|
Brokerage commission and
handling charge expenses |
(213,837 |
) |
|
(95,989 |
) |
|
(12,255 |
) |
Interest expenses |
(167,467 |
) |
|
(39,225 |
) |
|
(5,008 |
) |
Processing and servicing
costs |
(61,858 |
) |
|
(92,741 |
) |
|
(11,841 |
) |
Total
costs |
(443,162 |
) |
|
(227,955 |
) |
|
(29,104 |
) |
Total gross
profit |
1,761,441 |
|
|
1,413,049 |
|
|
180,407 |
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
Research and development
expenses |
(137,382 |
) |
|
(282,449 |
) |
|
(36,061 |
) |
Selling and marketing
expenses |
(274,610 |
) |
|
(288,145 |
) |
|
(36,788 |
) |
General and administrative
expenses |
(77,830 |
) |
|
(177,742 |
) |
|
(22,693 |
) |
Total operating
expenses |
(489,822 |
) |
|
(748,336 |
) |
|
(95,542 |
) |
|
|
|
|
|
|
Others, net |
6,281 |
|
|
(20,325 |
) |
|
(2,595 |
) |
|
|
|
|
|
|
Income before income
tax expense |
1,277,900 |
|
|
644,388 |
|
|
82,270 |
|
|
|
|
|
|
|
Income tax expense |
(115,601 |
) |
|
(72,548 |
) |
|
(9,262 |
) |
|
|
|
|
|
|
Net
income |
1,162,299 |
|
|
571,840 |
|
|
73,008 |
|
|
|
|
|
|
|
Net income
attributable to ordinary shareholders of the Company |
1,162,299 |
|
|
571,840 |
|
|
73,008 |
|
|
|
|
|
|
|
Net income per share
attributable to ordinary shareholders of the Company |
|
|
|
|
|
Basic |
1.02 |
|
|
0.49 |
|
0.06 |
Diluted |
1.00 |
|
|
0.48 |
|
0.06 |
|
|
|
|
|
|
Net income per
ADS |
|
|
|
|
|
Basic |
8.17 |
|
|
3.88 |
|
0.50 |
Diluted |
8.02 |
|
|
3.85 |
|
0.49 |
|
|
|
|
|
|
Weighted average
number of ordinary shares used in computing net income per
share |
|
|
|
|
|
Basic |
1,138,653,343 |
|
|
1,178,742,697 |
|
1,178,742,697 |
Diluted |
1,159,844,967 |
|
|
1,189,523,422 |
|
1,189,523,422 |
|
|
|
|
|
|
Net
income |
1,162,299 |
|
|
571,840 |
|
73,008 |
Other comprehensive
income, net of Tax |
|
|
|
|
|
Foreign currency translation
adjustment |
(6,492 |
) |
|
44,289 |
|
5,655 |
Total comprehensive
income |
1,155,807 |
|
|
616,129 |
|
78,663 |
|
|
|
|
|
|
FUTU HOLDINGS LIMITEDUNAUDITED
RECONCILIATIONS OF NON-GAAP AND GAAP RESULTS(In
thousands) |
|
|
For the Three Months Ended |
|
March 31,2021 |
|
March 31,2022 |
|
March 31,2022 |
|
HK$ |
|
HK$ |
|
US$ |
|
|
|
|
|
|
Net income |
1,162,299 |
|
571,840 |
|
73,008 |
Add: Share-based compensation
expenses |
16,873 |
|
50,388 |
|
6,433 |
Adjusted net income |
1,179,172 |
|
622,228 |
|
79,441 |
|
|
|
|
|
|
Non-GAAP to GAAP reconciling items have no income tax
effect.
_____________________________
1 The number of paying clients refers to the
number of clients with assets in their trading accounts with Futu.2
The number of registered clients refers to the number of users who
open one or more trading accounts with Futu.3 The number of users
refers to the number of user accounts registered with Futu.4 The
number of Daily Average Revenue Trades (DARTs) refers to the number
of average trades per day that generate commissions or fees.5
Non-GAAP adjusted net income is defined as net income excluding
share-based compensation expenses.
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