TIGR

Ladies and gentlemen, thank you for standing by. Welcome to UP Fintech Holding Limited 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 Li, 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 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. John Zeng, our CFO, and Mr. Huang 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 that follows the 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 an English translation. Mr. Wu, please go ahead with your remarks.

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Hello, everyone. Thank you for joining the Tiger Brokers second quarter 2026 earnings conference call.

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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 $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 $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 $39.4 million and $42.8 million respectively, returning to profitability from net loss in the previous quarter. Excluding the impact of approximately $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.

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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 $1.5 billion this quarter. At the same time, fueled by mark-to-market gains, total client assets stood at $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 promotion 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 and 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.

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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 lowered 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 option trading in Hong Kong and hosted a dedicated launch event for TigerX Cboe index option, alongside a series of investor education initiatives, further enriching the range of trading products available to local investors.

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Our [B2B] business continued to 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, continue to cover key sectors such as AI and hard tech, including major AI IPOs like Manycore, DeepZero, and WengeAI, and participating in the offering of intelligent manufacturing and automotive semiconductor companies such as Finemems, Robotphoenix, and SEER. 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 list of leading companies such as Huaqin 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 automotive industry, and Micware, a Japan automotive software company. Our ESOP business delivered steady growth during the quarter with 50 new clients added. As of June 30, 2026, our total ESOP clients served reached 840.

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

All right. [Non-English content], Tianhua and Aaron. 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 basis points this quarter, down from 5.9 basis points a quarter ago. The main driver was a quarter-over-quarter increase of roughly $15 billion in trading volume from Tiger Brokers 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 $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 Group's reorg 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 accelerated the expansion of our wealth management business. General and administrative expense 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 the 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 $5 million worth of ADS under our buyback plan announced on June 2nd, 2026. We may continue to execute repurchase from time to time under the $50 million share repurchase program announced on June 2nd, 2026. Now I have concluded our presentation. Operator, please open the line for Q&A. Thanks.

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

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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 others net, this last item. So what's the reason behind and how it would be going forward? We also see that income tax expense was a little bit high in Q2, with effective tax rate at nearly 28%. So what is 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 account users? These are two questions, thank you.

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First, on the roughly $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. In contrast, first of all, we believe a normalized effective tax rate is in the 10%-15% range. The second quarter tax expense was notably above that level for two reasons. Number one is there is a non-cash deferred tax adjustment tied to employee share-based compensation.

The share-based award we grant to employees amortized 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 award is deductible. The expense from unvested award is non-deductible and gives rise to a deferred tax asset. When our share price dropped after May 22nd, 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 $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, it is tied to the one-time penalty from May 22nd rectifications. 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 $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. We are consistent with the rules, we will aim to gradually reverse this against income tax expense in the second half. Okay, Tianhua.

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Okay. I will 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 $1 billion. So client asset has kept up its steady growth. Quarter-to-date, we have seen a high single-digit quarter-over-quarter increase on current 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. 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 versus Q2.

As we stepped up our brand activity in both Hong Kong and Singapore in the second quarter, the results have been looking good so far in Q3. On top of that, it is worth noting that so far in Q3, the average net asset inflow per new funded user has risen further versus Q2 to around $25,000, which is in line with our quality-first approach to client acquisition. Thank you. Operator, please move on to the next question.

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

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Thanks for taking my call. I have two questions. First, I would like to follow up the regulatory update after May 22nd. First, are there any other new policy changes? Second, is whether mainland clients have stabilized, such as trading activity, customer churn, and asset outflow. Currently, have you seen any significant changes in the percentage of customer assets and revenue from mainland retail clients? Second, the second question is, 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? Thank you.

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Let me take this from two angles: the policy and the client behavior. First on policy, we move quickly and are in full compliance with the regulators' requirements. On June 12th, we rolled out the necessary monitoring mechanism to restrict onshore activities by mainland users, such as opening positions and making deposits. Since then, we have not 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 inflow of about $500 million in the second quarter, most of them between May 22nd and June 12th.

This is a high single-digit percentage of these users' total current assets before the regulatory update. We think it is still manageable, and heading into the second quarter, the pace of outflow has been gradually easing. With those net asset inflows, 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%-25% range in full year 2025 and Q1 to a 15%-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 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.

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As I mentioned earlier, cash equity take rate went down from 5.9 basis points in the first quarter to 3.6 basis points 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, SanDisk were trading at high share price with take rate of well below 1 basis point, which drags 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 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 drags down 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 pull back in share price, which should be positive for the cash equity take rate. We expect the cash equity take rate to recover somewhat in the third quarter. As for the blended take rate, it stayed relatively stable quarter-over-quarter, mainly because the share of future trading declined while cash equity and option trading went up. Since future trading volume is calculated on notional basis, a lower future trading volume leads to the blended take rate. Thanks.

Okay, Operator, let's proceed to next question.

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

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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.

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Of the new funded accounts were 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.

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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 expense were FCN rebates, not really tied to user acquisition. Excluding the FCN rebates, marketing spending was up about $2.5 million quarter-over-quarter, and average CAC rose from around $420 in Q1 to about $450 in Q2. Under split, client acquisition, including branding, accounted for roughly 60%-70% of our total marketing expense.

The incremental spending went mainly into brand building in Hong Kong and Singapore, and it's clearly bringing in high quality users. Average net asset inflow per new funded account from under $20,000 in the first quarter to over $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 venues and channels. In Singapore, we kept reinforcing our brand and marketing leadership through a mix of online and offline campaigns. From taking part in GastroBeats 2026, the city's largest outdoor food and musical festival, to rolling out our Where's Your Next Step campaign with local running and pickleball communities to work our TV advertisement. Those campaigns helping us stay close to our user base, especially the younger ones, and build a warmer, more trusted brand connection that go beyond traditional financing 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 $450-$550 range. Thanks.

Thank you. That helps a lot.

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

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 to 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.

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

Ladies and gentlement. Thank you for standing by, welcome to the UP Fintech Holding Limited first quarter 2026 earnings conference call. At this time, all participants are in a 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, June 2nd, 2026. I would now like to hand the conference over to your first speaker today, Mr. Aaron Li, 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's first quarter 2026 earnings release was distributed earlier today and is available on our IR website at ir.tigerup.com, as well as global newswire services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and CEO, Mr. John Zeng, our CFO, Mr. Huang 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 the remarks. Now let me cover the safe harbor. The statements we are about to make contain forward-looking statements within the meaning of the 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 24th, 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 Chairman and CEO, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by an English translation. Mr. Wu, please go ahead with your remarks.

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Hello, everyone. Thank you for joining the Tiger Brokers first quarter 2026 earnings conference call.

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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 $155 million, representing a 26.3% increase year-over-year. Operating profit reached $47.6 million, up 17.5% from the same period last year.

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We onboarded 28,900 new funded accounts this quarter. Singapore and Hong Kong markets 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 $2.9 billion in the first quarter. In particular, net asset inflow from retail users under consolidated accounts exceeded $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 client quality seeing further improvement.

Due to the market turbulence in the first quarter, our client assets experienced mark-to-market losses of $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 $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 digits and double-digit quarter-over-quarter growth respectively.

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We keep rolling out features updates to enhance users' overall investment experience. This quarter, we delivered a major upgrade to TigerAI with a brand new multi-agent architecture. We split functions including market quote search, market analysis, and risk control into standalone 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 interaction with our futures tools. Besides, TigerAI has upgraded from our original dual model framework to a three model collaborative system by integrating with Claude models, 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.

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Our B2B business continued to perform well. In the first quarter, we enrolled 10 Hong Kong IPO, covering leading AI companies including MiniMax and Zhipu AI. We also successfully completed two 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.

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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 $50 million to be implemented over a 12-month period from June 1st, 2026 to June 1st, 2027.

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

All right. Thanks, Tianhua and Aaron. 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 it 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 five basis points this quarter, down from 6.4 basis points 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 zero 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. It narrows 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 our R&D. Occupancy, depreciation, and amortization expense were $2.7 million, increased 25% year-over-year due to the increase in office space and the 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 risk 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 22nd, we received a regulatory penalty notice totaling approximately RMB 411 million.

We have fully accounted for this among in our first quarter results. This is a one-time non-recurring charge and will not have material impact on our core business and overall financial health. As on the result, net loss and the 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 presentations. Operator, please open the line for Q&A. Thanks.

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to our first question. Our first question comes from the line of Peter Zhang from JPMorgan. Please go ahead. Your line is open.

[Non-English content] Thanks for giving me the opportunity to ask questions. This is Peter Zhang from JPMorgan. I have two questions. First is, how do you interpret the new regulatory rules released on May 22nd, 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, amendment 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? Thank you.

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I'll translate. On May 22nd, 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 $60 million.

Given our current profitability and cash reserves, this fine will not materially affect our core operation or 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 two-year rectification period is not about closing all existing PRC client accounts, but to restrict trading activities when they are onshore in Mainland 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 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%-25% of our total net revenue. Since the new rules were announced, we saw some uptake 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 inflow as usual throughout the period.

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For the 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. Operator, move on to the next question, please.

Thank you. Our next question comes from the line of Cindy Wang from China Renaissance. Please go ahead. Your line is open.

[Non-English content] Thanks for taking my call. I have two questions here. First one is we've noticed that the first quarter taking risk sequentially especially for the stagnation rate. Can you let us know first the reason behind it? Second, this quarter the company was affected by the resulting in a quartely loss. The income tax expense, increasing sequentially for this and how should this reach the effective tax rate going forward. Thank you.

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There are two 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 zero commission for Hong Kong users trading Hong Kong stock, and the take rate for Hong Kong stock is about 2 basis points lower than that of the U.S. stocks. A higher proportion of Hong Kong's trading volume would drag down the overall take rate. Another reason is Tiger U.S. onboarded some active user this quarter and saw an uptick in total trading volume. In the U.S., we follow market practice and offer zero commissions, which further compressed the stock take rate. Beyond those two factors, revenue from futures trading rose around 6% in Q4 to roughly 8% in Q1. Since future volume is calculated based on notional value, the enlarged total trading volume caused a decrease in blended commission rate.

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Based on tax rules, deductible. Out tax is given based on pre-tax profit before the penalty. The primary reason of this income tax increase was due to a non-cash tax adjustment linked to employee stock incentives. We amortize share-based compensation expense for this quarter accounting purpose, covering both vested and unvested employee stocks. For tax purpose, however, only amortization relates to vested award is tax deductible. Non-deductible 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 $4 million. This amount was recorded as an increase in income tax expense Conversely, a future share price rebound would also boost deferred tax assets and reduce tax expense accordingly. Excluding this one-time non-cash impact, we expect our effective tax rate to stay below 20% going forward. Thanks.

Thanks. Mel, move on to the next question, please.

Thank you. Our next question comes from the line of Yoyo Fan from CICC. Please go ahead. Your line is open.

[Non-English content] Thanks management for taking my questions. This is Yoyo Fan from CICC. I have two questions. Could you share more on our run rate since Q2, what's the trend of the new funded clients trading velocity and clients AUM? Second question is on the net new funded accounts in Q1. What's the regional breakdown? It seems that the number of the new added clients has not met the pace required for the full-year guidance. Will you invest more in clients acquisition or adjust the full-year guidance?

[Non-English content]

That's the first question about our run rate in the second quarter. For the number of new users, we expect the number to stay stable quarter by quarter, with Hong Kong and Singapore remaining our top contributing markets. Trading activity has picked up notably in the second quarter till date. Both DARTs and commission income are higher than the Q1 level. U.S. stock trading activity 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 $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 by quarter increase.

[Non-English content]

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 two markets. Australia and New Zealand contributed around 20%, with the rest coming from the U.S. Even with the headline news on May 22nd, 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, while indicators like average CAC or ROI are important, our strategic priority is user quality, with client assets and net asset inflow as our core KPIs. We view the ratio of customer acquisition cost to quarterly retail net asset inflow as a more relevant measure of acquisition efficiency. In other words, it's just how much net asset inflow we can generate per $1 spent on the client acquisition. This ratio was at roughly $170 in the first quarter, compared to around $150 over the past four quarters, and approximately $120 in the year before that. This shows that our customer acquisition strategy is indeed effective in acquiring high-quality users.

Thanks, Mel. Let's just move on to the next question.

Thank you. There are no further questions at this time. I'll hand the call back to Aaron 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.

Ladies and gentlemen, thank you for standing by. Welcome to UP Fintech Holding Limited Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by question and answer session. I must advise you that this conference is being recorded today, March 19, 2026. I would now like to hand the conference over to your first speaker today, Mr. Aaron Li, 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 GlobeNewswire. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and CEO, Mr. John Zeng, our CFO, Mr. Huang Lei, CEO of US 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 statement except as required under applicable law. It is my pleasure to now introduce our Chairman and CEO, Mr. Wu Tianhua. Mr. Wu Tianhua will make remarks in Chinese, which will be followed by English translation. Mr. Wu Tianhua, please go ahead with your remarks.

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 substantial improvement in both financial and operating performance. Full-year total revenue reached $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 UP Fintech was $170.9 million and non-GAAP net income was $186.5 million, both set record high, up 181.4% and 164.7% year over year respectively.

In the fourth quarter, total revenue was $175.6 million, an increase of 41.5% year-over-year. Fourth quarter GAAP and non-GAAP net income attributable to UP Fintech were $45.2 million and $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 remains strong. For the full year 2025, net asset inflows exceeded $10 billion, with over $3 billion of net inflow in the fourth quarter alone. Hong Kong was the largest contributor to 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 $80.8 billion, up 45.7% year-over-year.

[Foreign language]

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. Client assets in all regions have increased meaningfully. In particular, client assets in Singapore and the Australia-New Zealand market delivered strong double-digit and even more than doubling year-over-year growth. Hong Kong was a standout. Client assets 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 $43,000, reaching a historic high.

[Foreign language]

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 quotes significantly improve order execution fill rate when users trade based on combination price movements. As our presence in the Australia 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 margin accounts in the Australia market. This has significantly strengthened our product competitiveness locally and further completed our trading service ecosystem.

[Foreign language]

Our To B 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 Hesai, bringing the total number of U.S. and Hong Kong IPO underwritings 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.

[Foreign language]

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

Grace. Thanks, Tianhua Wu and Aaron Li. Let me go through our financial performance for the fourth quarter. All numbers are in U.S. dollar. 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, increased of 56% compared to the previous year. Both quarterly and full year top-line reach an all-time high in our operating history. The cash equity take rate this quarter was 6.4 basis points, down from 7.1 basis points in the previous quarter as the figure normalized in Q4 due to less meme stock trading compared to third quarter.

Within commission revenue, about 65% comes from cash equities, 25% from options, and the rest comes from futures and other products. Regarding cost, 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 headcounts. 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 the 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 our 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 to 61% year-over-year.

For the full year of 2025, total GAAP profit was $171.2 million, and the 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.

Thank you. We will now begin the question-and-answer session. To ask a question on the phone, please press star one one and wait for your name to be announced. To cancel your request, you can press star one one again. One moment for the first question. Our first question comes from the line of Dennis Bai from UBS. Please go ahead.

[Foreign language] This is Dennis from UBS, thank you for giving me the opportunity to ask questions, and congratulations on the solid results.

I have two 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? Could this create any pressure on your cash flow or capital? Thank you.

[Foreign language] [Foreign language]

OK, I'll translate. 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. We have executed firmly with this strategy. In 2025, full year net asset inflow exceeded $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 the full year basis. This helped total client asset jump from a $40 billion range at the end of 2024 to a $60 billion range by the end of 2025, which in turn has made our overall profitability more resilient.

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 user 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 Australian New Zealand market contributed around 25% and the remaining roughly 5% came from the U.S. market. 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.

[Foreign language] We issued a $155 million private CB back in 2021.

All of those will mature by April. Two strategic investors have agreed to extend their holding around $50 million for another two years. We will repay the rest $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. Thanks.

Thank you for the questions. One moment for the next question. The next question comes from the line of Emma Xu of Bank of America Securities. Please go ahead.

[Foreign language] The first question is 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? What is the target average customer acquisition cost for 2026?

[Foreign language] [Foreign language]

Okay, for the first question, on the number of new funded accounts, the recent market volatility did not have a lot of impact on our acquisition pace. We expect Q1 new funded 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 a previous pullback, Hong Kong equity has seen a pickup in trading activity and trading volume. In the Q1 quarter to date, Hong Kong share trading volume has already exceeded Q4 entire trading volume. With about two weeks remaining in the quarter, we will continue to monitor closely.

As for the client 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. Thus, in the first two 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 will closely monitor market activity throughout March.

[Foreign language] Total marketing expense increased around $4 million quarter over quarter, primarily due to the below three reasons. First, in Singapore, we stepped up campaigns and advertising in the fourth quarter around New Year and Christmas. For example, we partnered with HelloRide to promote healthy commuting and further embed 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 co-organized its first charity fundraising event with local non-profit organization Food from the Heart, raising 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 expanding 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 their payback period is the shortest across our licensed markets. Even though Hong Kong market experienced a 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 rising from around $30,000 to a record high of about $43,000. In addition, our wealth management business has also developed very well over the past year.

To attract more high net worth clients to Tiger platform, we have been partnering with high quality channels, which led to higher channel rebates costing 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 resulted 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 the user quality. Looking forward, we will adjust our strategy based on market conditions to ensure that ROI remains healthy. Thank you.

One moment for the next question. Our next question comes from Cindy Wang of China Renaissance. Please go ahead.

[Foreign Thanks for taking my question. I have two questions here. First, 4Q 2025 top line has been quite flattish, but the bottom line dropped 17% quarter-over-quarter as we've seen costs increase a lot in this quarter. So what is the reasoning behind it and any guidance for costs 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 current AUM, as well as the progress of the investment banking business. Thank you.

[Foreign language] Revenue was roughly flat quarter-over-quarter, while our bottom line declined by around $10 million. In addition to the roughly $4 million impact from higher marketing expense mentioned earlier, there are two 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-over-quarter increase in G&A is primarily due to we booked around $3 million in bad debt provision in the quarter. This relates to IPO underwriting deals from 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. Those two items, together with higher marketing expense, added up to about $10 million in additional costs. Bottom line declined quarter-over-quarter, while top line is flat. Thanks.

[Foreign language]

For your second question, our other revenue has increased from only a few million dollars quarterly to around $25 million-$30 million for the quarter in the past two 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 in other revenue, however, are our wealth management and investment banking business. For the investment banking, Tiger has long been among the industry leaders in the U.S. Tier 1 rating 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. 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 five 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 structural notes 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 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. 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 you participating in this 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.

Thank you.

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