UP Fintech's Q2 2025 Earnings Call: Contradictions Emerge on Regional Distribution and Mix of New Accounts, Market Volatility's Impact on Trading Volume and Revenue

The above is the analysis of the conflicting points in this earnings call

Date of Call: August 27, 2025

Financials Results

• Revenue: $138.7M, up 59% YOY and 13% QOQ

Guidance:

• Q3-to-date: average shares traded above Q2 monthly average; commission revenue on target.
• Client assets up high single digits vs end of Q2; net inflows strong and retail-led.
• Accelerating Hong Kong expansion; HK new funded accounts nearly match Singapore; more offline events planned.
• Hong Kong CAC around $400+ with ~2-quarter payback; expected to hover near this level in H2.
• Crypto: prioritizing new features; HK volumes up ~65% QOQ and custody nearly doubled; U.S. licensed in 14 states; Singapore application progressing.

Business Commentary:

* Revenue and Trading Volume Growth: - UP Fintech reported record total revenue of $139 million for Q2 2025, up 58.7% year-over-year and 13.1% quarter-over-quarter. - This was driven by increased trading volume, which reached $284 billion, contributing to a 90.1% year-over-year increase and 11.1% quarter-over-quarter increase in commission income. - The growth was attributed to the expansion of the user base and client assets, as well as improvements in product offerings.

• Client Assets and Funded Accounts:
• Total client assets reached a new record of $52.1 billion, up 13.5% quarter-over-quarter and 36.3% year-over-year.
• The company added 39,800 new funded accounts in Q2, with over 100,000 new accounts acquired in the first half of the year, exceeding two-thirds of the 2025 target of 150,000.

• This growth was fueled by significant net asset inflows, particularly from retail investors, and strong performance in markets like Hong Kong and Singapore.

• Non-GAAP Profitability and Margin Expansion:

• Non-GAAP net income reached $44.5 million, increasing 23.5% sequentially and 8.6x the number in the same quarter last year.
• The non-GAAP net profit margin in Q2 increased to 32%, marking the fourth consecutive quarter of margin expansion.

• This was due to strong financial performance across all revenue components and optimized cost management.

• Regional Market Expansion:

• The company's expansion in the Hong Kong market saw significant growth, with the average net asset inflow per new funded user reaching around $30,000.
• This contributed to a 50% quarter-over-quarter increase in overall client assets in Hong Kong.

• The increased focus on the Hong Kong market through offline events and promotions led to improved user quality and asset growth.

• Investment Banking and ESOP Growth:

• Other revenue rose strongly, driven by a surge in investment banking activities, including underwriting 11 IPOs and adding 30 new clients to its ESOP business, which brought the total to 663, up 15% year-over-year.
• This growth was attributed to the successful execution of IPO underwriting and expansion in the ESOP client base.

Sentiment Analysis:

• Management reported record highs across revenue and key metrics; total revenue $138.7M, up 59% YOY and 13% QOQ. GAAP net income $41.4M, 15x higher YOY; non-GAAP net profit margin expanded to 32%. Client assets reached $52.1B, up 36.3% YOY with 11 consecutive quarters of growth.

Q&A:

• Question from Yun-Yin Wang (China Renaissance): Why did the effective tax rate drop to ~15% and is it sustainable? Was the increase in other revenue mainly from investment banking? Also, update on crypto progress, strategic investors, and licensing plans in HK/SG/US.
  Response: ETR fell due to profit mix shift away from the higher-tax U.S. and a Singapore rate cut to 13.5%; other revenue strength was led by investment banking (plus FX and wealth). Crypto is scaling—HK volumes +~65% QOQ and custody nearly doubled—with 14 U.S. state licenses and SG application advancing.

• Question from Judy Zhang (Citi): Provide Q3 quarter-to-date run-rate for trading volume, client assets, and new paying customers; and updates on Hong Kong expansion and CAC outlook.
  Response: Q3-to-date trading activity is above Q2’s monthly average with commissions on target; client assets are up high single digits; Hong Kong expansion is accelerating with strong asset inflows, CAC around $400+ and ~2-quarter payback, expected to stay near this level.

• Question from Weizhou Bai (UBS): Break down newly added funded customers by region and explain the QOQ decline in new funded accounts; outlook ahead?
  Response: Q2 mix: ~50% Singapore/SEA, ~30% Hong Kong/Greater China, 15% ANZ, 5% U.S.; the lower count reflects pruning low-ROI channels and sentiment, boosting quality—NAI per new user >$20k (HK/SG ~ $30k), higher net inflows than Q1 despite fewer users; CAC fell ~10% QOQ and strategy will stay quality-focused.