Webull Corporation Class A Ordinary Shares (BULL) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Webull Corporation Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Carlos Questell, Head of Investor Relations for Webull.

Good morning, good afternoon, and good evening, everyone. Welcome to Webull's Second Quarter 2026 Conference Call. Earlier today, we issued a press release detailing our second quarter financial results. A copy of the release can be found on our IR website at webullcorp.com under the Investor Relations tab. Please note that this call is being recorded and will be available for replay via our IR website. This call will include forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For information concerning the factors that can cause actual results to differ materially, please refer to the cautionary statement and risk factors contained in our filings with the Securities and Exchange Commission and press release, both of which can be accessed via our website. Today's presentation will include a discussion on adjusted operating expenses, adjusted operating profit and adjusted net income, all non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures are included in the press release that we issued today. It is important to note that although we believe that these non-GAAP measures provide useful information about our operating results, this should not be considered in isolation or construed as an alternative to their directly comparative GAAP measures. Furthermore, other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage our investors and others to review our financial information in its entirety and not rely on a single financial measure. With me today is our Group President and U.S. CEO, Anthony Denier; and our Group CFO, H.C. Wang. We will begin with prepared remarks and then take questions at the end. With that, I'd like to now turn it over to Anthony.

Thank you, Carlos, and hello, everyone. Thanks for joining us today. Before I walk through our second quarter results, I want to share an update on the SEC's elimination of the Pattern Day Trader rule or PDT rule that became effective on June 4. Last quarter, we highlighted our expectation that the elimination of the PDT rule would be a strong tailwind for our active traders and noted that our engineering team was busy ensuring our systems were ready for the change. Today, I am pleased to share that we successfully navigated the changes in the market resulting from the removal of the PDT rule. From the moment the rule change took effect, Webull's advanced technology platform enabled every qualified customer to place unlimited day trades with the full benefit of our zero-commission model behind them. Executing on this rule change was our defining event for the quarter and contributed to a significant increase in trading volumes and record quarterly results. Turning now to Slide 2. In Q2, we delivered record revenue of $198.8 million, up 51% year-over-year, driven by continued asset growth and strong trading activity across all our core asset classes with options and equities being particularly strong on the back of the PDT rule change. Customer assets reached $28.5 billion, representing 79% year-over-year growth. While we continue to aggressively invest in organic growth initiatives and remain committed to building this business for long-term category leadership, the Q2 results also demonstrate the operating leverage in our business model as revenue growth significantly outpaced the growth in adjusted operating expenses. As a result, we delivered record adjusted operating profit of $62.6 million, up 169% year-over-year, representing an adjusted operating margin of 31.5%. Now turning to Slide 3, which highlights key developments in Q2 towards executing on our 2026 strategic road map. Webull's focus remains centered on our 3 core growth pillars: first, establishing Webull as a platform of choice for active traders; second, expanding our global footprint by exporting the U.S. retail experience worldwide; and third, building our institutional business. As we have highlighted over the past year, AI remains core to everything we are building. For active traders, we continue to roll out AI-powered tools that further enhance the Webull user experience. Vega, our AI-powered intelligence system, continues to see very good traction with our active trader base. We added approximately 160,000 new Vega users in Q2, bringing the total number of active Vega users to 480,000, an increase of 12% quarter-over-quarter. Active traders remain the heaviest Vega users with engagement up approximately 23% quarter-over-quarter. During the quarter, we further enhanced our position within the agentic stack with our MCP server being connected to leading AI models, enabling users to use natural language to conduct research, build tools and execute trades through the Webull platform. This is an important step forward in agentic trading and further establishes Webull's infrastructure as a differentiator in agentic trading. We also significantly upgraded our paper trading offering, establishing parity with our live trading capabilities across asset classes and giving users an increasingly comprehensive environment to test and refine their trading strategies. We believe this is a unique offering, empowering our users to create realistic simulations and gain invaluable experience in a no risk environment. Turning to our international expansion efforts. We now have approximately 810,000 international funded accounts. We are licensed across 35 markets globally and operate trading activities in 18 markets following the Q2 launches in Spain, Argentina and Colombia. We continue to leverage our global infrastructure, compliance expertise and product depth to scale the U.S. trading experience globally. In APAC, our customer assets have grown to over $5 billion. We recently announced the acquisition of Pi Securities in Thailand, which is expected to close at the end of August. This acquisition will increase our AUM in the region significantly and positions us for further growth in Thailand as we combine Pi's expertise in the local market with our best-in-class technology platform. In Latin America, we continue to expand our product offering, including in Argentina, where we completed our first customer-initiated tokenized equity trade, an important milestone as we continue to expand our product capabilities across the region. Finally, turning to our institutional business. We continue to make progress building out this business with institutional AUM exceeding $1.4 billion as our customer base continues to grow, accounting for approximately 5% of our total AUM. The large majority of institutional clients are located outside of the U.S. Within the U.S., having received our clearing license from FINRA in April, our team is busy building the platform of our future, even though we are not currently clearing and do not anticipate clearing trades for some time. In addition to offering execution and custody services, we also expanded our institutional product offering to include access to futures and prediction markets. We further announced our partnership with Monark Markets to provide accredited investors with access to late-stage private companies through special purpose vehicles, further broadening the investment opportunities available through the Webull ecosystem. On Slide 4, I'll discuss our continued user and funded account growth. Our targeted marketing continues to drive adoption as we added approximately 600,000 registered users during the quarter, bringing our total to 28.2 million, up 13% from 24.9 million at the end of the second quarter of 2025. As a reminder, we will have a considerable number of registered users that still take advantage of our data offerings in markets where our trading platform is not yet available. We remain committed to providing access to industry-leading market data and information to all users regardless of their ability to currently invest on the platform. On the right side of the slide, you can see funded account metrics, which showed steady growth. For context, funded accounts are defined as accounts where customers have made an initial deposit, and the balance has remained above 0 for 45 consecutive calendar days as of the record date. Funded accounts reached 5.13 million in the quarter, an 8% year-over-year increase. Growth in gross funded accounts was approximately 132,000, while net new funded accounts increased by approximately 20,000 users as we continue to actively address dormant accounts. Our quarterly retention rate was 97.3%. Turning now to Slide 5. Customer assets increased 79% on a year-over-year basis to $28.5 billion. I would note that our average customer account has nearly doubled to over $5,500 over this period. As you can see on the right-hand side of the slide, net customer deposits in the quarter were $1.6 billion, up over 7% on a year-over-year basis. On Slide 6, you will find trading volumes for the quarter. As mentioned in my earlier remarks, our successful navigation of the PDT rule change drove meaningful share gains, helping us reach a top 5 position among all retail brokers in options for the first time in our history and driving record volume in both equities and options during the quarter. Equity notional volume totaled $279 billion, up 73% year-over-year and 7% sequentially, while options contract volume reached 213 million contracts, up 68% year-over-year and 34% sequentially. With that, I will pass the call over to H.C. for a closer look at our financial results for the quarter.

Thank you, Anthony, and thanks to everyone for joining the call today. The second quarter was the strongest we've delivered as a public company and showed across our financial results. Total quarterly revenue reached a record $198.8 million, up 51% year-over-year and an acceleration from the growth rate we posted in the first quarter. This strong performance was driven by continued strength across both trading and interest-related revenue streams, which I will walk through in more detail shortly. On the expense side, adjusted operating expenses were $136.2 million, up 26% year-over-year, primarily due to higher trading-related activity and investment in new products, a meaningfully slower growth rate than our revenue, which is the operating leverage story I want to spend a minute on. Turning to profitability on Slide 8. Q2 was our most profitable quarter to date. Adjusted operating profit was $62.6 million, representing a 31.5% operating profit margin. Adjusted net income was $43.2 million, representing a net profit margin of 21.7%. We remain disciplined on our marketing spend, which started to normalize as a percentage of revenue during the quarter. As a technology-driven platform, we see significant operating leverage in our business model and expect that will continue to be reflected in our operating margins as our revenue continues to scale. Turning to Slide 9. We had another quarter of record trading volumes across our core asset classes. Trading-related revenues increased 66% year-over-year to $147.7 million and were up 33% quarter-over-quarter. Our DARTs also increased 62% year-over-year to 1.64 million and were up 25% from the first quarter of 2026. These results demonstrate that our platform continues to meet the needs of our active traders, and we believe we are well positioned for continued sustainable growth in trading revenues over time. Turning to Slide 10. In the second quarter, interest-related income grew 18% year-over-year to $42.8 million, mainly driven by higher AUM as well as growth in margin loans and client cash balances. This line item has been relatively stable in the last few quarters and continues to provide a durable complement to our trading revenue. Now turning to expenses on Slide 11. Adjusted operating expenses increased 26% year-over-year to $136.2 million, primarily driven by brokerage and transaction costs associated with higher trading activity. I also want to highlight that adjusted operating expenses declined 6% sequentially from $145.1 million in the first quarter, primarily reflecting the normalization of our marketing spend. Excluding marketing, our operating profit margin has remained above 40% every quarter since the third quarter of 2024, underscoring the strength of our underlying platform economics even as we continue to invest. We remain focused on disciplined expense management as we continue to scale the business. Lastly, this quarter, we began publishing our monthly operating metrics. We believe this level of disclosure provides our investors and analysts additional transparency into the business. You can find the monthly metrics on the Investor Relations tab of our website at webullcorp.com. With that, I'll turn the call back to Anthony before we open the line for questions.

Thanks, H.C. To summarize, we are pleased to deliver another record-breaking quarter for Webull, including record revenue and operating profit. We continued executing on our 3 key priorities while focusing on responsibly growing our AUM. I want to personally thank our global team members for a fantastic first half of the year as your dedication continues to be evident in our solid results. We are encouraged by our progress and excited about our growth prospects going forward. We look forward to engaging with you at our forthcoming investor event this quarter. And on that note, we welcome any questions you may have, either here on the call or one-on-one. Thank you.

[Operator Instructions] The first question will come from Devin Ryan with Citizens Bank.

This is Noah Katz on for Devin. First, I want to touch on the PDT removal. It clearly contributed to a strong increase in activity this quarter. You've described Webull as benefiting from account consolidation across the industry as well. So from what you've seen so far, is the bigger opportunity customers trading more actively within their accounts or more so transferring assets and then consolidating activity from several brokers? And also, what will show you that this is a durable benefit rather than an initial bump in activity following the rule change?

Thanks for the question. Yes, we've been -- I feel like I've been talking about PDT for the past year. So it's great to finally have the first kind of earnings print that shows all the work that we've been putting in ahead of this huge kind of industry-changing event, especially for platforms like Webull, where the average account size is well below that 25,000 PDT limit. So to give some perspective, it comes from both sides, right? So we were very, very active in targeting accounts where we looked at different cohorts of accounts and accounts that were very active, let's say, show up on Monday, day trade 3 times on Monday, and then we don't see them again until next Monday, right? You have to go in and assume that those active accounts have multiple accounts or fractionize their kind of brokerage accounts across the industry to skirt those PDT rules. So we kind of aggressively targeted a lot of those types of accounts with e-mail campaigns and reach out attempts. Now it is difficult, I will admit to put together like a hard case with numbers on exactly how many assets that we brought in from those accounts because typically, we use ACAT data for those. And we're talking about day traders. So at the end of the day, typically, they have no securities on -- no securities to transfer. And the ACAT process, as most probably know on this call, is extremely cumbersome, takes several days up to sometimes past a week. So we're not going to see much data on these types of active trader accounts through that. But what we did see is a considerable amount of deposits, new deposits from those types of accounts, meaning the ones that would trade on Monday, we wouldn't see them again till the next Monday. In terms of sustainable or sustainability or durability of these levels, when we put out our July figures only last week, you can clearly see that the options volume was pretty steady. We did see a little bit of softness on the equity side compared to June. But kind of comparatively, when you think of June, there was a couple of events, I think most importantly for the equities business with SpaceX. That was just a huge retail event. There was a lot of interest and a lot of eyes on the space during June. And August so far is kind of trending just along where we saw June as well. So August is looking even stronger than July. I truly believe that removal of PDT is the standard going forward. It will not revert, or volumes will not revert to pre-PDT levels. We actually see the behavior of a lot of those active traders change as well, meaning when customers knew they only had a set amount of day trades that they can make in a week, their behavior has changed when that restriction was removed. We're now seeing a significant amount of smaller day trades happening. Customers are taking, at least the day trading, customers are taking kind of smaller scalps on their position, getting in and out kind of at lower P&L threshold levels, which from a take rate perspective is actually much healthier for our business as well, right? So not only has the volume risen, but the amount of actual trades within that volume has risen significantly as well, which also raises our take rates or the amount of payment for order flow that we receive on those orders. So it's kind of a double positive there. I hope that answers your question.

Yes, that's great. That's great detail there. Thanks. That's very helpful. And then -- so no more PDT questions. But if I can switch gears a second and looking at your APAC activity this quarter, with customer assets now around $5 billion and your recent acquisition of Pi Securities, further expanding your presence in the region. We also saw a stronger institutional trading activity across Asian markets this quarter. So can you speak about what you're seeing in retail trading activity and then product usage relative to other regions? And then on the acquisition, how are you thinking about the opportunity to bring your trading technology to an established local customer base?

Sure. So we've always been very aggressive on growing our business outside of the U.S. It's one of our core pillars of growth that we've had for several years now operating. We have 35 licenses operating now in 18 different markets. And the kind of the largest APAC markets are the most mature markets that we have ex the U.S. Hong Kong, Singapore, they are pretty much the largest markets in APAC across the board. We've seen significant kind of evolution in customer trading behavior across APAC, specifically Hong Kong, Singapore, where I've said this before, and I hope I don't sound like a broken record too much. But as the world kind of de-globalizes over the last several years, the retail investors have truly globalized, right? And you see retail investors outside of the U.S. kind of reacting and positioning themselves alongside the traders that we have here domestically in the U.S., and they're looking very, very similar in terms of the products they use. I think options is the best example or the adoption of U.S. options trading outside of the U.S. has completely taken off. And I think we're still only in the early innings of that. In terms of the Pi Security acquisition, that is a strategic opportunity that we saw in Thailand. We do have a small but aggressively growing business organically in Thailand. And looking at this opportunity with Pi Securities, not only is it immediately accretive for us in terms of growing our APAC AUM, but it also introduces us to a significant amount of high-quality active trading funded accounts for a very low customer acquisition cost that we normally would have to pay a high price for that quality of account, and it would take a very long time to organically grow that over time. So it's like a little boost of, I guess, I'm of the age. So a little testosterone replacement therapy for us in, I guess, in a casual way to say it. H.C., any comments on Asia?

Yes. I think Asia is one of our strategic markets. So we look at Asia collectively as a whole and not so much individual markets like Hong Kong, Singapore and Thailand, where there's a lot of synergies actually between these markets. So we have -- for example, we have our institutional business in Hong Kong is serving broker-dealers from Thailand trading U.S. stocks. And we have a high-net-worth clients from one market that may want to open up for accounts in another market. And the fact that we are on the ground in all these different markets and operating as one is really a key differentiation factor for Webull, and that's how we're able to grow so fast so quickly.

The next question will come from Ed Engel with Compass Point.

Congrats on a nice quarter here. Can you elaborate on what you mean on addressing dormant accounts? I recall something about COVID era accounts kind of being pruned out, but I just kind of wanted to hone in on that. And then I guess, any kind of clarity of when that kind of starts to roll off for the end of the year?

Sure. So every platform has dormant accounts. It's just kind of a nature of the brokerage business in general. Typically, when you kind of use words like an escheatment, it's really a compliance function. But if anyone on this call doesn't know what escheatment is, we deal in the U.S., we deal obviously with 50 different states. Every state has their own kind of rules and regs surrounding on what qualifies as a dormant account, whether it's an account hasn't logged in for 2 years, some states have gone as far as 5 years. But typically, when an account is deemed dormant, it is an operational function required by broker-dealers in the U.S. where we actually have to liquidate the positions in those accounts and then transfer the funds from those accounts over to the state, whether it's a comptroller's office or the treasury office, right? And this is obviously an operational lift for us. It is -- it does cost us money. It is an operational function, and we do have to pay a fee to the state for every account that we do "escheat." So that is like when we roll promotions, especially most of these promotions -- excuse me, most of these accounts that have been deemed dormant that we are rolling off, which is why we separated the gross new accounts and the net new funded accounts to specifically show that we are growing significantly funded accounts. A lot of these were accounts that came on during kind of the GameStop frenzy or right after the GameStop frenzy, and we were running a lot of small deposit promotions, deposit anything, deposit a dollar and get a free share of stock. At the end of the day, these are accounts that had very low AUM. On average, we're talking like $10 to $15 of total AUM that did not trade, that did not invest. These are accounts that signed up specifically to hopefully get an expensive share of stock only to get an expensive share of stock, not to be an investor. So this actually cleans up our account base on its own. And it's a very healthy thing for our business. So as we focus right now on just quality accounts, especially the way we use our promotions and our marketing, we are replacing a lot of these non-revenue-producing drain accounts, removing them and replacing them with high quality, which is one of the factors in us gaining our average account size so quickly this quarter.

Great. And then it looks like marketing costs were down quite a bit Q-on-Q, and I think it was actually pretty far below the implied guidance you gave, just as a percent of sales. Do you mind providing any kind of directional commentary of kind of how this should shape out for the rest of the year? And I guess, were there any lumpy items in 4Q and 1Q related to maybe prior quarter incentives that are maybe normalizing now?

Yes. We spoke about the normalization of marketing expense. So like last year, we actually ran very aggressive asset match promotions. So for example, we had 3.5% match for IRA deposits. So -- and those -- as I talked about on the call, the last couple of quarters, those promotions because we require customers to keep their AUM on the platform for about -- usually for about 12 months, sometimes longer than a year. So the expenses are actually amortized over a period of time. So in Q1, our marketing -- also in Q2, so actually, our marketing expense included the effects of amortization from last year's promotions. So they're not just marketing spend for this year. So the results of those asset matching promotions that you saw last year was primarily reflected in the net deposits in Q4, but the spend was still being amortized well into 2026. So we've actually reduced the level of asset match promotions starting in Q1. So we've kind of -- for example, we've reduced the 3.5% match to like a 1% match, and we've cut off or stopped those promotions in some markets. And so you're seeing -- so you'll start to see our marketing spend like normalizing more over the next couple of quarters, as the effect from last year's aggressive asset match promotions rolls off.

Great. And then just lastly, I guess, maybe it's a little bit too exciting to get excited about crypto. But I guess with the recent kind of rally here, can you kind of remind us of where your crypto product stands today in terms of just number of coins offered and then maybe anything about coin-in, coin-out?

Sure. I mean I think -- I don't know, maybe it's Kismet, right? Crypto rally, we see Bitcoin up like almost 10% today on our earnings day. Last several quarters, one of the probably more disappointing businesses across the industry, not just Webull specific, has been crypto. And even this quarter, crypto represents, what did we do, about $2.25 million we did in crypto revenue for Q2, right? That's just over 1% of our total Q2 revenue stream. So any uptick in our crypto business will be immediately accretive, right, to our business. And we've been talking about consolidation on the margins in the crypto business and building a crypto product that is attractive for active crypto and semi-institutional crypto type of platforms and traders. So where are we now? We are in the process of gray scaling coin-in, coin-out, which is perfect timing given kind of the new spotlight put on the asset class. So for the first time, probably in the last 9 months I am starting to see the clouds start to part in the crypto business. And that is a very positive thing. The direction we're seeing a lot of the commentary and listen, I look at the odds on clarity to pass on Poly and Kalshi as well. But I think now there is some sun that's starting to shine, and that will be a nice step forward in our business.

The next question will come from Chris Brendler with Rosenblatt Securities.

Congratulations guys on a fantastic quarter. Good to see. I ask a question on July. Obviously, things slowed down market, the huge AI trade took a step back in July, but your results in the options business, in particular, were fairly strong. And I'm getting questions from folks, is your business sort of not as market sensitive today? Or is that just the PDT sort of helping support July volumes in the options business? Can you give us any color there on how we should think about market volatility as it relates to Webull's growth prospects right now?

Yes. I mean I think -- comparatively, I think Webull stands out as a little bit more insulated than some of our peers, I think, particularly because of our high concentration of active traders and active investors, right? So when there's volatility, when there's a weak market, we see sometimes even a spike in volume in the initial days. Now spread that out over the course of long term in a bear market, eventually going to see volumes dry out. But in the short term, like when we see a slow month or a slow several months, we actually see a little change in behavior of our customers, which from a revenue perspective, can be a little bit of a headwind because instead of trading more single stock, they trade a bit more kind of broad index ETF, whether it's QQQ's or SPY's. So we're not completely immune, but I think we are a bit more insulated. I mean when you talk about kind of how our customer demographic looks, over the course of the last 6 years, we've had to close over 1 million active trading and funded accounts because of the PDT rule, right? And trust me, we reached out to every one of them. On June 4, for example, we abated more than 50,000 margin calls as a result of the PDT rule, meaning abated, we removed those calls. And yes, we reached out to every one of those 50,000 active funded accounts on the platform. So those are the types of traders that when there is volatility, when the VIX is rising, they're getting involved, right? They're trading the momentum. So our numbers tend to be pretty steady through kind of the downturns. And I think that's something we've always concentrated on, and that's something we're really proud to have built over the years.

That's fantastic color. And then I ask a PDT question, if you don't mind. I was very interested to hear about the sort of multiple trades occurring, smaller trades that makes total sense if you're limited to 5 or whatever the old rules were that you would need to be very careful about which trades you're going to place because you can only place a handful a week. Was that something that was anticipated? Because I remember your guidance was at least 20% over the medium term. And are we already through the medium term? Or do you think this is like a sort of a 6- to 12-month process of folks getting used to the new rules?

Well, I think -- Chris, I think it was you that asked me the question on our Q1. What's my forecast for the additional volume kind of in a post-PDT world? And I think I said 20% to you. There might have been a little sandbagging that. Just to kind of protect myself a little, but this is the new -- like this is the new environment for trading, right? And we're seeing it across multiple asset classes. You look at the different products and crypto has never had a PDT rule, right? These new event contracts or prediction markets never had a PDT rule, yet we're seeing basically 70% Q-on-Q increase in our volume on prediction markets, right? So when you kind of flow begets flow is something we've always been saying in this industry for the last 25 years. And this momentum, I think, is very sustainable. So in the medium term -- I think we are in the medium term now, right? PDT removed in June, at the beginning of June. We now had almost a full month of June, which kind of took everyone by surprise. I don't understand why, but it did. July showed that it's sustainable. And here we are in almost towards the end of August. And it's -- we're still seeing that same sustained level of activity. And obviously, with the last 2 sessions with the AI trade coming back on and back in vogue, volumes have been really, really healthy. So I'm very optimistic for this to continue on.

The next question will come from Eli Abboud with Bank of America.

I wanted to drill down further on your new agentic AI offering. First, can you highlight what you view as the main point of differentiation between your offering and the agentic trading capabilities of your peers like Robinhood and IBKR? And then how much volume was attributable to agentic trading? Is there any disproportionate amount of flow coming from one asset class or the other?

No, I'm not an expert in what any of my peers are doing in this space. I am an expert on what we're doing. So if my explanation on what my competitors are doing is spot on, I apologize ahead of time. But in terms of we're looking in our MCP relationship, we're working with all of the large AI agentic platforms. We are putting a lot of emphasis on education and walking new customers and new clients through the process of how to utilize this new technology. And I think it comes in different phases. Right now, we are very, very early in Phase 1, where most of the interactions with our MCP server is based around portfolio building, research and trade analysis. It's not so much built on algorithmic execution strategies where maybe some of my peers are focusing on that. And I think there's reasons to do things in kind of a proper step fashion. It does take time kind of to normalize the experience that is completely new for how retail is going to engage with their trading platform. And we want to make sure that we do it in a very responsible and very transparent way. I can use a perfect real-time example that I just looked at the other day with my MCP connection. I was trying to figure out, obviously, Webull is the sponsor of the Tampa Bay Rays. Rays are not doing bad, first place, best league in the American League. I was trying to figure out which event contract was the most active for MLB games. Now I can take a spreadsheet and I can block out about 4 hours and go through every single contract that's trading to come to that conclusion or I connected with my MCP through a Claude interface, and I asked the question in natural language, and it came back in less than 30 seconds with an analysis on what is the most active in terms of price band movements of event contracts for MLB, right? That's kind of one perfect use case scenario on kind of the beginning phases on how you can use this technology to your advantage. I think towards the end of the year, you'll start to see a lot more product rollout that will deal more on the execution side, but it will take time to get there. And that's been our strategy on rolling out AI. I've been very, very vocal on talking about how AI interfaces and I don't want to spoil yet, but there's going to be a lot of really exciting announcements on our Vega Product Suite that will go more into the trade execution side of the AI product suite and what it can do.

Got it. And if I could maybe switch gears and ask Wang about your margin balances for a second. It looked like they stepped down a bit in July. Would it be possible to give any color on how those margin balances are trending in month-to-date in August? And how would you, bigger picture, just characterize your clients' risk appetite at this moment?

I think margin balances, they typically tend to fluctuate with the I mean, with the overall AUM level. So like July was a very choppy, like very difficult month. So I think it's -- there's a lot of deleveraging probably because the leverage that has been built up into July. So we saw that in our customer trading behavior as well. But overall, if you look at a longer time horizon, the margin balances of our customers have been steadily increasing, and that's a result of our actually best-in-class margin rates for our premium customers. And so we are seeing more usage of margin. We're seeing greater trade flow. And I think longer term, you will continue to see that going up. I think July is more of a kind of a one-off. So overall, like as our AUM continues to grow, and we expect our margin balances will continue to grow as well.

Yes. And I would also add that, again, I've said multiple times on this call, August has been a very healthy trading month for our customers. It seems that risk on is back on, so to speak. And I'm seeing like real time, our margin debit balances are trending to get to all-time highs if they're not there today.

The next question will come from Mike Grondahl with Northland Securities.

Congrats on a quarter. First off, I just want to circle back on the marketing spend in the quarter. I was surprised it dropped $15 million sequentially from about $50 million to $35 million. H.C., can you quantify how much maybe 1Q and 2Q had in it related to 2025? And when you said marketing spend is still normalized, do you mean that will drop in 3Q and 4Q kind of the reported number? I'm just trying to figure if there's some more leverage there.

Sure. I think it's about 40% of the marketing expenses in Q1 and to a lesser extent in Q2 is related to last year. So when we say normalizing, we just mean that the marketing spend will be more reflective of the actual marketing promotions that we're doing as opposed to having a lag -- being a lagged indicator from last year. So I think going forward, for the remainder of the year, we can expect marketing spend -- I mean, absent of significant changes in the market, we can expect marketing spend to be similar -- probably similar in quantum to the first half. So that means that we are -- we'll continue to invest and acquire new customers. We'll continue to invest in acquiring AUM. So it will not be lower for the -- compared to the Q2 levels, but we also don't expect it to be higher than the Q1 level. So I hope that answers your question.

Got it. And then just related to that, what are the marketing priorities right now? What are you kind of out there promoting or pushing today with the spend?

So focusing on brand building, focusing on quality account acquisition and focusing on international growth. And so obviously, the majority of our marketing spend still sits in the U.S., but that's just because of the scale of the market here. But if you were to look at proportionately in the smaller markets outside of the U.S., we are aggressively reaching new customers and onboarding new funded accounts. The CAC -- we look at kind of CAC and payback rates all over the world. And we kind of put our foot down on the gas in markets where we see kind of the most return on investment. So right now, again, it's branding in the U.S. It is quality customer acquisition outside the U.S.

Got it. And then -- your institutional strategy overseas, a couple of quarters ago, you talked about Meritz. Anthony, how is that going? Is that where you thought it would be August of '26? Kind of an update there would be helpful.

No -- is it where I thought it would be? No, it's taken longer than I had expected. That being said, we are ready to fire on all cylinders hopefully, by the end of this month, the end of August, especially with several of the kind of large Korean platforms that we partnered with. The onboarding process and the ability to build an institutional pipeline is a lot easier outside of the U.S., specifically because of our differentiation of kind of having so many options outside the U.S. If you just think of trade execution as an institutional business, we operate right now in 18 different markets. We can execute trades in 16 of those 18, right? That is -- that's a huge differentiator for us. That's -- and obviously an easier product to sell to platforms that are outside of the U.S. where the appetite for global trading is higher than it is here.

Got it. Lastly, I would just ask, on the crypto, you gave us that number, I think it was $2.5 million or close to that of revenue. Do you have a number of revenue you generated in the quarter tied to prediction markets?

I don't think we break it down in the quarter, but I don't think we have it in the sheet, but I absolutely know what the number is. And happy to say that sequentially, our prediction markets are up 71% quarter-over-quarter. I'm sometimes a little hesitant to put out like a specific number because it is a growing business, and it's not as robust as some of our peers. But we're probably doing anywhere between $5 million and $6 million per quarter right now in prediction markets, and that number grows significantly month-over-month.

The next question will come from Brian Vieten with Siebert.

Great. And I know we've covered this a bit, but when the PDT rule went -- first went into effect, I think it was early 2000s, can you just speak again to how broad-based you're seeing this within your customers? And I know you said there's a little bit of a ramp, but just one more time as far as -- is this something that only a handful of folks are really driving a lot of this increase? Does that ramp throughout the year? And then just one more on just the adoption curve there. And then just one more on competitive dynamics. So I know everybody is using a different exchange and the exchanges, I understand, implement this over the next 15 months or so, 15, 18 months, something like that. Is there a first-mover advantage? I know you guys have this platform that -- and customer base that's very digitally native that allowed you to be the very first mover. Is there much of a competitive advantage here? Or is it just kind of a rising tide lifts all boats dynamic?

Yes, so on the PDT stuff, not to beat a dead horse too much. I think it's -- when you're dealing with -- if you think about customer demographic, customer age, right, and maybe this isn't widely known, but average customer age on Webull sits at -- still, it's actually been for probably the last year, sits at 34 years old is our average customer age. A lot of our newer users of the platform are significantly younger than that, right? And so having them come on board now without even knowing what PDT means, not having any cares of what PDT means, it changes the dynamic, whereas I would say a year ago, I'm just using broad numbers, but a year ago, you would see clients specifically avoiding, our low AUM clients, specifically avoiding certain asset classes, meaning options and equities because of that limitation. And oftentimes, they go to products like prediction markets, they go to products like crypto trading. So they can scalp, they can trade in and out of names, they can play momentum and had to basically go around the PDT rule. And I talked about fractionalization of brokerage accounts, like that's cumbersome. It's really a pain in the neck. It's an inconvenience to the client. So sometimes they would just trade other products. Like that restriction is completely gone, right? And the idea that someone just starting their trading, their kind of trading life, right, their interest in trading markets. Now the options market is kind of #1 product they're looking at now because they're not having to deal with any restrictions on how many times they can actually get in and out of a position. This is, I think, a huge change for us, whereas, again, going back to account size, if you talk about some of the bigger players or the more traditional platforms that have been around for the last 20 years or so, that's not the customer that excites them. They're looking for that big asset transfer. They're looking for someone to grow their asset management business so they can add another T on their AUM. This is our core, right? This is how we build and become that platform in 20 years where we have trillions under AUM. So we're focused on these clients, and it's really paid off in terms of seeing our engagement levels grow in terms of seeing the amount of interest we're seeing in actively trading their accounts on a daily basis instead of on a one-time a-week basis. So that ramp, I think, will continue as trading behavior evolves and changes. We're no longer having PDT as being an obstacle to either get around or avoid completely. And then the second part of your question asking about the exchange. I didn't fully understand it. Would you mind kind of just drilling down a bit more?

Just -- I know you guys were one of the first ones to implement. So I was just curious if there is much of a first-mover advantage or if it's -- I think it's more exchange specific, but I was just curious if you guys are getting maybe incremental adds because you guys added this first or if it's not really too much of an impact there.

Sorry, my bad. Brian, I thought you said exchange, not the change. So I think in terms of our share of voice, meaning how much press we received during the PDT rule change, it was actually the biggest kind of momentum that we've ever seen in terms of -- I believe -- I mean, these numbers may be a little off because my marketing team likes to show off. But if you -- like if you take every article that was published that talks about the removal of the PDT rule, Webull was mentioned in almost 90% of them, right? And we have never had an event like that. And so the amount of exposure that we've gotten by making sure that we were well ahead of this change, both from a media standpoint as well from reaching out to different outlets, I was educating reporters kind of in the background behind the scenes, obviously, aggressive kind of customer awareness and customer education ahead of the rule. So yes, I mean, I'd love to take that credit if you're willing to give it that first-mover advantage is going to help us, but it definitely lifts -- it lifts all tides, right? So even -- like I mentioned earlier in the first part of your question, if I'm opening up an account at one of my peer platforms that doesn't even care about PDT or is really not targeting a 25-year-old that wants to trade a $2,500 account, they're still going to get the added benefit of that customer trading more, right? But first-mover advantage, I will take -- I'll take that one.

This will conclude our question-and-answer session as well as conference call. Thank you all for attending today's presentation. You may now disconnect.