Ladies and gentlemen, thank you for standing by, and welcome to the UP Fintech Holding Limited Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by the question-and-answer session. I must advise you that this conference is being recorded today, Wednesday, November 25, 2020. I would now like to hand the conference over to your first speaker today, Mr. Clark S. Soucy. Thank you. Please go ahead.

Thank you, Revati. Hello, everyone, and thank you for joining us for the call today. UP Fintech Holding Limited’s third quarter 2020 earnings release was distributed earlier today and is available on our IR website at ir.itiger.com, as well as Globe Newswire services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and Chief Executive Officer; Mr. John Zeng, Chief Financial Officer; Mr. Huang Lei, CEO of U.S. Tiger Securities; and Mr. Kenny Chao, 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 contains 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 statements. For more information about factors that could cause actual results to materially differ from those in the forward-looking statements, please refer to our Form 6-K furnished today Form 6-K furnished today, November 25th, and our annual report on Form 20-F filed on April 29, 2020. 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 Chief Executive Officer, 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.

[Interpreted] Hello, everyone, and thank you very much for attending our Q3 2020 earnings conference call. As a result of rapid growth in client numbers, as well as our strong commitment to continuous upgrade of our trading platform and services, operational and financial metrics displayed strong improvement. In the third quarter, total revenue was $38 million, an increase of 148% from the same period last year and a record high for our firm. Operating income and net income also demonstrated healthy growth. Operating income reached $7.4 million and net income reached $3.8 million and $5.3 million on GAAP and non-GAAP basis. In the third quarter, we added 46,800 funded accounts, seven times the quarterly growth rate in the same period last year and total funded accounts reached 214,700, an increase of 110% on the same period last year. I am also happy to report that on October 28, 2020, we reached a major milestone as total client accounts reached 1 million. This is especially notable given our five-year operating history. Total account balance continued to grow nicely and reached $10.9 billion this quarter, a 188% increase over the same period last year. Average client assets also increased 37% from $37,000 same quarter last year to $50,000 this quarter. As client numbers and assets continue to increase at a healthy pace, I am confident that our firm will continue to produce satisfactory results for our shareholders. In the past half year, our firm reached three major milestones. First and foremost, our internationalization strategy is showing good results. Today, we have licensed subsidiaries in the U.S., Australia, Singapore and New Zealand. Every day, we have investors from these countries choose us to open accounts and trade, despite the relative scale of our firm. We are an international company that enables global clients…

Thanks, Tianhua and Clark. Let me break down our financial performance in the third quarter. All numbers are in U.S. dollar. Commissions were $19.5 million this quarter, up more than 200% from the same quarter last year on the back of 1.5 times increase in trading volume at accelerated user growth. Blended commission rate was 3.1 bps this quarter, increased from 2.5 bps same quarter last year, but a decrease from 4 bps in the second quarter of this year. Within the operating and discount pricing this quarter, the decrease was primarily due to the increase in trading volume. Interest related income increased 26% year-over-year to $9.8 million. Other revenue, which includes our IPO underwriting business, increased close to 6 times year-over-year to $8.8 million. We were very active in IPO underwriting under our U.S. and Hong Kong IPOs in the third quarter and we remain very positive under the incoming deal pipeline. Total revenue were $38 million, up 148% year-over-year, another record high revenue in our operating history. Now, switching to the costs. Interest expense was $2.9 million, increased 110% year-over-year, primarily due to higher margin balance. Clearing expense was $3.9 billion, increased to 4 times in line with our user growth and the increase in trading volume. Compensation increased 37% year-over-year. We keep adding headcount in key position to support our business growth. More than 50% of the salary expense comes from research and product team as we keep investing in R&D. Marketing expense was $3.7 million, an increase of 147% from last year as we keep spending in user acquisition to take advantage of the favorable market backdrop. As our brand becomes more popular among investors, we see more organic growth. Our funded account acquisition cost actually comes down quarter-over-quarter from last year. Occupancy expense increased 13% year-over-year to $1.2 million to accompany our headcount growth. Market data usage expense increased 52% year-over-year to support our user growth. SG&A increased 68% due to business expansion. Total costs were $27.8 million. Operating income was $7.4 million. Net income was $3.8 million, compared to a net loss of $1.3 million last year. Non-GAAP net income was $5.3 million this quarter, an increase of 7 times over same period last year. That concludes our presentation. We are open to Q&A. Thanks.

Thank you. Ladies and gentlemen, we will now begin the question-and answer session. [Operator Instructions] Thank you. We do have our first question from the line of Eric Lu from China Renaissance. Please go ahead.

So, let me translate my question. So, thanks for taking my question. I am Jacky from China Renaissance. And my question is regarding the ESOP business. I’ve observed that we have very rapid growth of ESOP business this quarter by adding 23 new customers, which are coming for -- which actually brought 13% of new customers, regarding the paying customer. So, just wondering, can management help us elaborate more about our business trends and our competitive advantage in ESOP business and what is the growth outlook for this business? Thank you.

[Foreign Language]

Okay. Let me just quickly translate. So, Jacky, thanks for the question. So in terms of ESOP, this is where we are very focused. We think it’s a priority for our future growth, because we think for all the new emerging companies, every company has ESOP plan. So the TAM, the potential market is super big, so that’s why we want to invest a lot of resource into this business. So how we grow very fast in the past couple of years is, first of all, given we have multiple license across different jurisdictions, which give us a lot of, like, strengths or I would say, like, leverage to serve those global companies. For example, Xiaomi, they have employees in 20, 30 different countries and each country has different jurisdictions, tax quo. To be able to serve those people in different jurisdictions is actually a pretty complicated business, because we have our licenses in multiple locations. We will be offer customized service to service the companies’ needs under different jurisdictions. That’s why you can see in the past year, we are pretty much dominate the ADR ESOP business. More than 50% of the ADR issuers choose us to -- choose us as their ESOP provider. So, I think going forward, given we are working on more cases, especially those company cases, give us a lot more experience to be able to service more future issuers. In the future, we think from existing clients and a deal with future clients, we will be able to add in more ESOP corporate clients. And in return, it will help us to acquire more high-quality future users. Thanks.

Thank you so much.

Thank you. [Operator Instructions] We have our next question coming from the line of Hanyang Wang from 86Research. Please go ahead.

So let me translate my questions. I have two questions. First of all, is regarding on the commission rate. So, in my calculation, the commission rate and the margin interest rate in Q3 were down compared with Q2. So any color on that will be helpful? My second question is about licenses. So do we have any potential clients for the brokerage license in Hong Kong recently? And a follow-up question on institutional clients, so how many institutional clients that we are serving now? What are the average assets that we manage for the institutional investors? Thank you.

So, I will answer your first question on the take rate and the interest rate, then I will let Tianhua to answer your second and third question, okay? So, on the take rate, like I mentioned earlier, so the thing is right now, because the trading of volume has gone up, so the blended commission rate came down. In the third quarter, our pricing is actually the same versus as in the second quarter, so the decrease of the blended interest -- blended commission was due to the increase in trading volume. And the margin interest rate, actually, the -- in the third quarter, there were quite a few big Hong Kong IPOs, okay? But if in our current business model, we rely on our client and partner in Hong Kong to provide the funding. That’s why our margin -- the margin income which is the margin -- the net interest margin was relatively low. This is something we are working on to address in the future.

[Foreign Language]

Okay. Let me translate. Okay. Go ahead, Hanyang.

So, let me translate that question. So, if we compare with the interactive broker, we still serve like a group of institutional investors. So, could you help us understand that how big the market will be to serve the institutional investors? Thank you.

So, Hanyang, you want to know how big is the addressable market of the -- our potential institutional investor targets, right? Overall, how big is the size?

Yeah.

[Foreign Language]

Okay. So, hi, let me just elaborate a little bit more. So in terms of how big is the market, we think it’s very hard to pin down the exact number, because there are a lot of new, obviously, institutional investor coming to the market and some of them that has grown from small to much bigger size. So what do we think is, there is a definitely a huge need for banks like us or for like specialized broker like us to service those smaller institutional investors. So what we can service them now, just to recap what Tianhua said earlier is, we offer differentiated service. For example, they can now open account with bigger banks to have a prime brokerage account and we can help them to set up their accounts like traders to help them win all the trades and also help them to grow, sometimes we will help them to -- give them fundraising as well. So those are the stuff we can offer to smaller institutional investors. And to your second question on the license. Definitely, Hong Kong is definitely a huge market for us. As you can see, our financial performance, same as the same first question you asked is like we left too much money on the table, because we don’t have the Hong Kong license yet. So definitely, we will need the market once we have progress in this space. Thank you.

Very helpful. Thank you.

Thank you. We have our next question coming from the line of Hui Han from CICC. Please go ahead.

[Foreign Language] Okay. So let me translate my questions. Well, the first question is about the investment banking business. So we noticed that in this quarter we have made great achievements in assisting Chinese companies to list in the U.S. market. So what kind of special efforts have we made in the investment banking side? And compared to other competitors, what are our unique advantages? And the second question is about the international layout. So how do we acquire customers in countries like Singapore, Australia and New Zealand? And is there any difference in customer acquisition cost between these areas and Mainland China?

[Foreign Language]

Okay. Let me quickly translate the investment banking question first. So we pioneered the U.S. IPO distribution service back in 2017 on the back of our strong demand from retail and institutional investors. As you can see, our investment banking business has been growing very rapidly. Since then, within two years of timeframe, we have been working on more than 60 U.S. and Hong Kong IPOs. I think this year we have been working on pretty much all the big name, popular ADR IPOs. So how we can crack into the market when there are a lot of competitions from traditional international and domestic investment banks? Because our principal philosophy is we have to -- we want to bring in value-added service to the issuer. So, for example, we provide very steady demands. Those demands, especially during the tough market, like last year 2019, has been very helpful to the issuer to be able to get the IPO done. And also we provide a very customized DSP and IRPR services to the issuers, which traditional banks they don’t really be active in that kind of space. So this gives us an opportunity to be able to service those new economy issuers plus we have been doing the IPO ourselves a couple years ago. So we know all the stuff -- the issuer, potential issuers they have to manage when they are doing the IPO. So that’s why we have a huge growth in this space and as the investment basis also help us to drive more institutional and retail brokerage business.

[Foreign Language]

Okay. So given we are tech backed brokerage company. So this gives us the flexibility to enter into deal markets and be really adaptive to service that local need. For example, when we saw the needs in Singapore and Australia at the similar opportunities now to what we saw in China a few years ago when we started that business. So, I think that there is a huge potential down there. And the beauty of international expansion is the funding our conversion rate will be much higher and also we can offer very differentiated service versus the local brokers. For example, our commission rates will be much lower than the existing local players. And we help the local people not that only trade in their local stocks and also we help them to trade in Hong Kong and the U.S. equities. So we are very bullish about our international expansion strategy. We just started international expansion pretty much in the beginning of this year and we are seeing very promising results. So, we are very confident in the next 12 months to 24 months. Our international funding accounts will account for more than 50% of our deal paying clients. Thanks.

[Foreign Language] Thank you. [Operator Instructions] We do not have any more questions now. I would like to hand the conference back to our speakers today. Please go ahead.

Hello. This is Clark. I would like to thank everyone for joining our call today. I am now closing the call on behalf of the management team here at UP Fintech. 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.

Thank you.

Thank you. Have a great day.

Thank you.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all disconnect your lines now. Thank you.