UP Fintech Holding Ltd. Sponsored ADR Class A (TIGR) Q1 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the UP Fintech Holding Limited First Quarter 2026 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, June 2, 2026. I would now like to hand the conference over to your first speaker today, Mr. Aron Lee, the 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's first quarter 2026 earnings release was distributed earlier today and is available on our IR website at ir.itigerup.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; Mr. Wang 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 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 statements. 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 statements, 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 English translation. Mr. Wu, please go ahead with your remarks.

[Interpreted] Hello, everyone. Thank you for joining the Tiger Brokers First Quarter 2026 Earnings Conference Call. 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 USD 155 million, representing a 26.3% increase year-over-year. Operating profit reached USD 47.6 million, up 17.5% from the same period last year. We onboarded 28,900 new funded accounts this quarter. Singapore and Hong Kong market 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 USD 2.9 billion in the first quarter. In particular, net asset inflow from retail users and the consolidated accounts exceeded USD 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 credit quality seeing further improvement. Due to the market turbulence in the first quarter, our client assets experienced mark-to-market losses of USD 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 USD 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-digit and double-digit quarter-over-quarter growth, respectively. We keep building out features updates to enhance users' overall investment experience. This quarter, we delivered a major upgrade to Tiger AI with a brand-new multi-agent architecture with functions, including market search, market analysis and risk control into stand-alone 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 interact with our future tools. Besides, Tiger AI has upgraded from our original dual-model framework to a 3-model collaborative system by integrating with Claude model, 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. Our 2B business continued to perform well. In the first quarter, we underwrote 10 Hong Kong IPOs, covering leading AI companies, including MiniMax and Zhipu AI. We also successfully completed 2 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. 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 USD 50 million to be implemented over a 12-month period from June 1, 2026 to June 1, 2027. Now I'd like to invite our CFO, John, to go over our financials.

All right. Thanks, Tianhua and Aron. 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 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 5 bps this quarter, down from 6.4 bps 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 0 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, in line with 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 [indiscernible] R&D. Occupancy, depreciation and amortization expense were $2.7 million, increased 25% year-over-year due to the increase in office space and 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 wealth 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 22, we received a regulatory penalty notice totaling approximately RMB 411 million. We have fully accounted for this amount in our first quarter results as [indiscernible] this is a one-time nonrecurring charge and will not have material impact on our core business and overall financial health. As a result, net loss and 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 presentation. Operator, please open the line for Q&A. Thanks.

[Operator Instructions] And our first question comes from the line of Peter Zhang from JPMorgan.

This is Peter Zhang from JPMorgan. I have 2 questions. First is, how do you interpret the new regulatory rules released on May 22? 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, management 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?

[Interpreted] On May 22, 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 USD 60 million. Given our current profitability and cash reserves, this fine will not materially affect our core operation for 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 2-year rectification period is not about closing all existing PRC client accounts, but to restrict trading activities when they are onshore in Mainland of 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 of 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% to 25% of our total net revenue. Since the new rules were announced, we saw some uptick 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 inflows [indiscernible] throughout the period. For your 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.

And our next question comes from the line of Cindy Wang from China Renaissance.

I have 2 questions here. First one is, we noticed that the first quarter take rate decreased sequentially, especially for the stock commission rate. Can you let us know what's the reasoning behind it? Second, this quarter, the company was affected by the one-off penalty resulting in a quarterly loss, but income tax expense increased sequentially. So what are the reasons for this? And how should we expect the effective tax rate going forward?

So total trading volume and equity trading volume both increased quarter-over-quarter, but the commission revenue fell roughly 5%, leading to a lower blended take rate. There are 2 key -- 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 0 commission for Hong Kong users trading Hong Kong stock and the take rate for Hong Kong stock is about 2 bps lower than that of the U.S. stock. A higher proportion of Hong Kong's trading volume will drag down the overall [indiscernible] take rate. Another reason is Tiger U.S. onboarded some active users this quarter and saw an uptick in total trading volume. But in the U.S., we follow market practice and offer 0 commissions, which further compressed the stock take rate. Beyond those 2 factors, revenue from futures trading rose around 6% in the fourth quarter to roughly 8% in first quarter. Since future volume is calculated based on notional value, the enlarged total trading volume caused a decrease in blended commission rate. [indiscernible] before the penalty. The primary reason of this income tax rate increase was due to a noncash tax adjustment linked to employee stock incentives. We amortized share-based compensation expense this quarter for accounting purpose, covering both vested and unvested stock -- employee stocks for tax purpose. However, only amortization related to vested award is tax deductible. Nondeductible 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 USD 4 million, and this amount was recorded as an increase in income tax expense. Conversely, a future share price rebound will also boost deferred tax asset and reduce tax expense accordingly. Excluding this one-time noncash impact, we expect our effective tax rate to stay below 20% going forward. Thanks.

And our next question comes from the line of You Fan from CICC.

This is You Fan from CICC. I have 2 questions. Firstly, could you share more on our run rate since Q2? What's the trend of the new funded clients' trading velocity and client AUM? Second question is on the net new funded accounts in Q1. What's the regional breakdown? And it seems that the number of the new added clients have not met the pace required for the full year guidance. So will you invest more in client acquisition or adjust the full year guidance?

[Interpreted] Your first question about our run rate in the second quarter, for the number of new users, we expect the number to stay stable quarter-over-quarter with Hong Kong and Singapore remaining our top contributing markets. Trading activity has picked up notably in the second quarter -- quarter-to-date. Both [ starts ] and commission income are higher than the Q1 level. U.S. stock trading activities 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 USD 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-over-quarter increase. 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 2 markets. Australia and New Zealand contributed around 20% with the rest coming from the U.S. Even with the headline news on May 22, 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, where indicators like average TAC or ROI are important, our strategic priority is user quality with client assets and net asset inflow as our core KPIs. Therefore, we view the ratio of customer acquisition cost to quarterly retail net asset inflow as a more relevant measure of acquisition efficiency. The other work is just how much net asset inflow we can generate per dollar spent on the client acquisition. This ratio was at roughly USD 170 in the first quarter compared to around USD 150 over the past 4 quarters and approximately USD 120 in the year before that. This shows that our customer acquisition strategy is indeed effective in acquiring high-quality users.

There are no further questions at this time, so I'll hand the call back to Aron 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. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]