Futu Announces First Quarter 2019 Unaudited Financial Results
First Quarter 2019 Highlights
- Total revenues increased 37.1% year-over-year to
HK$236.4 million (US$30.1 million ). - Total gross profit increased 45.9% year-over-year to
HK$175.2 million (US$22.3 million ). - Non-GAAP adjusted net income increased 2.5% year-over-year to
HK$49.3 million (US$6.3 million ). Non-GAAP adjusted net income is defined as net income excluding share-based compensation expenses. - Total number of registered clients1 increased 68.6% year-over-year to 547,963.
- Total number of paying clients2 increased 59.3% year-over-year to 148,680.
- Total number of users3 increased 39.3% year-over-year to 5.7 million.
- Client assets increased 20.7% year-over-year to
HK$62.3 billion (US$7.9 billion ). - Daily average revenue trades (DARTs)4 increased 4.7% year-over-year to 105,932.
_____________________________
1 The number of registered clients refers to the number of users who open one or more trading accounts on Futu’s platform.
2 The number of paying clients refers to the number of the clients with assets in their trading accounts on Futu’s platform.
3 The number of users refers to the number of user accounts registered with Futu NiuNiu applications or websites.
4 The number of Daily Average Revenue Trades (DARTs) refers to the number of average trades per day that generate commissions or fees.
“I am proud to report strong performance in the first quarter of 2019,” said Mr. Leaf Hua Li, Futu’s Chairman and Chief Executive Officer. “We continued to invest heavily in our proprietary technology infrastructure which translates into unparalleled product and service extendibility as well as an ever-evolving premier user experience. In the past quarter, we launched real-time Level II US stock quotes and a US IPO subscription service. As a result, our total client asset balance in US dollar accounts (in the form of either stock or cash) amounted to
Mr. Li added, “We are also establishing an increasingly international presence: in the past quarter, our total paying clients increased by 59.3% year-over-year to 148,680 at a high quarterly retention rate of 98.0%. This was outpaced by the 139.5% year-over-year growth of our
Mr. Arthur Yu Chen, Futu’s Chief Financial Officer, said, “Solid growth in the number of paying clients and client assets drove robust top-line growth of 37.1% year-over-year for our first quarter as a public company. As a result of our operating leverage brought by larger business scale and improved operating efficiency, our gross margin increased to 74.1% from 69.7% in the first quarter of 2018. The capital raised through our recent IPO enhanced our capital base and provided us with ample ammunition to continue to ramp up our R&D and marketing efforts. All in all, we are well positioned to implement our growth strategy in the quarters to come.”
First Quarter 2019 Operational Highlights
- Total number of registered clients reached 547,963 as of
March 31, 2019 , an increase of 68.6% fromMarch 31, 2018 . - Total number of paying clients was 148,680 as of
March 31, 2019 , an increase of 59.3% fromMarch 31, 2018 . - Total number of users was 5.7 million as of
March 31, 2019 , an increase of 39.3% fromMarch 31, 2018 . - Total client assets were
HK$62.3 billion as ofMarch 31, 2019 , an increase of 20.7% fromMarch 31, 2018 . - Daily average client assets were
HK$57.2 billion in the first quarter of 2019, an increase of 12.9% from the same period in 2018. - Total trading volume was
HK$223.8 billion in the first quarter of 2019, a decrease of 14.3% year-over-year and 2.3% quarter-over-quarter. - Daily average revenue trades (DARTs) were 105,932 in the first quarter of 2019, an increase of 4.7% from the same period in 2018.
- Margin financing and securities lending balance was
HK$3.9 billion as ofMarch 31, 2019 , a decrease of 5.7% fromMarch 31, 2018 and an increase of 21.0% fromDecember 31, 2018 . - Daily average margin financing and securities lending balance reached
HK$3.4 billion in the first quarter of 2019, an increase of 2.9% from the same period in 2018 and an increase of 2.5% from the fourth quarter of 2018.
First Quarter 2019 Unaudited Financial Results
Revenues
Total revenues were
Brokerage commission and handling charge income was
Interest income was
Other income was
Costs
Total costs were
Brokerage commission and handling charge expenses were
Interest expenses were
Processing and servicing costs were
Gross Profit
Total gross profit was
Gross margin was 74.1%, compared with 69.7% in the first quarter of 2018. The rise was primarily due to the Company’s operating leverage brought by larger business scale and improved operating efficiency.
Operating Expenses
Total operating expenses were
Research and development expenses were
Selling and marketing expenses were
General and administrative expenses were
Net Income
Net income was
Non-GAAP adjusted net income increased by 2.5% to
Net Income per ADS
Basic net income per American Depositary Share (“ADS”) was
Conference Call and Webcast
International: | +65-6713-5090 |
China: | 800-819-0121 |
US: | +1-845-675-0437 |
Hong Kong: | +852-3018-6771 |
Passcode: | Futu |
A telephone replay will be available after the conclusion of the conference call through
International: | +61-2-8199-0299 |
US: | +1-646-254-3697 |
Passcode: | 8394377 |
Additionally, a live and archived webcast of this conference call will be available at https://ir.futuholdings.com/.
About
Use of Non-GAAP Financial Measures
In evaluating the business, the Company considers and uses non-GAAP adjusted net income, a non-GAAP measure, as a supplemental measure to review and assess its operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines non-GAAP adjusted net income as net income excluding share-based compensation expenses. The Company presents the non-GAAP financial measure because it is used by the management to evaluate the operating performance and formulate business plans. Non-GAAP adjusted net income enables the management to assess the Company's operating results without considering the impact of share-based compensation expenses, which are non-cash charges. The Company also believes that the use of the non-GAAP measure facilitates investors' assessment of its operating performance.
Non-GAAP adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using non-GAAP adjusted net income is that it does not reflect all items of expense that affect the Company's operations. Share-based compensation expenses have been and may continue to be incurred in the business and is not reflected in the presentation of non-GAAP adjusted net income. Further, the non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.
The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance.
For more information on this non-GAAP financial measure, please see the table captioned "Unaudited Reconciliations of Non-GAAP and GAAP Results" set forth at the end of this press release.
Exchange Rate Information
This announcement contains translations of certain HK dollars (“HK$”) amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from HK$ to US$ were made at the rate of
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the expectation of its collection efficiency and delinquency, contain forward-looking statements.
For investor and media inquiries, please contact:
In China: |
Futu Holdings Limited |
E-mail: ir@futuholdings.com |
In the United States: |
Tip Fleming |
Christensen |
Tel: +1 (917) 412 3333 |
E-mail: tfleming@christensenir.com |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
As of December31 | As of March31 | ||||
2018 | 2019 | 2019 | |||
HK$ | HK$ | US$ | |||
ASSETS | |||||
Cash and cash equivalents | 215,617 | 233,039 | 29,687 | ||
Cash held on behalf of clients | 11,771,487 | 12,123,079 | 1,544,381 | ||
Available-for-sale financial securities | 59,348 | 16,321 | 2,079 | ||
Equity method investment | - | 6,855 | 873 | ||
Loans and advances | 3,086,904 | 3,574,870 | 455,409 | ||
Receivables: | |||||
Clients | 120,256 | 187,223 | 23,851 | ||
Brokers | 425,849 | 657,184 | 83,720 | ||
Clearing organization | 175,955 | 188,783 | 24,049 | ||
Interest | 49,427 | 34,313 | 4,371 | ||
Prepaid assets | 8,810 | 10,591 | 1,349 | ||
Other assets | 149,279 | 160,235 | 20,415 | ||
Total assets | 16,062,932 | 17,192,493 | 2,190,184 | ||
LIABILITIES | |||||
Amounts due to related parties | 8,591 | 7,291 | 929 | ||
Payables: | |||||
Clients | 12,304,717 | 12,809,939 | 1,631,881 | ||
Brokers | 920,871 | 308,211 | 39,264 | ||
Clearing organization | - | 107,039 | 13,636 | ||
Interest | 2,405 | 3,601 | 459 | ||
Borrowings | 1,576,251 | 1,363,747 | 173,730 | ||
Accrued expenses and other liabilities | 149,818 | 182,677 | 23,272 | ||
Total liabilities | 14,962,653 | 14,782,505 | 1,883,171 | ||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands, except for share and per share data)
As of December31 | As of March 31 | |||||||
2018 | 2019 | 2019 | ||||||
HK$ | HK$ | US$ | ||||||
MEZZANINE EQUITY | ||||||||
Series A convertible redeemable preferred shares | 68,072 | - | - | |||||
Series A-1 convertible redeemable preferred shares | 14,587 | - | - | |||||
Series B convertible redeemable preferred shares | 282,627 | - | - | |||||
Series C convertible redeemable preferred shares | 777,835 | - | - | |||||
Series C-1 convertible redeemable preferred shares | 107,351 | - | - | |||||
Total mezzanine equity | 1,250,472 | - | - | |||||
SHAREHOLDERS’(DEFICIT)/EQUITY | ||||||||
Pre-IPO ordinary shares | 31 | - | - | |||||
Class A ordinary shares | - | 28 | 4 | |||||
Class B ordinary shares | - | 42 | 5 | |||||
Additional paid-in capital | - | 2,513,506 | 320,200 | |||||
Accumulated other comprehensive loss | (1,299 | ) | (204 | ) | (26 | ) | ||
Accumulated deficit | (148,925 | ) | (103,384 | ) | (13,170 | ) | ||
Total shareholders' (deficit)/equity | (150,193 | ) | 2,409,988 | 307,013 | ||||
Total liabilities, mezzanine equity and shareholders' (deficit)/equity | 16,062,932 | 17,192,493 | 2,190,184 | |||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except for share and per share data)
For the Three Months Ended | ||||||||
March 31, 2018 |
March 31, 2019 |
March 31, 2019 |
||||||
HK$ | HK$ | US$ | ||||||
Revenues | ||||||||
Brokerage commission and handling charge income | 94,772 | 114,639 | 14,604 | |||||
Interest income | 66,652 | 107,873 | 13,742 | |||||
Other income | 10,985 | 13,937 | 1,775 | |||||
Total revenues | 172,409 | 236,449 | 30,121 | |||||
Costs | ||||||||
Brokerage commission and handling charge expenses | (19,364 | ) | (20,923 | ) | (2,665 | ) | ||
Interest expenses | (17,280 | ) | (20,425 | ) | (2,602 | ) | ||
Processing and servicing costs | (15,689 | ) | (19,943 | ) | (2,541 | ) | ||
Total costs | (52,333 | ) | (61,291 | ) | (7,808 | ) | ||
Total gross profit | 120,076 | 175,158 | 22,313 | |||||
Operating expenses | ||||||||
Research and development expenses | (30,809 | ) | (53,425 | ) | (6,806 | ) | ||
Selling and marketing expenses | (10,086 | ) | (31,902 | ) | (4,064 | ) | ||
General and administrative expenses | (19,207 | ) | (27,527 | ) | (3,507 | ) | ||
Total operating expenses | (60,102 | ) | (112,854 | ) | (14,377 | ) | ||
Others, net | (62 | ) | (927 | ) | (118 | ) | ||
Income before income tax expense | 59,912 | 61,377 | 7,818 | |||||
Income tax expense | (14,131 | ) | (15,836 | ) | (2,017 | ) | ||
Net income | 45,781 | 45,541 | 5,801 | |||||
Preferred shares redemption value accretion | (16,738 | ) | - | - | ||||
Income allocation to participating preferred shareholders | (14,042 | ) | - | - | ||||
Net income attributable to ordinary shareholder of the Company | 15,001 | 45,541 | 5,801 | |||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Continued)
(In thousands, except for share and per share data)
For the Three Months Ended | ||||||
March 31, 2018 |
March 31, 2019 |
March 31, 2019 |
||||
HK$ | HK$ | US$ | ||||
Net income per share attributable to ordinary shareholder of the Company | ||||||
Basic | 0.04 | 0.09 | 0.01 | |||
Diluted | 0.03 | 0.07 | 0.01 | |||
Net income per ADS | ||||||
Basic | 0.30 | 0.68 | 0.09 | |||
Diluted | 0.24 | 0.56 | 0.07 | |||
Weighted average number of ordinary shares used in computing net income per share | ||||||
Basic | 403,750,000 | 535,376,069 | 535,376,069 | |||
Diluted | 508,095,915 | 646,254,513 | 646,254,513 | |||
Net income | 45,781 | 45,541 | 5,801 | |||
Other comprehensive income, net of tax | ||||||
Foreign currency translation adjustment | (5,432 | ) | 1,095 | 139 | ||
Total comprehensive income | 40,349 | 46,636 | 5,940 | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Three Months Ended | ||||||||
March 31, 2018 |
March 31, 2019 |
March 31, 2019 |
||||||
HK$ | HK$ | US$ | ||||||
Net cash generated from/(used in) operating activities | 734,845 | (781,134 | ) | (99,511 | ) | |||
Net cash (used in)/ generated from investing activities | (5,501 | ) | 28,095 | 3,579 | ||||
Net cash generated from financing activities | 835,128 | 1,033,300 | 131,635 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 12,983 | 88,753 | 11,306 | |||||
Net increase in cash, cash equivalents and restricted cash | 1,577,455 | 369,014 | 47,009 | |||||
Cash, cash equivalents and restricted cash at beginning of the period | 7,551,842 | 11,987,104 | 1,527,059 | |||||
Cash, cash equivalents and restricted cash at end of the period | 9,129,297 | 12,356,118 | 1,574,068 | |||||
Cash, cash equivalents and restricted cash | ||||||||
Cash and cash equivalents | 174,864 | 233,039 | 29,687 | |||||
Cash held on behalf of clients | 8,954,433 | 12,123,079 | 1,544,381 | |||||
Cash, cash equivalents and restricted cash at end of the period | 9,129,297 | 12,356,118 | 1,574,068 | |||||
Non-cash financing activities | ||||||||
Accretion to preferred shares redemption value | 16,738 | - | - |
UNAUDITED RECONCILIATIONS OF NON-GAAP AND GAAP RESULTS
(In thousands)
For the Three Months Ended | |||||
March 31, 2018 |
March 31, 2019 |
March 31, 2019 |
|||
HK$ | HK$ | US$ | |||
Net income | 45,781 | 45,541 | 5,801 | ||
Add: share-based compensation expenses | 2,368 | 3,756 | 478 | ||
Adjusted net income | 48,149 | 49,297 | 6,279 |
Source: Futu Holdings Limited