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CALL PARTICIPANTS
- Chief Executive Officer — Leaf Hua Li
- Chief Financial Officer — Arthur Chen
- Senior Vice President, Corporate Development — Daniel Yuan
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TAKEAWAYS
- Funded Accounts — 3,130,000 funded accounts, reflecting 43% year-over-year growth and 9% sequential growth.
- Net New Funded Accounts — 254,000 net additions, a 65% year-over-year and 25% sequential increase.
- Total Client Assets — HKD 1.24 trillion at period-end, up 79% year-over-year and 27% sequentially.
- Margin Financing & Securities Lending Balance — HKD 63.1 billion, up 23% sequentially, with demand boosted by leveraged positions and Hong Kong IPO activity.
- Total Trading Volume — HKD 3.9 trillion, increasing 105% year-over-year and 9% sequentially.
- Hong Kong Stock Trading Volume — HKD 1.19 trillion, up 43% sequentially and comprising 31% of total trading volume, the highest share since 2023.
- US Stock Trading Volume — HKD 2.6 trillion, as trading volume surged 161% sequentially, driven by a 90% quarter-over-quarter increase in crypto asset balance and accelerated trading velocity.
- Ethereum Volume — Quadrupled in the quarter, surpassing Bitcoin as the top-traded coin on the platform.
- Wealth Management Assets — HKD 175.6 billion, up 8% sequentially, with client allocations to fixed income and ongoing inflows to money market funds.
- IPO Distribution & IR Clients — 561 clients, up 22% year-over-year.
- Revenue — HKD 6.4 billion, an 86% year-over-year increase.
- Brokerage Commission & Handling Charge Income — HKD 2.9 billion, up 91% year-over-year and 13% sequentially, driven by trading activity.
- Interest Income — HKD 3 billion, with 79% year-over-year and 33% sequential growth, sourced evenly from client idle cash, margin financing, and securities lending.
- Other Income — HKD 441 million, up 111% year-over-year; sequentially flat.
- Total Cost — HKD 780 million, a 25% year-over-year increase.
- Gross Profit — HKD 5.6 billion, doubling from the prior year (100% gain).
- Gross Margin — 87.8%, an increase from 81.8% in 2024.
- Operating Expenses — HKD 1.7 billion, up 57% year-over-year and 31% sequentially.
- Income from Operations — HKD 3.9 billion, a 127% year-over-year and 17% sequential rise.
- Operating Margin — 61.3%, compared to 50.4% in 2024.
- Net Income — HKD 3.2 billion, representing 143% year-over-year and 25% sequential growth.
- Net Income Margin — 50.1% versus 38.4% in the prior-year period.
- Effective Tax Rate — 16.7% for the quarter.
- Client Acquisition Cost (CAC) — Averaged HKD 2,300, up slightly sequentially but below the full-year target range of HKD 2,500-3,000.
- Crypto Revenue Contribution — Daniel Yuan said, “crypto contributed a very small percentage to Futu Holdings Limited’s current revenue.”
- Air Star Bank Stake — Controlling share increased to 68.4%, with consolidation into Futu Holdings Limited’s financial statements to follow.
- Fed Rate Cut Sensitivity — Arthur Chen said, “for every 25 basis point cut by the Fed rate, our monthly pretax profit will be negatively impacted by around HKD 37 million.”
- Regional Account Mix — Greater China contributed 46% of funded accounts, with overseas markets at 54%.
- Singapore Operating Margin — Consistently above 60%, according to management commentary.
SUMMARY
Futu Holdings Limited (FUTU +1.71%) completed a capital injection in Air Star Bank, raising its stake to 68.4% and signaling plans for enhanced integration of digital banking and brokerage services. Client asset expansion was primarily driven by robust mark-to-market gains, comprising two-thirds of the total asset inflow, with the remainder from net new client funds. Crypto-related activity grew broadly across all major markets, but revenue impact remained limited, with Solana and Ethereum achieving record platform engagement during the period.
- Arthur Chen stated that fourth-quarter asset inflows remained “very robust” despite negative mark-to-market impacts to date.
- Management noted that client acquisition cost and momentum in the fourth quarter were “quite healthy,” and CAC was still tracking below annual guidance.
- Arthur Chen linked the sequential rise in R&D and G&A costs to investments in crypto, AI, and preparations for new market entry, as well as increased staff levels.
- Hong Kong’s percentage contribution to asset inflow slightly decreased compared to previous quarters, with Singapore and Malaysia recording very strong asset inflows.
- Daniel Yuan identified the expansion of coin offerings and derivatives as primary catalysts for future crypto revenue growth, with regulatory factors presenting key dependencies.
INDUSTRY GLOSSARY
- IPO (Initial Public Offering): The process by which a private company offers shares to the public in a new stock issuance, allowing it to raise capital from public investors.
- Net New Funded Accounts: The net number of brokerage accounts that have deposited funds during a reporting period, reflecting new client additions after accounting for closures or withdrawals.
- Crypto AUM: The total value of client crypto assets managed or held on the platform.
Full Conference Call Transcript
Thank you all for joining our earnings call today. We concluded the third quarter with 3,130,000 funded accounts, marking a 43% year-over-year and 9% quarter-over-quarter increase. During the quarter, we acquired 254,000 net new funded accounts, up 65% from a year ago and 25% sequentially. We are encouraged to see accelerated client acquisition in all markets. In the third quarter, Hong Kong posted the highest quarterly net client app since 2021 and remained the largest contributor to new funded accounts among all markets for four straight quarters. We effectively sparked and captured clients’ trading interests amid a quarter of strong equity market performance and busy IPO schedules.
With a new IPO framework, retail investors in Hong Kong increasingly consolidate their brokerage accounts to increase their chances of getting out CEO allocation. And they tend to pick a trusted platform with the best overall user experience as their main brokerage account. In Singapore, new funded accounts again posted steady sequential growth. We led our peers in DAUs by an even wider margin, further solidifying our position as the number one retail broker in Singapore. Following seven quarters of rapid expansion in Malaysia since launch, we still see a huge runway for future client growth as equity ownership continues to go up. In the third quarter, we further strengthened product localization by launching Versa Derivative and SGX Futures.
An upgraded AI tool to support Malay language and local stock analysis. Our annual flagship offline investor event, MoveFest, was held in Singapore in July and in Malaysia in October, altogether attracting over 28,000 investors to sign up and further elevating our brand image in the region. Thanks to our growing brand recognition and product experience, our US business delivered another quarter of high-quality growth. We achieved a high double-digit sequential increase in new funded accounts. We also observed another quarter of more active derivatives trading activity, as both the number of option traders and option contracts traded recorded double-digit sequential growth. As of quarter-end, total client assets reached HKD 1.24 trillion, up 79% year-over-year and 27% quarter-over-quarter.
The growth was driven by another quarter of robust net asset inflow, while the appreciation in client stock holdings also contributed meaningfully to the overall asset expansion this quarter. Average client assets logged double-digit sequential increases and hit new highs in every market. Bullish sentiment on Hong Kong and US equities prompted more leveraged positions. The buoyant Hong Kong IPO market also boosted financing demand. As a result, margin financing and securities lending balance climbed 23% quarter-over-quarter to HKD 63.1 billion. Total trading volume rose 105% year-over-year and 9% quarter-over-quarter to HKD 3.9 trillion on the back of favorable market dynamics and upbeat investor sentiment.
Elevated trading velocity and technology names lifted overall Hong Kong stock trading volume by 43% sequentially to HKD 1.19 trillion, which accounted for 31% of total trading volume, the highest percentage since 2023. US stock trading volume remained elevated at HKD 2.6 trillion, as many technology and crypto names posted new highs. Trading volume surged 161% sequentially, driven by a 90% quarter-over-quarter increase in crypto asset balance and accelerated trading velocity. Ethereum trading volume quadrupled during the quarter, overtaking Bitcoin as the most popular coin on our platform. In Hong Kong, the launch of Solana for retail investors was well received. Solana contributed meaningfully to the growth of crypto turnover this quarter.
We believe that as we continue to broaden coin selection, strengthen product capabilities, and deepen investor education, there is significant potential to further drive crypto trading penetration among our client base. For the period-end, wealth management assets rose 8% sequentially to HKD 175.6 billion. During the quarter, clients increasingly allocated to fixed income funds, alongside the sustained inflow into money market funds. To better serve the bespoke needs of professional investors, we introduced a self-service request for quote function to structure products, whereby clients can customize products based on their desired parameters, access and compare quotes from a number of issuers, and execute trades seamlessly without human intervention.
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