Futu Reports User Growth, Strong Financials and Ongoing Expansion

The brokerage, which completed its IPO earlier this year, has enjoyed growing revenue and income that has more than doubled during the second quarter despite the overall market volatility.

Author: CapitalWatch Staff   

Futu Holdings Ltd. (Nasdaq: FHL) reported an influx of clients in the second quarter and strong financial results.

The fast-growing company, a tech-driven online brokerage with headquarters in Shenzhen and Hong Kong, said in a statement today that its revenue in the three months through June rose to $33.3 million, a 40 percent increase from a year ago. Net income during the same time soared 129 percent year-over-year to $7.1 million, or 6 cents per American depositary share, Futu said.  

In response to the news, shares in Futu jumped 6 percent to $12.01 in early trading Monday, but in the afternoon slid to $10.94 per ADS, down 3 percent.

The chairman, founder and chief executive officer of Futu, Leaf Hua Li, said in a statement today that the company's technological capabilities have propelled it ahead despite market uncertainties during the second quarter.

He noted that, in June, Futu became the first Chinese broker to offer "full market-depth for U.S. option quotes, with quote refresh rates that are much faster than our peers in the region."

Earlier, in May, Futu delved into wealth management in Hong Kong with Money Plus, a money market mutual fund distribution platform. Futu has also begun to offer fixed income and equity funds, while more financial products are in development.

The new offerings, paired with Futu's marketing efforts, contributed to the solid growth in the number of users. For the second quarter, Futu reported 614,504 registered clients, at a 65 percent increase year-over-year. The number of paying clients who held assets in their trading accounts at Futu, at the same time, jumped nearly 51 percent to 164,717, according to the report. On NiuNiu, Futu's proprietary trading app, the total number of users reached 6.1 million.

Meanwhile, Futu's focus on expanding its market share in Hong Kong has led to a 115 percent increase in the number of paying clients in the city during the second quarter. That surpassed first-quarter results when Futu reported the number of its Hong Kong users has doubled year-over-year.

Backed by China's tech giant, Tencent Holdings Ltd. (HKEX: 0700), Futu lifted off in trading in March, raising $170 million in the public offering and the concurrent private placement of shares. Its stock lifted off at $12 per American depositary share and closed up 28 percent on debut day.

Since then, Futu has pursued expansion geographically, as well as in terms of its product portfolio and hiring new talents.

Geographically, in addition to its significant growth in Hong Kong, the company has furthered the development of its U.S. business. The U.S. version of its trading app, called MooMoo, has been steadily improving since it launched in beta in December 2018. Meanwhile, Futu's U.S. entity, Futu Clearing Inc., has been granted membership as a U.S. broker-dealer by the Financial Industry Regulatory Authority (FINRA). The membership includes the capacity to provide clearing services in the United States.

Furthermore, in May, Futu has kicked off its employee stock ownership plan (ESOP) management services to integrate them with its IPO subscription services.

Li said in the statement today, "We continue to see good synergies between our retail business and enterprise service business, which serves as an important client acquisition channel."

As of June 30, Li said Futu had 39 ESOP clients, among which was DouYu International Holdings Ltd. (Nasdaq: DOYU), a game-streaming platform. Its $775 million IPO in July was the biggest Chinese listing this year in New York, though it was not as grand as anticipated at a turbulent time in the U.S.-China relations.

Futu's chief financial officer, Arthur Chen, said in a June interview with CapitalWatch that a number of other expansion plans are in the works. Among them is getting a virtual banking license in Hong Kong.

In a statement today, Chen noted that Futu's gross margin rose to 75.5 percent from 67.6 percent a year ago.

He concluded, "We will continue to invest in technology to sustain our competitive advantages and market our business as we expand globally."