NEWS WRAP: UP Fintech posts strong quarterly growth, profit setback

By Teri Yu

UP Fintech Holding Ltd. (TIGR.US), known for its Tiger Brokers online trading services, reported last Friday its revenue touched a new record in the second quarter, even as its profit fell sharply due to a loss related to a discontinued business.

The company’s revenue for the June quarter totaled $87.4 million, up 10.8% quarter-on-quarter and 32.4% year-on-year. Its net income of $2.6 million was down 80.3% from $13.2 million a year earlier. Its non-GAAP net income, which excludes share-based compensation, also dropped sharply to $5.2 million from $15.3 million a year earlier.

The profit hit owed to a $13.2 million loss provision related to a case involving its pledged stock business in Hong Kong. As detailed on its earnings call, the company said it took a cautious approach by making a full provision for the transaction in question, even though it already signed a repayment agreement with the client and has a guarantor. The provision could ultimately be reversed if the payment is made and no problems arise.

The company said it has suspended the Hong Kong stock pledge business since last year due to unfavorable market conditions and risk. Despite that and assurances of no future exposure, the stock dropped as much as 8% in Friday trade after the results were published, before closing down 6.4% at $3.64.

In other operating metrics, the company’s number of newly funded accounts rose 68% year-on-year during the second quarter, driven primarily by growth in Singapore and Southeast Asia. The company began as a Chinese brokerage serving domestic clients but has been aggressively expanding into other markets as it faces regulatory headwinds at home. It said it was confident of meeting its annual goal of adding 777,000 new accounts in 2024.

UP Fintech’s quarterly commission income also jumped 54.9% year-on-year to $34.1 million, as more clients traded stocks, options and futures in U.S. markets due to their strong performance during that time. Net client asset inflows reached $1.7 billion, raising total client assets to $38.2 billion.

The company is targeting high-net-worth individuals in Singapore to drive growth, CEO Wu Tianhua told Bloomberg during an interview in June. Wu said Singapore, where the company is now based, has become UP Fintech’s single largest market in terms of client assets and revenue contribution, with about one-third of local adults registered to use its Tiger Brokers app.

Tiger and its competitor Futu (FUTU.US) both started out by offering offshore securities trading for Mainland Chinese investors. But the pair were ordered by the Chinese regulator to stop accepting new clients in China in late 2022, and their trading apps were barred from China in May last year. According to Wu, China’s share of Tiger’s client assets has now dropped to less than a quarter from the majority four years ago.

Founded in Beijing in 2014, UP Fintech runs brokerage services in Hong Kong, Singapore, the U.S., Australia and New Zealand. It also offers employee stock ownership program, investment banking and wealth management services.

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