Ladies and gentlemen, thank you for standing by, and welcome to UP Fintech Holdings Limited Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I must advise you that today's conference is being recorded today, November 27, 2023. I'd now like to hand the conference over to your first speaker today, Mr. Aaron Li, the Head of IR. Thank you. Please go ahead.

Thank you, operator. Hello everyone and thank you for joining us for the call today. UP Fintech Holding Limited's third quarter 2023 earnings release was distributed earlier today and is available on IR website at ir.itigerup.com, as well as GlobeNewswire services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and Chief Executive Officer; Mr. John Zeng, Chief Financial Officer; Mr. Huang 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. Some 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 statement. For more information about factors that could cause actual results to materially differ from those in the forward-looking statements, please refer to our Form 6-K furnished today, November 27, 2023 and our annual report on Form 20-F filed on April 26, 2023. We undertake no obligation to update any forward-looking statement except as required under applicable law. It is my pleasure to now introduce our Chairman and Chief Executive Officer, Mr. Wu. Mr. Wu will make remarks in Chinese which will be followed by English translation. Mr. Wu, please go ahead with your remarks.

[Foreign Language] Hello, everyone. Thank you for joining the Tiger Brokers' third quarter 2023 earnings conference call. In the third quarter, we saw improvement in both commission and interest-related income. As a result, total revenue was USD70 million, an increase of 6.2% quarter-over-quarter and 26.6% year-over-year. On the bottom line, as we started to see more operating leverage, net income attributable UP Fintech was USD13.2 million, a slight increase from the previous quarter and approximately 4x that of the same quarter of last year. Non-GAAP net income attributable to UP Fintech was USD16 million, up 4.3% from second quarter of this year and an increase of 141% from the same quarter of last year. We are glad to see a consistent quarter-over-quarter in the company's bottom line for all three quarters this year. Total non-GAAP net income of the first three quarters of this year was USD41 million, already exceeding the combined full-year non-GAAP net income of 2021 and 2022. We are confident in our business model to be adaptable in different market environments and regulatory framework. In the third quarter, we added 24,604 new funded accounts, bringing the total number of new funded accounts in the first three quarters of this year to over 84,000. Total number of funded accounts at the end of the third quarter reached 865,000 representing a growth of 15% compared to the same quarter of last year. In terms of total current assets, the trend of asset inflow remains strong, with net inflow over USD1.5 billion in the third quarter. After neutralizing the impact from market loss, total current assets in this quarter increased by 9.3% quarter-over-quarter and 45.4% year-over-year, reaching USD18.9 billion. Specifically, in the Singapore market, net inflow from local users remains stable and strong. In Singapore, the average net asset inflows…

Hello, everyone. Thanks, Tianhua and Aaron. Let me go through our financial performance for the third quarter. All numbers are in U.S. dollar. Total revenue was $70.1 million this quarter, increased 6.2% quarter-over-quarter and 26.6% year-over-year. Both commission income and interest-related income saw a sequential increase this quarter. Cash equity take rate was 6.1 bps this quarter, slightly decreased from last quarter. Within commission revenue, about 60% comes from cash equities, 30% from options, and the rest comes from futures and other products. Now on cost, interest expense was $12.1 million, increased 182% from the same quarter of last year, in line with the rate hike. Execution and clearing expense were $2.4 million, decreased 26% from the same period of last year, primarily due to more self-clearing in U.S. and Hong Kong securities. Employee compensation and benefits expense were $26 million, an increase of 8% year-over-year due to an increase in global headcounts. Depreciation expense decreased 10% to $2.2 million as the depreciation of the headquarters office declaration expense has been completed. Communication and market data expense were $7.6 million, an increase of 16% year-over-year due to the increase in user base. Marketing expense were $5.2 million this quarter, decreased 30% year-over-year as we remain prudent with our marketing approach in the third quarter. General and administrative expense were $5.4 million, an increase of 55% year-over-year due to increase in professional service fees. Total operating expense were $48.8 million, slightly increased 3.1% from the same quarter of last year. As a result, both GAAP and non-GAAP bottom line increased quarter-over-quarter and year-over-year. GAAP-related income was $13.2 million, slightly increased 1% from the previous quarter and about 4x that of the same quarter of last year. Non-GAAP-related income was $16 million, up 4% from the previous quarter and increased 141% versus the same quarter of last year. Now we have concluded our presentation. Operator, please open the line for Q&A. Thanks.

[Operator Instructions] First question comes from the line of Han Pu from CICC. Please go ahead.

[Foreign Language] Thanks management, for taking my question. I have two questions. Firstly, could you please give us the regional breakdown of the new funded accounts in Q3? And secondly, we have seen the positive improvement in the bottom line this year. Strategically, how do you balance the growth and the probability in 2024? Do we have any plans for new markets? Thank you.

[Foreign Language] For the first question, among the new funded accounts in the third quarter, approximately 55% came from Singapore. The contributions from Hong Kong, Australia and New Zealand region and the United States accounted for around 15% each. We've seen quarterly growth on bottom line throughout the first three quarters of this year, accumulating over USD41 million. As of now, the number of new funded clients has already exceeded our annual guidance of 500,000, and total client assets at the end of the third quarter have increased by 9.3% quarter-over-quarter and 45.4% year-over-year, reaching USD18.9 billion. So we have improved our profitability while growing user base and assets under custody. I believe the growth of user base and client assets goes hand-in-hand with the profit growth in the long run. There is a cap on how much cost savings can help profitability, especially with some variable costs, for example, our clearing expenses, are already one of the lowest in the industry. So the key is still to acquire more high-quality users, get more access on platform to increase total revenue and net income. It's a great question that you ask and it's also a question we keep asking ourselves, how to achieve better operating leverage if we incur more costs like CC. That's why we use ROI and payback period as important metrics to evaluate our different subsidiaries. As of now, our focus will continue to be on driving sustained profit growth in the existing market with manageable investment. So we can build buffer for company's future expansion, we will carefully evaluate all aspects of the company's resources before determining the pace and direction of new markets we want to enter. Thank you.

[Operator Instructions] Next up, we have the line from Cindy Wang from China Renaissance. Please ask your question.

[Foreign Language] So thanks management for taking my questions. So, I have two questions. First question is market, is that the Fed rate hike cycle is coming to the end, and they start to cut interest rate in the mid-2024. So based on this scenario, how would you adjust strategy and operations to maintain the current or even higher profit margin? The second question is the blended take rate in the third quarter was down sequentially. So what's the reasoning behind it? Thank you.

[Foreign Language] Okay. I'll translate his answer for first question. We think a good thing about the broker-dealer business model is trading velocity in general nature hedge with interest rate. When risks go up, velocity in trading commission tend to go down, and vice versa. In our business, a big chunk of interest income comes from margin financing and securities lending, where we earn a relatively stable interest spread. Therefore, the impact of interest rate costs on our interest income will be fairly limited. And of course, we will also adjust our product and operational strategy based on different market backdrop. For example, in the past year with the Fed rate hikes, we introduced more yield products such as U.S. dollar and Hong Kong dollar money market funds, and features for investments in U.S. Treasury. We also generated more interest income through treasury management and margin financing, securities lending business. But in the future, as market activity improves with interest rate cuts, more client assets will likely to shift from fixed income investment to equity investments. We will roll out more tailored investor education and promotions based on market conditions. So overall, we still consider future interest rate cuts as a positive signal, given increased market activity is more likely to generate beta effect growth on our top line.

[Foreign Language] So the slight decrease in blended take rate was due to high price names like Tesla and Nvidia, accounted for a big portion of our trading volume in the third quarter. So the increase in share price of those names outpaced the increase in number of shares traded. Since we charge commission by number of shares, the blended take rate came down slightly versus last quarter, even our pricing remained the same. Thanks.

[Operator Instructions] The next question comes from the line of Alan Kuang from Citibank. Please go ahead.

[Foreign Language] Thanks management for taking the question. This is Alan from Citi Research. I have two questions today. And the first one is about the Singapore market. Recently, we have seen one of our Tiger competitors building up growth momentum in Singapore with decent paying customer growth and market share gain during the third quarter. As Singapore is Tiger's core market, wondering if management have any comments on the latest local market share trends, and on a forward-looking basis, could management give us some color or update on the latest growth strategy for the Singapore market? And the second question is about crypto trading license. I'm wondering if management have any updates on the license application. Thanks.

[Foreign Language] So for the first question regarding our business in Singapore. The Singapore market has been a key profit driver for Tiger. Thanks to our low average CC which is staying below USD200 in the first three quarters, we've seen a double-digit compound growth on the bottom line throughout the first three quarters of this year. Also, the success in Singapore has boosted Tiger's reputation in the entire Southeast Asian market, brings us solid foundation and brand advantage for future entry into those Southeast Asian market. In the third quarter, the overall net asset inflow continued its strong momentum with around USD1.5 billion. Singapore played a big part in it, with average net asset inflows of our newly acquired clients in the third quarter reaching around USD10,000, and more importantly, our existing users from Singapore market showed a similar trend in terms of net asset inflows. The retention rate of our local users with assets remain at 99%, and the cash equity trading volumes saw a quarter-over-quarter increased about 10%, and we ranked at number 1 among our online brokers in Singapore in terms of Singapore shares trading volume. So whether we are looking at our strategic position, profitability, net inflows of client assets, or retention rates, we are comfortable with where we stand in Singapore. Our success locally is closely tied to our focus on user quality and our commitment to balancing ROI. So looking ahead, we will continue this strategy ensuring profitability while attracting high-quality users. Thank you.

[Foreign Language] So in our view, crypto is becoming a very important asset class. It's a natural extension of business as a broker dealer to add a new asset class. And the [Web3] technology is also integrated with Tiger's fintech background and low-how. So we are planning for multiple licenses across regions. For example, in the U.S., we are applying for MSP licensing each state. In Singapore, we are applying for PSA license. In Hong Kong, we already submitted our VATP application following SFC's consultation back in June. So hopefully, by next year, we will get an approval and offer crypto trading to investors. Thank you.

No questions. Now I would like to hand the call back to management for closing remarks, please.

I would 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 to this 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.

Thank you.

Ladies and gentlemen, that concludes the conference call for today. You may now disconnect your lines.