Futu (3Q25 Minutes): Crypto Trading Surges, Hong Kong Remains the Main Source of New Customers
The following is compiled by Dolphin Research$Futu(FUTU.US) 3Q25 Earnings Call Minutes. Detailed business data for the quarter can be viewed in the Longbridge APP - Individual Stocks - Panorama - Performance Composition.
I. Review of Core Financial Information
1. $FUTU-W(03588.HK) The company's total revenue for the quarter reached HKD 6.4 billion, a significant year-on-year increase of 86%, driven primarily by comprehensive growth in brokerage, interest, and other service revenues.
2. Brokerage commission and fee income increased to HKD 2.9 billion, up 91% year-on-year and 13% quarter-on-quarter, driven by increased trading volume;
3. Interest income surged to HKD 3.0 billion, up 79% year-on-year and 33% quarter-on-quarter, benefiting from increased income from securities lending, margin financing, and deposit interest;
Other income rose 111% year-on-year to HKD 441 million.
4. On the cost side, total costs rose to approximately HKD 780 million, up about 25% year-on-year, in line with the expansion of business scale;
Among them, brokerage commission and fee expenses increased by 97% year-on-year, interest expenses rose by about 17% year-on-year, and processing and service costs grew by 12% year-on-year.
Gross profit for the quarter rose to HKD 5.6 billion, up 100% year-on-year, with the gross profit margin significantly improving to 87.8%.
5. Operating expenses increased by 57% year-on-year to HKD 1.7 billion, with R&D expenses up 49% year-on-year, sales and marketing expenses up 86% year-on-year, and administrative expenses up about 40% year-on-year, mainly due to increased technology investment, new account expansion, and personnel expansion.
Driven by strong revenue growth and operating leverage, operating income for the quarter increased to HKD 3.9 billion, up about 127% year-on-year, with the operating profit margin significantly improving to 61.3%.
6. Net profit increased by 143% year-on-year to HKD 3.2 billion, with the net profit margin expanding to 50.1%, and the effective tax rate for the quarter was 16.7%.
II. Detailed Content of the Earnings Call
2.1 Key Information from Executive Statements
1) In terms of platform operating metrics, by the end of the quarter, the company had 3.13 million asset accounts, up 43% year-on-year and 9% quarter-on-quarter, with total client assets reaching HKD 1.24 trillion, up 79% year-on-year and 27% quarter-on-quarter, driven by continued strong net inflows and asset appreciation; at the same time, average client assets in all markets recorded double-digit quarter-on-quarter growth and reached historical highs. The pace of client acquisition accelerated in all markets.
2) The Hong Kong market recorded the highest quarterly net client growth since the first quarter of 2021, and has been the largest contributor to new funded accounts across all markets for four consecutive quarters. The company successfully capitalized on the opportunity of increased trading activity among local investors driven by a strong stock market and busy IPO activity.
3) The Singapore market maintained steady growth in new funded accounts, with the leading advantage in daily active users further expanding; the Malaysian business continued to grow rapidly for seven consecutive quarters, with the company launching derivative and futures products and enhancing AI localization capabilities, while significantly boosting regional brand influence through large-scale offline events.
4) The U.S. business achieved high-quality growth again this quarter, with new account openings recording double-digit growth quarter-on-quarter; options trading activity increased, with the number of traders and contract volumes both recording double-digit growth quarter-on-quarter.
5) Trading activity significantly increased, with total trading volume reaching HKD 3.9 trillion, up 105% year-on-year, Hong Kong stock trading volume increased by 43% quarter-on-quarter to HKD 1.19 trillion, U.S. stock trading remained at a high level of HKD 2.6 trillion, cryptocurrency trading volume surged 161% quarter-on-quarter, with Ethereum's quarterly trading volume quadrupling, becoming the most popular cryptocurrency on the platform.
6) Wealth management scale expanded, with wealth management assets growing 8% quarter-on-quarter to HKD 175.6 billion by the end of the quarter, with continued strong allocation to fixed income and money market funds by clients; at the same time, the company launched a self-service inquiry function for structured products to further enhance the experience and trading efficiency of professional investors.
7) The corporate services business maintained its growth momentum, with the company having 561 IPO underwriting and investor relations clients by the end of the quarter, up 22% year-on-year, with multiple IPO projects on the platform exceeding HKD 100 billion in subscription amounts, and for the first time acting as the global coordinator for the IPO of Butong Group, reflecting the continuous improvement in corporate service capabilities.
2.2 Q&A
Q: The strong growth in client assets in the third quarter, can you break down the changes in market value and net asset inflows? How has net inflow performed since the fourth quarter? Additionally, client acquisition cost (CAC) in the third quarter increased compared to the second quarter but remained below the full-year guidance. How do you expect the client acquisition trend and CAC to change in the fourth quarter given the recent market correction?
A: About one-third of the growth in client assets in the third quarter came from net inflows, and two-thirds from market value fluctuations. Since the fourth quarter, market value has been negative, but net inflows remain strong with no signs of slowing down. Third-quarter CAC was about HKD 2,300, slightly up quarter-on-quarter but still below the full-year target range of HKD 2,500–3,000. As of the current fourth quarter, both client acquisition momentum and CAC remain healthy, and management is more optimistic about achieving the full-year CAC target set at the beginning of the year.
Q: What were the key drivers of the strong quarter-on-quarter growth in interest income in the third quarter? Can you break down the income contributions from client idle cash, margin financing, and securities lending? Was the significant growth in securities lending in the second and third quarters driven by market factors or company initiatives? Additionally, what is the trend for securities lending interest income in the fourth quarter?
A: Interest income in the third quarter was composed of three parts—client idle cash, margin financing, and securities lending, with the three being roughly balanced. The strong growth in securities lending in the second and third quarters was mainly driven by market factors: there were more opportunities for lending "hard-to-borrow" stocks in the third quarter, rather than any special actions at the company level. As for the fourth-quarter trend, the company currently does not have high-frequency tracking data for securities lending interest income and will provide further updates in the next quarterly report.
Q: How did the cryptocurrency business perform in the third quarter? What are the key factors driving future growth in the crypto business—will token expansion, derivatives, staking, etc., become the main drivers?
A: The cryptocurrency business showed exponential growth in the third quarter, covering the three major markets of Hong Kong, Singapore, and the United States:
In Hong Kong, both the scale of crypto asset management and trading volume achieved triple-digit quarter-on-quarter growth, with Solana being one of the newly added and most popular assets this quarter;
In Singapore, trading volume grew by triple digits, with the penetration rate of crypto in funded accounts continuing to increase;
In the United States, the introduction of market order functionality and the addition of 10 new cryptocurrencies drove increases in trading volume and asset scale.
The current contribution of the crypto business to overall revenue is still small, but management believes there is significant growth potential, with future growth drivers including expanding the token product line and developing high-margin derivatives, although some businesses will depend on regulatory approvals. Overall, management remains optimistic about long-term growth while emphasizing that the growth path for new businesses will not be linear.
Q: If the Federal Reserve cuts interest rates, how will the company's interest income be affected? Additionally, R&D and administrative expenses increased significantly both year-on-year and quarter-on-quarter, what are the main investment directions? What are the future plans?
A: For every 25 basis point rate cut by the Federal Reserve, the company's monthly pre-tax profit would decrease by approximately HKD 3.7 million. However, rate cuts would also bring positive effects such as increased trading activity and enhanced client asset inflows, which could partially offset the decline in interest income.
In terms of expenses, the increase in administrative expenses mainly comes from early investments for new market expansion over the next two years, as well as personnel expansion; the growth in R&D expenses comes from building cryptocurrency and artificial intelligence capabilities. The company is investing in system construction for crypto-related licenses in Hong Kong and other markets.
In terms of AI, externally, the company will continue to upgrade client AI agent services, and internally, it will deepen the application of AI in process optimization and operational efficiency improvement to support long-term growth.
Q: The company saw strong client growth this quarter, how are the new and existing asset clients distributed regionally? Additionally, what are the latest developments, strategic priorities, and core advantages of the company in the U.S. market compared to peers?
A: Among the new asset accounts added in the third quarter, Hong Kong and Malaysia together contributed about 50%; excluding small new markets like Canada and New Zealand, the contributions from other markets were between 5% and 15%.
As of the end of the quarter, the client structure showed that clients from Greater China accounted for 46%, while clients from overseas markets accounted for 54%.
In the U.S. business, the company noted that new account funding was strong, and existing client activity significantly increased, with the number of options trading users and options trading volumes both achieving double-digit quarter-on-quarter growth. The growth mainly came from two aspects:
First, the continuous enhancement of brand influence, such as launching large-scale brand promotions in downtown New York;
Second, strong product capabilities, focusing on active traders. The company continues to optimize the product experience for this core customer group, thereby forming a differentiated advantage.
Q: What is the progress of the investment after the acquisition of Airstar Bank? What is its strategic positioning in Futu's business in the short, medium, and long term? Additionally, how is the regional composition of net asset inflows this quarter, and how have the proportions of Hong Kong and high-net-worth clients changed?
A: The shareholding ratio of Airstar Bank was approved to increase to 68.4% in the third quarter, making Futu the controlling shareholder.
In the short term, the focus will be on enriching banking products and services, enhancing client experience, and promoting synergy integration with the brokerage business;
In the medium to long term, the banking business will help enhance client stickiness and wallet share, allowing clients to complete the entire process of deposit, investment, loan, and consumption within the Futu ecosystem, reinforcing the positioning of a "one-stop financial service platform".
Futu is currently the only online brokerage platform in Hong Kong that integrates digital banking capabilities, the scarcity of this license and the breadth of services it can provide are seen as important competitive moats.
Airstar Bank will be integrated into Futu's financial statements in the future. Over the next 2–3 years, Futu will continue to invest in Airstar Bank, but as more markets improve profitability, the drag on Futu's overall profit and loss from its losses is expected to be limited and gradually narrow; after the capital injection, Futu will also continue to maintain deep cooperation with Xiaomi Group.
In terms of client asset inflows, the proportion from Hong Kong decreased slightly quarter-on-quarter, accounting for 70%, and has been declining for the past two quarters, mainly due to strong inflows from overseas markets such as Singapore and Malaysia. Currently, the Hong Kong market still contributes about two-thirds of the net asset inflows (NAI);
At the same time, the penetration rate of high-net-worth clients in Hong Kong continues to increase, and management expects this trend to continue in the coming quarters.
Q: What are the plans for cryptocurrency and tokenized products in the next one to two quarters? From a long-term perspective, what value does the company hope to provide to clients through tokenization? Is the company considering accelerating the development of crypto capabilities through acquisitions?
A: In terms of new product lines and tokenization, the company has made extensive preparations and internal discussions and has already started to lay out some related products. However, tokenization is still an emerging concept and is subject to scrutiny by different regulatory systems, the future launch of products will be highly dependent on regulatory progress, so it is currently not possible to provide a clear roadmap.
Regarding whether to accelerate the development of crypto capabilities through acquisitions, management emphasized that they remain open to this and believe that the crypto business is an important part of the company's long-term strategy, and will continue to retain relevant strategic options.
Q: Hong Kong has led in new client additions for four consecutive quarters, are there significant differences in asset scale, age, trading behavior, and product preferences between new clients and early clients? Additionally, what is the trend of gross profit margins in overseas markets such as Singapore and Malaysia?
A: In Hong Kong, the average assets of new clients continued to rise in the third quarter; coupled with strong net inflows from existing clients, the average assets of Hong Kong clients recorded double-digit growth quarter-on-quarter. With the enhancement of brand influence, the company expects to attract more high-quality clients and deepen their one-stop asset allocation needs.
As for trading behavior, there is no structural difference between new and existing clients, mainly driven by market performance—Hong Kong outperformed the broader market in the third quarter, so clients shifted from primarily trading U.S. stocks to more actively participating in Hong Kong stock trading, which is a cyclical change rather than a structural characteristic.
In terms of gross profit margins in overseas markets, the profit margins of trading and margin businesses in all markets are inherently high, with healthy gross profit margins; the operating leverage effect is mainly reflected on the operating expense side. As the scale of international markets expands, operating leverage accelerates, for example, the operating profit margin in Singapore has exceeded 60% for consecutive months and continues to improve, fully reflecting the strong profitability elasticity of the business model.
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