Futu

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Futu Holdings Ltd 2026 Q2 Earnings Call

[AI Key Takeaways]

Financial Performance

- Total revenue reached HK$7.2 billion, up 36% year-over-year from HK$5.3 billion in Q2 2025

- Net income increased 42% year-over-year to HK$3.6 billion, with net income margin expanding to 50.6%

- Total trading volume hit a record high of HK$6.42 trillion, up 78.8% year-over-year and 54.6% quarter-over-quarter

- Total client assets reached HK$1.4 trillion, up 43.6% year-over-year and 14.5% quarter-over-quarter

Business Highlights

- Net new funded accounts of 252,000 in Q2, bringing total funded accounts to approximately 3.84 million

- Singapore registered users surpassed the 2 million milestone, solidifying leadership among local retail investors

- Malaysia achieved operating profit break-even for the first time in Q2

- Became the first Hong Kong broker to launch securities-backed margin financing for virtual assets under an upgraded Type 1 license

Financial Guidance

- Full-year CAC guidance maintained at HK$2,500-3,000 range

- Q3 quarter-to-date metrics trending modestly softer due to market volatility

- Net addition of funded accounts moderated compared to Q2

- Trading volume down modestly sequentially in Q3, reflecting cooling retail sentiment

Opportunities

- Thailand market entry as a natural extension in Southeast Asia with over 4.5 million potential online investors

- AI-powered features seeing strong adoption growth, evolving from novelty to daily research staple

- Cross-selling synergy between prediction markets and core brokerage business driving higher client activity

- Nearly 60% of newly listed Hong Kong companies chose Futu as their IPO services partner

Risks

- New regulations announced on May 22 resulted in mid-single-digit percentage outflows of total client assets

- Blended commission rate declined due to structural changes in trading behavior and shifts in concentration

- Market volatility led to moderated client acquisition and trading activity in Q3

- Regulatory and compliance challenges in expanding markets may impact the growth trajectory

[AI Conference Transcript]

Operator

Gentlemen, welcome to Futu Holdings Ltd's Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect. At this time, I would like to turn the conference over to your host for today's call, Michelle Lee, Investor Relations Manager at Futu. Ma'am, please go ahead.

Michelle Lee

Thanks, operator. Thank you for joining us today to discuss our second quarter 2026 earnings results. Joining me on the call today are Mr. Li Li, Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Hsu, Senior Vice President. As a reminder, today's call may include forward-looking statements which represent the company's beliefs regarding future events, which by their nature are uncertain and outside of the company's control. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual report. With that, I will now turn the call over to Li. Li will make his comments in Chinese, and I will translate.

Lee Lee

In the second quarter, we added a net 252,000 funded clients. The number of funded clients increased by 23.7% year-over-year and 12.2% quarter-over-quarter, reaching a total of approximately 3.84 million, representing a 33.6% year-over-year increase and a 7% quarter-over-quarter increase.

Michelle Lee

In the second quarter, we acquired 252,000 net new funded accounts, up 23.7% year over year and 12.2% quarter over quarter. Total funded accounts reached approximately 3.84 million, representing an increase of 33.6% year over year and 7% quarter over quarter.

Lee Lee

Benefiting from active Hong Kong IPOs and the strong performance of US stocks, client acquisition in the Hong Kong market accelerated sequentially. In Singapore, registered users surpassed the 2 million milestone, further solidifying moomoo's leadership among local retail investors. Average revenue per new client in both Hong Kong and Singapore increased sequentially, driven by our ongoing investor education initiatives across multiple asset classes and our continuous investment in brand building.

Michelle Lee

Position in Hong Kong accelerated sequentially during the quarter, supported by a robust local IPO pipeline and strong performance in US equities. In Singapore, registered users surpassed the 2 million milestone, further solidifying our leadership among local retail investors. The average revenue per new client in both markets improved sequentially, underpinned by our ongoing investor education initiatives across multiple asset classes, reinforced by our sustained investment in brand.

Lee Lee

In Malaysia, targeted marketing campaigns centered on Malaysian IPOs and the AI-driven rally drove client acquisitions to a record quarterly high. Malaysia has led all markets in competitive performance for three consecutive quarters. The prediction market product offered by Moomoo in the US received strong market response, driving new client acquisitions and effectively boosting overall platform engagement.

Michelle Lee

Our targeted marketing campaigns centered around local IPOs and the AI driven rally catalyzed a record quarter of client acquisitions leading all markets in net new funded accounts for the third consecutive quarter. In the US, Muno's prediction markets garnered significant traction, driving incremental new client acquisition and helping improve overall client engagement on our platform.

Lee Lee

As of quarter end, total client assets stood at approximately HK$1.4 trillion, up 43.6% year over year and 14.5% quarter over quarter. The asset growth was mainly attributable to the rise in market value of client holdings, followed by net cash inflows. The margin financing and securities lending balance rose 31% quarter over quarter to HK$95.1 billion, primarily driven by an active Hong Kong IPO market and improved overall market sentiment, which encouraged clients to increase their leverage usage.

Michelle Lee

As of quarter end, total client assets stood at 1.4 trillion Hong Kong dollars, up 43.6% year over year and 14.5% quarter over quarter. The growth was mainly attributable to higher market valuation of client stockholding and to a lesser extent net asset inflow. Margin financing and securities lending balance rose 31% quarter over quarter to 95.1 billion Hong Kong dollars, supported by an active Hong Kong IPO market along with broader positive market sentiment that encouraged clients take on more leverage.

Lee Lee

Favorable market conditions drove total trading volume up 54.6% quarter over quarter and 78.8% year over year to approximately HK$6.42 trillion, setting a new historical record. Among this, US stock trading volume rose 67.2% quarter over quarter to HK$5.02 trillion, primarily driven by investor interest in AI-related stocks. Hong Kong stock trading volume increased 15.9% quarter over quarter to HK$1.17 trillion, mainly benefiting from active trading in semiconductors, China-concept internet stocks, and newly listed shares.

Michelle Lee

Thanks to favorable market conditions, total trading volume rose 78.8% year over year and 54.6% quarter over quarter to 6.42 trillion Hong Kong dollars, setting a new record high. U.S. stock trading volume grew 67.2% sequentially to 5.02 trillion Hong Kong dollars, driven by client interest in AI related names. Hong Kong stock trading volume increased by 15.9% quarter over quarter to 1.17 trillion Hong Kong dollars, largely attributable to heightened trading activity in Semiconductor, China, Internet and newly listed companies.

Lee Lee

Today, our Type 1 license has been upgraded, making us the first and currently only broker in Hong Kong to offer virtual asset trading with securities-backed financing. Meanwhile, we are actively exploring the inclusion of virtual assets into our unified purchasing power framework to further enhance capital efficiency across both traditional and digital asset markets.

Michelle Lee

In June, Q2 Securities became the first and remains the only broker in Hong Kong to launch securities-backed margin financing for virtual assets, following an upgraded Type 1 license approval from the SFC. We are also exploring extending our unified buying power framework to cover virtual asset holdings, further enhancing capital efficiency across traditional and digital asset markets.

Lee Lee

Wealth management client assets reached HKD 180.2 billion, up 10% year-over-year and 1% quarter-over-quarter. Driven by strong equity market performance this quarter, we observed a shift in client preference from money market funds to equity funds. In Hong Kong, we held our first offline fund roadshow for retail investors, focusing on the commercial space sector. Investor interest in this theme was strong, with the event fully attended onsite and hundreds participating via live stream, leading to significant subsequent subscriptions.

Michelle Lee

Wealth management client assets were 180.2 billion Hong Kong dollars, up 10% year over year and 1% quarter over quarter. During the quarter, we observed a shift in client preference from money market funds toward equity funds on the back of strong equity market performance in Hong Kong. We held our first offline fund roadshow for retail investors, centred on the commercial space theme amid heightened investor interest. The event drew a full on site audience and several 100 live stream participants, translating into meaningful follow on subscriptions.

Lee Lee

Our IPO distribution and IR clients totaled 683, a 32% increase year-over-year. The Hong Kong IPO market maintained strong momentum in the second quarter, with nearly 60% of newly listed companies choosing to partner with Futu. We served as joint bookrunners for several high-profile listings, including Tianxing Medical, Xizhi Technology, and Jitai Technology.

Michelle Lee

We concluded the quarter with 683 IPO distribution and IR clients, up 32% year over year. The Hong Kong IPO market sustained strong momentum in the second quarter with nearly 60% of newly listed companies choosing to partner with Futu. We served as joint bookrunners for multiple high profile listings, including those of Star Sports Medicine, Cytologins, and Mattis Tech Bio.

Lee Lee

Next, I'd like to invite our CFO, Arthur, to present our financial performance.

Michelle Lee

Next, I'd like to invite our CFO, Arthur, to discuss our financial performance.

Arthur Chen

Thank you, Liva and Michelle. Please allow me to walk you through our financial performance for the second quarter. All figures are in Hong Kong dollars unless otherwise stated. Total revenue was HK$7.2 billion, up 36% from HK$5.3 billion in the second quarter of 2025. Brokerage commission and handling fee income was HK$3.4 billion, up 30% year-over-year and 27% quarter-over-quarter. Total trading volume grew on both a year-over-year and quarter-over-quarter basis, while the blended commission rate declined due to stronger trading activity in higher-priced U.S. stocks and options.

During the quarter, interest income was HK$3.1 billion, up 37% year-over-year and 18% quarter-over-quarter. The increases on both a year-over-year and quarter-over-quarter basis were mainly driven by higher interest income from margin financing, bank deposits, and securities lending. Other income was HK$718 million, up 61% year-over-year and 27% quarter-over-quarter. The increases on both a year-over-year and quarter-over-quarter basis were primarily driven by higher foreign exchange income and IPO financing service income.

Our total costs were HK$985 million, up 47% compared to the second quarter of 2025. Brokerage commission and handling fee expenses were HK$248 million, up 54% year-over-year and 50% quarter-over-quarter. The increases on both a year-over-year and quarter-over-quarter basis were mainly due to higher trading volume. Interest expenses were HK$513 million, up 36% year-over-year and 24% quarter-over-quarter. The increases on both a year-over-year and quarter-over-quarter basis were mainly driven by higher interest expenses associated with our margin financing business.

Processing and servicing costs were HK$225 million, up 70% year-over-year and 32% quarter-over-quarter. The increases on both a year-over-year and quarter-over-quarter basis were primarily driven by higher clearing and settlement fees. As a result, total gross profit was HK$6.2 billion, an increase of 34% from HK$4.6 billion in the second quarter of 2025. Gross margin was 86.3%, compared to 87.4% in the same quarter of 2025.

Operating expenses were HK$1.8 billion, up 35% year-over-year and 11% quarter-over-quarter. Breaking it down, R&D expenses were HK$501 million, up 13% year-over-year and 5% quarter-over-quarter. The increases on both a year-over-year and quarter-over-quarter basis were primarily driven by increased investments in strategic initiatives such as AI and web streaming. Selling and marketing expenses were HK$657 million, up 53% year-over-year and 18% quarter-over-quarter. The increases on both a year-over-year and quarter-over-quarter basis were mainly driven by the growth in new funded accounts.

G&A expenses were $593 million, up 40% year-over-year and 10% quarter-over-quarter. The year-over-year increase was primarily due to an increase in G&A personnel and professional fees. As a result, income from operations was $4.5 billion, up 34% year-over-year and 26% quarter-over-quarter. The operating margin of 62% was largely flat compared to the second quarter of 2025. Our net income increased by 42% year-over-year to $3.6 billion. The net income margin expanded to 50.6% in the second quarter, compared to 48.4% in the same quarter last year. Our effective tax rate for this quarter was 16.1%. That concludes our prepared remarks. We would now like to open the call to questions. Operator, please go ahead.

Operator

Thank you. As a reminder, to ask a question, please press star-one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star-one-one again. We ask that you please limit yourself to one question and one follow-up. One moment while we compile our Q&A roster. Our first question will come from the line of Emma Fu with BofA Securities. Your line is open. Please go ahead.

Emma Fu

Congratulations to the company on its very strong second-quarter results. I am Emma Xu from BofA Securities, and I have two questions. First, since the release of the new regulations on May 22, has there been any significant change in the proportion of mainland clients in terms of funded client AUM and revenue contribution? Have you observed any significant outflow of accounts or assets? Second, against this regulatory backdrop, we observed that the Group's revenue and profit performance remained robust in the second quarter. Could management please share an update on the current development of overseas markets and their contribution to the Group? Thank you.

Lee Lee

Okay, thank you, Emma. I will invite Li Zi to answer the first question, and I will answer the second question. Thank you. Futu places a high priority on compliant operations and strictly implements various regulatory requirements. Following the release of the new regulations on May 20, we promptly executed actions in accordance with relevant compliance standards and maintained ongoing communication with regulators. Since the new regulations, cumulative client withdrawals accounted for a mid-single-digit percentage of total client assets, with the main impact fully realized in the second quarter. Outflows came from both mainland and Hong Kong clients, with roughly equivalent volumes. The mainland portion was mainly driven by compliance-related fund adjustments under the new rules, while the Hong Kong portion was concentrated in the early period following the announcement, reflecting risk-averse withdrawals triggered by market sentiment fluctuations. Mainland client attrition was concentrated after the implementation of app restrictions in June. By August, we saw a significant slowdown in the outflow pace. In the second quarter, the retention rate for Hong Kong clients remained above 98%, and retention rates in overseas markets remained relatively stable quarter-over-quarter. Additionally, new customer acquisition in overseas markets continued to show steady growth. We will continue to direct resources and growth focus toward advancing our international business. Thank you.

Michelle Lee

Futu places very strong emphasis on compliance, and we are committed to meeting all applicable regulatory requirements. Following the release of the new rules, we promptly implemented the relevant compliance measures and have maintained ongoing communication with regulators. Regarding cumulative asset outflows since the new regulations, outflows amounted to a mid-single-digit percentage of our total client assets, and we believe the bulk of the impact was already observed in Q2. The outflows came from both our mainland and Hong Kong client bases, with the two being roughly equal in volume. The mainland outflows were primarily compliance-driven adjustments under the new rules, while the Hong Kong outflows were more concentrated in the immediate aftermath of the announcement, reflecting some risk-off sentiment as the market digested the news. Most of the mainland client outflows occurred in June and July after we implemented restrictions on our app, and the pace of client attrition began to moderate in August. In Q2, our Hong Kong client retention rate stayed above 98%, and retention across our overseas markets remained stable quarter-over-quarter. We continue to see steady growth in new overseas client additions. Going forward, we will keep directing our resources and growth focus toward advancing our international business.

Arthur Chen

I will address the second question. First, regarding the revenue contribution from new clients, we have seen notable sequential improvements in revenue per newly funded account across multiple overseas markets in the second quarter. Specifically, markets such as the US, Singapore, and Hong Kong all posted double-digit sequential growth in this metric. We believe this reflects both a structural uplift in client quality in growing markets like the US and our continued acquisition of higher-value clients in mature markets like Hong Kong and Singapore, which together support overall revenue growth. From the perspective of client numbers and assets, funded accounts in overseas markets including Malaysia, Australia, New Zealand, and Canada also grew by double digits sequentially in the second quarter. In fact, average client assets rose quarter-over-quarter across all overseas markets. This demonstrates that we are growing not just in client numbers but also in wallet share. Our recent acquisition of the Thailand license provides an important additional anchor for our ASEAN footprint in the future. In terms of profitability, our overseas subsidiaries are at different stages of maturity. For instance, Singapore has been profitable for several years, and both absolute profit levels and net profit margins continue to expand, benefiting from positive operating leverage. I am also pleased to share that our Malaysia market achieved operational break-even for the first time in the second quarter of this year. We believe that more of our overseas markets may gradually cross the break-even point in the coming quarters. Currently, some overseas markets are still in the stage of accumulating client and asset bases. With rising average client assets and improved retention rates, we are confident in the long-term profitability potential of our overseas markets. Thank you.

Emma Fu

Thank you. They are very helpful. Thank you.

Operator

And one moment for our next question. Our next question will come from the line of Chia Huang with Morgan Stanley. Your line is open. Please go ahead.

Chia Huang

This is Chia Huang from Morgan Stanley. I have two questions. First, regarding the choice of the Thailand market, I would like to ask management about the strategic considerations behind this decision and when we can expect formal business launch and customer acquisition to begin. Additionally, given that we already have a presence in several Southeast Asian markets, is there any synergy among these different markets? Second, I would like to follow up on the commission rate, which has indeed seen a certain degree of quarter-on-quarter decline. The CFO briefly touched on this earlier; could you elaborate on what changes in trading structure or pricing might be reflected in this drop? Thank you.

Lee Lee

Okay, thank you, Chiayao. For the first question, I will invite my colleague Robin to answer, and I will address the second question. Thank you.

Robin Hsu

Thank you for the question. First, Thailand is the third-largest economy in Southeast Asia, and local investors have a relatively high level of digital adoption. Demand for global asset allocation and digital investment tools continues to grow. According to data from the Stock Exchange of Thailand, as of the first half of 2026, the number of investors who opened accounts online in Thailand reached 4.5 million. Therefore, entering Thailand is a natural extension for moomoo in the Southeast Asian market, following Singapore and Malaysia. It also creates strong synergies with our existing infrastructure and user operation experience in other markets. Currently, moomoo has obtained a Type A securities business license issued by the Thai SEC. Combined with our licensed operational experience in other overseas markets, the company's multi-jurisdictional compliance capabilities have been recognized by overseas regulators, and the overall pace of overseas business expansion remains stable. As for the specific timeline for launching operations in Thailand, we still need to wait for the Thai regulators to complete their inspection of our readiness and grant final approval. Therefore, there is no definitive timetable at this moment. We will strictly adhere to the local regulatory process and diligently prepare all necessary pre-launch work. Thank you.

Michelle Lee

Thailand is the third-largest economy in Southeast Asia, and local investors there are quite digitally savvy, with growing demand for global asset allocation as well as digital investing tools. According to the Stock Exchange of Thailand, as of the first half of 2026, over 4.5 million investors had opened accounts online. For moomoo, entering Thailand is a natural next step in the Southeast Asian market after Singapore and Malaysia. It allows us to leverage the infrastructure and operations we have already built in the region. moomoo has obtained the Type A securities license from the SEC. Combined with our licensed operations in other overseas markets, this reflects ongoing regulatory recognition of our ability to operate compliantly across multiple jurisdictions, and the overall pace of our overseas expansion remains steady. Regarding the timing of the official launch, we still need to undergo regulatory readiness checks and inspections to receive final approval. Therefore, we do not have a specific timeline to share at this point. We will continue to work closely with the local regulator to ensure all pre-launch preparations are thoroughly in place.

Arthur Chen

Regarding the second question about the slight quarter-on-quarter decline in the blended take rate, I will provide an explanation. First, we did not adjust any pricing structures during this quarter, so the decline in the blended take rate mainly reflects changes in user trading behavior. Firstly, the proportion of derivatives trading decreased slightly this quarter, although the absolute level of derivatives contribution remains very healthy. Secondly, more clients traded US stocks in the second quarter, with a particular focus on high-priced common stocks and large-value option contracts. Specifically, the average stock prices of AI and tech leaders such as SanDisk, Micron, and Tesla rose significantly in the second quarter, which to some extent affected our commission take rate. There were no price menu changes in the second quarter across all our markets. Thus, the quarter-on-quarter change in the take rate was mainly driven by customer behavior. Number one: the contribution from derivatives in the second quarter declined slightly compared to the first quarter, but the absolute contribution level remains very healthy. Secondly, more clients traded US stocks in the second quarter, with a high concentration on high-value AI names and leading tech stocks, which lowered our effective commission rate slightly. Thank you.

Operator

Thank you. One moment while we take the next question. Our next question comes from Charles Zhao with UBS. Your line is open. Please go ahead.

Charles Zhao

Thank you. This is Charles Zhao from UBS Group. Congratulations to management on the excellent results, which significantly beat market consensus. I have two questions. First, we noticed some volatility in the blended customer acquisition cost (CAC) in the second quarter. Could you elaborate on the key drivers and the expected trend for CAC in the coming quarters? Second, could you provide a breakdown of net new funded accounts and total funded accounts by region at the end of the quarter, particularly highlighting the contribution from overseas markets? Thank you.

Lee Lee

Thank you, Charles. For the first question, I will invite my colleague Xu Ni to answer. I will address the second question.

Robin Hsu

In the second quarter, our group's blended customer acquisition cost (CAC) rose quarter-on-quarter to approximately HKD 2,600, which remains within our full-year guidance range of HKD 2,500 to HKD 3,000. The quarter-on-quarter increase in CAC in 2Q was mainly influenced by regulatory events, where customer churn led to a lower number of net new funded accounts. Meanwhile, the company continued to maintain a certain level of brand-building investment to support long-term growth in various markets and the continuous enhancement of customer value. Additionally, the customer acquisition cost in July saw a certain degree of month-on-month increase.

Michelle Lee

So in the second quarter, the blended CAC rose sequentially to around HK$2,600, which is still within our full-year guidance range of HK$2,500 to HK$3,000. The quarter-on-quarter increase in CAC for Q2 was mainly driven by the relatively lower number of net new funded accounts resulting from regulatory developments. At the same time, we maintained a certain level of brand investment to support long-term growth and higher client lifetime value across our markets. Additionally, the CAC trended higher in July relative to Q2.

Arthur Chen

Regarding the performance across various markets, looking at the growth of new funded clients with assets, Malaysia has led the group for three consecutive quarters, followed closely by Hong Kong. Together, Malaysia and Hong Kong contributed more than half of the new funded clients with assets this quarter. Among the remaining markets, Singapore made the relatively larger contribution. By the end of the second quarter, the proportion of funded clients under the moomoo overseas brand has increased to nearly 60%, with Singapore, Malaysia, and the US being the major contributors.

Michelle Lee

Malaysia has led all markets in terms of new funded accounts growth for three consecutive quarters, followed by Hong Kong. Together, these two markets make up for more than 50% of net new funded accounts acquired in this quarter, with Singapore being the next largest source among the remaining markets. By the end of the second quarter, moomoo's share of total funded accounts has increased to nearly 60%, led by Singapore, Malaysia and the US.

Operator

Thank you. And one moment for our next question. Our last question is going to come from the line of You Fan with CICC. Your line is open. Please go ahead.

You Fan

Thank you for the opportunity to ask questions, and congratulations to the company on such outstanding performance. I am Yoyo Fan, an analyst from CICC. I have two questions. First, could management share insights on the overall operational trends since the beginning of the third quarter, including metrics such as new customer acquisitions, deposit volumes, and trading activity? Second, regarding prediction markets, given that moomoo has launched prediction markets in the US, could management share updates on its performance since launch? We are also interested in your views on the future commercialization path and growth opportunities for the prediction markets business. Thank you.

Lee Lee

Alright, for the first question, I’ll invite my colleague to answer, and I will address the second question.

Robin Hsu

Looking at our Q3 quarter-to-date run rate, key metrics have shown slight pressure due to market volatility. The net increase in funded accounts moderated compared to Q2. In terms of net asset inflows, based on the Q3 run rate, inflows from Hong Kong and overseas markets have returned to a normalized level. Trading volume declined sequentially, primarily reflecting a slight cooling in market sentiment during Q3 quarter-to-date compared to Q2.

Michelle Lee

So on the Q3 quarter to date run rate basis, our key metrics are trending modestly softer against a backdrop of market volatility. So the net addition of funded accounts moderated compared with Q2. And As for net asset inflow, so in Hong Kong and our overseas markets, net asset inflows have returned to a normalized level. And As for the trading volume, so total trading volume was down modestly sequentially. So this is primarily reflecting a cooling of the retail sentiment in the Q3 quarter to date relative to the previous quarter.

Arthur Chen

We obtained the FCM license in May, and moomoo US officially launched prediction market trading services for U.S. retail investors in early June. As mentioned by Lee in her opening remarks, the total trading volume for event contracts exceeded 200 million within the first month of launch, reflecting strong demand from U.S. retail investors for compliant prediction market products. We believe event contracts have been highly effective in both customer acquisition and engagement activation, generating significant synergies and cross-selling opportunities with our core securities business. We observe that users who trade event contracts also exhibit higher activity levels in securities trading, indicating that these two product categories are complementary rather than substitutive. Regarding our business layout in the U.S., I see two main objectives. First, we aim to capitalize on the rapid growth of the local prediction market industry. Second, and perhaps more importantly, we seek to build core capabilities in product design, operations management, and risk control, thereby preparing for the potential expansion of prediction market services to other regions within the Group in the future.

Michelle Lee

We obtained the FCM license in May from CFTC and Mumu US officially launched the prediction market trading service for our retail clients in the US in early June. The number of the event contracts as Lee mentioned in opening remarks traded exceed 200 million within one month of the launch, reflecting a very strong demand from the US retail investors for prediction markets products. And the event contracts has delivered great results in our observation in both acquiring new clients and driving engagement with clear cross sell synergy with our core brokerage business. For instance, users who trade event contracts are more active in security trading showing that event contracts are not substitute for security trading but rather a driver of it. The purpose for our US prediction market rollout, I think has two purposes. Number one is definitely to capture the near term opportunity as prediction markets took off locally. But more importantly, let us build up the product design, operational and the risk management expertise that will support our ability to bring prediction markets to other regions we have the operation down the road.

Operator

Thank you. And I would now like to hand the conference back over to Michelle Lee for closing remarks.

Michelle Lee

So that concludes our call today. And on behalf of the Futu management team, I would like to thank you all for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you and goodbye.

Host

Thank you to all fellow investors for waiting online. We will now move on to the Q&A session for individual investors. I have compiled the questions from the backend, focusing on the most frequently asked ones. The first question relates to the high client retention rate on the Futu platform mentioned earlier in the institutional segment. Could management share how the company maintains such a high retention rate across different market environments? We invite Robin Hsu, Senior Vice President of Futu, to answer this question. Let me translate the question first: You mentioned earlier in the institutional section that Futu has consistently maintained a high client retention rate. Could you please elaborate on how the company sustains such strong client retention amid diverse market conditions? We'll invite Robin Hsu, Senior Vice President of Futu, to answer this question.

Robin Hsu

Thank you for the question. As mentioned earlier in the institutional segment, our average client retention rate in Hong Kong and overseas markets continued to remain above 98% in the second quarter. Achieving this sustained high retention rate is a testament to the strength of Futu's comprehensive platform. Since our inception, we have remained committed to prioritizing user needs and experience, continuously refining our products and services to cover the entire investment journey. This ranges from real-time quotes, news, and community engagement to investor education, as well as multi-market equity trading, derivatives, ETFs, crypto assets, wealth management, and IPO subscriptions. We are consistently building differentiated competitive advantages. It is the continuous accumulation of these capabilities that encourages clients to choose us, trust us, and remain on the Futu platform for the long term.

Michelle Lee

As noted in the institutional Q&A, our average client retention rate for Hong Kong and overseas markets remained above 98% in the second quarter. This level of retention is a testament to Futu's comprehensive platform capabilities. Since our inception, we have remained committed to a user-centric approach. We continuously enhance our products and services to support users' full-cycle investment journey. From real-time quotes, news, and community engagement to investor education, our broad product offering—ranging from global equities and derivatives to crypto and wealth management—creates a differentiated value proposition. Ultimately, it is these cumulative strengths that earn our users' trust and ensure their long-term loyalty to our platform.

Host

Thank you, Robin, for sharing. Let's move on to the second question. Some investors have been wondering: since Futu has established itself as a top-tier retail broker in Hong Kong and Singapore, is the company approaching a growth ceiling in these two core markets? Could management share your views on the long-term growth prospects in these regions and where Futu plans to continue uncovering wealth management opportunities? We invite Arthur Chen, CFO, to answer this question. Let me translate the question first: Futu has established itself as a top-tier retail broker in Hong Kong and Singapore. Is the company approaching a growth ceiling in these core markets? Could management share your views on long-term growth prospects and where you see opportunities to unlock further wealth management growth? We'll invite Arthur Chen, CFO, to answer this question.

Arthur Chen

Thank you for the question. First, I believe both Hong Kong and Singapore are globally significant wealth management hubs. As we discussed last quarter, according to a BCG report, the total asset base in each of these regions is approximately HKD 30 trillion. Although Futu's market share in terms of user base in both locations exceeds 50%, there is still substantial room for growth in terms of customer asset penetration. We plan to advance our wealth management business along three dimensions: brand strength, product capability, and service quality. From a branding perspective, thanks to our long-term efforts in the Hong Kong and Singapore markets, Futu has built solid brand recognition and user trust in both regions. An increasing number of clients are willing to place their core assets on the Futu platform for the long term, and the proportion of high-net-worth clients among our total customer base is steadily rising. These brand barriers, accumulated over time, are difficult for competitors to replicate through short-term marketing investments. Secondly, regarding product capability, we are continuously expanding our matrix of wealth management products and trading categories to provide our clients with more diversified asset allocation options. In terms of service capability, we have established exclusive private wealth centers in core business districts in Hong Kong, and our localized private wealth service team in Singapore continues to expand, further strengthening our local service capabilities. Let me translate this.

Michelle Lee

First, it is important to recognize that Hong Kong and Singapore are premier global wealth management hubs with trillions of dollars in assets that remain largely untapped. As mentioned in previous earnings calls, according to the BCG report, the addressable wealth markets in both Hong Kong and Singapore have each exceeded HKD 30 trillion, while our market share in these regions has surpassed 50%. We see significant room for growth, not necessarily in raw user numbers, but in the penetration of client assets and the deeper monetization of these assets. Our roadmap to unlock this wealth management potential rests on three pillars. The first is brand equity. Through our long-term investment in these two markets, we have established strong brand recognition. This has led to an increasing number of clients, particularly high-net-worth individuals, trusting Futu with their core assets. We view this trust as a sustainable competitive advantage. The second is product strength. We are expanding our wealth management product offerings and tradable instruments, enabling our clients to achieve more diversified asset allocations. The third is service capability. We have launched dedicated private wealth centers in prime districts in Hong Kong and are actively expanding our local private wealth service teams in Singapore to further elevate our high-touch service delivery.

Host

Thank you, Arthur. That brings us to the final question of tonight. We have observed that Futu has rolled out AI features in both the Hong Kong and overseas markets. Could you please provide an update on the current user adoption of these AI features globally, and explain how AI specifically helps customers make better-informed investment decisions? We will invite Lee to answer this question. Let me translate the question first: Futu has rolled out AI-powered features in Hong Kong and overseas markets. Could you update us on current user adoption and explain how AI specifically empowers users to make better-informed investment decisions? Lee will be happy to take this question.

Lee Lee

Certainly. Currently, Futubull AI and Moomoo AI have been launched in Hong Kong and multiple overseas markets, with continuous improvements in overall user coverage and engagement depth. AI is gradually transitioning from a novelty feature to a daily staple for investment research. We believe the essence of AI is not merely adding a chatbot, but rather lowering the barrier to using professional financial data and tools by重构 (restructuring) the way users interact with them. We are advancing on two fronts simultaneously: first, continuously upgrading the native experience of Futubull AI and Moomoo AI for retail investors; and second, for professional users and the external ecosystem, converting our market data, research, and account capabilities into secure, AI-callable interfaces through APIs, Model Context Protocol (MCP), and open frameworks. Historically, the gap between individual investors and professional institutions was largely a gap in tools. Institutions had professional terminals, quantitative systems, and research teams. Essentially, our MCP and open initiatives transform Futu’s accumulated capabilities in market quotes, financial reports, and derivatives into interfaces that AI can directly call. This means investors can now perform research and execute trades via natural language, tasks that previously relied on professional terminals or coding. For example, assessing a stock's position risk before an earnings report used to require checking financial statements, reviewing analyst ratings, and calculating implied volatility to determine historical valuation percentiles, involving switching between four or five pages. Now, a single prompt to the AI will call our interfaces and provide a complete analysis within seconds. Futu’s long-term differentiation will not come from a single model or AI feature, but from integrating real-time cross-market data, professional financial tools, account context under user authorization, trading execution, and compliance risk control into a unified system. This creates a closed loop from information understanding and research validation to user confirmation and action. Thank you.

Michelle Lee

Futubull AI and Moomoo AI are seeing strong growth in adoption across our global markets, evolving from a novelty feature into a daily research staple. To us, AI is far more than just a chatbox. Our strategy is to use AI to dismantle the barriers to professional financial tools. We are executing this on two levels. First, providing a native, intuitive experience for retail users. Second, offering an open framework via APIs, Model Context Protocol (MCP), and Open AI for professional users to securely leverage our data and account capabilities. Historically, the gap between retail and institutional investors was a tooling gap. Institutions had the terminals, the quantitative systems, and the research teams. By turning our market quotes, financial filings, and derivative data into AI-callable interfaces, we allow users to perform institutional-level analysis via natural language. For instance, what used to be a tedious process of tracking five different screens to analyze a stock's risk before earnings is now a single-prompt operation. AI synthesizes filings, ratings, and volatility data into key insights instantly. Our competitive advantage is not the model itself, but the ecosystem surrounding it. By integrating real-time data, trading workflows, and compliance controls, we have built a closed-loop system that moves the user from insight to action with unprecedented efficiency.

Host

Thank you to the management team for sharing. That concludes our Q&A session for individual investors. Once again, thank you all for your continued companionship and support. This marks the end of the live broadcast for Futu Holdings Ltd.'s Q2 2026 earnings conference call. We look forward to meeting you online again next quarter. Good night, everyone.

More details:Futu Holdings Ltd IR

Disclaimer: The above content is generated by an AI language model based on public data and third-party automatic subtitles. The above content does not represent any position of Futu and does not constitute any investment advice. Futu Group makes no express or implied warranties or representations regarding the accuracy, timeliness, or completeness of the above content.

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