Futu Earnings Call: Actively Embracing Regulation, Full-Year Guidance for 800,000 New Clients Unchanged, Accelerating Expansion into Korean Stocks
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With regulatory penalties imposed and a decline in the proportion of revenue contributed by domestic operations, Futu is facing a key turning point in its growth model. Whether overseas markets can take over the baton, and if innovative businesses can deliver results, has become the focus of market attention.
In response to analysts' intensive questions about the new cross-border regulatory policies and the RMB 1.85 billion penalty, Futu's management stated during the Q1 earnings call on May 28 that these rule adjustments are unified requirements for the entire industry. The company will actively embrace regulation and steadily advance compliance work, and it expects no substantial impact on the full-year guidance of 800,000 new customers. Currently, the contribution of domestic business income has dropped to about 20%. Overseas markets and innovative business are forming a "dual-engine drive" against risks.
In terms of financial performance, Futu faced both pressure and growth in Q1. Due to the RMB 1.85 billion regulatory fine, net profit fell 61% year-on-year to HK$831 million; excluding this one-off item, net profit increased 36% year-on-year, and core profitability remained resilient. Total trading volume reached HK$4.15 trillion, up 29% year-on-year, setting a historical record.
Overseas markets are becoming a key growth engine. Malaysia and Hong Kong together contributed more than half of the net new clients, overseas brand Moomoo clients now account for over 55%, and five countries saw revenue growth exceed 100%. Facing Hong Kong's wealth management market totaling over HK$35 trillion, management commented that Futu's penetration has just begun.
On the innovation front, Futu has been authorized to conduct prediction market business in the US, and Hong Kong's "Penta Trade" is fully operational, expected to develop into essential Web3 infrastructure. Overall, overseas expansion and innovative ventures are gradually becoming key supports for Futu in adapting to environmental changes.
Building a Solid Compliance Line, Zero Tolerance for Fraud
Regarding industry guidelines for cross-border securities business jointly released by the CSRC and Hong Kong SFC last Friday, Futu CEO Li Hua responded at the earnings meeting that as of the end of Q1, clients with assets in Mainland China represented about 13% of the group total, client assets accounted for about 17%, and income contributed about 20%. He pointed out that the two-year rectification period does not require account closures, but limits clients in Mainland China from making deposits and purchases.
Li Hua emphasized that the company has completely stopped account opening for Mainland clients and continues to toughen review and anti-fraud mechanisms, rejecting tens of thousands of non-compliant applications over the past two years, with zero tolerance for fraud.
CFO Chen Yu stated that this week, there was close communication with credit rating agencies and global commercial banks, credit lines remain stable, and he is confident about the upcoming annual rating update.
For the Q2 outlook, management expects net new clients with assets to remain stable quarter-on-quarter; net deposits will continue the strong growth of Q1, and though there was some short-term disturbance from regulatory news last week, the overall impact is controllable. Benefiting from positive market performance and active transactions, AUM and trading volume are expected to see double-digit quarter-on-quarter growth, with total interest income remaining steady.
Record Trading Volumes, Accelerating South Korean Stocks Deployment
In Q1 business review, total trading volume reached HK$4.15 trillion, a new high for the platform. US stock trading volume was HK$3 trillion—overall stable. Management observed that AI is still the main investment theme, but client interest is extending from chips to AI infrastructure targets.
Hong Kong stock trading volume grew 22% quarter-on-quarter to HK$1 trillion, with intensified market volatility driving clients to bottom-feed. Chinese tech stocks and newly listed AI-related stocks were active. Client asset value at quarter-end remained flat, up 47% year-on-year, dragged by falling stock position values. With increased risk appetite, margin balances at quarter-end grew 8% quarter-on-quarter to HK$72.9 billion.
In business progress, Futu NiuNiu and Moomoo launched live South Korean stock quotes in April, and trading functionality is expected to go live in Hong Kong and Singapore in mid-June. By May 26, Futu clients’ allocations in the Southbound 2x long Samsung Electronics and Hynix ETFs were 30% and 18%, respectively, showing robust demand for core targets in the AI industry chain.
Virtual Assets and Prediction Markets: Laying Out the Next Growth Curve
Futu's Penta Trade officially passed the second phase of the Hong Kong SFC VATP license approval in March and is now fully operational, with part of the virtual asset trading volume and AUM from Futu Securities migrated to the platform.
Management stated that Penta Trade will proceed along three dimensions: strengthening internal synergy and traffic transfer; enriching product capabilities including security financing supported by virtual assets, OTC trading, multi-currency support, and staking functions; and building a long-term ecosystem by exploring tokenized securities trading in the secondary market and providing one-stop solutions for virtual asset ETF issuers, aiming to establish key infrastructure for Hong Kong’s Web3 ecosystem.
In the US, Moomoo Financial and Futu Clearing were NFA-approved in May to conduct prediction market brokerage and clearing business, with product and system setup complete. Retail investor access is expected soon, covering event contracts such as sports games.
CFO Chen Yu stated, prediction market products are intuitive and low-threshold and are expected to be important for client acquisition and boosting trading activity. Management also revealed active communication with regulators in other regions to explore further market launches.
Below is the full transcript of the earnings call (AI-assisted sorting):
CEO Li Hua:
Dear investors, welcome to Futu Holdings’ Q1 2026 earnings call. In Q1, the group added 225,000 net new clients with assets, reaching 3.59 million clients, up 34% year-on-year and 7% quarter-on-quarter. Despite pressure from the Hong Kong stock market and slightly slower client acquisition in Hong Kong, it was still the second-largest contributor for net new clients with assets. We remain confident in the Hong Kong market and will focus more on client asset scale and lifetime value.
Singapore saw double-digit quarter-on-quarter growth in clients with assets, with average client assets up 50% annually over the past three years, leaving ample room for growth. Malaysia led client growth, benefiting from sharp US stock operations and an active IPO window for Malaysian stocks; we expect profitability within 6-12 months. In Japan, our excellent US stock trading capabilities continued to drive growth, and this year we will continue improving the Japan stock trading experience. In the US, we have formally obtained NFA approval for prediction market operations, launching event contract trading to attract active traders.
Driven by precious metals and geopolitical events, client deposit intention was strong, with net deposits hitting the second-highest quarterly level ever, although declining stock position values weighed on client assets. Quarter-end client assets remained flat quarter-on-quarter, up 47% year-on-year. Margin balances grew 8% to HK$72.9 billion. Total trading volume set a new platform record at HK$4.15 trillion, up 29%. US stock trading was stable at HK$3 trillion; Hong Kong stock trading grew 22% quarter-on-quarter to HK$1 trillion.
In March, Penta Trade was officially approved for the second phase of the Hong Kong SFC VATP license and is fully operational. Future plans include virtual asset-backed securities financing trades, ongoing OTC trading, more currency support and staking, gradually building Penta Trade into key Web3 infrastructure for Hong Kong.
Wealth management client assets reached HK$178.4 billion, up 28% year-on-year. We further enriched our fund offerings, launching theme-space broker public funds in Hong Kong and a local equity fund in Singapore, as well as structured notes linked to gold and oil.
At quarter-end, IPO distribution and IR clients numbered 625, up 26%. Twelve IPOs in Q1 saw subscriptions exceed HK$100 billion each; six companies appointed Futu as full coordinator for their Hong Kong IPO. We acted as bookrunner for reputed IPOs including Zhipu AI, Mini Max, and Biren Tech.
Chief Financial Officer Chen Yu:
Thank you, everyone. Here are the Q1 financials (unless otherwise stated, figures in HKD). Total revenue was HK$5.9 billion, up 25%. Commission and fee income was HK$2.6 billion, up 14% year-on-year but down 5% quarter-on-quarter, mainly due to high-priced US stock and options trading causing a drop in blended commission rates. Interest income was HK$2.7 billion, up 28% year-on-year, down 13% quarter-on-quarter, up year-on-year mainly due to margin and deposit interest, but down quarter-on-quarter because securities lending interest dropped. Other income was HK$564 million, up 80% year-on-year, down 10% quarter-on-quarter.
Total costs were HK$749 million, flat year-on-year. Brokerage commissions and fees spent were HK$164 million, up 15% year-on-year, up 16% quarter-on-quarter. Interest expenses were HK$415 million, down 12% year-on-year, down 5% quarter-on-quarter, mainly due to lower interest from securities lending. Processing and services costs were HK$170 million, up 25% year-on-year, up 13% quarter-on-quarter.
Total gross profit reached HK$5.1 billion, up 29% year-on-year, with a gross margin of 87.2%. Operating expenses were HK$1.6 billion, up 25% year-on-year, flat quarter-on-quarter. R&D costs were HK$479 million, up 24% year-on-year, down 5% quarter-on-quarter, mainly due to increased R&D staff to support strategy and new markets. Sales and marketing costs were HK$557 million, up 21% year-on-year, up 10% quarter-on-quarter, mainly due to higher client acquisition costs. G&A expenses were HK$541 million, up 30% year-on-year, flat quarter-on-quarter.
Operating profit was HK$3.5 billion, up 31% year-on-year, down 15% quarter-on-quarter. Operating profit margin was 30.3%.
On May 22, the company received an administrative penalty pre-notification from the CSRC Shenzhen bureau of about RMB 1.85 billion, which is fully reflected as a subsequent adjustment in the Q1 financials. This does not affect the business fundamentals or financial stability. Due to this, net profit dropped 61% year-on-year, down 75% quarter-on-quarter to HK$831 million, with a net margin of 14.2%. Without this adjustment, net profit was up 36% year-on-year, down 13% quarter-on-quarter to HK$2.9 billion, net margin 49.9%.
As of May 27, the company had repurchased a total of about US$418 million in ADS. Following the US$800 million repurchase plan announced in November 2025, repurchases will continue per market conditions.
Q&A session
Q:How does the company interpret last Friday's latest regulatory guidance on cross-border securities, futures, and fund activities? What is the impact?Regional distribution of Q1 net new clients with assets and existing clients with assets? Regional distribution of clients' AUM at quarter-end?
A:
About regulation: CSRC and SFC issued industry guideline updates last Friday. The company responded immediately. These are unified requirements for the industry. The company will actively embrace regulation and steadily push compliance. Account opening for mainland identity clients has already fully ceased, with continued strengthening of account screening and anti-fraud mechanisms. Tens of thousands of non-compliant account openings rejected over the past two years. By Q1-end, clients with assets in mainland China represented about 13% of the group, asset share about 17%, revenue share about 20%. The two-year rectification period does not require account closures for mainland clients, but limits their deposits and purchases in mainland China. The company's business is now more diversified, maintaining a market share of over 50% in Hong Kong local market, and internationalization has entered full acceleration. In Q1, all overseas market revenues grew significantly, with five markets growing revenue by over 100%. Overseas clients with assets exceeded 2 million, with average AUM about US$18,000. The company expects this regulatory update will not have a substantial impact on the full-year guidance of 800,000 new clients.
About regional distribution: Malaysia and Hong Kong together contributed over half the net new clients with assets in Q1, with Singapore contributing the most among other markets. By Q1-end, overseas brand Moomoo contributed over 55% of group clients with assets, mainly in Singapore, USA, and Malaysia. Among group client assets, Futu Securities Hong Kong department had the largest share, Moomoo client assets mainly in Singapore and USA.
Q:After disclosure of the latest regulatory guidance and administrative penalty, are cooperation relations (credit lines, financing costs, credit rating) with banks and other funding providers stable?Growth potential of Hong Kong and Singapore as mature markets?
A:
About credit lines & ratings: Recently, communication with credit agencies and global bank partners was smooth. Bank credit lines unchanged and stable. Annual credit rating may be announced in the coming weeks, and we're confident about a good result.
About HK & SG market growth potential: Futu’s user coverage in both is high, but penetration and discovery of client asset potential remain vast. Per BCG report, Hong Kong has surpassed Switzerland as the world's largest cross-border wealth management hub, with Singapore in third. At end-2024, Hong Kong had over HK$35 trillion in financial assets, Singapore over HK$34 trillion, while Futu had just over HK$1 trillion of client assets. As brand influence rises, depth of service for tens of trillions in resident wealth is only beginning, and the ceiling is very high. After a decade of refinement, Futu has a rich product suite, strong service capabilities, and an expanding ecosystem, and is optimistic about the future.
Q:Opportunities, deployment, synergy, profitability, and potential market size of US prediction markets?Latest VATP business in Hong Kong, product strategy, links to Singapore & US crypto business? What level of crypto asset share will enable meaningful monetization? How long will it take?
A:
About US prediction market: In May, the company received the FCM license, allowing prediction market brokerage and clearing. Product and systems are complete; trading services for US retail investors will be open soon. Prediction market products are intuitive, low barrier, flexible, aid retail investor participation, and help with client acquisition, trading activity, and conversion. We aim to seize growing US prediction market opportunities and accumulate know-how in product design, operations, and risk management for future expansion. We're actively communicating with regulators about launching in more regions.
About Hong Kong VATP & crypto business: Penta Trade passed phase two approval in March and is fully operational. The focus ahead: 1) strengthen internal synergy and traffic transfer, with part of Futu Securities’ crypto trading and AUM migrated to Penta Trade; 2) keep enriching product functions: OTC trading, more currencies, staking if allowed by regulation; 3) build long-term ecosystem ability, exploring tokenized securities secondary trading, connecting third-party brokers’ traffic, providing one-stop solutions for virtual asset ETF issuers. As traditional finance merges with virtual assets, Penta Trade aims to become key Web3 infrastructure for Hong Kong. The virtual asset industry in Hong Kong and Singapore is still early-stage; the group will continue investor education and product innovation, and is confident about overall crypto business growth.
Q:Reasons for a 12.8% quarter-on-quarter drop in Q1 interest income? Breakdown by type and causes of change? Trends since Q2?Operating situation since Q2: net new clients with assets, net deposits, fair value change, and trading volume trends?
A:
About interest income: In Q1, cash and margin interest each contributed about 40% of group interest income, the rest from securities lending. The quarter-on-quarter drop was mainly due to lower cash interest and securities lending income, while margin interest rose. Cash interest dropped due to 1) full impact of the Fed rate cut in Dec was reflected this quarter, and 2) increased market volatility drove bottom-feeding, lowering average daily cash balances. Securities lending interest dropped mainly as US stock volatility fell and short-selling demand decreased, sharply reducing lending yields. Since Q2, interest income remains stable quarter-on-quarter.
About Q2 operating situation: Q2 run-rate suggests net new clients with assets will be stable quarter-on-quarter. Net deposits sustained good Q1 growth; although last Friday's regulatory event disturbed short-term net deposits, it's manageable overall. Supported by strong market performance and client activity, AUM and trading volume may see double-digit quarter-on-quarter growth.
Q:Ant Group’s acquisition of Yao Cai Securities, Webull’s advertising blitz, Ant Bank and ZA Bank launching HK/US stock trading—how to see intensifying HK market competition?Plans for launching Korean stocks? Timeline and target markets?
A:
About HK market competition: Hong Kong remains a market with long-term incremental potential. The government’s talent policy has brought over 230,000 professionals to Hong Kong, and amid global macro uncertainty, more HNWIs and international capital will flow here. We have strong confidence in our competitiveness. Even with many renowned rivals entering Hong Kong historically, we have steadily grown client scale, assets, and market share, with key advantage being our multidimensional competitive model built over time. In product/service, we’ve built a one-stop platform and keep upgrading AI innovation. As a brand, over a decade of deep cultivation has created strong recognition and user trust, and the proportion of high-net-worth clients keeps rising. Competition is not bad; it drives industry innovation, and leading platforms with product, brand, and ecosystem advantages will further enhance market share. Comparing to tens of trillions in HK resident wealth, our penetration is just beginning, and we’re confident in the market.
About Korean stocks launch: NiuNiu and Moomoo launched live Korean stock quotes in April. The team is actively working on trading function, expected to launch first in Hong Kong and Singapore mid-June, and other regions will follow. Many clients indirectly gain exposure to Korean stocks via leveraged ETFs. As of May 26, Futu client holdings of Southbound 2x long Samsung Electronics and Southbound 2x long Hynix accounted for 30% and 18% of related products, showing strong client demand for Korean stocks, especially core AI industry targets. We'll keep monitoring other global stock markets’ potential and will evaluate further market entry based on client needs and business value.
That ends today’s call. On behalf of Futu Holdings management, thank you for joining us. If you have further questions, please contact me or any IR representative. Thank you and goodbye.
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