UP Fintech Holding Limited Reports Unaudited Second Quarter 2020 Financial Results

BEIJING, Aug. 18, 2020 (GLOBE NEWSWIRE) -- UP Fintech Holding Limited (NASDAQ: TIGR) (“UP Fintech” or the “Company”), a leading online brokerage firm focusing on global Chinese investors, today announced its unaudited financial results for the second quarter ended June 30, 2020.

“We are happy to report strong growth in the second quarter of 2020,” stated Mr. Wu Tianhua, CEO and Director of UP Fintech. “Total revenues were US$30.1 million, a 121.8% increase from the second quarter of 2019. Our platform is continuing to attract new users as we continue to invest in expanding its capabilities; the number of accounts with deposits increased by approximately 33,800 this quarter, the highest quarterly growth in our operating history, and total accounts with deposits increased 76.7% on a year over year basis. Clients continued to entrust us with more assets; total client account balance as of June 30, 2020, rose 132.9% year-over-year to US$8.3 billion.”

In addition to our core brokerage business, other business units also performed well. We saw good momentum in the U.S. and Singapore in terms of user acquisition, and we gradually started to use Marsco Investment Corporation to self-clear. In the second quarter, we participated in eight U.S. IPOs and were an underwriter for NetEase’s Hong Kong IPO, maintaining our leadership position as the top underwriter for China based issuers by deal count. Our ESOP management business also continues to grow rapidly. We added 16 new clients this quarter and now we can provide a comprehensive solution to handle clients whose plans span multiple regions and entities. We believe our excellent system and outstanding service capacity will continue to attract potential clients to choose us as a long-term ESOP partner.

The Company commenced its share repurchase program on April 1, 2020 and between that day and the end of August 17, 2020, the company repurchased 695,287 ADS for an approximate consideration of US$2.2 million.

Financial Highlights for Second Quarter 2020

  • Total revenues increased 121.8% year-over-year to US$30.1 million.
  • Total net revenues increased 124.6% year-over-year to US$28.2 million. 
  • Operating income increased to US$5.1 million from negative US$2.6 million in the same quarter of last year.
  • Non-GAAP operating income increased to US$6.8 million from negative US$1.5 million in the same quarter of last year.
  • Net income increased to US$2.6 million from negative US$2.0 million in the same quarter of last year.
  • Net income attributable to UP Fintech increased to US$1.1 million from negative US$1.9 million in the same quarter of last year.
  • Non-GAAP net income attributable to UP Fintech increased to US$2.8 million, from negative US$0.8 million in the same quarter of last year.

Operating Highlights for Second Quarter 2020

  • Total account balance increased 132.9% year-over-year to US$8.3 billion.
  • Total margin financing and securities lending balance increased 20.4% year-over-year to US$1,227.3 million.
  • Total number of customers with deposits increased 76.7% year-over-year to 167.8 thousand.

Selected Operating Data for Second Quarter 2020

 As of and for the three months ended 
 June 30, March 31, June 30,
 2019 2020 2020
In 000's     
Number of customer accounts576.9 743.3 833.9
Number of customers with deposits95.0 134.1 167.8
      
In USD millions     
Trading volume24,370.0 44,109.9 46,755.7
Total account balance3,557.1 5,493.9 8,283.1

Second Quarter 2020 Financial Results

REVENUES

Total revenues were US$30.1 million, up 121.8% from US$13.6 million in the same quarter of last year.

Commissions were US$18.8 million, up 178.2% from US$6.8 million in the same quarter of last year, driven by an increase in our user base and market activities.

Financing service fees were US$1.7 million, down 10.9% from US$1.9 million in the same quarter of last year, primarily due to a shift in the number of fully disclosed accounts versus consolidated accounts, which generate interest income.

Interest income was US$7.1 million, up 116.2% from US$3.3 million in same period of last year. This was primarily due to the increased number of consolidated account customers and higher margin and securities lending balance compared to the same quarter of last year.

Other revenues were US$2.5 million, up 54.1% from US$1.6 million in the same quarter of last year, primarily due to higher revenue from IPO distribution services.

Interest expense was US$1.9 million, an increase of 87.7% from US$1.0 million in the same quarter of last year, in line with the increase in interest income.

OPERATING COSTS AND EXPENSES

Total operating costs and expenses were US$23.1 million, an increase of 52.4% from US$15.1 million in the same quarter of last year.

Execution and clearing expenses were US$2.9 million, an increase of 391.6% from US$0.6 million in the same quarter of last year, due to an increase in the number of consolidated accounts as well as an increase in trading volume.

Employee compensation and benefits expenses were US$11.3 million, an increase of 39.0% from US$8.1 million in the same quarter of last year. This increase was primarily due to the headcount increase of 33.9% compared to the second quarter of last year.

Occupancy, depreciation, and amortization expenses were US$1.1 million, an increase of 41.9% from US$0.8 million in the same quarter last year, due to the increase in overseas office space and relevant leasehold improvements.

Communication and market data expenses were US$2.1 million, an increase of 21.1% from US$1.7 million in the same quarter last year, due to rapid user growth and expanded market data usage.

Marketing and branding expenses were US$2.9 million, an increase of 47.7% from US$2.0 million in the same quarter last year, in line with higher user growth this quarter.

General and administrative expenses were US$2.8 million, an increase of 43.2% from US$1.9 million in the same quarter last year, primarily due to increased professional services expenses resulting from business expansion.

OPERATING INCOME/LOSS AND NET INCOME/LOSS ATTRIBUTABLE TO UP FINTECH HOLDING LIMITED

Operating income was US$5.1 million, as compared to an operating loss of US$2.6 million in the same quarter of last year. Non-GAAP operating income was US$6.8 million, as compared to a non-GAAP operating loss of US$1.5 million in the same quarter of last year. A reconciliation of non-GAAP financial metrics to the most comparable GAAP metrics is set forth below.

Net income attributable to UP Fintech was US$1.1 million, as compared to a net loss of US$1.9 million in the same quarter of last year. Net income per ADS – diluted was US$0.008, as compared to a net loss per ADS – diluted of US$0.014 in the same quarter of last year.

Non-GAAP net income attributable to UP Fintech, which excludes share-based compensation, was US$2.8 million, as compared to a US$0.8 million non-GAAP net loss attributable to UP Fintech in the same quarter of last year. Non-GAAP net income per ADS – diluted was US$0.020, as compared to a non-GAAP net loss per ADS – diluted of US$0.006 in the same quarter of last year.

For the second quarter of 2020, the Company’s weighted average number of ADSs used in calculating diluted net income per ADS, was 142,783,496. As of June 30, 2020, the Company had a total of 2,114,164,861 Class A and B ordinary shares outstanding, or the equivalent of 140,944,324 ADSs.

CERTAIN BALANCE SHEET ITEMS

As of June 30, 2020, the Company's cash and cash equivalents and term deposits were US$93.0 million, compared to US$125.0 million as of December 31, 2019.

Conference Call Information

UP Fintech’s management will hold an earnings conference call at 8:00 AM on August 18, 2020, U.S. Eastern Time (8:00 PM on August 18, 2020 Beijing/Hong Kong Time).

Participants may register for the conference call by navigating to http://apac.directeventreg.com/registration/event/4999749 . Once preregistration has been completed, participants will receive dial-in numbers, direct event passcode, and registrant ID. The conference ID is: 4999749.

To join the conference, simply dial the number in the calendar invite you receive after preregistering, enter the passcode followed by your PIN, and you will join the conference instantly.

A telephone replay of the call will be available after the conclusion of the conference call through August 25, 2020.

Dial-in numbers for the replay are as follows:

International:+61-2-8199-0299
Passcode:4999749

A live and archived webcast of the conference call will be available at https://ir.itiger.com.

Use of non-GAAP Financial Measures

In evaluating our business, we consider and use non-GAAP operating income or loss, non-GAAP net loss or income attributable to UP Fintech Holding Limited and non-GAAP net loss or income per ADS – diluted as supplemental measures to review and assess our operating performance. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the United States Generally Accepted Accounting Principles (“GAAP”). We define non-GAAP operating income or loss as total net revenue minus total operating costs and expenses, plus share-based compensation. Non-GAAP net loss or income attributable to UP Fintech Holding Limited is GAAP net loss or income attributable to UP Fintech Holding Limited excluding share-based compensation. Non-GAAP net loss or income per ADS - diluted is non-GAAP net loss or income attributable to UP Fintech Holding Limited divided by weighted average number of diluted ADSs.

We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. Non-GAAP net loss or income attributable to UP Fintech Holding Limited enables our management to assess our operating results without considering the impact of share-based compensation. We also believe that the use of these non-GAAP financial measures facilitates investors' assessment of our operating performance.

These non-GAAP financial measures are not defined under GAAP and are not presented in accordance with GAAP. These non-GAAP financial measures have limitations as an analytical tool. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expenses that affect our operations. Share-based compensation has been and may continue to be incurred in our business and are not reflected in the presentation of non-GAAP net loss or income attributable to UP Fintech Holding Limited. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore their comparability may be limited.

These non-GAAP financial measures should not be considered in isolation or construed as alternatives to total operating expenses, net loss attributable to UP Fintech Holding Limited or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review these historical non-GAAP financial measures in light of the most directly comparable GAAP measures. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting the usefulness of such measures when analyzing our data comparatively. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

About UP Fintech Holding Limited

UP Fintech Holding Limited is a leading online brokerage firm focusing on global Chinese investors. The Company’s proprietary mobile and online trading platform enables investors to trade in equities and other financial instruments on multiple exchanges around the world. The Company offers innovative products and services as well as a superior user experience to customers through its “mobile first” strategy, which enables it to better serve and retain current customers as well as attract new ones. The Company offers customers comprehensive brokerage and value-added services, including trade order placement and execution, margin financing, IPO subscription, ESOP management, investor education, community discussion and customer support. The Company’s proprietary infrastructure and advanced technology are able to support trades across multiple currencies, multiple markets, multiple products, multiple execution venues and multiple clearinghouses.

For more information on the Company, please visit: https://ir.itiger.com.

Safe Harbor Statement

This announcement contains forward−looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward−looking statements can be identified by terminology such as “may,” “might,” “aim,” “likely to,” “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements or expressions. Among other statements, the business outlook and quotations from management in this announcement, as well as the Company’s strategic and operational plans, contain forward−looking statements. The Company may also make written or oral forward−looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”) on Forms 20−F and 6−K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward−looking statements. Forward−looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward−looking statement, including but not limited to the following: the cooperation with Interactive Brokers LLC and Xiaomi Corporation and its affiliates; the Company’s growth strategies; trends and competition in global financial markets; changes in the Company’s revenues and certain cost or expense accounting policies; the effects of the global COVID-19 pandemic; and governmental policies relating to the Company’s industry and general economic conditions in China and other countries. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law. Further information regarding these and other risks is included in the Company’s filings with the SEC.

For investor and media inquiries please contact:

Investor Relations Contact
Clark S. Soucy
UP Fintech Holding Limited
Email: ir@itiger.com


UP FINTECH HOLDING LIMITED 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 
(All amounts in U.S. dollars ("US$")) 
  
 As of December 31, As of June 30, 
20192020 
 US$ US$ 
Assets:    
Cash and cash equivalents59,408,555  66,154,699  
Cash-segregated for regulatory purpose317,915,092  445,544,425  
Term deposits65,601,207  26,857,267  
Receivables from customers (net of allowance of nil and US$213,631 as of December 31, 2019 and June 30, 2020)106,113,896  371,315,913  
Receivables from brokers, dealers, and clearing organizations:  -  
Related party185,047,211  214,224,350  
Others9,274,205  17,066,455  
Financial instruments held, at fair value14,881,240  18,819,793  
Prepaid expenses and other current assets8,020,192  4,638,337  
Amounts due from related parties3,484,434  3,614,079  
Total current assets769,746,032  1,168,235,318  
Non-current assets:    
Right-of-use assets5,732,559  7,205,500  
Property, equipment and intangible assets, net9,535,541  9,352,275  
Goodwill2,421,403  2,421,403  
Long-term investments6,017,219  6,466,493  
Other non-current assets3,045,732  4,335,668  
Deferred tax assets12,561,461  9,643,495  
Total non-current assets39,313,915  39,424,834  
Total assets809,059,947  1,207,660,152  
Current liabilities:    
Payables to customers512,481,679  757,791,636  
Payables to brokers, dealers and clearing organizations:    
Related party53,774,882  114,585,222  
Others1,355,112  83,319,593  
Accrued expenses and other current liabilities16,881,957  19,044,845  
Deferred income-current697,330  634,453  
Lease liabilities-current2,401,566  2,759,417  
Total current liabilities587,592,526  978,135,166  
Deferred income-non-current1,552,595  1,251,088  
Lease liabilities- non-current
3,440,092  4,405,316  
Deferred tax liabilities1,449,000  1,449,000  
Total liabilities594,034,213  985,240,570  
Mezzanine equity:    
Redeemable non-controlling interest of sponsored fund3,084,122  7,350,720  
Total Mezzanine equity
3,084,122  7,350,720  
Shareholders’ equity:    
Class A ordinary shares17,772  17,870  
Class B ordinary shares3,376  3,376  
Additional paid-in capital285,767,622  288,724,078  
Statutory reserve724,008  724,008  
Accumulated deficit(73,704,745) (69,581,932) 
Treasury Stock-  (2,172,819) 
Accumulated other comprehensive loss(866,421) (2,645,719) 
Total equity211,941,612  215,068,862  
Total liabilities, mezzanine equity and equity809,059,947  1,207,660,152  
       


UP FINTECH HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(All amounts in U.S. dollars ("US$"), except for number of shares (or ADSs) and per share (or ADS) data)
 
 For the three months ended For the six months ended
 June 30, March 31, June 30, June 30, June 30,
 2019  2020  2020  2019  2020 
 US$ US$ US$ US$ US$
Revenues:         
Commissions6,772,071  14,272,955  18,839,234  13,126,916  33,112,189 
Interest related income         
Financing service fees1,911,404  1,636,196  1,702,733  3,997,534  3,338,929 
Interest income3,264,692  4,773,047  7,057,303  3,978,608  11,830,350 
Other revenues1,620,762  2,505,638  2,497,323  2,261,100  5,002,961 
Total revenues13,568,929  23,187,836  30,096,593  23,364,158  53,284,429 
Interest expense(1,015,470) (954,215) (1,905,671) (1,224,191) (2,859,886)
Total Net Revenues12,553,459  22,233,621  28,190,922  22,139,967  50,424,543 
Operating costs and expenses:         
Execution and clearing(587,927) (1,824,627) (2,890,349) (880,407) (4,714,976)
Employee compensation and benefits(8,146,485) (10,458,234) (11,324,133) (15,963,656) (21,782,367)
Occupancy, depreciation and amortization(784,006) (1,160,614) (1,112,339) (1,381,483) (2,272,953)
Communication and market data(1,742,592) (1,829,752) (2,109,820) (2,933,982) (3,939,572)
Marketing and branding(1,954,115) (2,764,839) (2,885,653) (3,866,622) (5,650,492)
General and administrative(1,928,528) (2,291,616) (2,761,370) (4,119,629) (5,052,986)
Total operating costs and expenses(15,143,653) (20,329,682) (23,083,664) (29,145,779) (43,413,346)
Other income/(expense):         
Others, net3,048  2,780,680  (123,254) 989,864  2,657,426 
(Loss)/income before income tax(2,587,146) 4,684,619  4,984,004  (6,015,948) 9,668,623 
Income tax benefits/(expenses)627,347  (1,957,732) (2,419,481) 1,710,660  (4,377,213)
Net (loss)/income(1,959,799) 2,726,887  2,564,523  (4,305,288) 5,291,410 
Less:         
Net (loss)/income attributable to redeemable non-controlling interests(81,348) (305,715) 1,474,312  447,436  1,168,597 
Net (loss)/income attributable to UP Fintech Holding Limited(1,878,451) 3,032,602  1,090,211  (4,752,724) 4,122,813 
          
Other comprehensive (loss)/ income, net of tax:         
Changes in cumulative foreign currency translation adjustment(264,125) (3,721,163) 1,941,865  (77,015) (1,779,298)
Total Comprehensive (loss)/income(2,223,924) (994,276) 4,506,388  (4,382,303) 3,512,112 
          
Net (loss)/income per ordinary share:         
Basic(0.001) 0.001  0.001  (0.003) 0.002 
Diluted(0.001) 0.001  0.001  (0.003) 0.002 
Net (loss)/income per ADS (1 ADS represents 15 Class A ordinary shares):         
Basic(0.014) 0.021  0.008  (0.051) 0.029 
Diluted(0.014) 0.021  0.008  (0.051) 0.029 
Weighted average number of ordinary shares used in calculating net (loss)/income per ordinary share:         
Basic2,037,217,084  2,118,759,654  2,118,493,263  1,388,932,775  2,118,626,461 
Diluted2,037,217,084  2,143,712,304  2,141,752,437  1,388,932,775  2,143,307,674 


Reconciliations of Non-GAAP Results of Operations Measures to the Nearest Comparable GAAP Measures
(All amounts in U.S. dollars ("US$"), except for number of ADSs and per ADS data)
 
 For the three months ended June 30, 2019 For the three months ended March 31, 2020 For the three months ended June 30, 2020
   non-GAAP     non-GAAP     non-GAAP  
 GAAP Adjustment non-GAAP GAAP Adjustment non-GAAP GAAP Adjustment non-GAAP
 US$ US$ US$ US$ US$ US$ US$ US$ US$
 Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
                  
(Loss)/Income from operations(2,590,194) 1,094,022(1)(1,496,172) 1,903,939 1,217,014(1)3,120,953 5,107,258 1,734,220(1)6,841,478
                  
Net (loss)/income attributable to UP Fintech Holding Limited(1,878,451) 1,094,022 (784,429) 3,032,602 1,217,014 4,249,616 1,090,211 1,734,220 2,824,431
                  
Net (loss)/income per ADS-diluted(0.014)   (0.006) 0.021   0.030 0.008   0.020
Weighted average number of ADSs used in calculating diluted net (loss)/income per ADS135,814,472    135,814,472  142,914,154   142,914,154 142,783,496   142,783,496
(1) Share-based compensation.

Non-GAAP to GAAP reconciling items have no income tax effect.