FUTU Holdings (Nasdaq: FUTU) announced its unaudited financial report for the third quarter of 2023. The total revenue of FUTU Q3 increased by 36.2% year-on-year, reaching HKD 2.65 billion (approximately $339 million). Non GAAP net profit increased by 43.7% year-on-year, with a year-on-year increase of HKD 1.158 billion (approximately $148 million).
In terms of revenue, brokerage commissions and handling fees amounted to HKD 1008.9 million ($128.8 million), an increase of 5.3% compared to the third quarter of 2022. The year-on-year growth in trading volume was flat, but due to the greater contribution of derivative trading, the mixed commission rate increased from 8.8 basis points to 9.3 basis points.
Interest income was HKD 1.505 billion ($192.1 million), an increase of 70.8% compared to the third quarter of 2022. The main reason for the growth is the increase in interest income from bank deposits and securities lending businesses.
Other income was HKD 137.1 million ($17.5 million), an increase of 28.1% compared to the third quarter of 2022. This growth is mainly due to an increase in income from fund allocation services.
In terms of cost, the total cost was HKD 437.4 million (US $55.9 million), an increase of 100.6% compared to the third quarter of 2022. The brokerage commission and handling fee expenses were HKD 62.8 million ($8 million), a decrease of 24.0% compared to the third quarter of 2022. The brokerage fees did not change in sync with the brokerage income, mainly due to cost savings from self clearing operations in the United States. Interest expenses amounted to HKD 288.7 million ($36.9 million), an increase of 545.9% compared to the third quarter of 2022. The main reason for the growth is the increase in expenses related to securities lending business.
The research and development expenses were HKD 359.5 million ($45.9 million), an increase of 14.7% compared to the third quarter of 2022. This is mainly due to an increase in research and development personnel supporting infrastructure upgrades, overseas expansion, and new product supply.
Sales and marketing expenses were HKD 211.7 million ($27 million), a decrease of 10.1% compared to the third quarter of 2022. The main reason for the decrease is the reduction in customer acquisition costs.
General and administrative expenses amounted to HKD 321.7 million ($41.1 million), an increase of 51.5% compared to the third quarter of 2022. This growth is mainly due to the increase in general and administrative personnel in support of overseas expansion.
Net profit increased by 44.6% to HKD 1091.2 million ($139.3 million) from HKD 754.6 million in the third quarter of 2022. The net revenue ratio in the third quarter of 2023 increased from 38.8% in the same period last year to 41.2%, mainly due to strong profit growth and reduced sales and marketing expenses.
Non GAAP adjusted net income increased by 43.7% from the third quarter of 2022 to HKD 1.158 billion ($147.9 million).
As of the end of the third quarter, the number of registered users of Futu Niuniu and Moomoo App reached 21.09 million, a year-on-year increase of 10.1%; The total number of clients with assets reached 1.65 million, a year-on-year increase of 14.2%. Q3 saw a net increase of 65000 customers with assets, with customer assets reaching 59.777 billion US dollars (approximately HKD 468.1 billion) at the end of the period. During the period, the customer retention rate remained at a high level of over 98%, with daily average customer assets of HKD 480.6 billion, an increase of 15.4% compared to the same period in 2022. The total customer assets increased by 26.6% year-on-year to HKD 468.1 billion, and the margin trading balance increased by 9.4% year-on-year to HKD 32.4 billion.
In the third quarter, Futu held a solid leading position in the Hong Kong market and remained the top stock trading software in terms of download volume in Hong Kong. During the period, Futu opened its first "Futu physical store" in Hong Kong, bringing Futu and its users closer in an offline form for the first time. In the third quarter, Futu's overseas independent brand Moomoo officially launched in the Japanese and Canadian markets, further expanding its international footprint. As of the end of the third quarter, moomoomoo has been operating in the Singapore market for two and a half years. According to data.ai (formerly App Annie) data, moomoomoo has ranked first in the local securities industry in key public indicators such as cumulative download volume and DAU.
In the third quarter, the three major business sectors of Futu also developed synergistically. As of the end of the third quarter, Futu has provided IPO and investor relationship services to 391 companies, and has added multiple Hong Kong stock IPO partners such as KEEP, Tuhu Yangche, and Fourth Paradigm during the period. As of the end of the period, Futu Enterprise Services has signed a total of 699 ESOP customers, an increase of 22.2% compared to the same period last year.
During the period, Futu Wealth Management business continued to grow rapidly, with the asset management scale of Futu Elephant Wealth reaching HKD 51.9 billion, an annual increase of 99.9%. The AUM of public funds increased by 85.9% throughout the year, and the AUM of alternative investment products (including bonds) increased by 284.6%. Among them, the latest growth in asset management scale of HKD 10 billion only took more than two months, with alternative assets accounting for 62% and institutional and high net worth clients contributing over 50%. Futu Elephant Wealth's fund clients and asset structure are more balanced and healthy.
Arthur Yu Chen, Chief Financial Officer of Futu, stated, "As of September 30, 2023, we have repurchased a total of 11 million American Depositary Shares (" ADSs ") in open market transactions for our latest stock repurchase plan, with a total repurchase amount of approximately $365 million