FUTU (Trans): Net income up 42%, mid-single-digit asset outflows post new rules

Below are Dolphin Research's notes on $ Futu.US FY26 Q2 earnings call. Highlights are compiled as follows.

I. Key financials recap

1. Guidance and Q3-to-date trends

a. Since Q3 began, market volatility has risen and key KPIs have softened QoQ. Funded account net adds slowed vs. Q2, while net asset inflows in HK and other Intl markets normalised. Total trading volume edged down QoQ, reflecting cooler retail sentiment vs. last quarter.

b. Full-year blended CAC guidance stays at HK$2,500–3,000. Blended CAC rose QoQ to ~HK$2,600 in Q2, and increased further in Jul.

2. Revenue

a. Total revenue was HK$7.2bn (+36% YoY; vs. HK$5.3bn a year ago). Growth was broad-based.

b. Brokerage commissions and fees were HK$3.4bn (+30% YoY; +27% QoQ). Volumes grew YoY and QoQ, but the blended take rate fell as high-priced US stocks and options trading were more active this quarter.

c. Interest income was HK$3.1bn (+37% YoY; +18% QoQ). Growth came from margin financing, bank deposits, and securities lending interest.

d. Other revenue was HK$718mn (+61% YoY; +27% QoQ). This was driven by FX gains and higher IPO financing fees.

3. Costs and gross profit

a. Total costs were HK$985mn (+47% YoY). Cost growth tracked business activity.

b. Breakdown: brokerage commission and fee expense HK$248mn (+54% YoY; +50% QoQ, alongside higher volumes). Interest expense HK$513mn (+36% YoY; +24% QoQ, mainly on financing-related interest). Processing and service costs HK$225mn (+70% YoY; +32% QoQ, mainly higher product service fees).

c. GP was HK$6.2bn (+34% YoY; vs. HK$4.6bn a year ago). GPM was 86.3% vs. 87.4% last year.

4. Operating expenses

a. Total Opex was HK$1.8bn (+35% YoY; +11% QoQ). Spending supported strategic initiatives.

b. R&D was HK$501mn (+13% YoY; +5% QoQ), driven by investment in AI and Web3. These are core strategic areas.

c. Sales and marketing were HK$657mn (+53% YoY; +18% QoQ). The increase tracked higher funded account adds.

d. G&A was HK$593mn (+40% YoY; +10% QoQ). YoY growth was mainly due to headcount and professional fees.

5. Profit and tax

a. OP was HK$4.5bn (+34% YoY; +26% QoQ). OPM was 62%, broadly flat YoY.

b. Net profit was HK$3.6bn (+42% YoY). NPM improved to 50.6% vs. 48.4% last year.

c. Effective tax rate was 16.1% this quarter.

II. Earnings call details

2.1 Management highlights

1. Customers and asset scale

a. Q2 net adds of funded accounts were 252k (+23.7% YoY; +12.2% QoQ). Period-end funded accounts were ~3.84mn (+33.6% YoY; +7% QoQ).

b. Period-end client assets reached HK$1.4tn (+43.6% YoY; +14.5% QoQ). Growth was mainly driven by higher market value of client holdings, with net inflows a secondary contributor.

c. Period-end margin financing and securities lending balance was HK$95.1bn (+31% QoQ). A more active HK IPO market and constructive overall sentiment supported higher leverage usage.

2. Customer acquisition by market

a. HK acquisition accelerated QoQ, helped by a strong local IPO pipeline and robust US market performance. Momentum improved noticeably.

b. Singapore registered users surpassed 2mn. This further solidifies leadership among local retail investors.

c. New client Avg. revenue in HK and SG improved QoQ. This came from sustained multi-asset education and brand investment.

d. Malaysia's targeted campaigns around local IPOs and the AI theme delivered a record acquisition quarter. It led all markets in funded account net adds for three consecutive quarters.

e. In the US, Moomoo's prediction market gained significant traction. It brought incremental new customers and lifted overall platform activity.

3. Trading and virtual assets

a. Benefiting from favourable markets, total trading volume reached HK$6.42tn (+78.8% YoY; +54.6% QoQ), a record high. Activity was broad-based.

b. US market trading volume was HK$5.02tn (+67.2% QoQ), mainly driven by client interest in AI-related names.

c. HK market trading volume was HK$1.17tn (+15.9% QoQ). Activity rose in semis, China internet, and newly listed names.

d. In Jun, under the SFC-upgraded Type 1 licence, Futu Securities became HK's first and currently only broker offering margin financing secured by virtual asset securities. This is an industry first in HK.

e. The company is exploring extending the unified purchasing power framework to include virtual asset holdings. This aims to enhance capital efficiency between traditional and digital asset markets.

4. Wealth management and IPO distribution

a. WM client assets were HK$180.2bn (+10% YoY; +1% QoQ). With equities rallying, clients shifted from money market funds to equity funds.

b. HK hosted its first offline fund roadshow for retail investors, themed commercial space. Interest was strong, with a full house onsite and hundreds online, translating into meaningful subsequent subscriptions.

c. Period-end IPO distribution and IR clients reached 683 (+32% YoY). Client base continues to expand.

d. The HK IPO market remained strong in Q2, with ~60% of new listings partnering with Futu. The firm served as joint bookrunner on high-profile deals including Star Sports Medicine, Lightelligence, and Metis TechBio.

2.2 Q&A

Q: Since the new rules on May 22, have there been material changes in funded accounts, AUM, and revenue contribution? Any notable account or asset outflows?

A: We prioritise compliance and aim to meet all applicable regulatory requirements. Following the new rules, we swiftly implemented measures and maintained ongoing dialogue with regulators.

Cumulative asset outflows since the new rules are mid-single-digit percent of total client assets. We believe the main impact was absorbed in Q2. Outflows came from both Mainland and HK clients at roughly similar scale.

Mainland outflows mainly reflect compliance adjustments under the new rules. In HK, outflows were concentrated in the initial period post announcement, reflecting risk appetite shifts as the market digested the news.

Mainland client outflows occurred mostly in Jun–Jul after we implemented app-based restrictions, and attrition began to slow in Aug. HK client retention stayed above 98% in Q2.

Overseas markets saw stable retention QoQ, with healthy new customer growth. We will continue to focus resources and growth on Intl expansion.

Q: Despite the regulatory backdrop, group revenue and profit remained resilient in Q2. How is the development of overseas markets and their contribution to the group?

A: In terms of funded account quality, Avg. revenue per new funded account improved QoQ across multiple overseas markets. The US, SG, and HK all posted double-digit growth.

This shows structurally higher account quality in growth markets like the US. It also reflects ongoing acquisition of high-value clients in mature markets such as HK and SG, together supporting overall revenue growth.

On assets, overseas markets including MY, AU, NZ, and CA all delivered double-digit QoQ growth in funded accounts. Every overseas market we operate saw client Avg. assets rise QoQ, showing growth in both account count and wallet share.

Our new licence in Thailand provides an important anchor for ASEAN expansion. This strengthens our regional footprint.

On profitability, overseas markets are at different maturity stages. SG reached breakeven years ago, and with operating leverage kicking in, absolute profit and NPM continue to expand.

MY recently reached breakeven at the operating level. Other overseas markets are still building client and asset bases, but with rising client Avg. assets and retention, the foundation for long-term profitability is being laid.

Q: What is the strategic rationale for choosing Thailand? When do you expect to launch, and are there synergies with existing Asia markets?

A: Thailand is SEA's third-largest economy, with high digital adoption among investors and growing demand for global asset allocation and digital investing tools. According to SET, as of H1 2026, online brokerage accounts in Thailand exceeded 4.5mn.

For Moomoo, entering Thailand after SG and MY is a natural extension in SEA. We can reuse infrastructure and operations already built in the region.

Moomoo has obtained the SEC Thailand Class A securities licence. Together with our licences in other overseas markets, this reflects continued regulatory recognition of our cross-jurisdiction compliance capabilities, and our overall expansion pace remains disciplined.

On timing, we still need to pass regulatory readiness checks and receive final approval. There is no specific timetable to share yet.

We will keep close communication with local regulators to ensure all preparations are in place before launch. Execution readiness is the priority.

Q: Commission rate dipped slightly QoQ. What structural shifts are behind this?

A: We made no changes to pricing standards across markets in Q2. Hence monetisation changes were primarily driven by client trading behaviour.

First, derivatives contribution fell slightly QoQ vs. Q1, though the absolute contribution remained healthy. Second, more clients traded US stocks in Q2, concentrated in high-priced AI themes and tech leaders, which lowered our implied take rate.

Q: How did CAC trend in Q2, and what were the key drivers? What is the outlook for the next few quarters?

A: Blended CAC rose QoQ to ~HK$2,600 in Q2, remaining within the full-year guide of HK$2,500–3,000. The increase was mainly due to regulatory changes resulting in lower net funded account adds.

We also maintained brand investment across markets to support long-term growth and higher LTV. In addition, Jul CAC rose further vs. Q2.

Q: Can you break down net new funded accounts and period-end funded accounts by market, especially the overseas contribution?

A: In Q2 net adds, MY led all markets for three straight quarters, followed by HK. These two combined contributed over 50% of net funded account adds this quarter.

Among other markets, SG contributed the most. By end-Q2, Moomoo (overseas brand) accounted for nearly 60% of total funded accounts, mainly driven by SG, MY, and the US.

Q: Can you share Q3 trends so far, including net new funded accounts, net inflows, and client AUM?

A: At the current Q3 run rate, with higher market volatility, key indicators have softened modestly. Funded account net adds slowed vs. Q2.

Net inflows for HK and overseas have normalised. Total trading volume edged down QoQ, reflecting cooler retail sentiment vs. last quarter.

Q: After launching prediction markets in the US, how are the business trends? What are the monetisation and growth opportunities ahead?

A: We received the CFTC-issued FCM licence in May, and Moomoo US launched prediction market trading for US retail clients in early Jun. Within one month, event contract volume exceeded 200mn, showing strong demand among US retail investors.

We see clear benefits in both acquisition and engagement. There is explicit cross-sell synergy with our core brokerage.

For example, users trading event contracts are more active in securities trading. This indicates event contracts are not a substitute for securities, but rather a driver of activity.

We have two goals in the US prediction market push: capture the near-term opportunity as the local market takes off, and more importantly, build capabilities in product design, operations, and risk management to support rolling out prediction markets in other regions we operate.

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