Futu Holdings Limited (FUTU) Earnings

Management highlights

- Client and Asset Growth * Acquired 252,000 net new funded accounts, up 23.7% year-over-year and 12.2% quarter-over-quarter. Total funded accounts reached 3.84 million, up 33.6% year-over-year and 7% quarter-over-quarter. * Total client assets hit HK$1.4 trillion, up 43.6% year-over-year and 14.5% quarter-over-quarter, driven by higher client equity valuations and net asset inflows. Margin financing and securities lending balance rose 31% quarter-over-quarter to HK$95.1 billion. * Wealth management client assets reached HK$180.2 billion, up 10% year-over-year and 1% quarter-over-quarter. - Market Expansion & Positioning * Singapore registered users surpassed 2 million, solidifying Moomoo's leading position among local retail investors. Malaysia led all markets in net new funded accounts for the third consecutive quarter, and reached operating profit break-even for the first time in Q2 2026. Singapore is already profitable with expanding margins. * Obtained a Type A securities license from the Thai SEC, as part of continued ASEAN market expansion, which builds on existing infrastructure in Singapore and Malaysia. * In the U.S., NUMU prediction markets gained significant traction, driving incremental new client acquisition and improved platform engagement. - Product & Strategic Initiatives * Total trading volume hit a new record of HK$6.42 trillion, up 78.8% year-over-year and 54.6% quarter-over-quarter. U.S. stock trading volume grew 67.2% quarter-over-quarter to HK$5.02 trillion, driven by AI-related stock interest; Hong Kong stock trading volume rose 15.9% quarter-over-quarter to HK$1.17 trillion, driven by semiconductor, China Internet, and new listing activity. * Futu Securities became the first and only broker in Hong Kong to launch securities-backed margin financing for virtual assets under an upgraded SFC Type 1 license, and is exploring extending its unified buying power framework to cover virtual asset holdings. * IPO services hit a new milestone, with 683 IPO distribution and IR clients, up 32% year-over-year. Nearly 60% of newly listed Hong Kong companies partnered with Futu in Q2 2026, including several high-profile listings. * Continued increased R&D investment in AI and Web3 strategic initiatives, and sustained brand investment to support long-term international growth.

Guidance

- No formal numerical guidance was provided, but management confirmed that blended customer acquisition cost (CAC) remains within its long-term target range of HK$2,500 to HK$3,000. - Management expects more overseas markets will reach operating break-even in coming quarters, with solid long-term profitability potential for the international business segment. - Management maintained its strategic priority of shifting growth resources and focus to international business, after the bulk of regulatory impacts from new mainland China rules were absorbed in Q2 2026.

Segment performance

In Q2 2026, Futu Holdings' total revenue was HK$7.2 billion, representing a 36% year-over-year increase from HK$5.3 billion in Q2 2025. Breakdown by revenue segment: 1) Brokerage commission and handling charge income: HK$3.4 billion, up 30% year-over-year and 27% quarter-over-quarter, contributing 47.2% of total revenue. 2) Interest income: HK$3.1 billion, up 37% year-over-year and 18% quarter-over-quarter, contributing 43.1% of total revenue. 3) Other income: HK$718 million, up 61% year-over-year and 27% quarter-over-quarter, contributing 10.0% of total revenue. Total costs were HK$985 million, up 47% year-over-year, resulting in total gross profit of HK$6.2 billion, up 34% year-over-year. Gross margin was 86.3%, down from 87.4% in the year-ago quarter. Operating expenses were HK$1.8 billion, up 35% year-over-year and 11% quarter-over-quarter, with R&D expenses of HK$501 million (up 13% year-over-year), selling and marketing expenses of HK$657 million (up 53% year-over-year), and G&A expenses of HK$593 million (up 40% year-over-year). Operating income was HK$4.5 billion, up 34% year-over-year, with a stable operating margin of 62% year-over-year. Net income was HK$3.6 billion, up 42% year-over-year, and net margin expanded to 50.6% from 48.4% in Q2 2025.

Risks & headwinds

- New mainland China regulatory rules implemented in Q2 2026 led to cumulative mid-single-digit percentage total client asset outflows, split roughly equally between mainland and Hong Kong clients. Mainland client attrition moderated by August 2026 after most compliance adjustments were completed. - Forward-looking statements are inherently uncertain, and actual results may differ materially due to regulatory changes across jurisdictions, market sentiment volatility, and other external factors. The company notes these risks in SEC filings. - Sequential CAC increased in Q2 2026 due to lower net new funded account growth from regulatory impacts, while the company maintained required brand investment for long-term growth. CAC also trended higher in July 2026 compared to Q2 averages. - Q3 2026 quarter-to-date key metrics have trended modestly softer than Q2 2026 due to broader market volatility and cooling retail investor sentiment.

Analyst Q&A

• Q: After the implementation of new mainland China regulatory rules in May 2026, have there been material changes to mainland client share of accounts, AUM, and revenue, or meaningful client/asset outflows? What is the update on overseas market development and contribution?

  A: Cumulative asset outflows from the new rules amounted to a mid-single-digit percentage of total client assets, with the bulk of the impact absorbed in Q2 2026. Outflows were split evenly between mainland and Hong Kong clients; mainland attrition moderated by August, while Hong Kong client retention stayed above 98% and overseas retention remained stable. On overseas contribution, average revenue per new funded account grew double-digit sequentially across the U.S., Singapore, and Hong Kong. All overseas markets delivered double-digit sequential growth in funded accounts, with Malaysia and Hong Kong contributing over 50% of Q2 net new accounts. Singapore is profitable with expanding margins, and Malaysia achieved operating break-even in Q2 2026.

• Q: What is Futu's strategic rationale for entering Thailand, and what synergies does it have with existing ASEAN operations? What drove the sequential decline in blended commission rate?

  A: Thailand is Southeast Asia's third-largest economy with over 4.5 million online investors and growing demand for global asset allocation and digital investing tools. Entering Thailand is a natural next step after Singapore and Malaysia, allowing Futu to leverage existing regional infrastructure and operational experience. Final launch timing is pending regulatory inspection and approval. The commission rate decline was not driven by price changes, but by client trading patterns: derivative contribution declined slightly sequentially, and trading was heavily concentrated in high-value U.S. AI and tech stocks which carry lower implied commission rates.

• Q: What drove Q2 CAC changes, and what should we expect for CAC going forward? What is the overseas market contribution to new and total funded accounts?

  A: Blended Q2 CAC rose sequentially to ~HK$2,600, which remains within the company's target range of HK$2,500 to HK$3,000. The sequential increase was driven by lower net new funded account growth from regulatory developments, while the company maintained steady brand investment to support long-term growth. CAC was also higher in July compared to Q2. Malaysia led net new funded account growth for three consecutive quarters, and together with Hong Kong contributed over 50% of Q2 net new accounts. By the end of Q2, overseas markets accounted for nearly 60% of Futu's total funded accounts, led by Singapore, Malaysia, and the U.S.

• Q: What is the Q3 2026 year-to-date business trend for key metrics? How has the U.S. prediction market business performed, and what is its long-term growth outlook?

  A: Q3 key metrics are modestly softer than Q2 against a backdrop of market volatility: net new funded account growth has moderated, and total trading volume is down slightly from Q2's record levels. Net asset inflows in Hong Kong and overseas markets have returned to normalized levels. The U.S. prediction market launched in early June 2026 after receiving CFTC approval, and generated over HK$200 million in trading volume within its first month, showing strong U.S. retail demand. The business delivers clear cross-synergy with core brokerage: prediction market users are more active in equity trading, and it also drives incremental new client acquisition. Near-term, Futu is capturing current local market growth, while long-term it is building product, operational, and risk management expertise to roll out prediction markets to other regions in the future.