Up Fintech Earnings. Should You Buy?

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UP Fintech Holding Limited (NASDAQ: TIGR), a leading online brokerage firm focusing on global investors, today announced its unaudited financial results for the fourth quarter and the year ended December 31, 2020.

“Continuous investment in our platform and innovative range of services drove robust financial performance for our Company in the fourth quarter of 2020,” stated Mr. Wu Tianhua, CEO and Director of UP Fintech. “Total revenues were US$47.2 million, a 136.5% increase from the fourth quarter of 2019, and were bolstered by healthy increases in commissions, interest income, and revenues derived from our corporate business. The profitability of our Company continued to improve as Non-GAAP net income attributable to UP Fintech in the fourth quarter was US$10.3 million, 29.7 times that of the fourth quarter of 2019 and total Non-GAAP net income attributable to UP Fintech for 2020 was US$22.3 million, a significant improvement from 2019’s loss of US$1.8 million.”

We added 44,000 funded accounts in the fourth quarter, 3.9 times the number of new funded accounts in the same quarter of last year; the total number of funded accounts more than doubled in 2020 to reach 258,700. Clients continued to entrust our Company with more of their assets; total account balance increased by US$5.0 billion in the fourth quarter and reached US$16.0 billion, an increase of 215.9% since the end of 2019. We continued to distinguish ourselves in the marketplace as we enhanced the functionality of our platform with expanded streaming of Level 2 market data for US equities and grey market for Hong Kong IPOs. Our strategy to develop our self-clearing capabilities also evidenced notable progress as a substantial number of our clients are now having their US cash equity trades cleared by Marsco Investment Corporation (“Marsco”).

Our corporate businesses continued to perform well. In the fourth quarter we participated in eight IPOs, of which we underwrote three. The growth in adoption of our ESOP system accelerated as we added 35 clients in the fourth quarter for a cumulative total of 124 clients. Our capabilities to serve corporate clients has already attracted a distinguished range of clients and we expect positive momentum going forward as more companies select our comprehensive service offering.

Financial Highlights for Fourth Quarter 2020

  • Total revenues increased 136.5% year-over-year to US$47.2 million.
  • Total net revenues increased 132.4% year-over-year to US$42.9 million.
  • Net income increased to US$9.4 million from negative US$0.2 million in the same quarter of last year.
  • Net income attributable to UP Fintech increased to US$8.5 million from negative US$0.6 million in the same quarter of last year.
  • Non-GAAP net income attributable to UP Fintech increased to US$10.3 million, compared to US$0.3 million in the same quarter of last year.

Financial Highlights for Fiscal Year 2020

  • Total revenues were US$138.5 million, a 136.1% increase from 2019.
  • Total net revenues were US$128.4 million, a 135.3% increase from 2019.
  • Net income increased to US$19.2 million from negative US$5.9 million in 2019.
  • Net income attributable to UP Fintech increased to US$16.1 million from negative US$6.6 million in 2019.
  • Non-GAAP net income attributable to UP Fintech increased to US$22.3 million from negative US$1.8 million in 2019.

Operating Highlights as of Year End 2020

  • Total account balance increased 215.9% year-over-year to US$16.0 billion.
  • Total margin financing and securities lending balance increased 101.0% year-over-year to US$2.0 billion.
  • Total number of customers with deposits increased 128.4% year-over-year to 258.7K.

Selected Operating Data for Fourth Quarter 2020

As of and for the three months ended
December 31, September 30, December 31,
2019 2020 2020
In 000’s
Number of customer accounts 649.0 975.6 1,104.1
Number of customers with deposits 113.2 214.7 258.7
In USD millions
Trading volume 21,799.6 62,810.7 65,449.4
Total account balance 5,051.6 10,915.7 15,956.9

Fourth Quarter 2020 Financial Results

REVENUES

Total revenues were US$47.2 million, up 136.5% from US$20.0 million in the same quarter of last year.

Commissions were US$25.2 million, up 244.5% from US$7.3 million in the same quarter of last year, driven by an increase in our user base and market activities.

Financing service fees were US$1.6 million, down 22.2% from US$2.0 million in the same quarter of last year, primarily due to lower interest rates.

Interest income was US$11.7 million, up 76.5% from US$6.6 million in the same period of last year. This was primarily due to an increase in consolidated account customers and margin activities.

Other revenues were US$8.7 million, up 118.7% from US$4.0 million in the same quarter of last year, primarily due to higher revenue from IPO distribution services.

Interest expense was US$4.3 million, an increase of 186.9% from US$1.5 million in the same quarter of last year as we have more consolidated account customers.

OPERATING COSTS AND EXPENSES

Total operating costs and expenses were US$36.3 million, an increase of 89.9% from US$19.1 million in the same quarter of last year.

Execution and clearing expenses were US$4.2 million, an increase of 362.7% from US$0.9 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$15.5 million, an increase of 47.3% from US$10.6 million in the same quarter of last year, primarily due to a headcount increase to accompany the rapid growth of the business.

Occupancy, depreciation, and amortization expenses were US$1.3 million, an increase of 11.9% from US$1.1 million in the same quarter last year, due to the increase in office space and relevant leasehold improvements.

Communication and market data expenses were US$3.9 million, an increase of 102.6% from US$1.9 million in the same quarter last year, due to rapid user growth and expanded market data usage.

Marketing and branding expenses were US$6.5 million, an increase of 277.4% from US$1.7 million in the same quarter last year. This increase was derived from our continuous efforts to expand globally in accordance with our internationalization strategy, which has resulted in client base growth.

General and administrative expenses were US$4.8 million, an increase of 69.9% from US$2.8 million in the same quarter last year, primarily due to increased professional services expenses resulting from business expansion.

NET INCOME/LOSS ATTRIBUTABLE TO UP FINTECH HOLDING LIMITED

Net income attributable to UP Fintech was US$8.5 million, as compared to a net loss of US$0.6 million in the same quarter of last year. Net income per ADS – diluted was US$0.059, as compared to a net loss per ADS – diluted of US$0.004 in the same quarter of last year.

Non-GAAP net income attributable to UP Fintech, which excludes share-based compensation and impairment loss from equity investments, was US$10.3 million, as compared to a US$0.3 million non-GAAP net income attributable to UP Fintech in the same quarter of last year. Non-GAAP net income per ADS – diluted was US$0.071, as compared to a non-GAAP net income per ADS – diluted of US$0.002 in the same quarter of last year.

For the fourth quarter of 2020, the Company’s weighted average number of ADSs used in calculating diluted net income per ADS, was 144,502,750. As of December 31, 2020, the Company had a total of 2,121,539,851 Class A and B ordinary shares outstanding, or the equivalent of 141,435,990 ADSs.

Full Year 2020 Financial Results

REVENUES

Total revenues were US$138.5 million, representing an increase of 136.1% from US$58.7 million in 2019.

Commissions were US$77.6 million, a 190.8% increase from US$26.7 million in 2019, driven by an increase in our user base and market activities.

Financing service fees were US$6.6 million, down 17.0% from US$7.9 million in 2019, primarily due to lower interest rates.

Interest income was US$31.8 million, up 92.4% from US$16.5 million in 2019.This was primarily due to an increase in consolidated account customers and margin activities.

Other revenues were US$22.5 million, an increase of 199.2% from US$7.5 million in 2019. The increase was primarily due to higher revenue from IPO distribution services.

Interest expense was US$10.1 million, an increase of 146.3% from US$4.1 million in 2019 as we have more consolidated account customers.

OPERATING COSTS AND EXPENSES

Total operating costs and expenses were US$107.4 million, an increase of 65.8% from US$64.7 million in 2019.

Execution and clearing expenses were US$12.6 million, an increase of 401.9% from US$2.5 million in 2019, due to the increase in the number of consolidated accounts as well as an increase in trading volume.

Employee compensation and benefits expenses were US$50.0 million, an increase of 39.8% from US$35.8 million in 2019, primarily due to a headcount increase compared to 2019.

Occupancy, depreciation and amortization expenses were US$4.7 million, an increase of 32.6% from US$3.6 million in 2019, due to an increase in office space and relevant leasehold improvements.

Communication and market data expenses were US$10.3 million, an increase of 58.9% from US$6.5 million in 2019. This increase was due to rapid user growth and expanded market data usage by our users.

Marketing and branding expenses were US$15.9 million, an increase of 123.4% from US$7.1 million in 2019. This increase was derived from our continuous efforts to expand globally in accordance with our internationalization strategy, which has resulted in client base growth.

General and administrative expenses were US$13.7 million, an increase of 48.5% from US$9.3 million in 2019. This increase was primarily due to business expansion and more professional services.

NET INCOME/LOSS ATTRIBUTABLE TO UP FINTECH HOLDING LIMITED

Net income attributable to UP Fintech was US$16.1 million, as compared to a net loss of US$6.6 million in 2019. Net income per ADS – diluted was US$0.111, as compared to a net loss per ADS – diluted of US$0.056 in 2019.

Non-GAAP net income attributable to UP Fintech, which excludes share-based compensation and impairment loss from equity investments, was US$22.3 million, as compared to a US$1.8 million non-GAAP net loss attributable to UP Fintech in 2019. Non-GAAP net income per ADS – diluted was US$0.154, as compared to a non-GAAP net loss per ADS – diluted of US$0.015 in 2019.

One of the significant subsidiaries of the Company, Tiger Brokers (NZ) Limited, has decided to change its functional currency after evaluation of the appropriateness of functional currency. The evaluation performed by the subsidiary took into account the nature and development of the business and was approved by its management and board of directors. The Company believes this change provides a more accurate view of both the subsidiary’s and the group’s business and results of operations. The financial impact of this change has been reflected in the financial statements for the year ended December 31, 2020.

CERTAIN BALANCE SHEET ITEMS

As of December 31, 2020, the Company’s cash and cash equivalents and term deposits were US$98.4 million, compared to US$125.0 million as of December 31, 2019.


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