TIGR (Trans): Rev. at Record High, Take Rate Falling

Trans compiled by Dolphin Research for $UP Fintech(TIGR.US) FY26 Q2 earnings call

I. Key takeaways from the print

1. Shareholder returns: As of the prior U.S. market close, the company had repurchased about $5 mn of ADS under the $50 mn buyback announced on Jun. 2. It will continue to execute from time to time within the remaining authorization.

2. Outlook (no formal revenue guidance; management commentary only)

a. Normalized effective tax rate expected at 10%–15%. Management aims to reverse the excess income tax accruals from Q2 over H2.

b. Cash equity take rate is expected to recover in Q3. New funded accounts in Q3 should be flat to up vs. Q2.

c. H2 Avg. CAC is projected at $450–$550. Client assets QTD are up high single digits vs. end-Q2, while volumes and commissions are slightly below Q2.

3. Key financials this quarter

a. Top line: Total revenue reached a record $182 mn (+31.4% YoY, +17.7% QoQ). Commission revenue was $78.3 mn (+21% YoY, +17% QoQ). Interest income was $79.8 mn (+36% YoY, +24% QoQ).

b. Profit: OP was $56.8 mn (+19.5% QoQ, +12.6% YoY). GAAP NI to shareholders was $39.4 mn and non-GAAP NI was $42.8 mn, turning from a loss in the prior quarter.

c. Excluding the $59.7 mn one-off fine in Q1, both GAAP and non-GAAP NI grew about 20% QoQ in Q2. The underlying profitability trend improved.

d. Opex: Total operating costs were $103.9 mn, up 47% YoY. Staff costs and benefits were $50.0 mn, up 39% YoY, mainly due to severance from group BU restructuring.

e. Marketing expense was $18.4 mn, up 87% YoY, reflecting focus on high-quality user acquisition and accelerated wealth management expansion. Communications and market data expense was $16.2 mn, up 56% YoY, driven by a larger user base and higher IT service fees.

f. G&A was $9.8 mn, up 45% YoY (higher professional services). Interest expense was $21.5 mn, up 19% QoQ. Execution and clearing fees were $6.8 mn, up 25% YoY. Facilities D&A was $2.8 mn, up 3% YoY.

g. Take rate and mix: Cash equity take rate was 3.6 bps vs. 5.9 bps in Q1. About 71% of commissions came from cash equities and 24% from options, with the balance from futures and others.

II. Details from the call

2.1 Management highlights

1. Users and client assets

a. New funded accounts were 32.6k in Q2, up 12.7% QoQ, with the vast majority from Singapore and Hong Kong. Total funded accounts reached 1.32 mn, up 10.3% YoY.

b. Retail users in Singapore, Hong Kong and other markets continued to deliver net inflows. Net inflows exceeded $1.5 bn this quarter.

c. Client assets were $60.7 bn, up 3.1% QoQ and 16.7% YoY. Market appreciation contributed to the growth alongside net inflows.

d. Client assets rose QoQ across all operating markets. Hong Kong local clients were up nearly 30% QoQ, ANZ exceeded 30%, and the U.S. was up nearly 50%.

2. Singapore market and product localization

a. Launched fractional trading for Singapore stocks and REITs. This lowers entry barriers and makes local investing more friendly for beginners.

b. Rolled out dedicated tax reports in Hong Kong, Singapore and New Zealand. Users can view and download annual tax reference files in-app and on the website, covering realized P&L, dividends, interest and coupons to reduce compliance costs and filing complexity.

3. Hong Kong market

a. Increased brand investment and localization in Q2. The flagship campaign centered on SpaceX, with integrated outreach via OOH, social media, new-user incentives and HK airport placements.

b. Introduced Cboe index options trading in Hong Kong. Hosted a dedicated launch for TigerX Cboe index options, alongside a series of investor education events to broaden the local tradable product set.

4. 2B biz.

a. IB: Underwrote 14 HK IPOs in Q2, with continued focus on AI and hard tech. AI deals included Monicorn and Deep Zero, and the firm participated in offerings by intelligent manufacturing and auto semiconductor companies to reinforce its position in tech and innovation listings.

b. The A+H listing franchise kept expanding. The firm worked on HK listings of leading players in intelligent hardware, new energy materials and consumer electronics.

c. U.S.: Participated in the distribution of 4 U.S. IPOs, including China auto digital platform DSC Holdings and Japan auto software firm Micware. The U.S. pipeline further diversified.

d. ESOP grew steadily with 50 new clients added this quarter. As of Jun. 30, 2026, cumulative ESOP clients reached 840.

2.2 Q&A

Q: Total revenue and OP were strong, but 'other items, net' showed a loss of over $2 mn. What happened and what’s next?

A: The loss mainly reflects FX losses from RMB appreciation and is non-cash. Management did not guide the forward trajectory.

RMB strengthened through Q2 with a corresponding USD move, leading to FX losses of about $2 mn recorded under other items. Given the non-cash nature, management refrained from providing quantitative or directional guidance for subsequent quarters.

Q: Income tax expense was high in Q2, with an effective tax rate near 28%. Why, and what is the normalized ETR?

A: Normalized ETR is 10%–15%, with two non-cash factors lifting Q2 taxes. Management intends to reverse them over H2.

The first relates to a non-cash deferred tax adjustment tied to stock-based compensation. SBC is amortized each quarter for accounting, including vested and unvested portions, but tax deductibility applies only to the vested portion, creating a deferred tax asset on the unvested share.

After May 22, the share price declined and the value of the unvested employee pool fell. Previously recognized deferred tax assets were reduced, with about $1 mn written off into tax expense this quarter. This is non-cash, and a rebound in share price would reverse the effect and lower taxes in the corresponding period.

The second relates to the one-off fine tied to the May 22 rectification. The company is still assessing the matter, and for prudence treated the entire fine as non-deductible, adding about $6 mn to tax expense this quarter, also non-cash.

Management will continue optimizing tax arrangements across regions within compliance. The goal is to gradually reverse these tax expenses in H2.

Q: How is the Q3 run-rate for trading activity, client assets and new funded accounts?

A: Client assets are up high single digits QoQ, while volumes and commissions are slightly below Q2. Net inflows and market gains each contributed over $1 bn QTD, supporting steady asset growth.

Volumes and commissions are modestly below Q2 due to a high base from the Q2 market rally. Entering Q3, markets pulled back and activity eased accordingly.

New funded accounts are still mainly from Hong Kong and Singapore, and are expected to be flat to up vs. Q2. Notably, Avg. net inflow per new funded account rose further to about $25k QTD, consistent with the quality-first acquisition strategy.

Q: Any new policy changes after May 22? Has Mainland retail activity and asset outflow stabilized, and how has their mix in assets and revenue changed?

A: No new policies after Jun. 12, and Mainland retail revenue share fell to 15%–20%. The company promptly complied with regulatory requirements and on Jun. 12 implemented necessary controls limiting onshore opening trades and deposits by Mainland users.

No further policy changes have been received since then. The impact concentrated in Q2 and is largely reflected.

Mainland retail users saw net outflows of about $0.5 bn in Q2, mostly between May 22 and Jun. 12, equivalent to a high single-digit percentage of their total assets before the change. Outflows have slowed entering Q3.

Post-outflow, Mainland retail now accounts for under 10% of client assets. Revenue contribution fell from 20%–25% for FY25 and Q1 to 15%–20% in Q2.

Management believes the outflow shock from the regulatory change has largely run its course. The core growth engine is the global business, with all operating markets showing QoQ asset growth in Q2, and no material mid-to-long term impact on global fundamentals based on current data.

Q: Overall take rate was stable, but cash equity take rate dropped QoQ. Why and what is the outlook?

A: Three factors weighed on cash equity take rate, which is expected to recover in Q3. Cash equity take rate fell from 5.9 bps in Q1 to 3.6 bps in Q2.

First, a higher mix of AI and semiconductor trading on the platform, where certain high-priced names like Micware carry take rates well below 1 bp, dragged U.S. cash equity take rates. Second, the Nasdaq rose over 20% in Q2, lifting average stock prices; as commissions are per-share, higher prices compress take rates.

Third, some high-frequency users routed via the U.S. subsidiary in Q2, boosting volume but at zero commission for U.S. local clients, further pressuring take rates. The first two are market-driven and hard to predict.

Since Q3 began, stock prices have pulled back, which is a tailwind for cash equity take rates. Overall take rate stayed stable as futures mix declined while cash equities and options rose.

Because futures volumes are measured on notional, a lower futures mix mechanically lifts the blended take rate.

Q: Can you break down the regional mix of Q2 new funded accounts?

A: Singapore and Hong Kong combined were over 70% and roughly split, with ANZ about 25%. The remainder came from the U.S.

Q: What drove higher marketing and CAC QoQ? How much was acquisition vs. reactivation, where did you invest more, and what is H2 CAC?

A: Ex-exchange rebates, marketing rose by about $2.5 mn QoQ and CAC increased to about $450. Some marketing line items are exchange rebates unrelated to acquisition.

After stripping rebates, marketing spend rose by about $2.5 mn QoQ and Avg. CAC increased from about $420 in Q1 to about $450 in Q2.

Acquisition including brand accounted for about 60%–70% of total marketing. Incremental spend targeted brand building in Hong Kong and Singapore and delivered higher-quality users, with Avg. net inflow per new funded account rising from under $20k in Q1 to over $25k in Q2.

Hong Kong client assets have grown double digits for five consecutive quarters, up nearly 30% QoQ in Q2 and about 3x YoY. In Singapore, the firm used a mix of online and offline branding, including the largest local outdoor food and music festival and the 'Where is your next step' campaign with a running community to connect with younger users.

Spending will remain flexible based on market conditions. Based on current trends, Avg. CAC is expected in the $450–$550 range for H2.

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