BofA reiterates Buy on UP Fintech with a $13.35 target, citing stronger profitability, robust AUM growth, and operating leverage.

2Q25: profit beat on active market & operating leverage

Tiger’s 2Q25 total revenue rose 13% QoQ/59% YoY to USD139mn, largely in line with BofAe and beat VA consensus by 9%. Its GAAP net profit surged 36% QoQ/1498% YoY to USD41.4mn, and non-GAAP net profit jumped 23% QoQ/756% YoY to USD44.5mn, beat BofAe by 7%/3% or VA consensus by 48%/44%. New funded clients fell 35% QoQ from a high base to 39.8k in 2Q, mainly as Tiger closed channels that did not meet its ROI and payback period standards. Importantly, the new funded clients in 2Q contributed more net asset inflows than the new funded clients in 1Q. And Tiger had already achieved 67% of its annual target of 150k new funded clients in 1H25. Net asset inflows remained strong at USD3.0bn in 2Q, with >70% of them from retail clients. Coupled with a USD3.2bn MTM gain, total client assets grew 14% QoQ/36% YoY to USD52.1bn, 3% higher than VA consensus. See detailed discussion of 2Q results on page 3-4. We increase 2025-27E EPS by 16-26% mainly driven by higher client assets and trading velocity assumptions, and thus lift PO by 20% from USD11.13 to USD13.35. Reiterate Buy on Tiger for its robust client and AUM growth, continued improving profitability and potentials in key markets and businesses.

3Q25: active trading and strong client asset growth QTD

Management guided the average monthly number of shares traded QTD has been higher than the monthly average in 2Q, and thus its commissions, which are mostly based on the numbers of shares traded in the US, are doing well QTD. Client assets achieved highsingle-digit growth QTD, with significant contribution from MTM gains and good retail net asset inflows. New funded clients may further slip QoQ as Tiger 1) continues to prioritize client quality and net asset inflows over client quantity and 2) stops acquiring existing mainland China clients in the industry. The contribution of HK (which has the highest client quality across all markets) to new funded clients QTD almost matches that of Singapore. HK’s CAC was >USD400 in 2Q (vs group average at ~USD250), but its payback period remains quite healthy at about two quarters based on the current market conditions. Management expects HK’s CAC to fluctuate at current level, though the group’s average CAC will be impacted by the mix of HK new funded clients.

2Q25 results and key developments

Revenue and net profit both beat VA consensus

Tiger’s 2Q25 total revenue rose 13% QoQ/59% YoY to USD139mn, largely in line with BofAe (see our preview) and beat VA consensus by 9%. Its GAAP net profit surged 36% QoQ/1498% YoY to USD41.4mn, and non-GAAP net profit jumped 23% QoQ/756% YoY to USD44.5mn, beat BofAe by 7%/3% or VA consensus by 48%/44%.

Prioritize client quality & asset inflows over client quantity

New funded clients fell 35% QoQ from a high base to 39.8k in 2Q, partly as Tiger closed channels that did not meet its ROI and payback period standards to ensure longterm quality of its user base. Importantly, these 39.8k new funded clients in 2Q contributed more net asset inflows than the 60.9k new funded clients in 1Q. ~50% of the new funded clients in 2Q was from Singapore and Southeast Asia, ~30% from HK/Greater China, ~15% from Australia/New Zealand and ~5% from US. Tiger had already achieved 67% of its annual target of 150k new funded clients in 1H25.

Net asset inflows remained strong at USD3.0bn in 2Q25, with the majority from retail clients. Coupled with a USD3.2bn MTM gain, total client assets grew 14% QoQ/36% YoY to USD52.1bn, 3% higher than VA consensus. The average net asset inflow of newly acquired funded clients reached a record high of >USD20k in 2Q. In particular, average net asset inflow of new clients in HK and Singapore markets was ~USD30k, contributing to ~50% and ~20% QoQ growth in client assets in these two regions, respectively. Australia/New Zealand and US also experienced >30% QoQ increases in client assets.

Margin Financing and Securities Lending (MFSL) balance increased 9% QoQ/65% YoY to USD5.7bn, though MFSL as % of total client assets edged down 0.4ppt QoQ to 11.0%. Client idle cash rose 26% QoQ, and its percentage in total client assets rose 0.7ppt QoQ to 6.9% in 2Q.

Active trading, lower commission rate, strong other income

Annualized trading velocity rose from 19.9x in 1Q to 23.2x in 2Q amid active markets. Trading volume rose 31% QoQ/168% YoY to USD284bn, of which: the stock trading volume increased 15% QoQ/104% YoY to USD68.2bn (24% of total), and non-stock trading volume increased 37% QoQ/198% YoY to USD215.9bn (76% of total). Commission rate declined 0.4bp QoQ to 2.3bp in 2Q, because 1) the stock commission rate fell 0.3bp QoQ to 6.4bp due to higher share price of US stocks (whose commissions are charged based on shares traded) and 2) the contribution of low-commission-rate futures trading increased. Brokerage income grew 11% QoQ/90% YoY to USD64.8mn in 2Q, interest income grew 9% QoQ/30% YoY to USD61.4mn, while other income surged 58% QoQ/100% YoY to USD12.5mn driven by IPO distribution income (Tiger underwrote 4 US IPOs in 2Q, of which, it acted as the sole bookrunner for 2), as well as wealth management services revenue and FX revenue.

Stepped up marketing in HK market

Employee expenses grew 6% QoQ/25% YoY, primarily due to an increase of headcount to support global expansion, though management continued to expect employee expenses (ex SBC) to be 10-20% p.a. Marketing and branding expenses grew 54% YoY, but declined 9% QoQ on less new funded clients in the quarter. CAC per new funded client increased from USD178 in 1Q to USD248 in 2Q, as Tiger increased investment in HK market. HK’s CAC was >USD400, but the payback period remains quite healthy at about two quarters based on the current market conditions.

Lower effective tax rate, improved margins

Effective tax rate declined from 21.8% in 1Q to 15.3% in 2Q as 1) US subsidiary pays the highest tax rate among all subsidiaries, and its contribution to pre-tax profit declined in 2Q, and 2) Tiger secures more favorable tax rate in Singapore, which reduced from 17.0% to 13.5% in 2Q. Combining all above, Tiger’s gross margin, operating margin and net margin improved 5.0ppt/30.8ppt/26.8ppt YoY or 0.7ppt/3.3ppt/5.0ppt QoQ to 76.1%/36.4%/30.0% in 2Q.

Digital asset business: small yet fast-growing

Tiger is committed to expanding its presence in the digital asset market and aims to develop a comprehensive one-stop platform to seamlessly connects traditional financial assets with digital assets. It partners with seasoned strategic investors in the Web3 ecosystem (e.g., former Huobi founder Li Lin) to develop leading digital asset trading products.

Although the digital asset business only accounts for a very small part of its total revenue currently, Tiger is seeing strong growth, especially as it keeps expanding in HK and continues to roll out industry leading features like digital asset deposits and withdrawal, and helped by the regulatory development in HK. Its digital assets under custody increased 83% QoQ, while its digital asset trading volume increased 65% QoQ in 2Q. Quarterly run-rate of digital asset trading volume as of July was more than USD50mn.

Tiger has obtained digital asset licenses in 14 states in the US. It is also actively progressing the application of digital asset license in Singapore. Its VATP (Virtual Asset Trading Platform) license in HK is under the phase two audit, and hopefully to be completed by year end.

CRS/tightened tax collection haven’t had much impact on its client behaviors

From the regulatory standpoint, mainland residents should declare and pay tax on their capital gain from overseas investments, which has been reinforced by the relevant authorities since 1H24. All Tiger’s major markets of operation, except for US, are a member of CRS (Common Reporting Standard), and Tiger needs to comply with the CRS requirements.

However, Tiger hasn’t observed notable impact of CRS on its operations so far, with its client retention rate in the Greater China region remaining above 98% in the past 2 years. Net asset inflows from the Greater China region have been constantly healthy and trading activity has not shown any meaningful difference.