Executive Summary / Key Takeaways

• Futu Holdings is rapidly solidifying its position as a leading tech-driven global financial services platform, driven by aggressive international expansion and continuous innovation in AI and digital assets.
• The company delivered exceptional financial results in Q2 2025, with total client assets reaching a record HKD 974 billion and net income surging 113% year-over-year to HKD 2.6 billion, showcasing strong operating leverage.
• A significant strategic milestone was achieved with over 50% of funded accounts now originating from clients outside Futu Securities Hong Kong, underscoring successful global market penetration.
• Futu is confident in achieving its 2025 guidance of 800,000 new funded accounts, supported by robust growth in existing markets and a rich product pipeline in wealth management and cryptocurrency.
• Key factors for sustained growth include continued international momentum, effective AI integration to enhance user experience and operational efficiency, and proactive engagement with evolving digital asset regulations.

A Global Fintech Powerhouse in the Making

Futu Holdings Limited, founded in 2007, has evolved into a prominent digitalized securities brokerage and wealth management platform, operating through its intuitive Futubull and Moomoo platforms. The company's overarching strategy centers on becoming an influential global financial services platform, distinguished by product localization, continuous technological innovation, particularly in artificial intelligence, and a comprehensive one-stop investment ecosystem. This foundational approach has enabled Futu to thrive in a competitive industry landscape characterized by growing demand for digital solutions, market volatility, and the emergence of new asset classes like cryptocurrencies.

Futu's journey has been marked by strategic expansion and product diversification. Following its IPO in 2019, the company significantly broadened its international footprint in 2024 by entering Malaysia and Japan. This period also saw the introduction of U.S. margin trading in Japan, an Options Strategy Builder for its U.S. desktop platform, and the establishment of a bond trading desk in Hong Kong and Singapore. In the Hong Kong IPO market, Futu demonstrated its prowess by underwriting 40 IPOs in 2024, ranking first among all brokers for the third consecutive year, and adeptly adapting to the new FINI digital IPO settlement platform. The third quarter of 2024 further diversified its offerings with the launch of its cryptocurrency business in Hong Kong, a U.S. stock Dividend Reinvestment Plan, NISA savings accounts and mutual funds in Japan, and Ringgit and USD-denominated money market funds in Malaysia, where it became the first broker to offer U.S. options trading.

This momentum accelerated into 2025, with Futu adding approximately 262,000 new funded accounts in the first quarter, reaching a total of 2.7 million. The company debuted Futubull AI in Hong Kong, a smart investment assistant, and launched a new desktop version of Futubull. Further enhancements included U.S. fractional shares and options trading in Japan, and expanded cryptocurrency services with deposit functionalities, paper trading in Hong Kong, and crypto trading in most U.S. states. By the second quarter of 2025, Futu achieved a pivotal milestone: over 50% of its approximately 2.9 million funded accounts now originate from clients outside Futu Securities Hong Kong, a clear testament to its successful global expansion.

Technological Edge: AI as a Core Differentiator

Futu's core competitive advantage is deeply rooted in its proprietary technology platforms, Futubull and Moomoo, which are continuously enhanced by significant investments in AI capabilities. These platforms are designed to offer a superior, more intelligent, and efficient investing experience for global users. The company's R&D efforts are substantial, evidenced by 209 iterations of its mobile app and desktop clients and the addition of 7,762 new features in 2024, representing year-over-year increases of 37% and 32%, respectively.

The integration of AI is a cornerstone of Futu's technological differentiation. Futubull AI, launched in Hong Kong, acts as a smart investment assistant, leveraging Futu’s proprietary financial data and community insights. It has received overwhelmingly positive feedback, boasting a "satisfaction rate of around 90%" and demonstrating "significantly higher accuracy and professionalism in answering investment-related questions than general purpose models." Building on this success, moomoo AI has been rolled out across all international markets, equipping investors worldwide with smarter tools. Notably, the adoption rate of the AI chatbot in Japan is the highest among all international markets, with customer satisfaction consistently above 90%.

Beyond client-facing tools, AI is also deployed internally to "meaningfully lift our efficiency in terms of the market use and data generation, filtering of content in our social community and the designing and the graphics, et cetera." For clients, AI powers features like a new synthesis function for individual stocks (available twice daily) and automatic interpretation of corporate announcements and financial results, helping investors "quickly understand market dynamics and reduce the time needed for them to make investment decisions." Futu plans to launch AI stock screeners and algo trading, which will "significantly lower their barrier" for retail clients to access sophisticated trading strategies previously exclusive to institutional investors. This technological roadmap, backed by "greater investments in AI capabilities" (Q2 2025 R&D expenses increased 18% year-over-year and 14% quarter-over-quarter), strengthens Futu's competitive moat by enhancing user engagement, improving operational efficiency, and opening new revenue streams, thereby solidifying its market positioning as an innovator.

Robust Financial Performance and Operational Strength

Futu's strategic initiatives and technological leadership have translated into impressive financial and operational performance. In the second quarter of 2025, total funded accounts reached approximately 2.9 million, marking a 41% increase year-over-year and an 8% rise quarter-over-quarter. This growth was fueled by the acquisition of 204,000 new funded accounts, up 32% from a year earlier, with Hong Kong leading all markets for the third consecutive quarter. Client engagement remains exceptionally strong, with a funded account quarterly retention rate "well above 98%."

The company's asset base expanded significantly, with total client assets hitting a record HKD 974 billion by the end of Q2 2025, representing a 68% increase year-over-year and a 17% rise quarter-over-quarter. This was largely driven by robust net asset inflow, which nearly doubled in the first half of 2025 compared to the same period last year, benefiting from favorable market performance in Hong Kong and U.S. equities. Total trading volume soared to HKD 3.59 trillion in Q2 2025, a 121% year-over-year and 12% quarter-over-quarter increase, propelled by market volatility and renewed enthusiasm in cryptocurrency trading. U.S. stock trading volume alone grew 20% sequentially to HKD 2.7 trillion, led by EV and crypto stocks.

Futu's revenue diversification is also evident in its wealth management segment, where client assets reached HKD 163.2 billion, up 104% year-over-year and 17% quarter-over-quarter. The company has enhanced its offerings with Hong Kong dollar and RMB-denominated bonds, floating rate bonds, and became the first online broker in Hong Kong to offer retail-facing principal protected structured products. Furthermore, Futu solidified its digital asset innovation by becoming the first and only online brokerage platform in Hong Kong to distribute China AMC Hong Kong's tokenized money market funds.

Financially, Q2 2025 saw total revenue climb to HKD 5.3 billion, a 70% increase from Q2 2024. Brokerage commission and handling charge income rose 87% year-over-year to HKD 2.6 billion, primarily due to higher trading volume, despite a decline in the blended commission rate. Interest income reached HKD 2.3 billion, up 44% year-over-year, driven by security borrowing and lending, bank deposits, and margin financing. Other income, including fund distribution and currency exchange, surged 176% year-over-year to HKD 444 million.

The company's profitability metrics underscore its operational efficiency, with gross margin expanding to 87.4% and operating margin increasing to 63% from 47.3% in Q2 2024, "mostly due to strong top line growth and operating leverage." Net income grew by an impressive 113% year-over-year to HKD 2.6 billion, expanding the net income margin to 48.4%.

Competitive Landscape and Strategic Positioning

Futu operates in a dynamic and highly competitive financial services industry, contending with both established giants and agile fintech players. In Japan, for instance, while incumbents like SBI (SBRGF) and Rakuten (RKUNY) command a significant 80% market share with robust financial ecosystems, moomoo has carved out a "unique value proposition, especially for self-directed investors interested in the U.S. markets," leveraging its competitive pricing, market data, trading experience, and social community. Futubull is also the "number 2 broker in Australia," demonstrating strong regional penetration.

Compared to Interactive Brokers (IBKR), Futu's user-friendly, community-driven platforms (Futubull, Moomoo) offer greater accessibility for retail investors, contrasting with IBKR's sophisticated tools geared towards advanced traders. Futu's social features foster loyalty and engagement, while IBKR excels in the depth of analytical capabilities and execution speed for high-frequency trading. Against Robinhood (HOOD), Futu provides a more comprehensive suite of wealth management tools, international trading options, and a focus on long-term wealth building, differentiating from Robinhood's simplified, U.S.-centric, commission-free model. Futu's integrated ecosystem aims for stronger loyalty, whereas Robinhood prioritizes rapid user growth. When juxtaposed with Charles Schwab (SCHW), Futu's digital-first, mobile-centric approach offers innovation in user interaction, contrasting with Schwab's hybrid model that combines online tools with physical branches. While Schwab has a broader appeal in traditional markets and established brand trust, Futu's agility and tech-driven growth target digital-native users.

Futu's competitive advantages, or moats, include its proprietary technology platforms, strong brand recognition in digital communities, and expanding global distribution channels. Its technology, integrating social features and real-time data, translates into enhanced customer loyalty and recurring revenue. The company's high client stickiness, consistently "above 98%, 99% on a quarterly basis," underscores the strength of its platform and brand. Furthermore, Futu's platform model for wealth management, offering clients access to a variety of products from different private banks, positions it as a neutral intermediary providing attractive investment opportunities. In the nascent cryptocurrency space, Futu enjoys an early mover advantage in compliant operations, which is crucial as the asset class becomes more mainstream.

However, Futu faces vulnerabilities, including potential dependence on evolving regulatory environments and intense competition in cost-sensitive markets. The company emphasizes its adherence to regulatory requirements, particularly regarding client data privacy, and has not observed meaningful client attrition from market rumors. Barriers to entry in the digital brokerage industry, such as regulatory approvals, technological expertise, and brand trust, help Futu defend its position and maintain financial stability.

Outlook and Guidance

Futu's management maintains a confident outlook for 2025, underpinned by its strategic initiatives and robust performance. The company is on track to achieve its guidance of 800,000 new funded accounts for the full year, having already secured 460,000 in the first half of 2025. This target is expected to be met through sustained growth in existing markets like Malaysia and Japan, which offer "meaningful, robust growth," and continued upside in mature markets such as Singapore and Hong Kong. Management anticipates no "meaningful implications" from new Hong Kong client onboarding regulations on its acquisition targets.

For Q3 2025, Futu expects "a steady Q-on-Q net new funded accounts" and sequential growth in total client AUM, driven by a "positive mark-to-market impact" and continued "net asset inflow." Trading volume also has the potential for "another Q-on-Q increase" if market sentiment persists. Interest income momentum is projected to continue into Q3 2025, supported by a "little bit rebound in the HIBORs," sustained high client cash positions, and strong asset inflow. Other income streams, particularly from wealth management and currency exchange, are also expected to grow "in line with our expansions for our wealth management products."

The company targets a customer acquisition cost (CAC) between HKD 2,500 and HKD 3,000 for 2025, balancing client growth with strategic brand-building investments. The effective tax rate is expected to remain stable at 17-18%, and the blended commission rate is also projected to maintain stability with the introduction of new products like crypto trading. Headcount is anticipated to increase at a "low to middle single digit" rate in 2025, reflecting a disciplined approach to growth. Futu plans to "revisit and evaluate our dividend payout policies" after the full year 2025 results, considering both dividends and buybacks to reward long-term shareholders.

Conclusion

Futu Holdings is executing a compelling growth narrative, leveraging its technological prowess and strategic international expansion to deliver strong financial results. The company's commitment to innovation, particularly in AI-driven tools and digital asset offerings, is enhancing its competitive edge and driving client engagement across diverse markets. Record client assets, surging net income, and a growing international footprint underscore the effectiveness of its one-stop investment platform strategy.

While market volatility, interest rate fluctuations, and regulatory developments present inherent risks, Futu's disciplined approach to growth, robust product pipeline, and strong client retention position it favorably. The company's ability to differentiate through superior user experience, a vibrant social community, and a comprehensive suite of financial products, including its early mover advantage in compliant crypto operations, is critical to its sustained success. As Futu continues its digital ascent, its strategic focus on international markets, AI integration, and wealth management diversification is poised to fuel long-term value creation for investors.