Webull Corp

NASDAQ:BULL

Q1-2025 Earnings Call

[Operator]

Good day, and welcome to the Webull First Quarter 2025 Earnings Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Carlos Questell. Please go ahead.

[Carlos Questell, executive]

Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to Webull's First Quarter 2025 Conference Call. Earlier today, we issued a press release detailing our first quarter financial results. A copy of the release can be found on our IR website at webullcorp.com under the Investor Relations tab. Please note that this call is being recorded and will be available for replay via our IR website.

During the call, we'll be making forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially, please refer to our cautionary statement and risk factors contained in our filings with the Securities and Exchange Commission and press release, both of which can be accessed via our website.

Today's presentation will include a discussion on adjusted operating expenses and adjusted operating profit, both non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to their most directly comparative GAAP measures are included in the press release that we issued today. It is important to note that although we believe that these non-GAAP measures provide useful information about our operating results, they should not be considered in isolation or construed as an alternative to their directly comparative GAAP measures. Furthermore, other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

With me today is our Group President and U.S. CEO, Anthony Denier; and our Group CFO, H.C. Wang. We will begin with prepared remarks and then take questions at the end.

With that, I would now like to turn it over to Anthony.

[Anthony Michael Denier, executive]

Thanks, Carlos, and hello, everyone. I'm truly delighted to be here with you today to welcome you all to our first earnings conference call as a public company in which we will discuss our first quarter financial results. I want to take a moment to thank our clients, investors and everyone at Webull, which includes our various partners who have helped us get to this point in our journey. Certainly, this would not have been possible without your contributions, and I want to extend my sincere thanks for everyone's hard work, dedication and continued support.

We are proud to have delivered a strong first quarter with significant revenue and profit growth. As you can see on Slide 1, we posted a 32% year-over-year increase in revenues totaling $117.4 million. This strong performance was driven by increases in new funded accounts and customer assets. Higher trading volumes, particularly in options and equities, helped fuel this revenue growth as we executed on several key strategic initiatives, including overnight equity trading and Options Discover, which is an internally developed options spread trading tool.

We also generated $28.7 million of adjusted operating profit in the first quarter, increased our adjusted operating profit margin to 24.4%, an increase of over 22 percentage points year-over-year. And even in this challenging and volatile market environment, we continue to see very strong growth in customer net deposits, a validation of the strength of our differentiated platform, the technical trading tools we offer and the strong value proposition we provide our sophisticated retail customers.

Let me walk you through our 2025 road map on Slide 2. To continue building on our momentum this year, we are on track to deliver a variety of strategic initiatives designed to continue growing our customer base and customer assets, while increasing our wallet share. While focusing our resources on three key growth pillars: first, broadening our product offerings; second, entering new asset classes; and third, expanding access globally. We're off to a strong start in 2025. In Q1, we introduced Webull Premium, our first subscription-based service, which is performing very well. Webull premium caters to active traders and long-term investors. And in just 7-weeks, we have already added more than 40,000 users and $260 million net new AUM.

We also launched prediction contracts with Kalshi, giving our customers access to a fast-growing and popular asset class. Lastly, Webull Advisors partnered with BlackRock to provide best-in-class portfolio solutions to our adviser clients. As we look to expand our product offering, we are on track to build out our fractional fixed income offering in Q2 with the launch of corporate bond trading, and we also look to begin supporting mutual funds by the end of the year.

Our team is also focused on our plan to launch crypto trading in select international markets starting in the second quarter and to reintroduce crypto trading for our U.S. customers in the second half of the year. We are also working to expand our financial product offerings to more customers globally. For example, we are working to deliver advanced option trading strategies to our international customers. Earlier this month, we launched the Latin America Webull app, which consolidates the customer experience from our Brazil and Mexican platforms and allows us to expand further in the region seamlessly. we're also working to launch brokerage service in the Netherlands in Q3, which will give us a foothold in the greater European market.

Turning now to Slide 3, which shows our continued strong user growth. Webull's growth is driven by the increasing number of experienced digitally savvy retail investors. We strive to be the preferred platform for investors looking for a more advanced trading partner with more diverse trading options that can grow with them and serve them over decades. In the first quarter, we added roughly 800,000 users, bringing the platform to a total of 24.1 million registered users, which represents a healthy 17% year-over-year growth. We also added roughly 60,000 funded accounts, bringing our total to roughly 4.7 million, a 10% increase year-over-year.

Importantly, we continue to attract more investors who are looking for a trading platform to serve their needs over a longer time horizon. For example, we've seen steady adoption of our retirement offerings, particularly among younger investors looking for a more flexible, mobile-first retirement funds management experience. Our retirement business has grown substantially to over $1 billion in AUM. Retirement is and will continue to be a big part of our strategy, and our focus is on the long-term investing. We are actively evaluating ways to broaden these offerings to support more diverse investor needs and deepen long-term engagement on our platform.

The launch of Webull Premium is providing a unique elevated retail investing experience for our users with an enhanced set of trading features and services that address customer demand for a premium service from our active traders and investors. Demand for Webull Premium has been strong since we officially opened for subscriptions on March 31. As of May 15, we've had approximately 40,000 users subscribed to Premium, representing nearly $2 billion in assets. Subscribers to premium tend to have significantly higher account NAVs and are more active traders than nonsubscribers. So we see this as a tremendous growth opportunity, both in terms of converting existing users as their needs change as well as attracting new premium subscribers right out of the gate.

On Slide 4, let's take a look at our customer assets. The S&P 500 declined by nearly 5% in the first quarter as the markets weakened in response to the shifting outlook on trade policy and economic growth. During recent periods of heightened volatility, including the tariff announcements in April, we can see shifts in our order flow demographics with increasing volume composition towards broad-based index and ETF products rather than single stock names. Our clients' assets rose 45% year-over-year to $12.6 billion, yet were down moderately in the quarter. This quarter-to-quarter change is not surprising given the overall market performance. It is important to note that despite the volatile market, our customers made net deposits of more than $1 billion this quarter and $5 billion cumulatively over the last 12 months.

We view this as a strong validation of our platform, our strategy and the trust that our customers continue to place in us to help them navigate this highly dynamic market environment through a variety of Webull sophisticated trading and investment tools.

Turning now to Slide 5 and our trading volumes for the quarter. For the quarter, we reported $128 billion in equity notional volume, which was flat sequentially, but up 15% on a year-over-year basis. Trading volume has increased substantially since the new administration was inaugurated, and we expect the ongoing volatility to positively impact trading volume in future quarters. Our options contract volume also grew solidly to 121 million contracts traded for the quarter, a roughly 8% year-over-year increase and a sequential increase of 9 million contracts.

We're seeing an increased level of customer sophistication and an appetite for risk spreading options trading strategies, and we believe this business will continue to be a significant growth driver. We will be investing time and resources through the rest of the year to continue expanding our product offerings in addition to bringing our best-in-class investment platform to more investors globally.

With that, I'll pass the call over to H.C. for a closer look at our results for the quarter.

[H.C. Wang, executive]

Thank you, Anthony, and thanks, everyone, for joining us today. As Anthony said, 2025 is off to a strong start with our global teams continuing to execute on our strategy and delivering strong growth across the business. On Slide 6, you can see that in the first quarter, Webull generated total revenues of $117.4 million, representing 32% growth on a year-over-year basis. We achieved this while maintaining our disciplined execution, adjusted expenses for the quarter came in at $88.7 million, just a 2.4% increase year-over-year.

Turning now to Slide 7, Webull has made significant improvements when it comes to our profitability. For the quarter, we recorded adjusted operating profit of $28.7 million, a sequential improvement of $7.1 million and a increase of $26.4 million on a year-over-year basis. This represents an adjusted operating profit margin of 24.4%, an improvement of 22 percentage points on a year-over-year basis. We are also pleased to have increased our GAAP net income attributable to the company to $13.1 million, representing a net profit margin of 11.1%, up 25 percentage points on a year-over-year basis.

On Slide 8, you can see that we realized a substantial increase in trading-related revenue for both our options and equities business, driven primarily by volume growth and increased monetization. On a year-over-year basis, we recorded a 44% increase in our daily average revenue trades and a 52% increase in trading-related revenue. Revenue per trade increased from $1.37 a year ago to $1.47 in the first quarter of 2025.

Let's turn to Slide 9 to discuss interest-related income, which consists of interest on client and corporate cash, margin financing and fully paid stock lending revenues. Our interest-related income has been relatively stable for the last several quarters demonstrating the resilience of our business model through the rate cycle. In Q1 2025, interest related income decreased 4.3% year over year to $31.1 million, driven primarily by a decrease in interest on client and corporate cash, but which was partially offset by an increase in margin financing income.

Now we’'ll turn to Slide 10, where I'll provide a closer look at our expenses. In general, our brokerage and transaction expenses, which primarily consist of clearing fees we paid to our clearing partner, grow in line with trading volume. Technology and development and general and administrative expenses that primarily consist of headcount costs have also grown over the last year as we continued our geographic expansion.

However, growth in these expenses has largely been offset by a reduction in marketing and branding expense as we continue to optimize our marketing spend by shifting our marketing promotions to asset matching promotions as opposed to free stock giveaways. We are always monitoring costs very closely to ensure we’'re executing in a disciplined way, while maintaining flexibility to continue investing in new products and other strategic initiatives that our OpEx can support.

With that, I'll turn the call back to Anthony before we open the line up for questions.

[Anthony Michael Denier, executive]

Thanks, H.C., and thanks again, everyone, for joining us for our first earnings conference call as a public company. There's much to be excited about here at Webull, and I'm so proud of all that we accomplished this quarter. As we shared today, we are very encouraged by the customer demand we're seeing and the momentum we've achieved across the business. Our significant revenue growth is an important validation of not just the Webull platform itself, but also our execution against our growth pillars. The strength of our bottom line is a testament to our commitment to financial discipline as we think about how we use our resources and capital wisely.

Looking ahead, we will be laser-focused on bringing exciting new product offerings to our customers and enabling more and more access to our differentiated platform globally. As I mentioned earlier, that includes introducing overnight options access and delivering advanced options strategies to international markets in line with customer demand. Building upon the launch of Webull Premium and our prediction contract offering in partnership with Kalshi, we will also launch corporate bonds, further bolstering our fixed income offering. We are also excited to be getting back into crypto trading, both here in the U.S. and in select international markets, having recently launched our Latin America version of the Webull app and our plans to begin offering brokerage services in the European Union. Demand for a platform like Webull is rapidly increasing, and we'll continue to innovate for customers looking for a comprehensive advanced retail trading platform that can grow with them over the long term. Thank you.

And I'll now open the call up to questions.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] Seeing no questions, this will conclude our question-and-answer session as well as conference call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.