Futu Holdings Ltd

NASDAQ:FUTU

Q1-2025 Earnings Call

[Operator]

Hello, ladies and gentlemen. Welcome to Futu Holdings First Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO, Head of Strategy and IR at Futu. Please go ahead.

[Daniel Yuan, executive]

Thanks, operator, and thank you for joining us today to discuss our first quarter 2025 earnings results. Joining me on the call today are Mr. Leaf Li, Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Xu, Senior Vice President.

As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which, by their nature, are not certain and are outside of the company's control. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual report.

With that, I will now turn the call over to Leaf Li, which will make his comments in Chinese, and I will translate.

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

Thank you all for joining our earnings call today. We kicked off 2025 strong momentum, adding approximately 262,000 new funded accounts in the first [ quarter ], up 48% year-over-year and 22% quarter-over-quarter. By quarter end, total funded accounts stood at 2.7 million, a 42% increase from a year ago and 11% [ via ] sequentially. With 1/3 of our annual target already in the back, we are tracking well against our guidance of 800,000 net new funded accounts in 2025.

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

For the second quarter in a row, Hong Kong market led in new funded accounts and [indiscernible] for China equities. An active [ IP calendar ] also helped acquire new clients while reactivating previously dormant ones. We believe that brokers with strong brand equity, seamless user experience and superior execution capabilities are best positioned to convert market tailwinds and to sustained growth. Funded account growth in the U.S. picked up pace as we enhance the platform experience for active traders. Our Take Charge of Your Trading campaign in New York City also boosted brand visibility and deepen engagement with [ retail investors ]. .

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

Malaysia delivered the fastest eventual growth in new funded accounts across all 7 markets, fueled by effective marketing campaigns and our seamless Malaysian IPO subscription experience. Looking ahead, we still see significant runway for market share expansion and remain committed to product localization and brand investment. In Japan, new funded accounts saw strong sequential growth and reached a historic high, reaffirming our position as the preferred platform for U.S. equity trading among Japanese retail investors. .

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

Among the products we shipped in the first quarter, the highlight Futubull AI, a smart investment assistant trained on Futu's proprietary financial data and investor community insights. This integrated solution combines AI-powered search, Q&A and customer support, offering [ context to wear ] responses tailored to retail investors. Since launch, it has received overwhelmingly positive feedback with a satisfaction rate of around 90% and has demonstrated significantly higher accuracy and professionalism in answering investment-related questions than general purpose models. We plan to allow similar AI offerings to other international markets in the second quarter to empower investors globally.

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

In the first quarter, we also launched a brand-new desktop version of Futubull, built on a new framework compatible with Windows, Mac OS and Linux. This next-generation version features intuitive drag and drop tools for building quantitative strategies and enumerates multi-like option strategy that reflect clients' views on the securities, bringing institutional grade functionalities in a more user-friendly manner. In Japan, we introduced -- fractional shares trading in February to enhance accessibility felt by the April launch of U.S. options trading to help clients better capture market movements. .

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

Total client assets reached HKD 830 billion, marking a 60% increase year-over-year and a 12% increase quarter-over-quarter. The growth was primarily driven by record [ naphtha inflow ]. The rally of Hong Kong equities led by large cap tech names, drove significant asset inflow. Total client assets in Singapore rose 11% sequentially, marking the 11th consecutive quarter of double-digit growth, thanks to a robust inflow into U.S. Equities and Wealth Management products. In Canada and Australia, average client assets increased for the fifth consecutive quarter, underscoring improving client quality and growing brand trust. Margin financing and securities lending balance closed the quarter at HKD 50.3 billion, largely stable from the prior quarter as clients delevered in March and the market pullback.

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

Total trading volume reached HKD 3.22 trillion in the first quarter, up 140% year-over-year and 11% quarter-over-quarter. U.S. equity trading rose 8% sequentially to HKD 2.25 trillion supported by bottom fishing of semiconductor and technology stocks. Trading volume in Hong Kong equities advanced 21% quarter-over-quarter to HKD 916 billion, lifted by a resurgence in investor sentiment amid the DeepSeek induced rally. In the U.S., we saw double-digit sequential growth in both the number of options traders and the number of options contracts traded, with the latter [ reaching its historic ] high.

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

Both management client assets reached HKD 139.2 billion as of quarter end, up 118% year-over-year and 26% quarter-over-quarter. 29% of funded accounts held Wealth Management products, a further sequential increase. A big part of the inflow was driven by money market funds as clients [indiscernible] assets amid market volatility. At the same time, we saw rising allocations into bond funds and strong demand for structured notes, especially in Singapore. In Hong Kong and Singapore, we expanded our structured product lineup with FX-linked notes. In Malaysia, we onboarded equity funds. While in Japan, we rolled out U.S. dollar-denominated money market funds to better serve clients' cash management needs.

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

As of quarter end, we had 488 IPO distribution and IR clients, up 16% year-over-year. In the first quarter, we participated in several Landmark Hong Kong listings as jointly manager, including those of Blok Group and Guming Holdings, where we acted as the exclusive online broker for IPO distribution. Notably, in the highly anticipated MIXUE Group IPO, 70,000 clients contributed to over HKD 1 trillion in subscription amount, putting us first among all brokers and both total subscription amount and number of subscribers. We observed that these high-profile IPOs typically lead to higher client engagement, stock trading volume and asset inflow. .

[Leaf Li, executive]

[Foreign Language]

[Daniel Yuan, executive]

[Interpreted]

Next, I'd like to invite our CFO Arthur to discuss our financial performance.

[Arthur Chen, executive]

Thank you, Leaf and Daniel. Please allow me to walk you through our financial performance in the first quarter. All the numbers are in Hong Kong dollars unless otherwise noted. Total revenue was HKD 4.7 billion, up 81% from HKD 2.6 billion in the first quarter of 2024. Brokerage commission handling charge income was HKD 2.3 billion, an increase of 113% year-over-year and 12% Q-o-Q. The year-over-year increase was mainly driven by higher trading volumes, partially offset by the decline in blended commission rate. The year-over-year decline in blended commission rate was mainly driven by changes in product mix and a higher average order size for Hong Kong stock trading. The Q-over-Q increase was mainly driven by the sequential growth in trading volume.

Interest income was HKD 2.1 million, up 53% year-over-year and 2% Q-over-Q. The year-over increase was driven by high interest income from security borrowing and lending business, margin financing and bank deposits. The Q-over-Q increase was driven by higher margin financing income as well as higher interest income from security borrowing and the lending business, partially offset by lower interest income from bank deposits due to lower interest rate on clients' cash deposits. Other income was HKD 314 million, up 101% year-over-year and down 11% Q-o-Q. The year-on-year increase was primarily attributable to higher fund distribution service income and currency exchange income.

Our total costs was HKD 749 million, an increase of 59% from HKD 470 million in the first quarter of 2024. Brokerage commission and handling charge expenses was HKD 144 million, up 138% year-over-year and 28% Q-o-Q. Both the year-over-year and Q-o-Q increase was roughly in line with the movement of our brokerage commission and handling charge income. Interest expenses were HKD 469 million, up 50% year-over-year and down 9% Q-over-Q. The year-over-year increase was driven by higher interest expenses associated with our security borrowing and lending business and higher margin financing interest expenses. The Q-o-Q decrease was mainly due to lower margin financing interest expenses and the lower interest expenses associated with our security borrowings and the lending business.

Processing and servicing costs were HKD 136 million, up 44% and down 10% Q-over-Q. The year-over-year increase was largely due to higher market information and data fee [ will enhance ] the market data coverage and the Q-over-Q decline was mainly driven by lower system usage fee as well as lower market information and the data fees. As a result, our total gross profit was HKD 3.9 billion, an increase of 86% from HKD 2.1 billion in the fourth quarter of 2024. Gross margin was 84% as compared to 81.9% in the first quarter of 2024.

Operating expenses were up 36% year-over-year and down 12% Q-o-Q to HKD 1.3 billion. R&D expenses were HKD 386 million, up 15% year-over-year and down 3% Q-o-Q. The year-over-year increase was primarily driven by investing in AI capabilities and the related technology initiatives. The Q-over-Q decline was mainly due to the sequential decrease in R&D headcount.

Selling and marketing expenses were HKD 459 million, up 57% year-over-year and down 1% Q-o-Q. The year-over increase was roughly in line with the growth of our new fund accounts. The Q-over-Q decrease was mainly due to lower client acquisition costs, partially offset by the sequential increase in new fund accounts. G&A expenses were HKD 415 million, up 38% year-over-year and down 28% Q-over-Q. The year-over-year increase was primarily due to an increase in the general and administrative headcount to support overseas market development. And the Q-over-Q decrease was mainly due to bonus accrual for general and administrative personnel in the previous quarter. As a result, income from operations increased 125% year-over-year and 21% Q-o-Q to HKD 2.7 billion. Operating margin increased to 57.2% from 46% in the first quarter of 2024, mostly due to strong top line growth and operating leverage.

Our net income increased by 107% year-over-year and 15% Q-o-Q to HKD 2.1 billion. Net income margin expanded to 45.6% in the fourth quarter as compared to 39.9% in the same quarter of last year. Our effective tax rate for the quarter was 18.6%.

That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead.

[Operator]

[Operator Instructions] First question comes from Cindy Wang of China Renaissance.

[Yun-Yin Wang, analyst]

[Foreign Language]

I have 2 questions here. First, the overall Hong Kong and U.S. stock market fluctuated greatly in April and May. Could you give us some color on the trading velocity, trading volume and the margin financing security lending balance on your platform so far in second quarter?

Second question is recently, we see Futubull and normal launch membership programs. Could you let us know what the business model looks like for this program? And how many [ pain ] clients have already subscribed to these services? In the long run, what do you expect the benefits could bring to the Futu?

[Arthur Chen, executive]

[Foreign Language]

So the new funded accounts in the second quarter will probably see double-digit sequential decrease sequentially, mostly due to a very high base in the first quarter. But overall, we maintained very strong client acquisition momentum in the second quarter. And we are very confident to hit our 800,000 new paying clients guidance for 2025 and with a very big market volatility, clients continue to trade very actively. And based on the current run rate, we expect a further sequential increase in total trading volume. [indiscernible] also [ departed ] a lot of assets into our platform the quarter-to-date based on the run rate, net asset inflow will stay at a very high level, similar to what we saw in the first quarter, coupled with a mark-to-market positive impact since the second half of April due to the market rebound, we expect a further sequential lift to our total client assets. Thank you.

[Foreign Language]

In terms of the membership programs we've launched recently, it is more catered to our Wealth Management products clients, particularly for these clients with huge assets or higher trading velocity or even have some particular risk appetite into some alternative wealth management products. So we will start to layer different clients in terms of their risk appetite, their cloud assets and brand product needs. Given we just launched the programs recently, the penetration and the absolute number of these membership clients versus our total clients, the proportion is very small.

[Operator]

Our next question comes from Charles Zhou from UBS.

[Cheng Zhou, analyst]

[Foreign Language]

So first of all, congratulations to the management. I think it's a very strong set of results and beat the consensus and also our estimate. So I have 2 questions. The first one, could you please maybe just give us a little bit more color about the time line of your crypto trading business? And also the implication of the passage of the Hong Kong stable coin [ spill ] recently to our company. The second question is about can we talk about the customer retention and also the client AUM following the right thing recent concern over the taxation on Mainland China clients overseas investment income?

[Arthur Chen, executive]

[Foreign Language]

So the crypto prices experienced some pullback since the first quarter. That affected the enthusiasm of the crypto investors on our platform, but the monthly trading volume and the number of crypto traders stayed at a pretty high level. And since May, the crypto prices rebounded, and we've seen investors quickly picked up interest in crypto trading, and we also saw a rebound in daily trading volume.

We continue to build crypto-related product capabilities. Recently, we launched the crypto deposit functionalities in Hong Kong, which made it easier for our clients to seemly -- simply deposit the crypto onto Futu's platform and make it easy to switch between different asset classes. So after we launched the function, we got very good feedback from the [ web 3 ] community and also very positive feedback from our clients. And we plan to launch crypto withdrawal functions very soon. We also launched the crypto paper trading function in Hong Kong, and we're the first regulated crypto platform to allow for paper trading, which really helps the new investors to familiarize themselves with the trading rules and in the trading procedures, especially during market volatility. And a couple of days ago, we launched crypto trading on a gray scale basis in most of the states in the United States, and we now support over 30 mainstream cryptocurrency trading. We'll closely monitor our clients' trading behaviors to iterate on our product, and we plan to increase the number of cryptocurrencies in the near future.

So from a long-term perspective, we are very bullish about virtual assets as an asset class. And for Futu, the take rate for crypto trading is higher than cash equities. And we believe that as the regulatory landscape and the regulatory guidelines become more clear, there will be more cryptocurrency allowed and more functions allowed and which will bring Futu more ways to monetize from this asset class. And we believe that whether it's from an AUM or a revenue perspective, crypto has so much potential, and we're still in the very, very early innings. And in terms of stable coins, we are aware of the relevant regulations being released recently. And [ Aerostar Bank ] invested by Futu participates in the stable coin sandbox and exploring ways to do a stable point custody.

[Leaf Li, executive]

[Foreign Language]

[Arthur Chen, executive]

[Interpreted]

Now many countries in the world have participated in this common reporting system. And for the countries that participated in the common reporting system, that the CRS rules apply to all of the licensed financial institutions whether it's banks or insurance companies or brokers and there is a very clear set of rules that is executed consistently across different financial intermediaries. And although the United States is not part of CRS, it has its own [ FATCA system ], which established this tax information, exchange mechanism with most of the mainstream countries in the world. And as all of the other licensed brokers in Hong Kong, while the explicit request from the Hong Kong SFC and if it's not compliant with the relevant laws and regulations of Hong Kong, Futu Securities will not disclose client information and client data to any third party.

So we've noticed that on the Internet, there have been some rumors about Futu disclosing client data and client trading information to third parties, and we want to make sure that everyone knows that these are very baseless rumors. And we always adhere to regulatory requirements, and we want our clients to also correctly and understand and interpret these laws and regulations. So we've actually done a lot of education in this area as well. And so far, we have not seen this leading to meaningful client attrition and asset outflow. Thank you.

[Operator]

Our next question comes from the line of Emma Xu of Bank of America Securities.

[Emma Xu, analyst]

[Foreign Language]

So congratulations on another quarter of outstanding performance. I have a question regarding HIBOR. Recently, HIBOR dropped sharply. How will this impact your net interest income? Meanwhile, with high volume, are we seeing changes in client behavior, such as increased [ phone ] deposits and more allocation to [ money market power ], equity asset or active trading?

[Arthur Chen, executive]

[Foreign Language]

In our last earnings call, actually, we provide a sensitivity analysis, assume every 25 basis rate cut, our pretax monthly pretax profit will be down HKD 8 million to HKD 10 million roughly. But since the Fed rate cut last year by 50 basis points, we see the overall interest income revenues in the first quarter has continued to grow on a Q-on-Q basis, which is [indiscernible] because the average size of our client idle cash balance largely offset the rate cut implications.

At the same time, as you mentioned, the recent declines in HIBOR, which would trigger more clients trading activities in terms of velocity and consequently, we will benefit from the trading commissions. On the other hand, I think the reason that sharp declines by HIBOR may be just a temporary partially due to certain mega IPOs in Hong Kong. So whether it will be sustained such a low level, it is still wait to see. Thank you.

[Operator]

Our next question comes from the line of Chiyao Huang from Stanley.

[Chiyao Huang, analyst]

[Foreign Language]

So my first question is on the client asset inflow that is hitting a record this quarter. And so just wondering the mix of inflows by different regions, especially from non-Greater China region contribution and what's the outlook for the full year? And second question is about if any quantitative metrics that we can look at to measure the adoptance or engagement satisfaction and the client stickiness arising the AI tools that we have launched? And what could potentially be -- could be done more in this space?

[Arthur Chen, executive]

[Foreign Language]

Then in terms of the first quarter net asset inflows, actually, we see a very strong inflow momentum across our 7 different markets. The overall asset inflow by the group increased over 50% Q-on-Q basis. And also, as Leaf mentioned in the opening remarks, it is our record high single quarter numbers. That in terms of the geographic breakdown, Hong Kong and Singapore still the majority contributor markets for the asset inflows. And going forward, we are constructively positive on the overall -- on the full year asset inflow situation.

[Foreign Language]

So we've launched the Futubull AI functions for about 2 months now. So it's not been that long. We're still analyzing more data. But based on the preliminary numbers we've seen, our users have very good feedback of our Futubull AI function, and that also leads to more engagement and activity on the platform. We've also packaged our AI functions into our membership programs. So there's a limited number of free questions you could ask to AI, and that depends on the tier of your membership and that is based on the client assets and the trading behavior on our platform, which means that the AI function has helped with net asset inflow and the trading velocity. I think that's why we're trying to roll out AI functions to more international markets based on the initial traction we have seen of our Hong Kong clients.

[Operator]

Next question comes from You Fan of CICC.

[You Fan, analyst]

[Foreign Language]

This is You You Fan from CICC, and I have 2 questions [ held ]. The first 1 is about the customer acquisition cost [indiscernible] We see it decline much this quarter. So what's the reason behind? And do you have any new guidance for the future [indiscernible] And the second question is that we see we have announced to enter the New Zealand market. Would you please share more color on this market?

[Arthur Chen, executive]

[Foreign Language]

In terms of the cap in the first quarter, the average [ cash ] we reached around -- in the first quarter is around HKD 1,800, which is relatively lower than our objectives in the [ beginning ] of this year, partially due to a very strong market tailwinds we got regardless in China, the China assets rating, very strong IPO markets in Hong Kong and volatilities in the U.S. And in these trading windows, our marketing colleagues, time they catch these windows. And thanks to our brand equities, influence as well, we got a very good result.

Going forward, we do expect we will continue to set client growth as our first priority. At the same time, we will further emphasize our brand-building deployment in terms of the fundings. So in the long run, we think the further enhance of the brand equity will let us become more present in different trading investment cycles. So the investment on this branded equity, the effect in the near term, it is very difficult to predict, not to mention the overall market environment and the macro environment is still include a lot of [indiscernible] So from the prudence angles, we will maintain our full year guidance on cap and change, but we will revisit this assumption in the coming quarters. Thank you.

[Foreign Language]

[ Nimble ] is now the #2 broker in Australia [indiscernible] [ BAU ]. And we've accumulated a lot of brand equity, and we feel like expanding into New Zealand, it was a natural extension. And we've also seen that Australian stocks and U.S. stocks are the 2 most popular asset classes for Kiwi investors. And we have already built very strong product capabilities for these 2 products in Australia. So expanding into New Zealand will not incur much investments in terms of licensing or personnel or R&D, and we can largely replicate the IT infrastructure and the marketing resources and the brand equity we built in Australia. So the incremental cost will be quite manageable, and we think the New Zealand business will present very favorable ROI.

[Operator]

The next question comes from Peter Zhang from JPMorgan.

[Peter Zhang, analyst]

[Foreign Language]

Thanks for giving me the opportunity to ask questions. This is Peter Zhang from JPMorgan. I have 2 questions. This is about the FX rate. We noticed that effective tax rate pick up in first quarter to 18%. We're wondering what's the reason behind what's the medium to long-term effective tax rate level for Futu going forward? Second question is about branded commission fee rate, we noticed that in first quarter, branded commission fee rates stabilize and pick up slightly. We wish to understand the reason behind and what will be the trend going forward?

[Arthur Chen, executive]

[Foreign Language]

In terms of the effective tax rate in the first quarter, this quarter, our [ effect tax ] rate is around 18.6%. There are 2 reasons behind that. One is as more and more our overseas markets start to generate profit, the historical accumulated tax credit has been fully utilized, which will consequently enhance our overall group effective tax rate. Secondly, after the implementation of Pillar 2 by OECD in different markets, in the different countries, our overall effect tax rate will be impacted to some extent as well. So I would expect our overall effect tax rate will maintain 17% to 18% in the coming quarters.

[Foreign Language]

Then for the second question regarding the blended commission rate changes. Actually, there is a slightly uptick on a Q-on-Q basis in terms of the blended commission rate. The reason behind that is mainly due to the product mix change. There's more concentrating on certain derivatives such as U.S. auctions, et cetera. Going forward, as we will be launching more new products, for instance, the crypto trading, et cetera, I do expect that our -- blended commission rate will maintain stable. Thank you.

[Operator]

Our next question comes from [ Alan Guang, ] Citi.

[Unknown Analyst]

[Foreign Language]

This is Alan from Citibank. My first question is on Hong Kong markets. So Futu previously has a market share target of about 40% in Hong Kong. That basically implies about 1 million of paying customers in Hong Kong. Starting from our 1Q numbers, our paying customer numbers is already approaching close to around 900,000. And given the pace of all your paying customer acquisition in Hong Kong so fast, I think our long-term goal of market share of 40% in Hong Kong is probably within reach within the next couple of quarters. So against this backdrop, I wonder if management could share your updated view on the Hong Kong market, especially considering that there's recent changes in the competitive landscape with potential competition for [indiscernible] Group and [ Rob ] [indiscernible] if we look beyond the 40% market share, how much additional headroom do we see to further increase market share in Hong Kong?

The second question is on interest income. We see that [indiscernible] cash [ balance ] has grown very notably during the first quarter. Wondering if management could help us break down the interest income? How much of that is coming from idle cash? And how much of that is [indiscernible] margin financing [indiscernible] lending, et cetera?

[Arthur Chen, executive]

[Foreign Language]

For the second question regarding the idle cash, roughly, the idle cash related income account for 35% to 40% of our total interest income for this quarter. The very strong robust increase in the revenue arising from idle cash partially due to reasons. Number 1 is we've got a very strong net asset inflows from existing clients, not to mention a lot of new clients we acquired in the fourth quarter. Secondly, it's due to the market was quite volatile in the fourth quarter. So in our observation, a lot of clients actually partially inclined to increase the cash position and lower their stock positions, so which is -- we got some benefit arising from that as well. Thank you. Over to you.

[Foreign Language]

So in terms of our Hong Kong market share, the absolute number of [indiscernible] you mentioned applies to our Greater China business, while the market share target you mentioned was about our Hong Kong local business. So these 2 numbers are not apple-to-apple comparison. In the past 2 quarters, we have seen the Hong Kong market contributed the highest number of paying clients among all of our 7 markets, which gives us confidence that as a leading broker in Hong Kong, we'll be able to gain outsized benefits from favorable market conditions. And we think that our Hong Kong business has huge runway for growth both in terms of client numbers and client assets. And the Hong Kong market has never been short of competition. And in the past few years, there have been a number of our peers, a very notable peers entering into Hong Kong. But regardless how the client market environment changes, we've always been doing product innovation and product iteration, and we believe that our product capabilities have built a very strong barrier to entry for our business. And we -- in each and every market we enter into, we build very customized product experience, very innovative product features. And coupled with our superior user experience and very competitive pricing strategy, we continue to gain user mind share in Hong Kong and take market share.

And top of that, we think brand is probably one of the most important intangible assets of financial services platform and building a brand takes time. And Futu has built a considerable level of trust with our clients and we've seen very, very high client stickiness on our platform. It's consistently above 98%, 99% on a quarterly basis. So if there is a newcomer that cannot provide highly differentiated product experience and service, we don't think it can sway the client choices. And as we continue to build our brand, we also see a higher number of high net worth clients in Hong Kong, which contributed to a very high net asset inflow quarter-over-quarter.

And we've also seen that when the clients choose the broker, that decision is usually multidimensional whether it's applying a 0 condition strategy or just direct traffic from other platforms, we don't think either 1 is going to achieve very desirable effects. The users will choose the platforms that are compliant, that have high brand recognition and have the strongest all rounded capabilities. Thank you.

[Operator]

Our last question comes from Zoey Zong from Jefferies.

[Yi Zong, analyst]

[Foreign Language]

Congratulations on your solid results. I have 2 questions. Firstly, I have a follow-up question on Futubull AI. Management mentioned that more AI products will be launched in overseas markets in Q2. So wondering what's your AI product strategies and investment scale? And my second question is about the [ ATP ]. Could you please share an update on the business development with your ATP license?

[Arthur Chen, executive]

[Foreign Language]

For [ VATP ] license, there's -- actually, there is no any update in the first quarter. We got the short [indiscernible] by Hong Kong [indiscernible] for VATP license alongside with other [indiscernible] in the process of phase 2. There are still a lot of validations need to be conducted by the third-party consultants -- independent consultants, and there's a lot of process need to be -- get the final approval from [indiscernible] . We will keep you posted for this any progress.

[Foreign Language]

In terms of our AI strategy, Futu has assembled our own AI team. We're closely monitoring the industry development and keeping up with innovations. So the AI is applied in 2 ways at Futu. One, internally, we use that to increase operating efficiency, and we also leverage AI to develop new products and features for our clients. And in terms of operation efficiency, we've already leveraged AI in a number of scenarios, including customer services and the account opening, documentation, verification processes and we've seen AI bring intangible up to our operating efficiency. And in terms of our client-facing features, [indiscernible] for active traders, a key benefit of AI would be to lower the investment threshold and help them more efficiently gather information to make informed investment decisions. For example, we'll launch algotraining very soon. So before [ algo training is ] almost exclusively for the sophisticated institutional investor and now for our retail clients, by telling AI, the stock you were interested in, [ pairs ] you want to monitor and what kind of conditions [ will be ] AI can generate an [ algo trading ] from our clients, which we think significantly lower. So around that goal, and we'll continue to innovate to bring more AI-powered features. Thank you.

[Operator]

Thank you for the questions. With that, I call back to Mr. Daniel Yuan for closing.

[Daniel Yuan, executive]

That concludes our call today. On behalf of the Futu management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations. Thank you, and goodbye. .

[Operator]

That concludes today's conference call. Thank you for your participation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]