Ladies and gentlemen, thank you for standing by, and welcome to the UP Fintech Holding Limited third quarter 2022 Earnings Conference Call. At this time, all participants are in a listen only mode. There will be a presentation, followed by a question and answer session. I must advise you that this conference is being recorded today, November the 23rd, 2022. I would now like to hand the conference over to your first speaker today, Mr. Aaron Lee, the Head of IR. Thank you. Please go ahead.
Thank you, operator. Hello, everyone, and thank you for joining us for the call today. UP Fintech Holding Limited Third Quarter 2022 Earnings Release was distributed earlier today, and it's available on our IR website at ir.itiger.com, as well as global newsletter services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and Chief Executive Officer, Mr. John Zeng, Chief Financial Officer, and Mr. Huang Lei, CEO of US Tiger Securities, and Mr. Kenny Zhao, our Financial Controller. Mr. Wu will give an overview of our business operations and discuss corporate highlights. Mr. Zeng will discuss our financial results. Both will be available to answer questions during the Q&A session that follows their remarks. Let me cover the safe harbor. The statements we are about to make contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about factors that could cause actual results to materially differ from those in the forward-looking statements, please refer to our Form 6-K furnished today, November 23, 2022, and our annual report on Form 20-F, filed on April 28, 2022. We undertake no obligation to update any forward-looking statement, except as required under applicable law. It is my pleasure to now introduce our Chairman and Chief Executive Officer, Mr. Wu. Mr. Wu will make remarks in Chinese, which will be followed by an English translation. Mr. Wu, please go ahead with your remarks.
Hello, everyone. Thank you for joining us. The Tiger Brokers Third Quarter 2022 Earnings Conference Call. The macro environment showed no significant improvement over the third quarter.
Price tightening and re-rate increase has slowed down market activity and transaction volume, which drags down our trading commission and IPOs underwriting incomes. Income from margin financing and securities lending benefited due to the higher interest rates. The total revenue of the third quarter slightly increased by 3.6% from the previous quarter to reach $55.4 million. Non-GAAP net income was $6.6 million, increased 91.3% quarter-over-quarter and 26.2% year-over-year. GAAP net income also turned profitable at $3.3 million compared to a net loss in the first half of this year, demonstrating the resilience of our business model and product capital deployment. We added 22,700 funded accounts this quarter.
Total number of funded accounts exceeded 750,000 by the end of this third quarter, an increase of 23.2% from the same quarter last year. We have acquired over 80,000 new funded accounts in the first three quarters, we are confident to deliver our annual guidance of acquiring 100,000 new funded accounts this year. In the third quarter, mark-to-market loss still had an adverse impact on the total client assets, which decreased by 12.8% to $13 billion compared to the end of the second quarter. The trend of healthy asset flow continues. Net asset inflows exceeded $700 million this quarter. Funded account retention rate exceeded 98% this quarter, demonstrating users' confidence and trust in our platform.
我 们 非 常 关 注 用 户 质 量 和 回 本 周 期 ， 由 于 是 在 市 场 环 境 比 较 动 荡 的 时 期 ， 不 会 为 了 追 求 用 户 数 量 的 增 长 而 牺 牲 用 户 质 量 以 及 合 理 的 投 资 回 报 率 。 三 季 度 人 均 获 客 成 本 为 三 百 二 十 六 美 金 ， 相 比 二 季 度 有 小 幅 上 涨 ， 但 获 客 效 率 依 然 处 于 行 业 领 先 水 平 。 同 时 我 们 也 很 高 兴 看 到 三 季 度 新 入 金 用 户 质 量 进 一 步 的 提 升 。 以 老 虎 国 际 全 球 市 场 增 量 和 存 量 用 户 最 大 的 新 加 坡 区 域 为 例 ， 三 季 度 新 加 坡 新 增 入 金 客 户 在 当 季 度 的 平 均 净 入 金 超 过 一 万 一 千 美 金 ， 在 二 季 度 人 均 九 千 美 金 左 右 的 基 础 上 有 了 进 一 步 的 提 升 。 说 明 即 使 在 市 场 存 在 不 确 定 性 的 情 况 下 ， 得 益 于 我 们 健 康 的 获 客 策 略 ， 依 然 在 获 客 效 率 和 用 户 质 量 方 面 进 行 了 很 好 的 平 衡 。
We pay very close attention to client quality. We will not jeopardize ROI merely for the growth of funding accounts. In the third quarter, the overall average CAC was $326. A slight increase from last quarter due to several branding campaigns. Remained one of the most efficient within our industry. We are very glad to see the quality of our newly acquired customers further improved in the third quarter. Taking Singapore as an example, our company's largest market in terms of both incremental and existing clients. The average net asset inflows of our newly acquired clients in Singapore exceeded $11,000 in the third quarter, further increase from over $9,000 in the second quarter, which reflects our healthy business model in balancing customer acquisition, efficiency, and client quality.
我 们 持 续 加 大 在 研 发 上 的 投 入 ， 以 提 升 运 营 效 率 和 用 户 体 验 。 自 清 算 方 面 ， 今 年 三 季 度 整 体 的 清 算 成 本 占 总 佣 金 收 入 的 比 例 得 到 进 一 步 优 化 ， 环 比 持 续 降 低 到 百 分 之 十 三 ， 其 中 美 股 正 股 的 清 算 成 本 率 降 到 百 分 之 三 左 右 的 低 水 平 。 老 虎 国 际 作 为 一 家 拥 有 美 股 完 整 风 控 和 清 结 算 体 系 的 互 联 网 券 商 ， 在 三 季 度 我 们 自 研 的 美 股 碎 股 功 能 已 经 成 - 成 功 上 线 ， 通 过 降 低 交 易 门 槛 ， 可 以 更 好 地 提 升 散 户 对 高 价 格 股 票 的 参 与 度 。 在 财 富 管 理 业 务 侧 ， 我 们 不 断 优 化 现 金 管 理 服 务 功 能 。 三 季 度 在 新 加 坡 市 场 上 线 了 老 虎 钱 袋 子 产 品 ， 为 用 户 提 供 自 动 申 购 和 赎 回 的 功 能 ， 实 现 老 虎 钱 袋 子 中 的 资 金 可 以 直 接 用 于 老 虎 安 类 股 票 、 基 金 、 期 权 和 IPO 的 投 资 ， 实 现 了 现 金 管 理 产 品 和 其 他 投 资 品 种 之 间 的 联 动 。
We continue to invest in research and development to improve operational efficiency and to enhance user experience. With self-clearing, the execution and clearing cost as a percentage of the trading commission down to 13%, further decreased compared with the previous quarter. Specifically, the execution and clearing cost as a percentage of the trading commission for U.S. cash equity has come down to only 3%. As a leading online broker with comprehensive risk control and self-clearing capability, we have added fractional shares trading for U.S. equity this quarter, aiming to provide retail investors with easier access to high-quality names. In wealth management business, we keep optimizing cash management products to better serve our user. In Singapore, we launched Tiger Vault, our wealth management platform, in the third quarter to help users diversify their portfolio and combine cash management and other investment products.
老 虎 国 际 的 To B 业 务 保 持 迅 猛 发 展 势 头 。 投 行 业 务 侧 ， 三 季 度 参 与 承 销 了 十 一 个 港 美 股 IPO 项 目 ， 在 其 中 两 个 美 股 项 目 中 作 为 主 要 牵 头 行 。ESOP 业 务 方 面 ， 今 年 三 季 度 新 增 二 十 九 家 ESOP 客 户 ， 累 计 服 务 客 户 已 达 三 百 九 十 三 家 ， 同 比 增 长 百 分 之 五 十 。 为 了 更 好 地 支 持 ESOP 业 务 发 展 ， 我 们 聘 请 了 CROW 一 家 专 业 的 评 估 机 构 ， 对 ESOP 业 务 进 行 了 第 三 方 估 值 ， 并 在 四 季 度 引 入 了 几 家 战 略 投 资 人 ， 完 成 了 天 使 轮 融 资 。
Our B2B business continues to perform well. In the investment banking business, we underwrote 11 US and Hong Kong IPOs in the third quarter. In which we were the lead bank in two U.S. IPOs. In terms of ESOP, in the third quarter, we added 29 new companies to a total of 393 group clients. A year-over-year growth rate of 50%. To better grow the ESOP business, we hired Crowe, a reputable valuation specialist, for fairness opinion on valuation and closed an angel round financing with few strategic investors.
香 港 方 面 ， 我 们 提 升 了 香 港 IPO 的 承 销 能 力 和 港 股 的 清 算 效 率 ， 并 陆 续 完 善 了 相 关 的 技 术 建 设 和 系 统 调 试 。 很 高 兴 地 和 大 家 宣 布 ， 我 们 计 划 在 今 年 十 二 月 正 式 开 始 香 港 零 售 商 开 展 业 。
In terms of Hong Kong business, we have improved the capability of our Hong Kong IPOs underwriting, self-clearing efficiency, and completed the Hong Kong infrastructure updates. We are now very excited to announce that we are ready to onboard Hong Kong retail market in December of this year.
现 请 CFO John 跟 各 位 汇 报 一 下 财 务 细 节.
Now, I would, I would like to invite our CFO, John, to go over our financials.
Thanks Tianhua and Aaron. Let me go through our financial performance for the third quarter. All numbers are in US dollar. Total revenue were $55.4 million this quarter, a decrease of 9% year-over-year due to a slowdown in market activities, which dragged down commission and IPO underwriting. On a quarter-over-quarter basis, total revenue increased to 4%, primarily due to a 69% jump in interest related income versus last quarter. Cash equities take rate was about 6.7 basis points this quarter, slightly better than 6.5 basis points of last quarter. Within commission revenue, about 60% come from cash equities, 30% from options and the rest from futures and other products.
On cost side, interest expense was $4.3 million, a slight increase from the same quarter of last year as we still have some margin borrowed from Interactive Brokers. The borrowing cost increased in line with the rate hike. Execution and clearing expense were $3.2 million, decreased to 66% from the same quarter of last year. We expect further reduction in clearing expense when we start self-clear Hong Kong equities. Employee compensation increased 11% year-over-year to $24.2 million this quarter as we added headcount during last year to support our global expansion. In line with the headcount increase, occupancy expense increased to 50% to $2.5 million. General and administrative expense decreased to 30% year-over-year to $3.5 million due to some one-off professional service fee occurred last year.
Marketing expense were $7.4 million this quarter, decreased 34% year-over-year. Our marketing strategy has been the same for the past few quarters. We don't just chase for the number of new users. Instead, we focus on quality of new users and keep a close eye on CAC and payback. We will dynamically adjust our marketing strategy based on market environment. Communication and market data expense were $6.5 million, an increase of 23% from a year ago due to rapid user growth and expanded market data coverage. Total operating costs were $47.3 million, decreased 13% from the same quarter of last year. As a result, GAAP net income turned positive to $3.3 million versus a GAAP net loss of $0.9 million last quarter.
Non-GAAP net income further increased to $6.6 million from $3.5 million of last quarter. I have conclude our presentation. Operator, please open the line for Q&A. Thanks.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question comes from the line of Yu Fan from CICC. Please go ahead. Your line is open.
Okay. I will translate my questions. Thanks management for taking my call through. This is Yu Fan from CICC. I have two questions here. First one is that considering the interest rate hike cycle, how do you evaluate its impact on our income statement? How do you, have you made any changes in business strategy to better adapt to the rate hikes? Secondly, we have seen that meaningful contribution of new paying clients in Australia and New Zealand in the past few quarters. At same time we still have well-controlled CAPEX. Would you please introduce more on the strategies and initiation in these two markets? Do we have any target to further penetrate these markets?
Okay. In terms of first question regarding the impact from rate hikes. As you can see from our third quarter results, overall net impact from rate hike is positive. Grossing interest related income more than offset the decrease in trading commission underwriting due to a tightened liquidity. In terms of business strategy, we will keep investing in our U.S. business, particularly in self-clearing infrastructure, so we can better utilize our asset base during this rate hike cycle.
We expect to see more interest-related income from Hong Kong as well, once we become self-clearing and don't need to share interest income with our clearing partners in Hong Kong. It's a little bit hard to quantify the impact for Hong Kong yet, as this will be determined by the growth of our Hong Kong operations. Okay, Tianhua. Question number two on Australia and New Zealand.
Okay. I will translate. We have entered the Australia market for two full quarters, nearly 20% of our new funded accounts in the past two quarters were from Australia and New Zealand. We saw a quarter-over-quarter decrease in CEC in Australia during the third quarter. That being said, our expansion there is still in early stage.
We think the total addressable market is big, but to be honest, we haven't found the most effective marketing strategy yet. We will keep progressing with more user feedback and data analysis. In terms of product offering, we have clear competitive advantages compared to, you know, local brokers. Our self-developed infrastructures allow us to be more flexible to meet local needs, such as 8.0 version app with both pro and light version and our fractional shares trading function. Thank you.
Thanks for the answer.
Thank you. We will take our next question. Our next question comes from the line of Judy Zhang from Citi. Please go ahead. Your line is open.
Brandy, translate my questions. My first question is about overall average customer acquisition cost as we see CAC increased in the quarter. Would like management to elaborate a bit on reason behind and also how do we expect CAC trend in future? The second question is the regional breakdown of the new funded accounts in the quarter. How do management expect the breakdown of total funded accounts by end of 2022? Thank you.
Well, the average CAC was around $326, a slight increase from last quarter. The increase was primarily due to our sponsorship of the ASEAN Football Cup, which will take place in December. The agreement will be Tiger Brokers' first-ever partnership with Southeast Asia's flagship international football competition, we will see the firm become the tournament's official online trading platform for stock, options, funds, and futures. help us better reach out to potential users in the region of Southeast Asia. If we deduct this branding expense, the average CAC was around $175, decreased 12.5% compared to about $200 in the second quarter.
In the next few quarters, CAC might go up after we start to, you know, onboarding Hong Kong. It's very normal to incur more branding, expense after entering a new market. Our long-term strategy of balancing user quality and capital deployment will remain the same.
Okay. Regarding the question about the regional breakdown of our new funded accounts, our internationalization is progressing well. In the third quarter, about 20% of funded accounts came from mainland China. More than 60% came from Singapore, and nearly 20% were from Australia and New Zealand. We expect the trend of regional breakdown will remain fairly consistent in the fourth quarter. We will expect to see more users from Hong Kong region next year. Thank you.
Thank you. We will take our next question. Our next question comes from the line of Cindy Wang from China Renaissance. Please go ahead. Your line is open.
Congrats on completing the infrastructure update in Hong Kong and ready to onboard Hong Kong retail investors in December. My question is, since your bottom line has shown a positive trend over the past two quarters, how do you balance Customer Acquisition Costs in Hong Kong and the company's profit margin in the next few quarters? The second question is related to your product upgrades. Could you provide more colors on fractional shares for U.S. stocks and our Tiger Vault, your wealth management platform in Singapore. Thank you.
In terms of Hong Kong, Hong Kong, of course, is a very important market for us. I think, you know, a lot of people already know, like, before we have the Hong Kong license, we couldn't onboard Hong Kong clients, which slowed down our user growth. It also hurt our profitability because we had to pay down third party for execution and clearing of Hong Kong securities. Once we start, you know, offering our retail service in Hong Kong, we look forward to improve on both ends starting next year. Our customer acquisition strategy in Hong Kong is the same with our strategies in other regions.
We focus on user quality, ROI and payback, and we are confident we can earn the trust of Hong Kong users with comprehensive product offerings from the user experience and a high-quality trade execution. We understand Hong Kong is very competitive. In the near term with more marketing spending or branding campaigns, we might see some fluctuation in CAC, but we will stick to our, you know, core marketing strategy and then adjust accordingly with market condition and user feedback. Thanks. Tianhua, question number two.
In the third quarter, we rolled out U.S. fractional shares trading function. This fractional shares trading will make high quality names such as Amazon and Tesla more affordable for retail investors. They can invest in these names with $5 instead of paying a few hundred for just one share. Using our in-house fractional share execution and clearing infrastructure, we can be innovative in product offerings to better serve global retail users. In Singapore, we also upgraded our cash management products to Tiger Vault. A more comprehensive platform combines currency management with different trading products. With five tightening still on the horizon, we will roll out more wealth management products for users with different risk appetite, you know, to help them diversify for pure equity investment. Thank you.
Thank you. Very clear.
There seems to be no further questions at this time. I would like to hand back to Aaron Lee for closing remarks.
Thank you, operator. I would like to thank you everyone for joining our call today. I'm now closing this call on behalf of the management team here at Tiger. We do appreciate your participation in today's call. If you have any further questions, please reach out to our investor relations team. This concludes the call. Thank you very much for your time.
This concludes today's conference call. Thank you all for participating. You may now disconnect. Speakers, please stand by.