Ladies and gentlemen, thank you for standing by, welcome to the UP Fintech Holding Limited second quarter 2020 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, Tuesday, August 18, 2020. I would now like to hand the conference over to your first speaker today, Mr. Clark S. Soucy. Thank you. Please go ahead.
Thank you, Ralph. Hello, everyone, and thank you for joining us for the call today. UP Fintech Holding Limited's second quarter 2020 earnings release was distributed earlier today and is available on our IR website at ir.itiger.com, as well as GlobeNewswire services. On the call today from UP Fintech are Mr. Wu Tianhua, Chairman and Chief Executive Officer; Mr. John Zeng, Chief Financial Officer; 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. They will both be available to answer your 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, August 18th, and our annual report on Form 20-F, filed on April 29th, 2020. 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.
[Non-English content]
Good day, everyone, and thank you very much for attending the Tiger Brokers 2020 second quarter earnings conference call. We saw moderated market volatility in the second quarter. Our users remained very active, which fueled our strong growth this quarter. Total revenue exceeded $30 million, a 122% increase on the same period last year. This marks the second quarter this year when revenue growth exceeded 100% on a year-on-year basis. Our operating efficiency and earnings quality keep improving. We achieved consecutive quarters with GAAP profits. In the second quarter of this year, our company reported operating income and non-GAAP operating income of $5.1 million and $6.8 million respectively. Please refer to our Form 6-K furnished today, August 18th, for a reconciliation of non-GAAP financial measures to GAAP financial measures.
Our improving financials are dependent on the trust and goodwill of our users. As Tiger continues to grow our business and our brand, as well as provide more differentiated services, more people entrusted us with their money. In the second quarter, we added 33,800 new accounts with deposits, a new quarterly high for our company. Total accounts with deposits increased 76.7% from the same quarter last year. We saw strong inflows this quarter. Total client assets reached a new high of $8.3 billion, 133% higher than the same period last year, and a 51% increase on the previous quarter. I expect that with high growth in client numbers and client assets, Tiger will keep delivering good financial performance in the near future. While brokerage is of course our core business, investment banking, ESOP, and our internationalization efforts continue to develop nicely.
Our U.S. and Singapore businesses are on the right track. They are expanding our customer acquisition channels while diversifying our revenue streams. In addition, we completed our self-clearing infrastructure setup and gradually started to self-clear U.S. equities.
[Non-English content].
Thanks to our growing influence in capital markets, as well as our strong retail and institutional client base, our investment banking business continues to grow rapidly. In the second quarter, Tiger participated in 80 U.S. IPOs. Recently, we also served as an underwriter for Li Auto, solidifying our number one position as the most active ADR underwriter in terms of deal count. We were also active in high-profile Hong Kong IPOs. In the second quarter, we were a joint book runner for NetEase's Hong Kong listing, which demonstrates Tiger is an indispensable partner for Chinese companies looking to enter global capital markets.
[Non-English content].
In the past half year, our ESOP business has grown rapidly. We have invested heavily in this system to gradually improve its functionalities. The system now supports complex plans that span multiple countries and corporate entities. In the second quarter, I am proud to report that we added 16 ESOP customers. In the first half of this year, over 50% of Chinese ADR issuers have chosen Tiger's ESOP system. We look forward to continuing to grow our dominant market share, and are resolute in our conviction that our outstanding service and comprehensive capabilities will attract more clients to our ESOP system.
With regards to our wealth management business, at the end of the second quarter, we unveiled our proprietary fund analysis system that assists clients analyze the rich range of investments available on our Fund Mall, which presently features over 100 mutual funds from distinguished global asset managers. Finally, I would like to provide an update on our share repurchase program. From April 1st- August 17th, we in total repurchased 700,000 ADS. For an approximate consideration of $2.2 million.
[Non-English content].
I would now like to invite our CFO, John, to go over our financial results.
Thanks, Tianhua and Clark. As mentioned earlier, second quarter was a strong quarter in terms of both operating and financials. With favorable market backdrop, increased user base, and trading activities, commission revenue went up 178% year-over-year to $18.8 million this quarter. Interest-related income, which combines financial service fee and interest income, went up 69% year-over-year to $8.8 million, thanks to increased margin trading and securities lending activities. Other revenue also increased 54% year-over-year to $2.5 million, primarily due to more IPO underwriting. Total revenue was $30.1 million, up 122% from the same quarter last year. Taking out interest expense of $1.9 million, total net revenue was $28.2 million, an increase of 125% from the same quarter last year. Now switching to cost. Execution and clearing costs were $2.9 million, increased almost four times year-over-year as we have a much bigger user base and increased trading volume.
Compensation expense increased 39% year-over-year to $11.3 million. Taking out share-based compensation, the cash portion of compensation expense increased 36% year-over-year. The increase was due to us adding headcounts into key positions to support the rapid growth of our business. Marketing expense increased 48% year-over-year to $2.9 million this quarter, as market backdrop remains favorable for user acquisition. We likely will keep investing in marketing in the second half. Occupancy depreciation and amortization increased 42% to $1.1 million. SG&A increased 43% to $2.8 million. Both increases are in line with our business expansion. Total operating costs were $23.1 million, an increase of 52% year-over-year. Operating income, which is a key metric we focus on internally, increased to $5.1 million this quarter, a significant improvement from negative $2.6 million in the same quarter last year and $1.9 million in the first quarter of this year.
Net income attributed to UP Fintech was $1.1 million, compared to a net loss of $1.9 million in the same quarter of last year. One thing I want to elaborate is our effective tax rate of 49% this quarter looks very high. The reason is while we started to make profit on a consolidated group basis, some of our subsidiaries still don't have profit, so deferred tax assets accumulated at those entities cannot apply it. We expect our effective tax rate to gradually go down as more subsidiaries will make profit and can apply deferred tax asset benefits. That's it for the management presentation. We are now open for questions.
Thank you so much, ladies and gentlemen. We will now begin the question and answer session. As a reminder, if you wish to ask a question, you will need to press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Again, it's star and one if you wish to ask a question. One moment, ladies and gentlemen. If you wish to ask a question, you will need to press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Again, it's star and one if you wish to ask a question. Thank you. Your first question comes from the line of Daphne Poon from Citi. Your line is now open.
Hi, management. Thanks for taking my questions. My first question is about your commission rate. We see a meaningful increase in terms of your net commission rate in the second quarter to about 3.4 basis points. Can you explain the reasons behind, and what's the outlook going forward? In terms of your new customer growth, we have seen some very strong momentum year-to-date.
Just wondering if it's possible to give some color on your full year new customer growth outlook or maybe the run way in the third quarter so far. Lastly, I want to check on your overseas market expansion. We understand you are tapping into, for example, the U.S. market and also the Singapore market since beginning of the year. Just wondering if you can share any progress there, for example, the number of new clients, and also maybe the current assets contribution. Thank you.
Okay. Daphne, let me answer your first two questions regarding the commission rate and also the new customer growth. I will let Tianhua to answer your question regarding the offshore international expansion. Okay. Our commission in the second quarter, actually our commissioning has been gradually increasing for the first two quarter this year. I think the main reason is first of all, there are more people trading. Second thing is there are some people are trading more diversified product. Instead of trading U.S. equities, we have also a lot of people trading U.S. options, which relatively is obviously a higher margin product for us. That's why you can see the blended commission rate also goes up. That's the answer for the first question.
For the second question, unfortunately I cannot give you a very clear guidance in terms of the total customer growth this year. The reason is because like you know our international expansion just started. U.S. started last fourth quarter last year, and Singapore started this year. For those two regions, so far the growth has been pretty positive. Right now I still don't have the full grasp on either growth potential. I cannot give you a very clear guidance, but I can share with you the momentum is pretty strong. I will let Tianhua to answer your third question.
[Non-English content].
In terms of international expansion, so far, we see very promising growth out of U.S. and Singapore. If you average them up, like the international new user acquisition accounts for more than 10% of our quarterly user growth.
In June, the new user growth in the offshore regions actually grow much faster than the April composition. Overall, we are very positive on the international expansion. I think we have a good brand and also user experience and the product offering in those regions, so we are very positive on the growth prospect. Daphne, you have other questions?
Yeah, actually, if I may, can you actually share the breakdown of your trading volume, like by different types of products? For example, what is the percentage of derivatives trading, accounting for your trading volume in Q2?
Sure. The cash equity accounts for over 50% of our trading volume. Other derivatives like futures, options, is about like another 45%. That's the total composition of our trading volume.
Okay, understood. Thank you.
Thanks.
Thank you so much. Once again, ladies and gentlemen, if you wish to ask a question, it's star and one on your telephone keypad. Your next question comes from the line of Yada Li from CICC. Your line is now open.
Hello, management. Firstly, congrats to impressive financial performance for this quarter, and thanks for giving me the chance to ask these questions. After review of financial performance, I think I got three questions for you today. First of all, I saw the number of accounts with deposits increases by approximately 33.8 thousand this quarter. I was wondering if you can share with us more information on the geographical distribution of this number. What are the specific percentages of this number that are from Mainland China, Hong Kong, and other regions respectively?
Secondly, I saw you gradually started to use Marsco Investment Corporation to do the self-clearing. I was wondering what is the percentage of transactions are using the self-clearing for right now, and what the percentage will be in the future and for the rest of the year? Last, I have a follow-up question for the previous question about your international business. Earlier I saw on the news that you got five more U.S. licenses. Could you please share more information on how you will plan to use these licenses to expand your businesses in the United States and how you will view or position your U.S. business sector to the development of your whole company? Yeah, that's all. Thanks.
Okay. Yeah. Thanks. I will let Tianhua answer your first question.
[Non-English content]
Right. In terms of our new user deposits in this quarter, so far still majority comes from the PRC region. Like we mentioned earlier, our international business, even though it just started a couple of quarters ago, right now we are seeing positive growth. Going forward, we expect more users will come outside of China. To answer your second question regarding Marsco. As you know, we acquired Marsco back in last July. It took us a year to set up the infrastructure, get the system fully integrated, and also we did a bunch of testing. In the second quarter, we finished all the testing and we just did very minimum self-clearing trades to make sure everything is in place and we don't jeopardize any user experience.
Starting the third quarter and first quarter, I think we will gradually put in more trading volume into Marsco. Exact volume percentage, it's hard to say right now, but my goal is to have about 15%-20% by the third quarter, and eventually we have another 30%-40% by the fourth quarter. That's our goal. Depends how the market goes and how the clearing system works from our day-to-day operation. To answer your third question in regards to the license. Yes, so we have a really strong team in the U.S. They are based in New York, and all the guys used to work for the bulge bracket firms in the States. We got a research license, a prop trading license, FA license, recently.
What we're going to do is, it's a lot of way for us to expand our institutional business, because right now we cover a lot of U.S. institutions, which definitely helps us in terms of getting IPO mandates. Also with the research license, we will be able to issue research on those IPO deals we underwrite. Actually, we already start to issue research on Bloomberg. If you guys can check, you guys can see the type of piece in terms of how we covered the Chinese ADR business and also the Hong Kong-listed companies. I think overall, getting more license in the U.S. will definitely help us to increase our brand and also help us acquire more users, both institutional and retail investors.
Thank you so much, ladies and gentlemen. If you wish to ask a question, it's star and one on your telephone keypad. Again, it's star and one on your telephone keypad. Once again, ladies and gentlemen, it's star and one if you wish to ask a question. Once again, ladies and gentlemen, it's star and one if you wish to ask a question on the phone. There are no further question at this time. Speakers, you may continue.
I would like to thank everyone for joining our call today. I am now closing the call on behalf of the management team here at UP Fintech. 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.
Thank you.