Ladies and gentlemen, thank you for standing by, and welcome to the UP Fintech Holding Limited second quarter 2019 earnings conference call. At this time, all participants are in listen-only mode. There will be a presentation followed by the question and answer session. I must advise you that this conference is being recorded today, Friday, August 2 3rd, 2019. I would now like to hand the conference over to your first speaker today, Mr. Clark Soucy. Thank you. Please go ahead.
Thank you, Grace. Hello, everyone, and thank you for joining us for the call today. UP Fintech Holding Limited's 2019 second quarter 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. Today's discussion will contain forward-looking statements.
These forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today. We do not take any obligation to update these statements 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.
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I will now translate for Mr. Wu. Hello, everyone, and thank you for joining our second quarter 2019 earnings conference call. I am delighted to report that in the second quarter, Tiger delivered solid revenue growth across business segments. Total revenues were nearly $13 million, an 88% increase on the same period last year, and a 34% increase from last quarter. Our revenue sources became more diverse as we recognized approximately $3.5 million in net interest income, a large increase on the $1.5 million in the same period last year. Net interest income now accounts for nearly 30% of revenues, as opposed to 22.6% during the same period last year. Our other revenues, which primarily comprise corporate services such as ESOP and IPO distribution, among others, grew twelvefold over the same period last year.
I am proud to report that in the second quarter, Tiger participated in five U.S. IPOs, burnishing our reputation as the market's leading online broker for U.S. IPOs. Our ESOP business is also exhibiting strong growth. In just under a year since product launch, we have signed close to 30 corporate customers. Now I would like to give you an overview of some of our key business metrics. Excluding share-based compensation, our Non-GAAP net loss was approximately $800,000, a 76% improvement over the same period last year and a 61% improvement from last quarter. Customer account balances now total $3.6 billion, a 75% increase over the same period last year. Finally, at the end of the second quarter, we counted 580,000 customer accounts, an increase of 80% over the same period last year. Our vision is to use technology to give our investors seamless access to global markets.
Thus, we continually invest in our research and development capabilities to enhance the customer experience, as well as acquire new licenses to expand our global reach. During the second quarter, we acquired Marsco, a U.S. broker-dealer with a 30-year operating history that holds a self-clearing license. As we integrate Marsco into our company, we look forward to leveraging their strong knowledge of the brokerage industry and compliance protocols to improve our operations and proprietary technology. By leveraging Marsco's expertise in combination with Tiger's strong fintech capabilities, over the next 6-12 months, we will unveil new products for our customers and will use the self-clearing license to improve our profitability. Another notable development is that our U.S. subsidiary also acquired membership of the National Futures Association, giving it the capability to provide futures trading services to U.S. customers.
In Asia, our Singapore subsidiary obtained a Capital Markets Services license, which will allow us to provide brokerage services to Singapore nationals in the coming months. We look forward to using these new licenses to further diversify our global customer base. Finally, I would like to speak to the technological prowess that is at the core of our business and which we keep investing heavily in. Recently, we allowed our customers to start streaming US Level 2 real-time market data, giving them the ability to examine the depth of book for the equities they trade. On the product side, besides from updating our app at two-week intervals, we also upgraded our Tiger community interface with new educational resources to increase our customers' understanding of investing in global markets. These efforts are already showing promising results, with the customers trading a greater percentage of US equities that are not Chinese ADRs.
Of the 25 most traded U.S.-listed equities on our platform, only 28% were Chinese ADRs by value, representing a notable decrease from 36% during the same quarter last year. We will continue to allocate resources to investor education to assist our users to diversify their assets globally. I will now hand the call over to our CFO, Mr. John Zeng, to go over the details of our financial results. Thank you.
Hello, everyone. Let me go over Tiger's second quarter financial performance. All dollar amounts are in USD. On the revenue side, very encouraging growth across business segment this quarter. Total revenues were $12.9 million, an 88% growth year-over-year, and a 34% growth quarter-over-quarter. Gross commissions were $6.8 million, an increase of 31% from the same period last year, helped by a 14% increase in trading volume and an increase in blended commission rates. Combining financing service fee and interest income, total interest was $4.5 million, an increase of 190%, 1-9-0, from the same period last year due to higher margin trading and securities lending activities. Other revenue, which comprise our two big business, such as IPO distribution and ESOP, increased 12-fold to $1.6 million year-over-year, solidifying Tiger's leading position in U.S. IPO distribution and ESOP management for corporate issuers.
Helped by all segment growth, our revenue stream is getting more diverse. For this quarter, commission, net interest, and 2B revenue each accounted for 57%, 25%, and 14% of our net revenue. While the split was 75%, 23%, and 2% in the same quarter last year. With our expansion in more geographical locations and a self-clearing capability up and running in the next six to 12 months, we expect our revenue to be more diversified going forward. Now on the cost side, employee compensation remains our biggest expense. This quarter, our salary expense was $8.1 million, a 79% decrease from the same quarter last year. The decrease was due to a one-time share-based expense of $32 million recorded last year. Excluding share-based compensation, our salary expense increased by 37%, while our headcount increased 51%, from 344 to 520 during the same period.
Headcount increase also resulted in a 21% increase of occupancy expense this quarter to $800,000 USD. Execution and clearing expense increased 16 times this quarter. Interest expense increased from zero to $1 million. Both increases are due to more consolidated account customers this quarter. Communication expense was $1.7 million, an increase of 96% from the second quarter last year, as we are offering more data services, such as US Level 2, to our users. Marketing expense was $2 million, a 20% decrease from last year, since we have been optimizing our marketing spending to focus on when those can yield better ROI. SG&A increased 9% to $1.9 million due to an increase in headcount and professional service fee.
To summarize, comparing with the same quarter last year, total cost, excluding share-based compensation, increased 25%, while top line grew 88% during the same period, which translates to a strong improvement in our bottom line. On a GAAP basis, net loss attributed to the company was $1.9 million, a 95% improvement from last year. On a non-GAAP basis, net loss attributable to the company was USD 800,000, a 75% improvement from last year. Overall, we are making good progress to improve earning quality in addition to drive user growth. Our revenue streams are more balanced and less dependent on commission versus last year. We might incur more headcount, R&D, and marketing expense in the next few quarters when expanding offshore. We feel very confident about our business outlook with the strategies we are executing. Now, we have concluded our remarks, and it is open for Q&A.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the star or hash key. The first question comes from the line of Judy Zhang from Citibank. Please ask the question.
Hi, this is Judy from Citi. I have two questions. The first question is, we have seen a very strong quarter for the margin financing revenue in the second quarter. Can the management share with us what's the total margin financing balance in the second quarter and how the interest rate trended over the past quarter? The second question is on the commissions. We see the trading volume has dropped further in the second quarter. Can you give us a breakdown by country and by type of securities? Also, what is the driver for the weakness in this quarter? Thank you.
Hey, Judy. Let me answer your first question. Sorry, the line was a little bit fuzzy. I didn't hear your second question clearly. Can you repeat your second question?
Yes. The trading volume has dropped a lot in the second quarter. Can you give us a breakdown for the trading volume by country and by type of securities? Also, can you share with us what is driving the weakness in the second quarter?
Okay. Let me answer your first question regarding my margin balance. As you know, the margin balance, we have 2 type of accounts. One is my fully disclosed account, which the balance is not on our book. I can give you the number of the balance of the margins on our book is about $40 million. Okay. That's the balance on our book. Overall, we can drive more interest out of our own margin balance. We expect the margin balance will keep growing as we have more consolidated account new customers coming forward. The net interest margin, let me just give you a rough estimate. I would say for consolidated accounts, it's about 2%-4%, depends on the user type. For the FD accounts, the net margin was much lower. I would say it's about 50 basis points on an aggregate basis.
That's on the margin balance. For the trading volume, second quarter was down about, I would say, 13% from the first quarter. The reason is the market volatility actually came down in the second quarter. The total U.S. equity trading volume, if you look at the Cboe data, is actually down from the first quarter. Our company experienced similar trends in terms of client trading activities. Still, we are able to optimize our operation to drive higher blended commission rates. Because last year, we had signed promotion programs which expired, our blended commission rates came up higher versus the first quarter. That's one of the reason behind the increase in gross commission.
Okay. How about the second question?
Sorry, Judy, what's your second question?
The breakdown of the trading volume by country and by different types of securities in second quarter.
Yeah-
What is the driving the weakness in the trading volume in the second quarter?
You mean the driving weakness of the trading volume in the second quarter?
Yeah.
Like I just mentioned, the overall market volatility, if you look at the VIX volatility, actually came down in April and June. It came back a little bit in May, but overall, the market activities, at least on our platform, slowed down a little bit. That's why the trading volume came down. If you look at the breakdown of the countries, U.S. equities still accounts for the most of our trading volume in terms of equities. All the U.S. product, USD product, I would say accounts for over 70%-80% of our trading volume. I don't have the exact breakdown by country, but I can just give you the breakdown by currency. U.S., USD product are the most, then followed by Hong Kong HKD product as the second. Accounts for slightly above 15%.
15% for the Hong Kong dollar denominated products, right?
Yes, something like this, about 15%.
Okay. Also, how about the breakdown by different type of securities, like futures, equities, et cetera?
Let me take a look. For the futures, I would say equities accounts for 40%-45% of our total trading volume. The future is about the same, like 40%-45% of our trading volume for this quarter.
Okay. Thank you.
No problem.
Next questions comes from the line of Libby Lu from HSBC. Please ask a question.
Hello, this is Libby from HSBC. I basically have three questions. First one is the trend of our commission in revenue and the trend of trading volume, because the trading volume is going down, but the commission is going up. Is the difference because of some IPO commission? The second question is also about the financing business, because we see a significant growth in the interest income in the second quarter. Going forward, if that means we are going to have more financing business or more interest income on our balance sheet instead of off the balance sheet. What is the potential funding source if we're going to continue to grow this business? Third question is about other revenue, because as our CEO just mentioned that the other revenue is basically from IPO subscription fee.
How do we going to compete with other investment banks in terms of the IPO subscription business, and is our strategy like low pricing strategy for this business? How important is our B2B business compare with our B2C business? Thank you.
Sure, Libby, thanks for the question. Let me answer your first two questions, then I will let Tianhua to answer your third question in Chinese, and I will do a quick translation. For your first question regarding the volume and the commission, so it is similar to the question that Judy asked a little bit earlier. Trading volume actually slowed down a little bit because the market activity slows down. The activities also slowed down a little bit on our platform. In terms of the increase in trading, the commission rates like. First of all, we had some discount program offered last year, and it was expired. Also, for this quarter, we saw a little bit higher margin product trading, which is more like cash equities versus last quarter. That's why the blended commission increased compared to the last quarter.
That's to your first question. The second question is on the financing business and what's the future driver for the financing business. I think for this business, we have a huge potential, because as I said earlier, so far, the margin balance on our own book is still relatively low. A lot of our origin balance is holding at our clearing partners. Going forward, once our consolidated account keeps growing, we will have more margin balance on our book, then we can churn out more revenue from those margin balance. I will let Tinhua answer your third question regarding our 2B business and how we compete with other investment bank and what's the strategy we play in the 2B business. 2B.
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IPO. Traditional investment bank value added services. High-value customer. IPO. ESOP traditional ESOP company.
Those ESOP providers are, first of all, relatively more expensive, and their softwares are not that easy to use. We see this as a good opportunity for us to tap into, and we combine ESOP and IPO services together to offer as a completed package to the corporate issuers. That's why you can see Tiger has been growing really fast in this segment.
Oh, thank you. Thank you. Once again, if you wish to ask questions, please press star one on your telephone and wait for your name to be announced. Next, we have the follow-up questions from the line of Judy Zhang from Citibank. Please proceed.
Thank you. Thank you for giving me an opportunity to ask questions again. I have another two questions. The first question is on your overseas expansion. Is there any meaningful contribution from the non-China-based clients in the total new clients in this quarter? If so, what is the contribution? My second question is, can management share with us any update on the progress of your licensing application in Hong Kong? Thank you.
Right. Judy, first of all, on how many clients are our overseas clients. So far, given our overseas expansion just started, we just got all the licensing in place. So far for this quarter, we don't see I would say majority of our clients are still the PRC clients. For the next two or three quarters, we would like to see more international clients to be able to use our platform. For the Hong Kong license, we are in preparation to apply for Hong Kong license.
Okay. Thank you.