Public Startups Venture

A Quick Look At Online Broker Futu’s IPO filing

Morning Markets: Futu wants to go public. Let’s take a peek at its offering.

Futu, a Hong Kong-based fintech company has filed to go public. The firm, founded in 2012, raised $215.5 million during its life as a private company, absorbing capital from a number of well-known investment and technology firms including Sequoia Capital China, Matrix Partners China, and Tencent.

Having not raised since mid-2017, Futu’s IPO is somewhat exciting. What has it gotten done since its last round, a $145.5 million Series C? Well, let’s find out.

Results

Futu’s core business, what it describes as “a fully digitized brokerage platform” aimed “primarily [at] the emerging affluent Chinese population,” is profitable and quickly growing.

The company’s revenues grew 258.2 percent from 2016 to 2017, and 227.5 percent from the first three quarters of 2017 to the same period of 2018.

In the first nine months of calendar 2018, Futu posted revenue of $74.6 million, gross profit of $51.0 million, pre-tax net income of $17.9 million, and post-tax profit net income of $12.8 million. Given its quick growth rate, Futu’s profitability is nearly astounding.

The firm also generated cash from operating activities in the first three quarters of 2018, as well as financing cash flow. Those two positive numbers were more than enough to blast a small investing cash flow result out of the water.

So, the firm has good figures. What about the company’s health in terms of users?

Bragging Rights

From September 30, 2017 to September 30, 2018 (recall that we only have Futu data through the third quarter of 2018; I’m sure that the firm will re-file with fourth quarter figures shortly) the company’s userbase grew from 3.7 million to 5.3 million (+45 percent), while its “registered clients” expanded from 221,297 to 457,323 (+106.7 percent), and its paying client figure grew from 62,899 to 124,809 percent over the same period (+98.4 percent).

That’s a lot of figures. They mostly show that the engine behind Futu’s revenue growth in the last year has been powered in part by picking up new users. But, also, in rising use of its offered services. Recall that the company’s revenue grew over 227 percent from the first three quarters of 2017 to the same period in 2018, during which its “paying clients” expanded on 98 percent or so. That implies, unless I really do need another espresso, rising revenue per user over time.

The trend bodes well for future, low-cost growth at Futu as the firm. Of course, the global stock markets are largely up during that period. Which brings us to a question of timing.

Why Now?

As you can tell from the positive language above, Futu is in good shape to go out. Its currently shared numbers are strong. Pretty much every metric we tend to examine in S-1s and F-1s looks good for Futu.

Right now, that is. The fourth quarter, the only portion of 2018 that we don’t have accounted for in Futu’s numbers, is the mystery. And who wants to wager that when the global stock markets all decided to spit up all over themselves that the service companies helping folks buy and sell shares didn’t do as well as before?

We’ll see. But this F-1 is timed so well given both Futu’s performance and the market that I can’t help but applaud some banker somewhere who helped line up the ducks.

Futu wants to raise $300 million per its F-1, a placeholder figure that merely helps us get a sense of the offering’s scale, and will trade on the Nasdaq under the symbol “FHL.”

More when it refiles.

Pin It on Pinterest

Share The Latest Deal