(Bloomberg) -- China’s online brokerage Futu Holdings Ltd. is reducing its headcount by about 5% as it reassesses the firm’s strategy to expand globally.
Responding to social media posts over large scale layoffs, the Tencent Holdings Ltd.-backed firm said it has “recently made adjustments to its organizational structure.”
“These adjustments include adding new roles as well as cutting certain existing positions for optimization,” Futu said in a statement. “The changes represent approximately 5% of the company’s total workforce, and are part of our business evolution.”
Earlier this week, Futu’s management flagged that it had passed the “rapid expansion phase” in new markets, with no imminent plans to venture into more markets next year. The company’s costs are rising faster than its revenue.
Futu has added staff over the past few years even after Chinese authorities lashed out at online brokers in 2021 and curtailed their efforts to target Chinese investors with cross-border equity trading.
“Overall from a headcount perspective, I think we’ll be relatively disciplined next year,” Daniel Yuan, chief of staff and head of investor relations, said during a call with analysts after its third-quarter results.
Under regulatory scrutiny, Futu and Up Fintech Holding Ltd. pushed to seek growth in global markets instead. Futu Chief Financial Officer Arthur Chen said in a 2022 interview that the firm’s key strategy in the following two to three years would be internationalization.
While that’s helped Futu to power its growth in overseas markets including Singapore and Hong Kong, costs had crept up. Its total number of paying clients increased 33% on year in the past quarter, and total costs jumped 43%. Over 50% of Futu’s selling and marketing expense was fixed and salary-related, according to Yuan.
Rival Up Fintech, also known as Tiger Brokers, had a major layoff round in early 2022. Futu’s headcount had grown 39% from late 2021 to more than 3,200 employees at the end of last year, compared with about 1,100 at Tiger Brokers.
Futu’s shares have gained 63% this year.
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