Compiled by Dolphin Research: Trans of Webull FY26Q2 earnings call

I. Key takeaways

1. Guidance (marketing spend)

Assuming no major market shifts, H2 marketing spend is expected to be broadly in line with H1. It should not be below Q2 levels and not above Q1 levels.Approx. 40% of Q1 marketing spend was amortized from last year's asset-matching promos, with a lower proportion in Q2.

2. This quarter's key financials

Total: revenue of $198.8mn (+51% YoY), with growth accelerating vs. Q1. Adj. operating expenses of $136.2mn (+26% YoY, -6% QoQ; Q1 was $145.1mn).Profit: adj. OP of $62.6mn (+169% YoY) and OPM of 31.5%. Adj. net income of $43.2mn with NPM of 21.7%.Segments: transaction-based revenue of $147.7mn (+66% YoY, +33% QoQ). Interest income of $42.8mn (+18% YoY), driven by growth in AUM, margin balances, and client cash.

Smaller segments: crypto revenue of $2.25mn, a bit over 1% of total. Prediction market revenue around $5–6mn per quarter, +71% QoQ.Unit economics: excluding marketing, OPM has stayed above 40% every quarter since Q3 2024.

3. Client assets and flows

Client assets reached $28.5bn (+79% YoY). Avg. assets per funded account rose above $5.5k, nearly doubling YoY.Net inflows were $1.6bn for the quarter, up more than 7% YoY.

4. Trading activity and accounts

Equity notional turnover was $279.0bn (+73% YoY, +7% QoQ). Options contracts were 213mn (+68% YoY, +34% QoQ). DARTs were 1.64mn (+62% YoY, +25% QoQ).Funded accounts were 5.13mn (+8% YoY). Gross adds were ~132k, with net adds ~20k, as the firm proactively purged dormant accounts. Quarterly retention was 97.3%.

5. Disclosure policy changes

Starting this quarter, the company will publish monthly operating metrics on its IR site. This brings higher-frequency transparency to investors and analysts.

II. Detail from the call

2.1 Management highlights

1. Removal of the PDT rule (defining event this quarter)

The SEC’s removal of the Pattern Day Trader rule took effect on Jun 4. The platform enabled unlimited zero-commission day trading for all eligible clients at the effective moment.The change lifted trading share meaningfully. Options entered the top five among US retail brokers, and both equity and options volumes hit an all-time quarterly high.Webull’s avg. account size is well below the $25k PDT threshold, making the platform one of the most direct beneficiaries.

2. Active traders and AI tools

Vega (AI system) added ~160k users this quarter, taking actives to 480k (+12% QoQ). Active traders are the heaviest users, with usage up ~23% QoQ.The MCP server has integrated major LLMs, enabling natural-language research, tool-building, and execution on-platform. Management views MCP as differentiated infra for agentic trading.

Paper trading was significantly upgraded. Capabilities across asset classes are now aligned with live trading, letting users practice near-real strategies without risk.

3. Intl expansion

Intl funded accounts were ~810k. The firm is licensed in 35 markets and operates trading in 18, adding Spain, Argentina, and Colombia this quarter.APAC client assets exceeded $5.0bn. The acquisition of Thailand’s Pi Securities is expected to close by end-Aug, materially boosting regional AUM and combining the platform with Pi’s local know-how.In LatAm, the firm continues to broaden products and completed its first client-initiated tokenized equity trade in Argentina.

4. Institutional business

Institutional AUM exceeded $1.4bn, roughly 5% of total AUM. Most institutional clients are outside the US.The firm obtained a FINRA clearing license in Apr but has not launched clearing and does not plan to self-clear near term, while building the future platform.Institutional products now include futures and prediction markets, beyond execution and custody. Partnering with Monarch Markets, the firm offers access to late-stage private companies via an SPV for qualified investors.

5. Users and account mix

New registered users were ~600k this quarter. Total registered users reached 28.2mn, up 13% vs. 24.9mn in Q2 2025.A sizable share of registrants are in markets where trading is not yet live and only consume market data and content. The company remains committed to providing market data and information to all users.A funded account is defined as one that makes the first deposit, and keeps a positive balance for 45 consecutive calendar days at the record date.

2.2 Q&A

Q: Is the PDT uplift more from existing clients trading more actively in-account, or asset transfers from other brokers concentrating activity? What signals show this is durable rather than a one-off spike?

A: It’s both. The company targeted cohorts of anomalously active accounts — e.g., appearing on Mondays, doing three day trades, then not appearing again until the next Monday — which likely split brokerage activity across multiple brokers to circumvent PDT limits. These accounts received focused email campaigns and outreach.Quantifying asset transfers is hard without clean data. ACAT would normally help, but day-trader accounts often lack transferable securities and ACAT is cumbersome, taking days or longer, so these accounts leave limited traces. What is visible is meaningful new deposits from those Monday-only accounts.On durability: the Jul data showed options volumes were steady. Equities dipped vs. Jun, which had high-profile retail events such as SpaceX. Aug to-date looks similar to Jun and stronger than Jul. Management views PDT removal as the new normal, with volumes not reverting to pre-removal levels.

Client behavior has changed as well. With fixed day-trade limits gone, many more smaller day trades emerged, as clients enter and exit at lower P&L thresholds and trade tighter waves.This improves the take rate. Not only is notional up, but the number of actual trades per unit notional rose sharply, lifting PFOF yields — a double positive.

Q: How does APAC retail activity and product usage compare with other regions? After acquiring Pi Securities, how will tech be brought to its local client base?

A: Intl growth has been a core pillar for years, with 35 licenses and operations in 18 markets. APAC is the most mature and largest region outside the US, with Hong Kong and Singapore being the main hubs.APAC client behavior is evolving. Even as the world de-globalizes, retail investors are becoming truly global, increasingly mirroring US behavior in reactions, positioning, and product use. US equity options adoption outside the US has scaled, and is still in the early innings.Pi Securities is a strategic opportunity in Thailand. The company already has a small but fast-growing local business; the deal immediately boosts APAC AUM and brings a large set of high-quality funded active accounts at very low CAC — which would be costly and slow to acquire organically.

(H.C. Wang) Asia is a strategic region, viewed holistically rather than as silos of Hong Kong, Singapore, and Thailand. There are strong cross-market synergies — e.g., Hong Kong institutional business serving Thai brokers trading US equities, while HNW clients in one market may open in another.Local presence across all these markets, operated as one system, is a key differentiator and a reason for rapid growth.

Q: What does proactive dormant-account handling entail, and when will this batch be cleared?

A: Dormant accounts are inherent to brokerage platforms, and the process ties to compliance — escheatment. Each US state has its own rule, ranging from two years of inactivity to as long as five.Once deemed dormant, brokers must liquidate holdings and remit cash to the state’s Comptroller or Treasury. This is an operational burden, costs money, and each escheated account incurs a state fee.The current batch mostly dates to the GameStop era, when the firm ran small-deposit promos — deposit $1 to get one share — producing accounts with avg. AUM of only $10–15, no trading or investing, and a registration motive of claiming an expensive stock rather than investing. Hence the disclosure of gross vs. net funded adds to show funded accounts are still growing strongly.

Purging non-revenue accounts and replacing them with high-quality ones makes the base healthier. It also contributed to the sharp rise in avg. account size this quarter.

Q: Marketing spend fell materially QoQ and below the previously implied revenue ratio. What is the H2 direction? Are there one-off items from prior incentives normalizing in Q4 and Q1?

A: (H.C. Wang) Last year the firm ran aggressive asset-matching promos, e.g., 3.5% match for IRA deposits.(Anthony Denier) These promos require AUM to stay on-platform typically ~12 months or longer, so costs are amortized. Q1 and Q2 marketing spend includes last year’s amortization, not just this year’s spend. The promos chiefly drove Q4 net inflows, but amortization runs through 2026.The firm began dialing back asset-matching in Q1, cutting matches from 3.5% to ~1%, and halting such promos in some markets. As last year’s aggressive matching rolls off, marketing spend should normalize over the next few quarters.

Q: How is crypto progressing — number of supported coins and the status of coin-in/coin-out?

A: Crypto has disappointed industry-wide in recent quarters, not just at Webull. This quarter’s crypto revenue was ~$2.25mn, just over 1% of total, so any recovery directly lifts results.The firm has focused on marginal integration and building a product for active and semi-institutional crypto traders.Current status: coin-in/coin-out is in gray launch, coinciding with renewed attention to the asset class. It is the first time in nine months that the crypto clouds are clearing, with a positive directional shift. Management is also tracking CLARITY legislation odds on platforms like Polymarket and believes sunlight is coming, making crypto a good incremental driver. (No specific coin count disclosed.)

Q: Jul saw a clear market slowdown and an AI-theme pullback, yet options stayed strong. Is sensitivity to market down, or was PDT supporting volumes? How to think about volatility vs. growth?

A: Webull appears more cushioned vs. peers due to a high share of active traders and investors. When volatility hits and markets weaken, volumes can even spike in the first days; but in a prolonged bear, volumes ultimately dry up.In short lulls lasting one to several months, client behavior shifts, which is a slight headwind for revenue — less single-stock trading, more broad-index ETFs like QQQ and SPY.So the platform is not immune, but it is cushioned. Over six years, PDT forced closure of over 1mn active funded accounts, and the firm has contacted each one. On Jun 4 alone, the firm waived over 50k margin calls and individually reached out to those 50k active funded accounts, and such traders engage when volatility and VIX move higher, keeping data relatively stable in down markets.

Q: Were more smaller trades expected? Does the previously given mid-term +20% volume uplift target already play out, or is there a 6–12 month adjustment?

A: The +20% forecast post-PDT did include some conservatism. It is a new trading environment across multiple asset classes, and the pattern is visible — crypto never had PDT, and events/prediction markets do not either, where volumes grew ~70% QoQ.Flow begets flow, and momentum is sustainable. The mid-term is effectively here — PDT was removed in early Jun, giving nearly a full month of data that surprised many, though management is unsure why. Jul confirmed sustainability, and as Aug nears month-end, activity remains similar, with AI trading returning in recent days, leaving volumes very healthy.Management is optimistic the trend continues.

Q: How do your agentic AI products differ from HOOD or IBKR? How much volume comes from agentic trading, and is any asset class skewed?

A: Management cannot speak to competitors’ specifics and will focus on its own approach.At the MCP layer, the firm works with all major AI platforms and invests heavily in client education and onboarding. It is very early stage, with interactions focused on portfolio construction, research, and trading analysis rather than algorithmic execution, where some peers focus.Phased rollout is deliberate. Retail interaction with platforms has fundamentally changed, and normalizing the experience takes time; the firm aims to proceed in a responsible and transparent way.

A practical use case: as a sponsor of the Tampa Bay Rays, management wanted to find the most active MLB event contracts. A manual spreadsheet review would take ~4 hours. Via MCP and natural-language queries, it returned an analysis of the most active MLB contracts by price-range volatility in under 30 seconds.More execution-side products are expected by year-end, but it will take time. There will be a series of announcements around Vega, focused on execution capabilities. (No disclosure on agentic volume or asset mix.)

Q: Margin balances appeared to dip in Jul. What is the trend in Aug to date, and how do you assess current risk appetite?

A: (H.C. Wang) Margin balances usually track overall AUM. Jul was very volatile and difficult, with notable de-leveraging from prior build-ups, which was visible in behaviors.Over longer periods, margin balances have trended up, driven by best-in-class rates for advanced clients. Utilization is rising, flows are growing, and the longer-term trajectory should keep rising. Jul looks more like a one-off swing; as AUM grows, margin balances should grow.(Anthony Denier) Aug has been a very healthy trading month, with risk appetite back. In real time, margin debt is approaching record highs and may have already reached them today.

Q: Marketing spend fell ~$15mn QoQ, from ~$50mn to ~$35mn. How much of Q1 and Q2 was related to 2025? Does normalization mean absolute dollars will keep falling in Q3–Q4?

A: (H.C. Wang) Roughly 40% of Q1 marketing related to last year, with a lower ratio in Q2. Normalization means spend will better reflect current-period promos, rather than lagged effects from last year’s campaigns.Guidance: barring major market changes, H2 marketing spend should be similar in magnitude to H1 — not below Q2 and not above Q1. The firm will keep investing to acquire new clients and AUM.

Q: What are the priorities for current marketing investments? What are you pushing?

A: (H.C. Wang) Three priorities: brand-building, high-quality account acquisition, and intl growth. Most dollars remain in the US due to market size, but proportionally the firm is actively acquiring funded accounts in smaller non-US markets.CAC and payback are tracked globally, and spend is increased where ROI is highest. In short: brand in the US, high-quality acquisition ex-US.

Q: How is the overseas institutional strategy (e.g., with Meritz) progressing? Are you on track with the early-year plan for Aug 2026?

A: It is behind plan and taking longer than expected. Full operation is expected by end-Aug, especially with several large Korean platforms.Onboarding and pipeline are easier outside the US, mainly due to product breadth differentiation. In execution alone, the firm operates in 18 markets and can trade in 16, a major edge that is easier to sell to non-US platforms with stronger global trading needs.

Q: How much did prediction markets contribute this quarter?

A: Not broken out intra-quarter and not separately shown in statements. Revenue grew +71% QoQ.Given the business is still scaling and smaller than some peers, management prefers not to provide a precise figure; it is currently around $5–6mn per quarter and growing significantly month by month.

Q: How broad was the PDT benefit? Was it driven by a minority of clients or broadly spread? Will it keep climbing through the year?

A: Avg. client age has held around 34 for about a year, with new users visibly younger. Many do not know or care what PDT is, and the dynamics have shifted.A year ago, low-AUM clients avoided options and equities due to PDT and instead traded prediction markets or crypto to play momentum and in-and-out moves, essentially bypassing PDT. Splitting brokerage accounts was cumbersome, so they often chose other products.Now the constraint is gone. For new traders, options are often the first choice, because entry and exit are no longer limited.Contrasting traditional platforms: large incumbents of ~20 years do not prioritize these clients; they want big asset transfers to add another trillion to AUM. That is precisely Webull’s core segment and the path to trillion-level AUM over the long term.Engagement and daily actives are rising, with weekly traders becoming daily. As behavior evolves without PDT barriers, the climb should continue.

Q: Webull was among the first to implement PDT changes. Did that bring first-mover advantages and new clients, or was it an industry-wide uplift with little differentiation?

A: Media share during PDT changes was the strongest momentum in the firm’s history. Marketing may overstate, but Webull appeared in nearly 90% of articles discussing PDT removal, an unprecedented event-level exposure.This came from preparation — media work, behind-the-scenes education for journalists, and proactive client education before the rule took effect.First-mover advantage helped, but it was more a rising-tide dynamic. Even clients opening at a peer that does not target 25-year-olds trading $2.5k accounts can benefit from higher activity levels.

<End of text>

Risk disclosure and statement:Dolphin Research Disclaimer and General Disclosures