- Revenue: RMB4.16 billion, a 6.3% year-over-year increase.
- Net Take Rate: Increased by over 1 percentage point year-over-year to approximately 4.4%.
- Non-GAAP Net Income: RMB1.41 billion, a 23% year-over-year increase.
- Non-GAAP Net Income per Diluted ADS: RMB9.16, a 32% year-over-year increase.
- Return on Equity (ROE): 25.4% for Q2.
- ABS Issuance: RMB4.6 billion in Q2, a 30% increase compared to the same period last year.
- Funding Costs: Decreased by 56 basis points sequentially, totaling a 132 basis points decrease for the first half of the year.
- Day 1 Delinquency Rate: Decreased by 10 basis points.
- 30-Day Collection Rate: Increased by around 1.2 percentage points sequentially.
- Sales and Marketing Expenses: Decreased 12% quarter-on-quarter and 16% year-on-year.
- 90-Day Delinquency Rate: 3.4% in Q2.
- Provision Coverage Ratio: 421% in Q2 compared to 414% in Q1.
- Cash from Operations: RMB1.96 billion in Q2.
- Total Cash and Cash Equivalents: RMB8.5 billion in Q2.
- Dividend: USD0.30 per Class A ordinary share, or USD0.60 per ADS for the first half of 2024.
- Share Repurchase: Approximately 10.7 million ADSs purchased for USD211 million under the 2024 repurchase plan.
- Loan Volume from Technology Solutions: RMB22.56 billion facilitated in Q2.
- Non-GAAP Net Income Outlook for Q3 2024: Expected between RMB1.55 billion and RMB1.65 billion, representing a year-on-year growth between 31% and 40%.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Qifu Technology Inc (QFIN, Financial) achieved a 6.3% year-over-year revenue increase to RMB4.16 billion in Q2 2024.
- Non-GAAP net income increased by 23% year-over-year to RMB1.41 billion, with non-GAAP net income per diluted ADS rising by 32% year-over-year to RMB9.16.
- The company recorded the highest quarterly profit over the past 11 quarters, demonstrating strong business resilience.
- Asset quality improved with a decrease in Day-1 delinquency rate by 10 basis points and an increase in the 30-day collection rate by 1.2 percentage points sequentially.
- Qifu Technology Inc (QFIN) maintained a strong cash position with total cash and cash equivalents of RMB8.5 billion in Q2, up from RMB8.3 billion in Q1.
Negative Points
- Revenue from credit-driven services (capital-heavy) decreased from RMB3.02 billion in Q1 to RMB2.91 billion in Q2.
- Sales and marketing expenses decreased by 12% quarter-on-quarter and 16% year-on-year, indicating a reduction in user acquisition efforts.
- The 90-day delinquency rate was 3.4% in Q2, which was mathematically inflated by roughly 18% due to a reduction in the total outstanding balance of loans.
- The effective tax rate for Q2 was 33.1%, significantly higher than the typical rate of approximately 15%, due to a large withholding tax provision.
- The company decided to gradually discontinue certain technology solutions services by the end of 2024 due to marginal returns, which may impact future revenue streams.
Q & A Highlights
Q: What are the expectations for loan volume growth in the second half of 2024 and 2025, and any expected changes in take rate?
A: We expect loan volume to grow in the second half of the year due to stable credit demand, improved risk metrics, diversified customer acquisition channels, and enhanced platform strategy. The take rate in Q3 may not be at a normal level due to declining credit and funding costs, better monetization through our platform strategy, and an increased proportion of asset-light business models. Long-term, a sustainable take rate of 4% to 4.5% is expected.
Q: What are the main considerations behind Mr. Zhou Hongyi's resignation as Chairman and Director, and will it impact the company's operations?
A: Mr. Zhou resigned due to personal reasons and believes the company has matured and can develop independently. His resignation will not impact daily operations as he was not involved in them. He remains confident in the company's long-term development and will continue to provide strategic insights.
Q: Why has the company accelerated the pace of share buybacks, and will this pace continue for the rest of the year?
A: The accelerated buybacks are due to the challenging macro environment and undervaluation of the company's stock, aiming to create additional EPS accretion. The company will continue to execute the repurchase program based on market conditions and may complete it ahead of schedule if undervaluation persists.
Q: What are the main reasons for the decline in average funding costs, and how much room is there for further decreases?
A: The decline in funding costs is driven by reduced costs for capital-heavy loan facilitation, lower ABS costs, and a slight increase in ABS proportion. Funding costs are expected to remain stable with limited room for further reduction.
Q: What are the main reasons for the stabilization and improvement in asset quality, and how will this trend impact credit costs?
A: Asset quality improved due to cautious new loan origination, optimized asset and funding matching, and enhanced post-loan operations. The second half of the year is expected to see better risk performance, leading to optimized credit costs and a stable trend.
Q: What is the management's view on the pace of customer acquisition in the second half of the year?
A: The company may accelerate customer acquisition in the second half due to improved profitability and diversified acquisition channels. The focus will be on quality loan growth rather than just volume, aiming for overall business health improvement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
