- Total Revenue: RMB71.5 billion, a 30% increase year-over-year.
- Total Loan Volume: RMB12.9 billion, up 59% year-over-year.
- Number of Borrowers Served: Increased by 47% year-over-year to 1.5 million.
- Monthly Active Users: Increased by 88% year-over-year to 4.5 million.
- Overseas Loan Volume: Nearly doubled in the second quarter of 2024 compared to the prior quarter.
- Customer Acquisition Costs: Decreased by 18% quarter-over-quarter.
- 15- to 89-Day Delinquency Rate: Declined to 3.8%, down 10 basis points.
- M1 Collection Rate: Increased by 290 basis points quarter-over-quarter.
- Funding Costs: Decreased by 82 basis points quarter-over-quarter.
- Gross Written Premiums: RMB1.1 billion, a year-over-year decrease of 20% and a quarter-over-quarter increase of 16%.
- Property Insurance Premiums: RMB557 million, a 19% increase from the previous quarter.
- GMV (Consumption and Lifestyle Services): RMB554.6 million, a 40% increase year-over-year.
- Sales and Marketing Expense: Increased by 21% year-over-year to RMB218.5 million.
- Research and Development Expense: Increased by 59% year-over-year.
- General and Administrative Costs: Increased by 8% year-over-year to RMB8.7 million.
- Allowance for Contract Assets and Receivables: RMB123 million, a 152% year-over-year increase.
- Net Income: Decreased by 22% year-over-year to RMB400 million.
- Net Cash from Operations: RMB369 million.
- Cash and Cash Equivalents: RMB25.5 billion as of the end of the quarter.
- Dividend: USD0.2 per American depository share, to be paid on or about October 15, 2024.
Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total loan volume reached RMB12.9 billion, marking a 59% increase year-over-year.
- Number of borrowers served increased by 47% year-over-year to 1.5 million.
- Monthly active users on the loan facilitation platform rose by 88% year-over-year to 4.5 million.
- Customer acquisition costs decreased by 18% quarter-over-quarter.
- The company announced a new dividend policy, with the first cash dividend set at USD0.2 per American depository share.
Negative Points
- Gross written premiums in the insurance brokerage business decreased by 20% year-over-year.
- Revenue from the insurance segment was down 77% year-over-year.
- Sales and marketing expenses increased by 21% year-over-year.
- Allowance for contract assets and receivables increased by 152% year-over-year.
- Net income decreased by 22% year-over-year.
Q & A Highlights
Q: Regarding your AI strategy, have there been any notable advancements in AI applications or research? Can you share more details about any specific investments in AI and any significant breakthroughs from your AI product commercialization?
A: Ning Tang, CEO: We use AI extensively in our operations, including customer acquisition, customer service, risk management, and asset management. Our proprietary large language models have been implemented across various operations, achieving significant enhancements in efficiency and accuracy. We are also exploring external opportunities to monetize these technologies through partnerships with fintech firms and financial institutions.
Q: Could you add some insight into the large second-quarter increase in net cash used in investing activities and net cash used in financing activities?
A: Na Mei, CFO: The increase in net cash used in investing activities is primarily due to our strategic investments in financial guaranty companies and other financial service businesses. This is part of our broader strategy to enhance our financial licenses and expand our service offerings. Regarding financing activities, the increase is related to our efforts to optimize our funding structure and support our growth initiatives.
Q: Where is most of the international business growth coming from?
A: Ning Tang, CEO: Our international business growth is primarily driven by our operations in the Philippines and Mexico. We are also looking to expand into other markets in Southeast Asia and other parts of the world. The growth is fueled by strong demand for convenient credit solutions in these regions, leveraging the capabilities we have developed in Mainland China.
Q: Can you provide more details on the current customer acquisition cost for your overseas business, particularly in the Philippines?
A: Na Mei, CFO: The current customer acquisition cost in the Philippines is around $5 to $10 per person. We expect this cost to increase slightly in the second half of the year as we ramp up our customer acquisition efforts to support our growth targets.
Q: Could you provide additional color on how the guaranteed contracts work in terms of sharing of credit risk and what that means for your return relative to the default rate on the underlying loans?
A: Ning Tang, CEO: Our guaranteed contracts involve sharing credit risk with our partners, which helps us manage and mitigate potential losses. The accounting for these provisions is designed to reflect the expected credit losses and is aligned with our overall risk management strategy. We can provide more detailed information in a follow-up call if needed.
Q: Are there any expected related party transactions coming up, particularly with CreditEase?
A: Ning Tang, CEO: We do not anticipate any substantial related party transactions similar to the one in 2019. Our focus remains on our core business operations and strategic growth initiatives.
Q: What is driving the growth in your overseas business, and what is your outlook for revenue generation from this segment?
A: Ning Tang, CEO: The growth in our overseas business is driven by strong demand for digital financial services in large, young populations in countries like the Philippines and Mexico. We expect to maintain a high growth rate in these markets and see significant revenue generation potential in the coming quarters.
Q: Can you share more details about the increase in R&D costs and how these funds are being utilized?
A: Ning Tang, CEO: Our R&D costs have increased due to our investments in developing proprietary AI models and purchasing necessary hardware and software. These investments are strategic and aimed at enhancing our technological capabilities to support future growth.
Q: What are the key areas of focus for your insurance brokerage business moving forward?
A: Ning Tang, CEO: We are focusing on strengthening channel partnerships, expanding the scale of property insurance, optimizing our product mix, and increasing the proportion of higher profitability products such as liability insurance. Additionally, we are enhancing online customer acquisition using AI tools to improve market outreach and boost sales volume.
Q: Can you provide more details on the new dividend policy and its expected impact on shareholder returns?
A: Ning Tang, CEO: The new dividend policy aims to declare dividends amounting to no less than 10% of the company's anticipated net income after tax for each half year. The cash dividend for the first half of 2024 is set at USD 0.2 per American depository share, expected to be paid on or about October 15, 2024. This policy is designed to enhance shareholder returns and boost market confidence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
