Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jiayin Group Inc (JFIN, Financial) achieved a loan facilitation volume of RMB24 billion in Q2 2024, exceeding previous guidance.
- Net revenue increased by 15.5% year over year to RMB1.476 billion, continuing healthy growth momentum.
- The company has integrated AI into several areas, including customer services and decision support, enhancing technological capabilities.
- Jiayin Group Inc (JFIN) established partnerships with 69 financial institutions and is in talks with an additional 35, expanding its network.
- The number of new borrowers reached 680,000, reflecting a 32.9% year over year growth, indicating strong future development potential.
Negative Points
- Net income for Q2 2024 decreased by 27% year over year to RMB238.3 million, indicating profitability challenges.
- Sales and marketing expenses increased by 15.7% year over year, primarily due to higher borrower acquisition costs.
- General and administrative expenses rose by 29.8% year over year, driven by increased payroll and share-based compensation.
- Research and development expenses increased by 36.3% year over year, reflecting higher employee compensation and benefits.
- The repeat borrowing rate dropped from 70.1% last year to 67.1%, indicating potential challenges in borrower retention.
Q & A Highlights
Q: Considering that the net revenue this quarter increased by 15.5% year over year, but the net income decreased by 27% and the operating costs and the sales and marketing expenses also increased. How does the management expect the take rate and the net margin to change in the future?
A: (Chunlin Fan, CFO) The decline in net income is primarily due to the structural difference in revenue, particularly the higher proportion of guaranteed business, which has lower margins. Additionally, strategic investments in borrower acquisition and R&D have increased costs. However, the company expects the profit margin to improve in the second half of the year as the proportion of guaranteed business declines and the benefits of these investments materialize.
Q: The company's second quarter loan facilitation volume was RMB24 billion, flat year over year and up RMB6.7 million quarter over quarter. Do you expect this growth rate to continue in the coming quarters or is there potential for it to accelerate in the future?
A: (Yifang Xu, Chief Risk Officer) The guidance for the third quarter is set at RMB25 billion, which is a challenging but achievable target. The company is cautiously optimistic about the economic environment and borrower demand. The focus will be on maintaining stable and slightly increasing growth while balancing risk management and market competition.
Q: The repeat borrowing rate this quarter dropped from 70.1% last year to 67.1%, while sales and marketing expense grew by 15.7% year over year. Does this indicate challenges in borrowing acquisition efficiency and retention under current market conditions? What targeted strategies has management implemented to retain existing borrowers, attract new ones, and optimize marketing spend?
A: (Yifang Xu, Chief Risk Officer) The decrease in repeat borrowing rate and increase in sales and marketing expenses reflect a strategic focus on acquiring new borrowers and reducing credit limits per borrower. The company has made structural adjustments to balance borrower acquisition and retention, aiming for stable facilitation volume and expanded borrower base.
Q: At the end of this quarter, the company's cash and cash equivalent position reached about RMB880 million, a significant increase compared to the previous quarter. How did the company achieve cash flow growth under the current macro-economic period? What are the main factors for the growth?
A: (Chunlin Fan, CFO) The improved cash flow is due to strong profitability and operating cash flow, as well as the release of funds from business model optimization and reduced guarantee business. The company plans to use the improved cash flow for sustainable business development, including overseas expansion, and to continue implementing dividend and share repurchase plans.
Q: What are the company's plans for leveraging AI technology in its operations?
A: (Dinggui Yan, CEO) The company has integrated AI into several areas, including customer services, internal communications, decision support, production monitoring, predictive maintenance, and personalized marketing. These advancements are part of the company's commitment to using technological innovation to drive business development.
Q: How is the company performing in its international markets, particularly in Indonesia, Mexico, and Nigeria?
A: (Dinggui Yan, CEO) The company has maintained healthy and stable growth in international markets. In Indonesia, loan size increased by 25% compared to the previous quarter. In Mexico, the focus is on improving business infrastructure and exploring long-term products. In Nigeria, business scale increased, and regulatory norms are expected to support healthy industry development.
Q: What are the company's ESG initiatives and how are they integrated into its business operations?
A: (Dinggui Yan, CEO) The company actively pursues technology empowerment, support for small and micro enterprises, employee care, environmental protection, and social welfare. The 2023 ESG report highlights efforts in educational support, youth mental health care, and volunteer services. The company aims to promote sustainable and high-quality development while taking on social responsibilities.
Q: What is the company's outlook for the second half of the year and its annual targets?
A: (Dinggui Yan, CEO) The company is confident in achieving its growth targets for the second half of the year. The guidance for the third quarter loan facilitation volume is set at approximately RMB25 billion. The company also announced a dividend distribution plan of USD0.5 per ADS, reflecting its commitment to enhancing shareholder value and reinforcing investor confidence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
