Lexinfintech Reports Record Profits Amid Strategic Growth

Lexinfintech ((LX)) has held its Q1 earnings call. Read on for the main highlights of the call.

Lexinfintech’s recent earnings call painted a picture of robust financial health, marked by significant profit growth and strategic expansions. The company showcased improved risk management and a focus on e-commerce and overseas operations. However, these positive strides were tempered by declines in lending-related and e-commerce platform revenues, attributed to strategic shifts and prevailing market conditions.

Record GAAP Net Profit

Lexinfintech reported a record GAAP net profit of CNY 430 million, marking the highest in 13 quarters. This impressive figure represents an 18.6% growth quarter-over-quarter and a staggering 113% increase year-over-year, underscoring the company’s strong financial performance.

E-commerce GMV Growth

The company saw a significant boost in its e-commerce segment, with the approval rate of installment applications driving a 16.2% increase in GMV. This growth highlights Lexinfintech’s successful strategies in enhancing its e-commerce offerings.

Overseas Business Profitability

Lexinfintech’s overseas operations turned profitable, aided by a 19% reduction in customer acquisition costs quarter-over-quarter. This milestone reflects the company’s effective cost management and strategic international expansion.

Improved Net Income Margin

The net income margin saw a notable improvement, rising from 9.9% to 13.9%. This increase indicates enhanced operational efficiency and profitability.

Enhanced Risk Management

The company reported a decrease in its Day 1 delinquency ratio by about 11% and a 9% reduction in the 90 days delinquency ratio quarter-over-quarter, showcasing its strengthened risk management practices.

Increased Dividend Payout Ratio

In a move to reward shareholders, Lexinfintech’s Board approved an increase in the dividend payout ratio to 30% of net profit, effective from the second half of 2025, reflecting confidence in the company’s ongoing profitability.

Decline in Lending-Related Revenue

Despite the overall positive financial performance, Lexinfintech experienced a 15% quarter-over-quarter decline in lending-related revenue. This was due to lower APR, increased early payoffs, and a shift in GMV volume to a capital-light model.

Installment E-commerce Revenue Decline

The installment e-commerce platform service income decreased by 16.4%, attributed to changes in the structural volume mix. This decline highlights the challenges faced in adapting to market dynamics.

Forward-Looking Guidance

Looking ahead, Lexinfintech remains optimistic about its growth trajectory. The company reaffirmed its full-year 2025 profit guidance, anticipating substantial year-over-year growth. With a record GAAP net profit and a rise in net income margin, Lexinfintech is poised for continued success. The increase in the dividend payout ratio further underscores the company’s commitment to delivering value to its shareholders.

In conclusion, Lexinfintech’s earnings call reflected a positive sentiment, driven by record profits and strategic growth initiatives. While challenges remain in certain revenue streams, the company’s robust financial performance and forward-looking strategies position it well for future success.