Qifu Technology, Inc ((QFIN)) has held its Q4 earnings call. Read on for the main highlights of the call.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Qifu Technology’s latest earnings call painted a cautious picture, mixing operational resilience with mounting near‑term pressure. Management highlighted stable full‑year loan volumes, rapid growth in technology solutions and strong capital returns, yet stressed sharp Q4 profit declines, weaker revenue, rising delinquencies and a notably downbeat outlook for early 2026.
Full‑Year Volume Holds Up Amid Industry Stress
Qifu’s platform facilitated and originated RMB 327.1 billion of loans in 2025, up 1.6% year on year despite a difficult credit environment. The modest growth underscores the franchise’s ability to sustain throughput even as regulatory changes and weaker demand weighed on peers.
Platform Scale and Institutional Reach Deepen
By year‑end 2025, the company served 167 financial institutions and had delivered digital credit services to over 63 million cumulative credit line users. This scale reinforces Qifu’s position as a major distribution and risk‑management partner for banks across China’s consumer finance ecosystem.
Technology Solutions Becomes a Growth Engine
Technology Solutions was the clear standout, with loan volume surging about 448% year on year in 2025 and the outstanding balance nearing RMB 11.7 billion. Management said bank‑focused products such as Focus Pro and enhanced AI capabilities are driving adoption, validating the strategy to lean into tech‑driven, partner‑centric lending.
ABS Funding Expands as Costs Hit Historic Lows
Asset‑backed securities issuance rose 40.8% in 2025 to RMB 21.4 billion, even as average issuance costs dropped by 72 basis points. Overall funding cost fell a further 20 basis points from Q3 to a historical low, giving Qifu some cushion to navigate declining loan pricing and tighter risk standards.
New Vintages Show Early Risk Improvement
Risk metrics for recent originations are trending better, with FPD30 for new loans down about 18% sequentially in Q4 and December vintages near two‑year lows. January brought further gains, with FPD7 improving roughly 10% and C2M2 down 8.2% month on month, suggesting underwriting and collections tweaks are working at the margin.
Shareholder Returns Take Center Stage
Qifu leaned heavily on capital returns, distributing about USD 200 million in dividends and repurchasing roughly USD 680 million of stock in 2025. The buybacks equate to about 21.1 million ADSs in 2025 and around 25.4% of the starting share count since early 2024, signaling management’s confidence in long‑term value despite short‑term earnings pressure.
EPADS Rises on Accretive Buybacks
Non‑GAAP EPADS for 2025 climbed 10.4% year on year to RMB 46.8, even as operating trends softened. The increase reflects strong per‑share accretion from aggressive repurchases, partially offsetting weaker profitability at the headline level.
Solid Operational Cash Flow Supports Deleveraging
The company generated CNY 3.15 billion of cash from operations in Q4, up from CNY 2.5 billion in Q3, underpinning liquidity during a volatile period. This cash generation provides flexibility for debt reduction, continued investment in technology and selective capital returns.
Q4 Loan Volumes Slide on Regulatory Tightening
Against the full‑year stability, Q4 proved challenging as total loan volume dropped 21.8% year on year to RMB 70.3 billion. Management attributed the contraction to tighter market liquidity and regulatory changes, which constrained origination and pushed Qifu to prioritize quality over growth.
Profits Hit Hard in the Fourth Quarter
Non‑GAAP net income in Q4 fell 45.7% year on year to RMB 1.07 billion, while fully diluted non‑GAAP EPADS dropped 39.8% to RMB 8.23. Lower volumes, higher costs and deleveraging combined to compress margins, underscoring the earnings vulnerability during the transition to a more conservative risk posture.
Revenue Weakness and Capital‑Light Slowdown
Total net revenue in Q4 fell to CNY 4.09 billion from CNY 5.21 billion in Q3 and CNY 4.48 billion a year earlier. Platform, or capital‑light, revenue was hit particularly hard, sliding to CNY 660 million from CNY 1.34 billion in Q3 and CNY 1.59 billion a year ago as partner activity and take rates declined.
ICE Take Rate and Volume Under Intense Pressure
ICE‑related referral and service fee income plunged, with ICE revenue down about 85% quarter on quarter and loan volume off roughly 41%. The operational take rate slipped slightly below 3% in Q4, and reported take rate of 3.5% relied on one‑off items, while average loan IRR compressed by about 140–150 basis points.
Delinquencies Worsen in Legacy Portfolios
Headline risk metrics deteriorated in Q4, with the 90‑day delinquency ratio rising to 2.71% from 2.09% and Day‑1 delinquency increasing to 6.1% from 5.5%. C‑M2 climbed to 0.97%, the highest since 2020, reflecting mounting stress in older vintages even as newer loans show improving behavior.
Provisioning Remains High but Volatile
New provisions for risk‑bearing loans reached CNY 1.92 billion in Q4, down from CNY 2.58 billion in Q3 largely because risk‑bearing volumes fell. Write‑backs dropped sharply to CNY 274 million from CNY 785 million, and while the provision coverage ratio remained elevated at about 481%, it eased sequentially, pointing to ongoing uncertainty.
Liquidity Shrinks as Funding Challenges Persist
Cash, cash equivalents and short‑term investments declined to CNY 10.72 billion in Q4 from CNY 14.35 billion in Q3. Management acknowledged continued funding challenges and warned of potential short‑term volatility in ABS issuance and funding costs amid regulatory and market shifts.
Pivot Toward Capital‑Light Model to De‑Risk
Qifu plans to push further into capital‑light operations in 2026 to preserve balance‑sheet flexibility and reduce risk. While capital‑light business represented about 44% of 2025 loan volume and is expected to rise, management conceded that this shift will likely pressure take rates and near‑term revenue versus historically higher‑margin, capital‑heavy periods.
Forward Guidance Highlights Earnings and Funding Headwinds
For Q1 2026, Qifu guided non‑GAAP net income to RMB 900–950 million, implying a steep 51–53% year‑on‑year decline and signaling extended earnings pressure. Management aims to hold operational take rates near 3% if regulations stabilize, while diversifying funding and emphasizing higher‑quality users, but also cautioned that ABS issuance and funding costs could remain volatile.
Qifu’s earnings call offered a nuanced story of structural strengths meeting cyclical and regulatory headwinds. Investors heard evidence of scale, technology‑driven growth and robust capital returns, but also of weakening Q4 economics, rising delinquencies and a soft 2026 start, suggesting that risk control and funding stability will be the key drivers of the next leg for the stock.