Qifu Technology, Inc ((QFIN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Qifu Technology, Inc. presented a balanced sentiment, highlighting significant achievements alongside challenges. The company reported notable growth in loan facilitation volume, non-GAAP net income, and ABS issuance. However, it also acknowledged the challenges posed by regulatory uncertainties and increased provisions for risk-bearing loans. Strategic advancements in AI and international expansion were also key points of discussion, despite facing economic headwinds and regulatory impacts.
Increase in Loan Facilitation and Origination Volume
The company reported a 16% year-over-year increase in total loan facilitation and origination volume, reaching RMB 84.6 billion. This growth underscores the company’s robust performance in expanding its lending operations.
Growth in Non-GAAP Net Income
Qifu Technology, Inc. achieved a 30.8% year-over-year increase in non-GAAP net income, amounting to RMB 1.85 billion. Additionally, the non-GAAP EPADS on a fully diluted basis rose by 48.8% to RMB 13.63, reflecting strong profitability.
Expansion in ABS Issuance
The company saw a significant 70% year-over-year increase in ABS issuance, reaching approximately RMB 7.8 billion during the quarter. This figure nearly matches the full-year total anticipated for 2024, indicating strong growth in this area.
User Growth and Decreased Acquisition Costs
There was a 40% year-over-year growth in total new credit line users, reaching 1.79 million. Moreover, the average cost per credit line user decreased slightly, showcasing improved efficiency in user acquisition.
Advancements in AI and Risk Management
Qifu Technology, Inc. made significant advancements in AI-powered risk decisioning and user profile enhancements. The integration of 670 models and over 100 million historical decisions highlights their commitment to leveraging technology for risk management.
Overseas Expansion
The company launched small-scale operations in the U.K., which have shown healthy performance across key metrics. This move marks a strategic step in their international expansion efforts.
Regulatory and Economic Uncertainties
Persistent economic uncertainties and regulatory updates are influencing market dynamics and risk management strategies. The company is navigating these challenges while maintaining its strategic focus.
Increase in Provision for Risk-bearing Loans
New provisions for risk-bearing loans in Q2 amounted to approximately CNY 2.5 billion. This increase reflects a higher volume of risk-bearing loans and a near historical high provision booking ratio.
Slight Increase in Delinquency Rates
There was a slight increase in delinquency rates, with Day 1 delinquency at 5.1% in Q2 compared to 5.0% in Q1. The C2M2 metric also increased modestly quarter-on-quarter to 0.64%.
Impact of New Regulations on Business Mix
The new regulation effective from October 1 could lead to volatility in take rates and necessitate adjustments in the business mix. The company is preparing to adapt to these changes.
Forward-looking Guidance
Qifu Technology, Inc. provided detailed guidance for the upcoming quarters. They project a non-GAAP net income between RMB 1.6 billion and RMB 1.8 billion for Q3 2025, reflecting a cautious approach amid regulatory changes. The company emphasized its strategic focus on prudent operations, AI-driven innovations, and global expansion, including new operations in the U.K.
In summary, Qifu Technology, Inc.’s earnings call highlighted a balanced view of their achievements and challenges. The company demonstrated strong growth in key areas such as loan facilitation, non-GAAP net income, and ABS issuance, while also addressing the challenges posed by regulatory uncertainties and increased provisions for risk-bearing loans. Their strategic advancements in AI and international expansion efforts are noteworthy, setting the stage for future growth.