X Financial ((XYF)) has held its Q1 earnings call. Read on for the main highlights of the call.
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X Financial’s recent earnings call highlighted a robust financial performance, marked by significant growth in loan originations and revenue. The company demonstrated improved delinquency rates and operational efficiency, although there was a cautious note regarding potential regulatory impacts and slight upticks in delinquency rates. Overall, the positive aspects of the report significantly outweighed the concerns, indicating a favorable outlook for the company.
Strong Loan Origination Growth
X Financial reported a remarkable increase in loan originations, facilitating RMB35.15 billion in loans. This represents an 8.8% sequential increase and a staggering 63.4% year-over-year growth, underscoring solid borrower demand and the company’s ability to meet this demand effectively.
Revenue Surge
The company saw a surge in total revenue, reaching RMB1.94 billion. This marks a 13.4% increase from the previous quarter and over 60% year-over-year growth, driven primarily by higher borrower volumes and loan originations.
Improved Delinquency Rates
X Financial achieved significant improvements in its delinquency rates. The 31 to 60-day delinquency rate improved to 1.25%, a 22% improvement year-over-year, while the 91 to 180-day delinquency rate decreased to 2.7%, down from 4.7% in Q1 2024, marking a 37% reduction year-over-year.
Increased Operational Efficiency
The company’s income from operations increased by 52% year-over-year, showcasing improved operational leverage and disciplined expense management, contributing to overall financial health.
Strong Profitability Metrics
X Financial’s non-GAAP adjusted net income for Q1 reached RMB457 million, a 44.9% increase year-over-year. Additionally, basic earnings per ADS improved by approximately 45.6% year-over-year, reflecting strong profitability.
New Share Repurchase Plan
The company announced a new share repurchase plan, authorizing the buyback of up to $100 million worth of Class A shares and ADS, effective until November 30, 2026. This move signals confidence in its financial position and growth prospects.
Uptick in Delinquency Rates
Despite overall improvements, there was a slight uptick in delinquency rates, which were previously at a low level. This could potentially signal future increases, warranting close monitoring.
Regulatory Uncertainty
X Financial anticipates changes in the regulatory environment that could introduce compliance challenges and may affect loan pricing and operations moving forward, adding a layer of uncertainty to its future operations.
Forward-Looking Guidance
Looking ahead, X Financial provided optimistic guidance for the coming quarters. The company expects loan originations to range between RMB37.5 billion and RMB39.5 billion in Q2 2025, supported by improved operational efficiency and disciplined expense management. The announcement of a new share repurchase plan further reflects the company’s confidence in its financial position and growth prospects.
In conclusion, X Financial’s earnings call painted a positive picture of its financial health, with strong growth in loan originations and revenue, improved delinquency rates, and enhanced operational efficiency. While regulatory uncertainties and slight upticks in delinquency rates pose challenges, the overall sentiment remains optimistic, with the company well-positioned for future growth.