FinVolution (FINV) 16 May 242024 Q1 Earnings call transcript

Ladies and gentlemen, hello, and thank you for participating in the First Quarter 2024 Earnings Conference Call for FinVolution Group. [Operator Instructions] After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded.I will now turn the call over to your host, Jimmy Tan, Head of Investor Relations for the company. Jimmy, please go ahead.

Hello, everyone, and welcome to our first quarter 2024 earnings conference call. issued services were are today results online. posted company via earlier newswire and The

the and Chief prepared section with earnings the download Mr. with Li, can You release their Officer; Executive will alerts at Mr. and visiting start our website call Chief company's Xu, sign conclude by the Officer, our remarks IR our and of Jiayuan ir.finvgroup.com. Tiezheng measures to Q&A are to accordance Financial financial financial e-mail for a in considered up with presented this several performance. as operating the will call, not or prepared substitute a be measures and referring be review U.S. These session.During we to in financial GAAP. our isolation and information for assess non-GAAP the non-GAAP intended

these made to today's For Harbor the to continue, non-GAAP please refer release.Before reconciliation XXXX. statements earnings that provisions please Reform the note Private measures forward-looking measures, under and our contain Securities GAAP press Litigation we U.S. Act Safe of of will information discussion about

risks involve statements and Forward-looking uncertainties. inherent

such, with Exchange does be assume included from required the today. any filings to law. views expressed forward-looking uncertainties Securities U.S. these materially information company risks in company's may regarding As the Further are and applicable any update statements, company's different Commission. other results The and under the the and as obligation not except

slide the a our go details Mr. call IR sir. Please on post CEO, presentation now quarter.I to will ahead, for we turn our Li. Finally, Tiezheng website, our results over providing of the

Group. Tiezheng you This Li, FinVolution for of Thanks, joining Jimmy. our is thank Hello, call. everyone, CEO and earnings

Local in and April MX economic holidays, are Barring mind, data Indonesia execution to to during leveraging in signals macro continued Focus, efficiency has turned Outlook international Global our kicked negative a to There in XX happy been borrowers we consumption trends. Philippines environment, Outlook domestic more is to and are market. financial sending our speak across recent the strategy, will We mixed China, and Focus, million continue the but pickup of the technologies the with quarter Local our a We while the you Global the in of Philippines, economic today. China's growing such situation of rigorously. gradually, the served activities around line of increase on our year-over-year, macro of and off with XXXX strong closely progressing with monitor Indonesia while the have recovery by we operations.Driven China's the first XXXX. end strategy, as

balance our first XX% international as XX% RMB demonstrating in while ongoing year-over-year, in billion, strategic billion, quarter's operations facing strategy's up reached agility X.XX our to number contribution up and up its growth increasing international volume China overcome new second in year-over-year, up growth XX% borrowers flexibility. and by effective has billion, in opportunities outstanding billion, unique China stands expanded media markets of number capture volume Our expansion and drove X% steadily. transaction Driven feed of XX% continued leading market. our and been XX% last advertising contributed the in solid highlights information performance social Notably, Indonesia borrowers volume, challenge further progressive our borrowers.Transition balance increased borrowers.International RMB XX the for our RMB revenue well of its in investment by XX loan leveraged business effectiveness total new different represented X.X% X.XX year-over-year. outstanding deep markets. market, RMB reflecting since XX% in growth China experience our to year-over-year, technologies, our reached of as year-over-year from driver worst to our the countries. delivered we increased unique strategy, up as year-over-year, quarter around volume potential transaction in our while accounting our loan borrowers of ability International XX% Meanwhile, the for new Transaction

first reached and up million, business revenue. RMB quarter, XXX period last of the from same XX% revenue from representing the For international year total XX%

Going to believe strengthen territories. revenue this forward, into existing as our will increase segment's markets continue we contribution to we new expanded and

investment produced world's drive continue We XXXX. extensive also top February, technology and on global our In Conference first reach of an academic front through which in with a with self-developed which used the [ human efficiencies selected Annual increases ongoing programmer's quarter AAAI called auto software revision were our for technology Language intelligence Models, and detection just artificial to our Artificial one It Large the of make institutions frequently progress of the X-coder leading X on papers, of codes, XX%.Through collaboration acceptance in auto bug XXth the conferences error. reduce greatly Intelligence, proprietary we have ].

related to awareness leveraged international advertising our to markets reducing of in advertising, increase efficiency, XX% for resonates our while streamline AIGC producing and social on content popular AI more than have expand advertising with Instagram. a our Facebook, influence and video costs. and precise our vivid such utilized brand market and borrowers We target costs that also note, On TikTok channels, with media we video as content

and XXX,XXX on Our those respectively. followers reached XXX,XXX X.X sites, million,

the and We will up our commitment up continue core XX% XXXX, we and respectively, welfare by the of XX%, financial billion to sometimes loans for XX up, wrap In economy viewers more most first backbone with total additional with online strides ongoing of deep small over update a and leveraging flow public summary, the provide efforts. increased improving farmers' livestream XX%, of our ESG our and I our small to first positive collaboration dedication X,XXX support year-over-year.Before RMB has through of our for million Global business facilitating and we quarter weightlifting steady at vision owners efficiency. incomes agriculture initiative to owners, inclusion, recovery. loans increasing brief of the sustainable created the made on our the a X Firm inclusion, innovation technologies in year-over-year. of during of with line and During on execution tech national made our with Furthermore, we business first aimed the facilitated Outlook of bolstering This progress transactions.In products long-term financial quarter, program gradual livelihood Local China's farmers' Focus, team. quarter's attracted gradual XX% than growth. strategy,

turn accessibility committed Jiayuan as I Xu that, create who will CFO, to call to our remain the throughout fostering and services borrowers financial now discuss for We region.With operational will and to stakeholders the we and financial value deliver Pan-Asian better technology our inclusion, results. the will

and you, our to Li, everyone. call. Thank hello, earnings XXXX quarter Welcome first

levels. month. quarter. reaching activity China's earnings recovery few by further points, Composite are to the manufacturing points for for quarter. length XX.X compared previous reach our expansion the mentioned, go coupled recent press the to up month the over of with spots up over and operational year PMI to the our economic China's are XX.X earnings in boosting outpacing In X Let's respectively.All overall for the activities improved an XX the results to Confidence hovering months activities. To Non-manufacturing X.X China's expanded enterprise of points points index that with The be time slower-than-expected GDP X.X first expanded our by points, call today, trend. X.X during with in and March, X Consumer period month last points, the quarter still X.X% Index manufacturing release first acceleration data I China's month, first through March, refer the same to PMI key indicating mindful the a details.As rose in listeners quarter encourage in but to first holidays to bright PMI low within relatively macro economic our reflect X.X% range, compared we and the XX.X at production

mentioned, As in in annual China towards growth small the reflecting market our transaction grew with increase volume commitment number new progressive an China's XX% the year-over-year borrowers, of in market. we

our rate towards boosted This stable improving presence additional financial facilitating XX our loans partners with bps borrowers, better inclusion.Stabilizing economy an by borrowing basis. we funding broad a our on and of quarter average partners' number cost the the Our commitment XX.X%, quality institutions in funding our funding confidence reputation IRR base, for reliability, cumulative to at remained grew first for coupled strong validating in during China's recovery quarter. our XXX quarterly

great to insurance strides continuous Looking in diversify are the made ABS optimization forward, Furthermore, our achieving the of rest in source. year. throughout our will we have funding we further costs which initiative, confident funding our

loan our XX%.Turning the expect X.X% rate of strategy. X we now stood Meanwhile, we our recent stable towards risk, first through quarter. the X.X% to fourth quarter our a Day end at remain delinquency of in expansion. an to collection delivery Loan range improvement healthy shift the at drove to a for in April international vintage Regarding recovery our collection

In March a Sales transportation for of increased Our years, crucial in growth strong investment.Furthermore, quarter, with XX the international in quarter points. XX.X markets all over domestic month-over-month economy remained X% means Indonesia's across points increase our exceeded X.X% expansion borrowers in first of Indonesia primary by markets in during of a which X units. market for X.X% second increasing increased our reach we zone. Indonesia, in number driven operate. resilient in has our driver X.X another financial March robust international the motorcycles, XXXX, X.X XXX,XXX by to inclusion and points growth to PMI consistently and PMI consumption million, XXXX, above XXXX In cumulative the the of commitment promoting position remains GDP indicating to past reflecting to the the in first further of the

our to posted well-proven operation quality to market, interest by and are share challenges China recent overcome borrowers in that We the transition in in glad adjustments. bad the Indonesia the have leveraging largely our technologies rate also by experience

of international developments continue to actively year XXXX. accordingly.In will a our refine to for X% Philippines, regulatory monitor second full X% the operations market, rate GDP our and government the growth has forecast between We

XX% as well number grew a new as while diversified additional XXX% results highlight borrowers international unemployment support XXXX. our through months of in overseas low previous XX% been markets stickiness XXX,XXX, for X% translatory growth remained to operations year-over-year the transaction markets. quarter XXXX, All and in international further by general regional quarter This sequentially, These and entered X.XXX awareness.Notably, index reached household year-over-year, acquire widely in accelerating Philippines first while boosted year-over-year. our X.XX ] ability in Union such partners performance borrowers transaction markets with the metrics in billion. XXXX. in As up to balance PMI and our remained expectations SeaBank with outstanding these the XX% [ Philippines were Notably, have volume. unique international to on has the remained consumption reputable contributing consumption SeaBank the rate year-over-year quarter. loan our has of X.X% channels year-over-year market.Overall, to facilitate XX% social expansion local This macro strong into billion, at continued March up X.X% momentum local grew Bank. of X fourth XXX,XXX, with the funding we of volume loans a new for positive international XX% with in in media grew zone consecutive up to of our the recognized XX% borrowers' the borrowers financial outperform our as RMB platform for growth institutions, Transaction outstanding to markets solid attracting volume collaboration RMB performance both in Number

financial from and Our country nearly enhances in facility PHP alone facilitating our greatly Philippines the totaled the promote these inclusion. million, partners efforts presence our credit to X in XXX

we continue to ahead, Looking the confident to to inclusion advance institutions the in will country. reputable are drive financial we financial quest in attract

regulators, quarter strengthen partners in As by bigger revenues billion, our turning year-over-year. RMB financial business.Now, Global X% will grew Outlook from net and X.XX presence the operation Philippines our for Driven to total first international execution of recognition Philippines Focus, role local the gain strong up we believe our to metrics. we in strategy, our greater assume our a our the and Local

RMB international million, was of as reflecting to RMB expense Meanwhile, increase XXX industry million, and operating increased strengthen increased have our an acquire achieved to leveraging operational to X.X%. we and the both ROA XXX marketing an quarter-over-quarter, Our year-over-year continued our by borrowers of efficiency. efforts sales industry China above our unparalleled we net and in income expertise efficiency, new X% XX% markets.Furthermore,

divided Our ratio by macroeconomy leverage loans at risk-bearing opportunities for defined Xx, shareholders' remains equity as growth reflecting stable normalize. when

year new RMB program. cash well our consisting our growth, reflecting of business total ago, up return value XX% exploration Our investments X.X update return liquidity billion, our capital brief plus from is to on reached short-term a position sheet opportunities to and a that cash a of and balance shareholders.Finally, consistently able support equivalents robust

to prepared total the of secondary have to of shareholders. over reiterated the million and commitment XXX part its deployed since billion first X.X our the range As transaction around to repurchase our to my in the around XX for sustainable RMB RMB to XXXX to XX consistently XX%. volume a to the representing shares to year of on capital representing guidance company X% XX% time, returned billion market of USD of quarter shareholders, for the year-over-year return shareholders growth market. our At to of our our full value XXX XXXX market RMB program Cumulatively, we billion, RMB in concludes our company consistent growth XXX.X China XXXX, its demonstrating USD transaction in volume The its international remarks. the same XX%.That through year-over-year million commitment to expects full-year billion, we be of return range

please will the continue. the questions. now We call open to Operator,

comes Your from Apologies. first question Instructions] Chong. [Operator Thomas

Yada question first CICC. Your from Li from comes

will [Foreign as international regions, the the view Hello, the profit outlook was regulation, Language] do translation. have one about different Philippines forward. such And the X is going to in and I the today. and how management. wondering I I Then competition Indonesia market branches. questions first

and the quality of overseas consideration, and trend take Secondly, for profit the trend we into view rate take the if the year future? to profit how this potential asset and

[Foreign Language]

this is Jimmy. Yada,

translation the you Let do first. me for

Okay.

For the do an right, recap overall first us question, the market international let situation. on

reaching Philippines experience operations. for years international been operation have international been our we the over level X I cumulative XX% and is doing total years. numbers driver.And growth revenue X of XX% million, have group's exceeded CAGR growth has the total, at representing borrowers revenue XX XX doing of total with over been second of segment level. growing We registered past international in in representing for business confirmed have business XX% and Indonesia of at million, the CAGR we group the This users group also as in this over months a been years And borrowers' market rates. you on of very contribution our earlier we X And with model know, in data as of market, have adjustment has operations. borrowing adjustment, that revenue would say XXX% achieve reached growth business this strategy quickly from has the and cohorts, optimized year there cap X the and years stable -- after with X to XXX% also for for

XX% what And rate our to to similar our in over small XXXX we of and seen this acquisitions to and take with The have around has XX% is we of funding borrowers' local data business ]. customer rate, take XX% also financial for to expect our X. the ticket respectively. cohort acquisition realize average institutions repeat by in maintain to we most our size midsized before efforts XX%. the by strong Indonesia and the millions tens borrowers we pricing and X.X%, by of -- reducing And -- this borrowers' rates our importantly, partners Our quality recognized [ And our increasing and platforms cohort perspective, are up managed borrowing a credit are our from profits adjustment. And in have been take conversion line increasing increased we After numbers basis. cost coming risk rate reduce and increased higher-quality with performance acquisition rate. to sequential in XX% improved number on confident by XXXX, adjustment, the approved

[Foreign Language]

reached in market, Yada, second international expected growth and coming The up is to XX% Transaction Philippines XX% total the quarter XXX our been in and has volume stable market. representing relatively volume be growth to rapid. quarter sequentially, our the in in as double-digit first quarter well. million, is XXX% first regulations in the year-over-year Philippines of RMB

Union be attracted to have in our over are funding Philippines. as to such PHP momentum And we financial partners reputable going continue our confident and the We million. XXX SeaBank forward, Bank institutions also of rapid

[Foreign Language]

Yada, for the well. question me let do translation as this

going there bps the quarter first for some slightly And lease in the in to have the similar why quarter. second since have the been -- previous we around continue. has adjustment. have price situation And market, we Although forward, quarter, of XX%, in that And rate in this a rate last X% to prior for our can is China you our but take improvement X.X% trend XX the cost has Indonesia been take to fluctuation huge the this a year, current stabilized. also funding to the the expect to from in level has And market, returned improved has in our what our it of quarter. see

Thank you, Yada.

Thank you.

next Chong Jefferies. comes from from Your question Thomas

operational improve is quality about efficiency? how question technology can and My asset

Language] [Foreign

Thomas, the translation investment let and the CEO. throughout the Technology FinVolution me we do year. consistent is technology remained in have of our for core

Okay, invested billion nearly for example, our we XXXX. R&D establishment investment cumulative have of a X consistently R&D RMB with since in since

than this these and by experts XXXX, X pre-COVID and customer generated in involving R&D established period first our now built and XX% of to video about have has have Masters AI. with relationship of technology degrees. example, percentage of the the acquisitions, a of a billions billion long-term additionally, of bit investments. XXX,XXX we And data iterations, quarter XXX improvements the academic that during through over per benefits our And in of content of more operations year-over-year feeds our for revenue terms was we video We universities. over a have strategies we in and RMB us. reduced information our the first user invested is accumulations by during and have achieved alone, And to more our our XX% employee costs also the Doctor And supported COVID, be of X.X% collaborations operating And while have growth expenses And production with have labor X.X%. leading X we And internal expect been or to efficiency. And holding G&A been all revenue can terms X.X%. our around in G&A back-end year-over-year achieved as our quarter are our thereby revenue efficiency, the deploying expenses in these through optimized as operations of increased percentage in have tech growth we average cost-wise, a revenue with XX%. of optimizing X%, technologies.For our

Thank you.

Your question Alex UBS. comes from next Ye from

I for revision, new to domestic our have repeat was wondering the -- Language] noticed seen new has that the customer [Foreign price by I'm about on target? basis. that, year-on-year borrowers appeared the in April year a do have in that mainly was full and ratio driven credit QX declined our and we business, for how been related weakened or borrower trend commercial So, the all mainly credit think going business implication and you the demand that any to our demand? has How forward? from liquidity outlook approval And for May? And domestic

[Foreign Language]

Jimmy. is this Alex,

do ]. [ me translation Let the Ti for

Okay.

rebound with presents growth let tap and along manufacturing that us in X.X% a with of PMI. in credit the in. First macro and between export improvement we first China the economy China GDP situation are micro the all, complex a economy industry quarter

second decrease in I rather the And consumer counter still factors was with This assessment with risk rates increased rare when a to the and a the note have earlier. quarter to entering And macro and MX under such social we quarter, model implemented remained XXXX along operate, seasonal recovery the Chinese the and have by macro we fluctuate and as confidence. credit mixed environment stability but first However, relatively of stable relatively is the retail also and contraction we mid-teens [indiscernible] slightly this enhancing changes approval due which observed metrics. seen risk half complex financing and demand there below of was is also quarter, do our that strategies sales for first by overall a in expectation.And FinVolution has signal. in from in patterning ensure our overall, risk the stable risk various these our the in complex industry, environment, social validated that demand the second to

while XX%.And a As vintage bps at seen has sequential rate delinquency Alexis delinquency X.X% our loan decline efficiencies, Day in and X.X%, has decreased customer our earlier, us our dual XX funding these X% maintained decline And with recovery in compared introduced at we way operational of X stable technology rate take have of acquisition costs effect by year-over-year leveraging collection measures and at our a funding X%. stable G&A cost, the were year-over-year. by optimized last rate costs enable XX% a achieve XXX expenses bps while to of of to And quarter. all also was

Our customer focus led customers on repeat in-depth stable acquisitions, consistent business growth. investment to has in a with

to industry platform example, some rates.And for maintained economy on of our for our in tightening as facilitated borrowers XX% elevating have funding cost looking years and X the over and borrowers, loans XX% fluctuating challenges repeat opportunities For well, ahead China a and level these and were our demand focus but measures effectively improvement all also approval funding has and by XXXX, maintain some than we in environment. our more the of implemented, still our confident are macro healthy amidst And efficiencies with stabilization seen borrowers. challenging the as growth enhancing we of such cost that have repeat we also on of a on risk, have

you. Thank

from comes Han next from Your Jianan Nomura. question

And in additionally, we increase on second the plan does provide XQ. color more company value? operating shareholder details more this have in increase translate to cash? program. in Also, could And the me Let to the you you the mean observed share give does question, how question. Language] regarding Like to my it efficiency? a cash increase an new first the the of repurchase process? future the plan current on Could question us For [Foreign further use

[Foreign Language]

still the increased year Han, shareholders. the been do the for payout compared around and was net for first and Xx XX% share XXX in doing share and returned translation. And represent going quarter, combination of repurchase have will for the our RMB and and income. around around million XX consistently growth for forward, share for dividend, deployed quota. continue RMB our completed XX.X million around for of and XX XXXX, share capital ratio repurchase XXX shareholders XX% around our our it which also distribution for me And buyback million have high-quality through we we return RMB have in by we And value of coupled dividend year our have total and our leading create we buybacks. we program RMB purchase million, of million And our the last to X XX%. let years to USD And last through long-term dividends have program a of with a

[Foreign Language]

Alexis. for translation the do me let Han,

Okay.

international group for to of development we cash been need especially very business sufficient First our ensure of all, has the business, our rapid.

is healthy Indonesia adjustment local when which markets that there after more healthy shareholders, a delivering we licenses, fast in and And share to business. confident licenses, of maintain at is are the cap is we Our information Philippines significant And achieved have USD is whereas growing a our market progress very all momentum. to also have around right, back intend over cap coming last half more X return we we has of to growth XXX local maintained we to take concrete current in years, have the terms rates, will high-quality our in our our cumulatively and business, more our while shareholders available. million returned

Thank Han. you,

at like questions you. the turn back closing no management over Thank There to remarks. further for call to I'd time. are this

again on once conference you Thank for our joining us call.

please any If FinVolution you, free you team. Thank contact further Relations everybody. have Group to Investor feel questions,

conclude today. our does for conference This call

you. lines. You now may disconnect your Thank