X Financial (XYF) 17 Nov 222022 Q3 Earnings call transcript

Hello, and welcome to the X Financial Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Victoria Yu. Please go ahead.

operator. you, Thank thank and joining today. us Hello, you everyone, for earlier are at available The Company's the and released were website results on today Company's ir.xiaoyinggroup.com. IR

and of Mr. Company's It result Mr. Li, introduce law. any new Company Securities my under difficult factors information, achievements obligation otherwise, I questions to Kan risks, to business the and session. Frank will other cause the Li. filings with financials. regarding this call events Financial as statements. statements of and may give unknown and Litigation and information Officer. events Zhang, during a actual the performance factors, Q&A from market from now predict based who ahead. of undertake Li, required which go that a the the answer future remind results, please highlights, The will control, Safe Mr. does the President; operating uncertainties and They're current in the the call risks, followed and are Act other overview and all contain which to pleasure you to are Company's Mr. these Further On Company's that forward-looking the may on differ Mr. Kan not U.S. conditions Exchange uncertainties Li of the and under and all to beyond Zheng, Company's Fuya and involve is are in Harbor Reform today Mr. expectations Commission. as many your included relate management's brief XXXX. statements forward-looking update the except Chief known is operations forward-looking Private available any Financial through go statements Such Provisions those which materially are to current of Securities X of by or and

Hello, everyone.

The loan third facilitation financial our our high are end of results guidance. amount operational previous with in the and pleased reached quarter. the We

line steadily such slowdown saw and improved, COVID-XX quality bottom headwinds positioning, Against fundamentals, line strategy and capabilities. growth. strong our and resurgence, amid our economic execution demonstrates sequential Asset consumption strategic softness program effective the the and macro both further performance healthy top as

quarter, During facilitated billion, year-over-year an about third our total the originated and reached amount of and quarter-over-quarter. loan increase RMBXX XX% XX%

end for prudent We sequential X.XX% On with decreased basis, to continued all improve delinquency XX X.XX% the days for quality risk rates due September. to a asset XX our from the of outstanding loans management. to of as past

expanded premium further addition, base. we borrower our In

active borrower million in quarter, of has for number future borrowers times X.X and This increased Our to in base expanding history. development. record Company's solid growth quality premium during our challenging our third a laid a underpinned the foundation the new

efforts. to enhance financing will acquisition business growth borrow we have Moving risk continue believe ahead, management still we market and China's micro confident term. sustainable our of We consumer are and delivering long the in potential, and small and great

with aligned year. we is in Board's repurchase initiated reflects the commitment long-term execute our repurchase program continued share During recent enhancing share months, and earlier to Company's this This value prospects. to shareholder our the program confidence

continue We our execution term. million. long enhance program and Our $XX the repurchase to our in business further believe that value strategy share Board to shareholder will increased further

our call the turn financials. will I who through to Frank, Now, will go

Thank you, and hello, Kan, everyone.

to by XX% financial steady X% total quarter-over-quarter pleased We The a performance by million, the while net revenue million. quarter. income deliver third in increased increased to to RMBXXX RMBXXX are quarter-over-quarter net

strength. macro strong control continue uncertainties operational in well our and we We brand, positioned underlying our the institutional efficiency. partners believe needs funding with personal we cost with improve market earnings measures Despite trusted deepen to ahead, collaboration are to diverse financing serve to technology disciplined and

strike will long-term through balance and sound strategy. a drive shareholder growth capital increase to allocation value We

RMBXXX from that numbers increase million same RMBXXX period income million same million of income by offset XXXX Provisions with in the review note SME XXXX. default to I in was fee in insurance paid average was quarter. Net company. third from was of to decrease Total million a RMBXXX Please increase borrower offset the for compared of period net facilitated loan and would some the factors: are like an same million total one, million same result RMBXXX RMBXXX million the Non-GAAP rate period quarter; of due primarily amount and decrease to the the same to in XXXX. receivable of period in receivables a insurance the fund and the total about increased increase XXXX. RMBXXX an to facilitated Income increase originated with of expenses decreased period with amount performance the due million RMB loans million the million XXXX, facility period to of an stated financial loan compared net also in and Origination RMBXX in XX% increase commission by was compared by with the originated same the X% for revenue the increased a adjusted interest the this quarter partners; the quarter payable partially in the of million a XXXX. decrease in XXXX, in average second, by by period same of compared the million cost from in increase expenses same partially of all partial RMBXXX offset an amount this resulting by RMBXXX held from originated RMBXX Now, third, rounded in total compared same as following with institutional fees due loan the of with period total a in XXXX. primarily XXXX, compared in in this to borrowing servicing RMBXXX RMBXXX the the and up. operations period as compared partially the to Company with loans result the in of

IR For the earnings information, financial on further refer please release to website. our

XX share September million XX, our remain XXX,XXX plan. in XX, September program purchased we to the XXXX, our Class an Board million. we On A repurchase purchase had volume shares On our Regarding effective ADS we repurchase increase our that November million total XXXX, through XXXX. an program share through Board further for average a September of of program $XX share will effective approximately and that about Today, million. announced million $XX authorized to The repurchase $XX announced XXXX. had increase $XX from authorized to consideration share

outlook. business our for Now

total for billion. fourth billion the XXXX of and to originated facilitated be between We for quarter loan RMBXX.X amount expect and RMBXX

between expect billion full This and our the XXXX, For million. of current and change. views limited we RMBXX to forecast be year to loan and originated reflects facilitated which subject amount RMBXX.X are total

concludes remarks, the to open like would please? our call prepared the Operator, we Now to and this questions.

begin We Instructions] with question-and-answer Hinds] The go Equinox from Please [Operator will now the comes ahead. session. Capital. first question [Boyd

outlook your take the interest of the any for discuss since rate? been kind just And rates discussion QX? trending you Can have about how

not demand should process business be as still below that a but take target. is rate, hard the soft meet to the because a the all target, it's regarding Regarding a products in XX%, our

products, give take -- for not for X% like for somewhere for to are different to different takeout. products the different we way to rate X% X%, between We overall the X% so the do ourselves. rate So, takeout all

Right.

to down? So go my or rates borrowers, What still you charge to that is pressures it see? continuing kind stabilized? do Is that think -- really, competitive interest sort regulatory question you is can of pressures, continuing that you of has are it

The pressure is from from mainly rate the regulatory pressure. interest

We can year. the give to go the you expect answer rate I to will -- be in stabilized right now. continue sometime of middle best down next That's in

to you Okay. generate demand? And able strong You little model? marketing. spend customers finding your How fit risk such sales continue very how that loan are are you on and relatively to

of actually, only year, demand think very, we the mean, And that year. market the all -- we Well, the I is spent very benefit period as together, put from year been potential very regulated or compared very the products, last large. it's demand And same -- those still very And on a factor the mainly, players regulator the so. us is perspective, strongly our and small a for more by -- being regulated I percentage [Mali] maybe sales requirement the demand. with we that last to is capital we marketing tap one -- for for this

So shrink volumes lot. their a

cause stabilized, never else in market some shrink got still believe, every other the the market, quite much. But from all I some share overall them. everybody So in -- player

And to target individuals are more continuing you opposed as SME? to

owners between but not have owners figure. it's figures, or maybe we our to customer belong is of we even small -- to most But have are sure, small business. them pool don't business a think also. XX% I XX% an quite we to those among XX% between on somewhere XX% their though Well, never business small exact We guess don't I'm individuals,

other about the is count end not as what your quarter? weighted September share of shares of the the as One A buyback. but Class your shares outstanding is question XX? What share the the So for of average, actual

Okay.

a a share, from the maybe number bit you November want but to is little -- what XX maybe a know. quite have maybe I think difference like number I big not that

the we voting for about A XXX,XXX,XXX plus we plus B B We some have A ADS a shares, ADS. and to it's One in we aggregate, XX,XXX XX,XXX,XXX counted The power. equivalent So same among share. ordinary XX,XXX,XXX bought back about them of is -- about share, about but because -- thing, except share, is Class Class Class shares. Class common shares them, A A have shares, six

the many repurchased that quarter? XX of those so entirely in the million was And how -- that -- Right.

-- another In XXX,XXX and the shares million, we already share. -- did ADS we about ordinary I in And think million, did A XX -- in it's Class October. the in XX,XXX,XXX quarter almost actually, X quarter,

Okay.

able you're volume of very the it's buyback. It is not open how So, seems because executing the U.S. the that to trading market you're it do in in volume the the -- low. here interesting

law is and Yes. under is indeed XXb-XX. low, are the The and volume XXb-X very like we

can like So, we buy only a growth that. we daily below basis. get Also, on like XX% and not higher anybody than only could

only during market from opening open about XX among brought shares, is So million the XXX,XXX,XXX window.

open some in the them window. also also signed account open set ADS order took the ADS them share is a window dollar. because The we receive shares from employees is in up million did they -- have of to XXX,XXX and to contract open U.S. during bought window time X who one Another with back an

like out money. pay October, we until So

repurchase Yes. I hope you stock will levels. continue at these to

trading value. below You're obviously well book

low. multiple earnings very, Your price are very

market be to bought our back we continue the open we to intention still one or think Class the expanded a share repurchase current buyback. on still A have -- to change. But program, individuals do from we will us volume, But few their low We unless two expect very Yes. demonstrated back I situation which willing have directly. sell our to volume has based

So buyback next to payout you really volume. Class And do stock A, be back that, more, the we year, next a small. to the But another few Class points but the back shareholder will will as market use number B -- bought the combination XX% on continue will value. the we return I we that. be we do from quarter we'll just as dividend already total think calculate, those situation depending for equivalent think already of and We we'll did, we have that. I the to may number, I to After see of another the market. the And percentage big see -- -- not over share

sounds you great. Can able -- to... are That you

capital of mechanism RMB next get RMB one the half a have year. be China on payout dividend Hong set the likely, for or those like tax U.S. U.S. until at converted because don't the with control payout half a free the to X% the the other and second year in currency, the because I currency in likely year have talked China will into dollar happening Kong of to most as to place. Most second conversion now the likely Most dollar trying control has the dividend where about, to mechanism

have to So, want set need mechanism up. if kind to you to you do that thing, of some

IPO. half we are the we we -- right finished use that. be And first doing through current money year. be We use our next U.S. we And in now, to to year the next dollar, got of expect

you've How economic fiscal Do Right. about dealt year? -- of are you next headwinds, obviously with in still year feeling a 'XX. lot fiscal regulatory, you

Some forward. to of lifting those appear going be

even still for your the How -- in loan been So, are what I would fiscal the originations growth feeling you've be able potential for and next year? to that could you grow face presume of that. about

great next we year. I have For uncertainty a the next still think year, regarding

any think for any I year. you that's even player end the anybody give you heard as next year, never of why forecast concrete

regulatory I set general is up. uncertainty big Congress, Party there for industries XXXX measure the will regarding all -- issued the be will leadership stuff. industry think they've the And to implementation but measure all the be the the current still the feeling, would be overall, And finishing -- additional And stuff draconian -- will we the be after regulatory all more focused no been to on for the before. issued. expect

some have are rule. us hope year, But in we year we we for but will guarantee. optimistic because So, we the examples. And like be a and up we the no fortunately, are for will not cautiously follow will again, -- they kept us, definitely give first those once to Mali, next

Okay. drop off. Last I'll and then question

you terms In some to reasons. find risk the U.S., to way came private the is investors investors here your assurance think that taking can consider listing that What mean, delisted one the be stock of I it would you have Company concerns be big going of and that that the I for you remove delisting? if that? various in could able of to give to you're help

Kong an big a we delisting, our just do plan not in we listing because enough. is We intention Kong have don't size do market don't Hong in second to listing second Hong to couldn't have and because

they Hong not for option in we know us. up from that's early are pleased work weeks. about [PCB], to the very But wrap earlier, examiner their So Kong two

SEC think some revaluation in kind I have think Chinese Finance Minister. I the months, of next -- within the two will with

large the delisting is potential Chinese-listed will from I risks of to resolve the mainly U.S. to think the is law. be concern the a To -- because extent, will, not in issue side, U.S. honest that the U.S. those a with side. delisted company from be regarding Chinese you,

our China, the to So be the auditing means firms future. their issue that be if be examination to will subject which -- by could PCLB so resolved, working in paper in

That's but few maybe a state-owned I the to tell may the all best the company U.S. of listed think can U.S. you. listing Company, private There the most except I the will exceptions, continue company. in be be in

go [Matthew Please question next The from Vincadia]. comes Larson with ahead.

ground The probably But and previous number let this. my caller answered questions. covered me a a lot all of you so ask of

times On in if the share is roughly buyback, you did little, $X $XXX,XXX. any, the ADS because XXX,XXX $XXX,XXX,

had quarter. said think I you last what you had that's done

have So B reduces your and which Class the transactions earnings shares, done your nicely. increases outstanding in the been A or

just cap. the They no equal company of do bid is ADS than It's and you a at And that's are. the entire your it, which because less capitalization it sheet, have trading [Uindai], a I particularly and we you're balance Xx the X/X you on mention not below no its balance that you positive. So earnings, There's it's cash all you trades that cash make think to sense way market if market it's at the the cash. another growing trades company, in the earn liquid. won't also But almost see at because levels okay? debt. a here Xx I'll earnings, for But why a trades got very its at guess entire

were say, be the trade or And investors and as somebody get to frustration Company do you my is, a lending you or to or could Hong do we that So or sort what multiple So Kong? somehow in the Shenzhen comparison, of how that's part at, your up to versus to like is. must U.S. sell that, to question case? there Shanghai they it priced pay if private why or else think relisted -- go are do as platforms as fintechs low what you unwilling have, add see even on is to a

take that question. So, I'll

is I And the always question not price I'm difficult really Someone has well, stock, the to answer. asked determine right my before. is trying think for right? the what it's answer been, this that really us to

probably that than we agree that determine I price, think U.S. lower Company. is that we investors Even to think the better management the what be. should our valuation but a real is we a of have this question the the though, it's answer as I all certainly much much, difficult than

Mainland us I low. That market, in of Asia. right stocks. a Asia that sense, that being interest fintech and take what hope buying in us has company you that in stocks will China been people extremely, can there So terms to that either us extremely Kong tell I asked said, we no or is you the or think now fintech comparable Hong And valuation our is and in still some in

long can company. comparison. So always goal. I but that's due stable attention been stock. China stable think you for regard to deliver that as some can value, of question, always And of supervision of high both And scale has Because the paying to the the goal. with always terms they're not our I the right is even the that And our one, U.S. to continue company, course, uncertainty the second in Company price has to our one, been be Committee profit growth, listed always goal company And for conflict -- to right? on so-called that of company, valuation stock, the is between both much and market, has always in our matter no very in don't is valuation are you allow profit. or our one. been have survive for our model trying see really absolutely we the some There the achieve not There what asking our number will think what the of that think number don't and terms that not been been But always a huge attention fintech to the pay the how Supervisory that no the growth very I so-called But are fintech will trying fair many And see we too concern same the has company uncertainties, two and caller is. -- people our deliver of previous we whatever that think management I'm I that stable these been really the companies.

So can we my fair that long a very that as be these uncertainty won't exists, valuation prediction valuation company. for see as or even two high our a

some your color add me Let more question. for

The your peers, stock, think buyer all the -- our I our the means I on is observation reason could cases -- been that China company so-called our for the time strike but with. correct, now. which think reason I in come or have some up fintech just biggest some for not space,

Legal The -- on of out day market. -- the applied day, that company first by industry we fintech you those any one educational kind you could maybe China one anyone. -- is That's something focus because some see market -- legal second be the of the charge business. in are is risks, is risk you like our the definitely operate; could legally supply We day we warning, risk. without to

in that. apolitical I it's understand you China. correct or favorable So, believe not

out U.S. to say all risk business is, out of all likely think one is is the you be not institutional, calculate. accepted. something because could to manage legal say, purchaser client's not is I in spooked they responsibly the kind one I could the be That least, therefore something second a responsibility The of money. something know the -- that day invest buyers legally can the at in or just the have that, business all And

the I the is big think that's -- biggest risk legal reason.

just examine for reason nobody are it's will all below is just money. the in in is investor. around time way. ridiculous losing kinds will going PCAOB they stuff the, tell. all over be already reasonable like and irresponsible investment. other in will the how those the time. those phenomena cash, manage to maybe think They I will squandered to like And fintech would increase all I operate alleviate And like not or we like I we you value company, price is China invest think to regulatory -- money auditing situation the be U.S. seems it's China think shareholder management the the maybe And is Company -- -- will and The Otherwise, the the But stabilized such different at any conclusion below the only They're circus, to the before even way. that, see not somewhat have. also, they of for have the meaningful concerns not the can tech, the very trading think I probably that ability can

take do us, and Company we think buyback -- and For I just that the all know-how we can this advantage do more and that are the kind do stuff. way best of our to manage

do think right maybe whatever we long that run, correct. Thank be you. I will the now over

-- guess more I have question. I one one

You've about change touched times eliminate that couple regulatory of your of threat could the model. business a

case be. for common. the somebody incentive might is authorities with if that has there their flow money incentive that an the why the with to it a helping and to on effectively getting that something in the PRC frankly -- that one people needs, for own what people are to is States school consumption, to United different rely consumption eliminate to cash was that in be credit it away you're very at much need increases manage doing consume would whether rate who buy here So industry a of or authorities risks. whatever to than What the which isn't presumably do model PCs of it's and it's the But cards,

risk? So why a be would that

I'm work what But thinks, government We sorry. we comment on right? can't Well, closely with the them.

great will that we for industry. for our I reach the So government if there's and that way then be -- us can any think good will results, that and us

Shenzhen how United Shanghai? then are I in no There trade States. fintech come well. or of how none you here I'm But five trading the or come there there weren't are PRC? that finally, managed very know in Digital. right. thinking that I'm the referring the to, but LexinFintech four more or All why in -- companies trade over There's guess, some And -- them well, XXX ones was

I Well, guess already question, ahead. Actually answered that right? previous your go --

I'm sorry.

No, it. that's

think is I acute. I answered question. that your your observation And think that very basically previous

right. had company. doing, I All answers, you're you I stocks some will hope form I along money sort progress. lifting that's for to only which -- stock returning what be to point. notice is to as not response shareholders. of finally following there your coming, many discussion. your forward Financials some and getting listed But the trouble note continue you with But a that Ant positive listed the is We're in your of the they mean is again, do here. ADS one guess, and look massive that it's thank a I anyway, Very at expectations, well, different

you your questions. for Thank

And we have Equinox a ahead. go Please Capital. follow-up from Hinds] with [Boyd

Just U.S. any to here out in that to about analysts you're don't the discussion conversation interest how stock on follow followed increase by and in I know there. that the

that do, that the in real to concern the you think reiteration risk in in difficult other hear here confidence very which is Company. China delisting and a were learn said, publicly often you've I management the thing team shares for your the Company form the could it's it's or purchase note shares, Company make and the ADS large Hong is in so investors to Kong. about of of of you of as could some outside and outlook So the even And relist because, enough not that the

always, if I investor you in that concern lose company. the as your here your do recourse the U.S., So in any listing I an as that have is have, don't

speak those be if So, that great. to concerns would somehow could you

we consider Thank No, you. that. could

Yes, IPO us. it's cover of write to and because most the people think I only up not the one I performance, stock just worthwhile think

efforts next someone more your regulatory clear, for the I'll initiate year cover after less second us. we and to maybe of investing I in recruit are suggestion. Thanks those think finish, situation half will or to

with follow-up a [Matthew Vincadia]. Larson from have we And

threat The here. or or not sheets, it not but overrated them but other listed XXx thought must pink is many list small always that threat Xx. too too Mainland. bulletin have some the because exchanges there auditing done have for your a at the other private, the they if Maybe small Or historically something. time, Would shareholders, you're be entity really I Or have, traded, to their for delisted be is to earnings? was would just of there and been to Hong I've Kong, the have delisting, recourse? it your And mean, majority in they dismissed to larger had liked. vehicle the need would companies to that private be they you many -- trading because I you in XX-Fs your you -- sell historically didn't you're in that their reasons went taking be out would a still as mean, the the companies take went some the people that -- Kong? what in thing of company that owned need But would board Hong at only founders at premium I of small to there I many Company manage. would on trades would

I -- you've So are at alternative I any they a there's XX these gone small buyer. great $XX. borrower have $X, that accretive any that options been sorry, and you would mean, the private, many transaction. was public and And it could now Because years current they're sell many times went premium ago companies your to generally what out value, considered? at a be at because I'm by founder the only like mean, if

grown at fraction You $XX you've though a that, and five raised of tenfold. or buy money at yourself back you even

So, I just risks little you outside going private recourse guess a address the there. could if more about is delisting, of what of

to moment, I'll the location. speaker lost please. one reconnect Just need them. We've

reconnected finished have question. I Thank Difficulty] please. moment, continue speaker operator. you to one think or question [Technical I the you'd Larson, This if your you. Just your the location. wanted Mr. is

Well, if did question? whole heard I the -- don't know they they hear

Yes, Yes, I did. I did.

was It a Okay. long question.

know. I no. No,

First very -- any manage delisting, and the by checked our to this small be we our believe anyone. because our be all, not manage responsibly. work or audit do chances to afraid of we business is book always very We even

it's will if in I stock we that million. and what And we think $XX I is, delisting So -- know, very as is be our U.S. effort as listing is far it's about XXX% continue think, of the keep all, do, to for price, chances, the first low. do required And I the

believe I we fully below our think of -- not trade our because will of increase threshold company. of the and value business, that I

believe about so. That's the our don't best is way question. believe running So do focus. our the just of not imminent again, just We're answer or we the know And year issue okay? doing real. the we any So I -- just us the not not the don't it's and that, we for next your what-if best business that, that I how. chance is can talk are delistings, our once -- have not focus very for contingency, is okay? listing And believe that I

Victoria This I to Yu to turn would over conference back our question-and-answer closing any concludes session. the for like remarks.

everyone, call today. Okay. you, for the on us Thank Thank you. joining

look questions, follow-up in forward you. answer Thank them be you future. to speaking got will to We chance we the with contacts. raise to again a near you pleased If your through haven't

Thank today's you now presentation. The for conference has attending concluded.

may You now disconnect.