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01/10 05:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong e-commerce growth, improved risk management, and increased shareholder returns, indicating a positive outlook. Despite revenue declines in credit business and unclear future guidance, the company's strategic adjustments and proactive risk management are promising. The Q&A section reflects management's confidence in navigating regulatory changes and maintaining profitability. The raised dividend payout and share repurchase plan further support a positive sentiment.
Loan Volume RMB 50.89 billion
Revenue RMB 3.42 billion
Net Profit RMB 521 million, up 2% quarter-over-quarter and 68% year-over-year. Reasons for change: Strong risk management capabilities, resilience of the business ecosystem, and smooth business adjustments to comply with new regulations.
Net Profit Take Rate 2.01%, increasing by 9 basis points quarter-over-quarter and 92 basis points year-over-year. Reasons for change: Improved operational efficiency and compliance with new regulations.
E-commerce GMV for Essential Daily Consumer Goods Grew 58.5% quarter-over-quarter and 133.8% year-over-year during the Singles' Day Shopping Festival.
Total E-commerce GMV Increased by 38% year-over-year, with transaction volume for essential daily consumer goods surging by 237% year-over-year.
Net Revenue of Credit Business RMB 1.9 billion, a 3% or RMB 59 million decrease quarter-over-quarter. Reasons for change: Increase in credit costs of approximately RMB 40 million due to strengthened provisioning.
Net Revenue of E-commerce Business RMB 111 million, increased by 14% or RMB 14 million quarter-over-quarter.
Total Net Revenue RMB 2.1 billion, a 2% or RMB 46 million decrease quarter-over-quarter. Reasons for change: Decline in credit business revenue and e-commerce platform service income.
Operating Expenses RMB 1.4 billion, decreased by 4% or RMB 57 million quarter-over-quarter.
Tax and Others RMB 162 million, increased by 1% or RMB 1.8 million quarter-over-quarter.
Total Expenses RMB 1.5 billion, decreased by 3% or RMB 56 million quarter-over-quarter.
90-day Delinquency Ratio Improved by 15 basis points to 3.0%. Reasons for change: Enhanced risk control measures and prudent provisioning.
Full Provision Ratio of New Assets Increased by 6 basis points to 6.97%. Reasons for change: Strengthened provisioning to ensure a strong buffer during the transition period.
Cash Position Approximately RMB 4.3 billion as of September 30.
Shareholders' Equity Approximately RMB 11.8 billion as of September 30.
AI Technology Deployment: Accelerated AI technology deployment with Lexin GPT, improving user request identification accuracy by over 20% and enhancing efficiency in risk management, credit granting, and repayment.
Customer Care System: Upgraded products and management capabilities, enhancing customer satisfaction and loyalty through flexible repayment solutions and tailored pricing strategies.
E-commerce Growth: E-commerce GMV for essential daily consumer goods grew 58.5% quarter-over-quarter and 133.8% year-over-year during Singles' Day Shopping Festival. Total GMV increased by 38% year-over-year.
Offline Inclusive Finance: Focused on small and micro business owners in lower-tier markets, with stable asset quality and plans to increase investments in offline markets.
Risk Management: Enhanced user categorization and risk identification, phasing out high-risk users and implementing tailored pricing strategies to maintain a balanced risk-return profile.
Operational Agility: Smooth transition between capital-light and capital-heavy models, ensuring compliance with new regulations and mitigating impacts on loan volumes.
Regulatory Compliance: Completed business adjustments to comply with new regulations, positioning the company for healthier and more sustainable growth.
Shareholder Returns: Increased dividend payout ratio from 25% to 30% of net profit and progressed share repurchase plan, with $25 million worth of ADS repurchased and $5 million worth of shares purchased by the CEO.
Regulatory Compliance: The company had to adjust its business to comply with new regulations, which led to a temporary decline in loan volumes and overall pricing. The transition to a fully compliant model by October 1, 2025, has created operational challenges and required significant adjustments.
Industry Liquidity Tightening: The broader industry experienced liquidity tightening, particularly after the new regulations took effect in October. This has led to increased risk volatility and pressure on business volumes.
Credit Risk Volatility: The company observed increased credit risk volatility, particularly in early risk indicators starting from September. This has impacted the day 1 delinquency ratio and collection rates, requiring enhanced risk control measures.
High-Risk Customer Management: The company had to phase out high-risk customers and reduce credit lines for borrowers with weak repayment capacity or those vulnerable to liquidity tightening. This has limited the growth of certain customer segments.
E-commerce Business Risks: The company slowed down the growth of its e-commerce loan volume due to industry-wide risk volatility. This cautious approach was necessary to balance asset quality and volume growth.
Economic and Market Uncertainty: The company faces ongoing economic and market uncertainties, which have created challenges in maintaining steady growth and asset quality.
Operational Adjustments: The transition between capital-light and capital-heavy models has been challenging, particularly as the company reduced its capital-light business volume to comply with regulations. This has impacted revenue streams and required operational agility.
Provisioning and Financial Buffer: The company has had to increase provisions to ensure a financial buffer during the transition period, reflecting the heightened credit risk environment.
Regulatory Compliance and Industry Outlook: The company has completed business adjustments to comply with new regulations effective in the fourth quarter of 2025. These adjustments are expected to position the company to capture opportunities arising from industry adjustments and drive steady growth. The new regulations are anticipated to lead to a healthier and more sustainable industry environment.
Loan Volume and Risk Management: Loan volumes are expected to see a moderate quarter-over-quarter decline in the fourth quarter of 2025 due to ongoing credit risk volatility. The company will prioritize regulatory compliance and asset quality over business expansion. Risk fluctuations are expected to persist in the first half of the fourth quarter but may stabilize and improve in the second half.
E-commerce Business Growth: The e-commerce business is expected to continue growing prudently, with a focus on balancing volume growth and asset quality. The company will leverage its unique advantages in the new regulatory environment to expand its e-commerce operations.
AI Technology Deployment: The company will continue to expand the application of its AI technology, including its self-developed Lexin GPT model, to enhance efficiency, revenue growth, and user experience. AI-driven digital transformation is expected to provide robust technological support for future growth.
Shareholder Returns: The company will maintain its commitment to enhancing shareholder value through semi-annual dividends and share buyback programs. The CEO has personally purchased over USD 5 million worth of shares, and the company has repurchased $25 million worth of ADS as of October 2025.
Dividend Payout Ratio: Increased from 25% to 30% of the net profit starting from the second half of this year.
Share Repurchase Plan: The company's share repurchase plan is progressing well and is more than halfway completed.
CEO's Personal Share Purchase Plan: The CEO has personally purchased over USD 5 million worth of shares.
The earnings call highlights strong e-commerce growth, improved risk management, and increased shareholder returns, indicating a positive outlook. Despite revenue declines in credit business and unclear future guidance, the company's strategic adjustments and proactive risk management are promising. The Q&A section reflects management's confidence in navigating regulatory changes and maintaining profitability. The raised dividend payout and share repurchase plan further support a positive sentiment.
Lexin's earnings call reveals strong financial performance with significant revenue and net profit growth. The company has increased its dividend payout ratio and announced a share repurchase program, both positive for shareholder returns. Despite regulatory challenges, Lexin's proactive risk management and strategic expansion efforts, particularly in e-commerce and ecosystem business, show resilience and growth potential. The Q&A session further supports a positive outlook with management's confidence in sustained profit growth. Overall, the sentiment is positive, indicating a likely stock price increase of 2% to 8% over the next two weeks.
The earnings call highlighted strong financial performance with an 18.6% QoQ and 113% YoY increase in GAAP net profit, improved net income margin, and enhanced risk management. The dividend payout ratio increase and capital-light model adoption further support a positive outlook. Despite some uncertainties like potential IPO plans, the overall sentiment remains positive, driven by strong financial metrics and shareholder returns. The market is likely to react positively to these developments.
The earnings call summary shows a mixed sentiment. While there are positive developments in risk management, shareholder returns, and overseas profitability, concerns arise from unclear management responses regarding an IPO and changes in revenue structure. The Q&A section reveals a cautious approach to risk management and a focus on improving asset quality. However, the lack of specific guidance and vague responses could dampen investor confidence, leading to a neutral stock price movement prediction.
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