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01/11 04:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with a 13% revenue increase and a 59.9% rise in non-GAAP net income. Despite increased marketing expenses, the company shows stable asset quality and a favorable delinquency rate. A significant share repurchase plan and optimistic guidance further support a positive outlook. While some Q&A responses lacked detail, the overall sentiment remains positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks, especially given the company's moderate market cap.
EPS Reported EPS is RMB1.74, up from RMB1.72 year-over-year.
Total Revenue Total revenue for Q1 was RMB4.69 billion, up 13% year-over-year from RMB4.15 billion.
Revenue from Credit Driven Service Revenue from credit driven service was RMB3.11 billion, up from RMB3.02 billion year-over-year.
Revenue from Platform Service Revenue from platform service was RMB1.58 billion, up from RMB1.14 billion year-over-year.
Non-GAAP Net Income Non-GAAP net income increased by 59.9% year-over-year to RMB1.93 billion.
Non-GAAP Net Income per ADS Non-GAAP net income per fully diluted ADS rose by 78.5% to RMB13.53.
Sales and Marketing Expenses Sales and marketing expenses increased 42% year-over-year.
90-day Delinquency Rate 90-day delinquency rate was 2.02%, down from 2.09% in the previous quarter.
Cash from Operations Generated approximately RMB2.81 billion cash from operations, down from RMB3.05 billion in the previous quarter.
Total Cash and Cash Equivalents Total cash and cash equivalents increased to RMB14.03 billion from RMB10.36 billion in the previous quarter.
Total New Provision for Risk Bearing Loans Total new provision for risk bearing loans was approximately RMB2.23 billion, up from RMB2.07 billion in the previous quarter.
Write-backs of Previous Provisions Write-backs of previous provisions were approximately RMB1.14 billion, up from RMB1.02 billion in the previous quarter.
Provision Coverage Ratio Provision coverage ratio was 666%, up from 617% in the previous quarter.
Leverage Ratio Leverage ratio was 2.7 times, near the low end of historical range.
Share Repurchase Repurchased approximately 9.6 million ADS for a total amount of USD 405 million.
AI-Plus credit strategy: At the start of this year, we began rolling out our AI-Plus credit strategy at scale, aimed at building the industry’s first AI agent platform to empower core credit processes.
AI Agent platform: In April we introduced an internal AI Agent platform and by May deployed five digital employees across key functions such as data analytics, operations, compliance, risk management strategy and financial reconciliation.
User profiling agent: We developed a user profiling agent that performs consistency checks on user features with over 95% accuracy, supporting differentiated credit lines and pricing based on user profiles.
New credit line users: In Q1 we added 1.54 million new credit line users, up 6% year-over-year, with new borrowers increasing approximately 41% year over year to 1.13 million.
Embedded finance channels: During the quarter, our new credit line users from the embedded finance channels grew 36% year-over-year, while loan volume surged by roughly 106%.
Technology Solutions partnerships: We established partnerships with three additional mid-to-large sized municipal banks in Q1, driving loan volume from this segment to grow by roughly 144% year-over-year.
Operational efficiency: With operational efficiency continuing to improve, our take rate for the quarter reached 5.7%, up 2.2 percentage points year-over-year.
Funding costs: We maintained our negotiating leverage on the funding side, resulting in a consistent decline in funding costs.
Cash from operations: We generated approximately RMB2.81 billion cash from operation in Q1 compared to RMB3.05 billion in Q4.
Share repurchase program: We expect our total repurchases this year to be no less than USD 680 million.
AI Plus strategy: Our technology solutions business will continue to empower financial institutions to accelerate their intelligent transformation through our AI Plus strategy.
International funding channels: In Q1, we issued USD 690 million in convertible senior notes, further expanding our international funding channels and improving capital allocation efficiency.
Macroeconomic Risks: The increasingly complex international landscape has added uncertainty to the pace of China’s economic recovery, influenced by trade war impacts.
Regulatory Risks: New regulations from China’s National Financial Regulatory Administration on Internet loan facilitation may impose stricter guidelines, affecting operational practices.
Risk Management: Despite improvements in risk management metrics, the company remains vigilant in managing overall risk exposure due to macroeconomic uncertainties.
Delinquency Rates: The 90-day delinquency rate was reported at 2.02%, indicating potential credit risk, although it remains within a comfortable range.
Funding Costs: While funding costs have decreased, the reliance on asset-backed securities (ABS) may pose risks if market conditions change.
User Acquisition Challenges: The company plans to adjust user acquisition strategies in response to volatile macro conditions, indicating potential challenges in maintaining growth.
Operational Efficiency: The need to enhance operational efficiency amidst uncertain market conditions presents a challenge for sustained growth.
AI-Plus Credit Strategy: Qifu Technology began rolling out its AI-Plus credit strategy at scale, aimed at building the industry’s first AI agent platform to empower core credit processes.
Deep Bank Division: Established a deep bank division to drive the research and development of AI Plus bank agent products.
User Profiling Agent: Developed a user profiling agent that performs consistency checks on user features with over 95% accuracy.
Embedded Finance Business: Continued to expand the breadth and depth of channel coverage in the embedded finance business, adding seven new channels.
Technology Solutions Partnerships: Established partnerships with three additional mid-to-large sized municipal banks, driving loan volume growth.
Share Repurchase Program: Executed a share repurchase program with a total of approximately USD 405 million in ADS repurchased in 2025.
Q2 2025 Non-GAAP Net Income Guidance: The company expects to generate non-GAAP net income between RMB1.75 billion and RMB1.85 billion, representing a year-on-year growth between 24% and 31%.
Funding Costs Outlook: Funding costs are expected to decrease slightly from Q1 levels in the coming quarters.
Total Share Repurchases: Expect total share repurchases this year to be no less than USD 680 million.
Leverage Ratio Outlook: Expect leverage ratio to fluctuate around 2.7 times in the near future.
Share Repurchase Program: Qifu Technology has initiated a share repurchase program with a total expected repurchase amount of no less than USD 680 million for the year. As of May 19, 2025, the company has repurchased approximately 9.6 million ADS for a total amount of USD 405 million, including commissions, at an average price of USD 42.3 per ADS.
Convertible Senior Notes: In Q1 2025, Qifu Technology issued USD 690 million in convertible senior notes, with 100% of the proceeds allocated to share buybacks.
Recent Share Repurchase: On March 25, 2025, the company completed a share repurchase of approximately USD 227 million, resulting in a 3.6% reduction in share count.
Total Repurchases: The company expects total repurchases this year to be no less than USD 680 million, estimating a total share count decrease of approximately 11% compared to the beginning of the year.
The earnings call reveals strong financial performance with record revenue, cash flow, and a solid financial position. Management's optimism about regulatory adjustments, market consolidation, and AI advancements suggests future growth. Despite short-term risks and regulatory impacts, the company's long-term strategy, including overseas expansion and shareholder returns, is promising. While Q&A highlights some uncertainties, management's focus on sustainable growth and increased dividends indicates a positive outlook. Given the market cap, the stock price is likely to see a moderate positive reaction in the coming weeks.
The earnings call summary shows strong financial performance with significant revenue and earnings growth, a high provision coverage ratio, and successful share buybacks. The Q&A section reveals cautious optimism, with management addressing regulatory challenges and maintaining a conservative approach. Despite some uncertainties, the overall sentiment is positive due to robust metrics and strategic initiatives like overseas expansion and embedded finance growth, likely leading to a positive stock price movement.
The earnings call indicates strong financial performance with a 13% revenue increase and a 59.9% rise in non-GAAP net income. Despite increased marketing expenses, the company shows stable asset quality and a favorable delinquency rate. A significant share repurchase plan and optimistic guidance further support a positive outlook. While some Q&A responses lacked detail, the overall sentiment remains positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks, especially given the company's moderate market cap.
Qifu Technology's earnings call highlighted strong financial performance, with significant increases in non-GAAP net income and EPS, and a robust share repurchase plan. The Q&A section revealed stable asset quality and positive management outlook, despite macro uncertainties and increased marketing expenses. The strategic initiatives and optimistic guidance for 2025 support a positive sentiment. However, concerns about regulatory impacts and increased delinquency rates temper the outlook slightly. Given the company's market cap, the stock price is likely to see a positive movement of 2% to 8% over the next two weeks.
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