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01/11 16:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company showed strong financial performance with significant growth in loan originations and revenue, improved delinquency rates, and increased profitability. The share repurchase program and dividend policy further enhance shareholder value. Although there are concerns about macroeconomic uncertainties and compliance costs, the management's focus on asset quality and use of AI for cost reduction are positive signs. The Q&A section did not reveal any major negative concerns. Overall, the positive financial results and shareholder return plans outweigh the potential risks, indicating a positive stock price movement.
Loan Originations RMB 38.99 billion, a 10.9% sequential increase and a strong 71.4% growth year-over-year. This growth was supported by robust borrower demand and advancements in risk management.
Total Revenue RMB 2.27 billion, up 17.3% sequentially and 65.6% year-over-year. The increase was driven by disciplined execution and expansion of the platform and capabilities.
31-60 Day Delinquency Rate 1.16%, down from 1.29% a year ago, reflecting nearly a 10% improvement year-over-year. This improvement was due to disciplined borrower screening and rigorous underwriting practices.
91-180 Day Delinquency Rate 2.91%, down from 4.38% in Q2 2024, a 33% reduction year-over-year. This was attributed to better borrower behavior and proactive engagement initiatives.
Total Outstanding Loan Balance RMB 64.91 billion, representing an increase of 55.3% from Q2 2024.
Total Number of Loans Facilitated Approximately 3.72 million, reflecting a growth of 70.8% year-over-year, with an average loan size of RMB 10,476.
Active Borrower Base Approximately 2.85 million, a notable 73.7% increase year-over-year.
Income from Operations RMB 675.1 million, rising by 45.8% year-over-year, driven by operating leverage and disciplined expense management.
Non-GAAP Adjusted Net Income RMB 593.2 million (USD 82.8 million), up 58.3% year-over-year, reflecting strong core profitability driven by prudent expense control and high-quality loan growth.
Non-GAAP Adjusted Net Income per ADS RMB 14.6 (USD 1.98), representing an 85.8% increase year-over-year, underscoring operational leverage and enhanced profitability per share.
Return on Equity (ROE) 27.9%, improved both sequentially and year-over-year, reflecting core earnings growth and capital efficiency.
Loan Origination: Facilitated RMB 38.99 billion in loans in Q2 2025, a 10.9% sequential increase and 71.4% year-over-year growth.
Borrower Tools: Enhanced borrower-facing tools to improve decision-making, application processes, and transparency.
Active Borrower Base: Active borrower base grew to 2.85 million, a 73.7% year-over-year increase.
Loan Facilitation Services: Expanded loan facilitation services, contributing to a 65.6% year-over-year revenue growth.
Delinquency Rates: 31-60 day delinquency rate improved to 1.16% (down from 1.29% a year ago); 91-180 day delinquency rate reduced to 2.91% (from 4.38% in Q2 2024).
Operational Efficiency: Operating margins maintained near 30% despite increased borrower acquisition spending.
Share Repurchase Program: Repurchased 16.7 million Class A ordinary shares for USD 47.7 million under the share repurchase plan.
Regulatory Alignment: Proactively aligned with evolving Chinese regulatory standards, emphasizing responsible lending and consumer protection.
Regulatory Environment: The regulatory environment in China is evolving, with new compliance obligations introduced by the National Financial Regulatory Administration. These changes, while aimed at promoting responsible lending and financial stability, may impose incremental compliance costs and operational adjustments for the company.
Macroeconomic Uncertainty: Ongoing macroeconomic uncertainties could impact borrower demand and repayment behavior, posing risks to loan origination volumes and asset quality.
Loan Growth Moderation: The company has deliberately moderated loan growth in Q3 2025 to prioritize asset quality and profitability, which may limit revenue growth in the short term.
Compliance Costs: Adapting to evolving regulatory standards may require additional investments in compliance infrastructure and processes, potentially increasing operational costs.
Market Conditions: Challenging market conditions, including competitive pressures and economic uncertainties, could affect the company's ability to sustain its growth trajectory.
2025 Growth Outlook: X Financial expects the total return amount facilitated and originated in Q3 2025 to be in the range of RMB 32 billion to RMB 34 billion. This represents a deliberate moderation from record Q2 levels as management emphasizes asset quality and profitability over pure volume growth. The company remains attentive to challenges and uncertainties from the evolving regulatory environment while maintaining confidence in resilient borrower demand and disciplined execution.
Dividend Policy: As part of the semiannual dividend policy, the Board has approved a cash dividend of USD 0.28 per ADS, equivalent to approximately USD 0.0467 per ordinary share. Shareholders of record as of September 26, 2025, will be entitled to receive the dividend, with payments expected to be distributed on and around October 15, 2025. ADS holders will receive their dividend payments through the Bank of New York Mellon, subject to brokerage processing.
Share Repurchase Program: From January 1, 2025, through August 15, 2025, X Financial repurchased approximately 16.7 million Class A ordinary shares, including approximately 2.3 million ADS, for a total consideration of approximately USD 47.7 million under its share repurchase plans. The previous USD 50 million repurchase authorization has been fully utilized. The company now has approximately USD 68.2 million remaining under its new USD 100 million share repurchase program, effective through November 30, 2026. This program is subject to market conditions, regulatory guidelines, and the company's discretion regarding capital allocation priorities.
The earnings call reveals a mixed financial performance with increasing delinquencies, declining margins, and sequential declines in income and active borrowers. Despite share repurchases, regulatory uncertainties pose risks. The Q&A section highlights negative impacts on volume and profitability due to new regulations and vague management responses, reinforcing a negative sentiment. These factors, combined with a lack of clear guidance and a focus on maintaining dividends rather than growth, suggest a likely negative stock price reaction in the coming weeks.
The company showed strong financial performance with significant growth in loan originations and revenue, improved delinquency rates, and increased profitability. The share repurchase program and dividend policy further enhance shareholder value. Although there are concerns about macroeconomic uncertainties and compliance costs, the management's focus on asset quality and use of AI for cost reduction are positive signs. The Q&A section did not reveal any major negative concerns. Overall, the positive financial results and shareholder return plans outweigh the potential risks, indicating a positive stock price movement.
The company's strong financial performance, including significant year-over-year increases in loan originations, revenue, and net income, supports a positive sentiment. The new share repurchase plan and dividend announcement further enhance shareholder value. Despite concerns about regulatory changes and delinquency rates, management's proactive approach and confidence in compliance mitigate these risks. The positive loan growth outlook and improved asset quality contribute to a favorable market reaction, likely resulting in a 2% to 8% stock price increase over the next two weeks.
The earnings call summary shows strong financial performance with significant revenue and loan origination growth, improved profitability metrics, and a positive outlook for loan volume growth. The dividend and share repurchase plans further enhance shareholder value. Despite some regulatory uncertainties and competitive pressures, management remains confident in adapting to changes and maintaining growth. The Q&A section highlights management's proactive approach to compliance and market adaptation, with positive sentiment towards their strategies. Overall, the positive financial results and strategic initiatives suggest a likely positive stock price movement.
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