X Financial (XYF) Q4 2025 Earnings Call Prepared Remarks Transcript
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Overview
Despite a strong share repurchase program, the financial performance in Q4 2025 showed significant declines in loan origination, revenue, and margins. Rising delinquency rates and increased credit-related provisions indicate financial stress, overshadowing the optimistic full-year results. The Q&A section lacked clarity, adding to uncertainties. Overall, these factors suggest a negative sentiment, likely leading to a stock price decline between -2% to -8%.
Key Financial Performance
Loans Facilitated and Originated (Q4 2025) RMB 22.77 billion, representing a 29.5% decline year-over-year and a 32.3% decline sequentially. The decline was intentional to prioritize credit quality and prudent risk management.
Loans Facilitated and Originated (Full Year 2025) RMB 130.6 billion, up 24.5% from RMB 104.9 billion in 2024. This reflects the scale achieved earlier in the year and disciplined operations amidst evolving market and regulatory conditions.
Active Borrowers (Q4 2025) 1.69 million, down 20.2% year-over-year and 30.7% sequentially. This decline reflects moderated borrower activity.
Outstanding Loan Balance (Q4 2025) RMB 50.5 billion, down 3.6% from the same period in 2024. This reflects a cautious approach to risk and credit quality.
31-60 Day Delinquency Rate (Q4 2025) 2.9%, compared to 1.85% in Q3 2025 and 1.17% in Q4 2024. The increase reflects rising repayment stress and a conservative risk approach.
91-180 Day Delinquency Rate (Q4 2025) 6.31%, compared to 3.52% in Q3 2025 and 2.48% in Q4 2024. This increase is due to elevated credit pressure and repayment stress.
Total Net Revenue (Q4 2025) RMB 1.47 billion (USD 209.9 million), a 14.1% decrease year-over-year and a 25.1% decrease sequentially. The decline was driven by higher credit-related provisions and reduced activity.
Total Operating Costs and Expenses (Q4 2025) RMB 1.45 billion (USD 207 million), up 22.3% year-over-year but down 9.5% sequentially. The year-over-year increase was due to higher credit-related provisions.
Credit-Related Provisions (Q4 2025) RMB 669.3 million (USD 95.7 million), reflecting higher expected credit losses and conservative provisioning.
Borrower Acquisition and Marketing Expense (Q4 2025) RMB 212.2 million (USD 30.3 million), significantly reduced compared to prior periods to prioritize efficiency and risk discipline.
Income from Operations (Q4 2025) RMB 20.2 million (USD 2.9 million), a 96.2% decrease year-over-year and a 94.4% decrease sequentially. This reflects lower revenue and elevated provisioning.
Operating Margin (Q4 2025) 1.4%, compared to 18.5% in Q3 2025 and 30.7% in Q4 2024. The decline was due to higher credit costs and reduced activity.
Net Income (Q4 2025) RMB 57.2 million (USD 8.2 million), compared to RMB 421.2 million in Q3 2025 and RMB 385.6 million in Q4 2024. The decline reflects lower revenue and higher credit costs.
Net Profit Margin (Q4 2025) 3.9%, compared to 21.5% in Q3 2025 and 22.6% in Q4 2024. This reflects the impact of elevated credit costs.
Return on Equity (Q4 2025) 2.9%, reflecting substantially lower net income during the quarter.
Total Net Revenue (Full Year 2025) RMB 7.64 billion (USD 1.09 billion), a 30.1% increase from RMB 5.87 billion in 2024. This reflects growth earlier in the year.
Income from Operations (Full Year 2025) RMB 1.63 billion (USD 233.1 million), compared to RMB 1.87 billion in 2024. The decline reflects higher credit-related provisions.
Operating Margin (Full Year 2025) 21.3%, compared to 31.9% in 2024. The decline reflects a cautious operational posture in the second half.
Net Income (Full Year 2025) RMB 1.46 billion (USD 209.4 million), compared to RMB 1.54 billion in 2024. The decline reflects higher credit-related provisions.
Net Profit Margin (Full Year 2025) 19.2%, compared to 26.2% in 2024. This reflects the impact of higher credit costs.
Non-GAAP Adjusted Net Income (Full Year 2025) RMB 1.56 billion (USD 223 million), compared to RMB 1.54 billion in 2024. This reflects adjustments for non-recurring items.
Total Assets (End of 2025) RMB 14.67 billion (USD 2.1 billion).
Total Liabilities (End of 2025) RMB 6.83 billion (USD 976.5 million).
Total Shareholder Equity (End of 2025) RMB 7.84 billion (USD 1.12 billion).
Cash and Cash Equivalents (End of 2025) RMB 987.6 million (USD 141.2 million).
Restricted Cash (End of 2025) RMB 1.15 billion (USD 133.9 million).
Total Cash Including Restricted Cash (End of 2025) RMB 2.13 billion (USD 305.1 million).
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Operating Highlights
Loan Origination: Facilitated and originated RMB 22.77 billion in loans in Q4 2025, a 29.5% decline year-over-year and 32.3% sequentially, reflecting a focus on credit quality and risk management.
Operational Efficiency: Increased activity on internally operated platforms to enhance customer stability and reduce costs. Tightened underwriting standards, optimized workflows, and expanded automation to improve efficiency without increasing headcount.
Borrower Activity: Served approximately 1.69 million active borrowers in Q4 2025, down 20.2% year-over-year and 30.7% sequentially. Facilitated approximately 2.47 million loans with an average loan amount of RMB 9,226.
Credit Quality: Observed increased delinquency rates: 31-60 day delinquency rate rose to 2.9% (from 1.85% in Q3 2025), and 91-180 day delinquency rate rose to 6.31% (from 3.52% in Q3 2025). Tightened underwriting criteria and adjusted capital deployment to address credit pressures.
Regulatory Adaptation: Adapted operations to comply with Notice 9 and other regulatory measures, including stricter borrowing cost controls and white list management systems for loan facilitation platforms.
Share Repurchase Program: Repurchased approximately 3.79 million ADS for USD 53.85 million under a USD 100 million share repurchase program, with USD 46.15 million remaining.
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Risk or Challenges
Loan Origination Decline: Loan origination in Q4 2025 decreased by 29.5% year-over-year and 32.3% sequentially, reflecting a deliberate moderation to prioritize credit quality and risk management, which could impact revenue growth.
Credit Quality Deterioration: Delinquency rates increased significantly, with the 31-60 day delinquency rate rising to 2.9% from 1.85% in Q3 and 1.17% a year ago, and the 91-180 day delinquency rate increasing to 6.31% from 3.52% in Q3 and 2.48% a year ago, indicating rising repayment stress and elevated credit risks.
Regulatory Uncertainty: Notice 9 and other regulatory measures introduced significant uncertainty, including stricter borrowing cost caps and white list requirements for loan facilitation platforms, potentially affecting funding relationships and profitability.
Profitability Decline: Net income in Q4 2025 dropped significantly to RMB 57.2 million from RMB 421.2 million in Q3 and RMB 385.6 million a year ago, with operating margin decreasing to 1.4% from 18.5% in Q3, driven by higher credit-related provisions and reduced revenue.
Borrower Activity Reduction: Active borrowers decreased by 20.2% year-over-year and 30.7% sequentially, reflecting moderated borrower activity and potentially impacting future loan origination and revenue.
Increased Compliance Costs: New regulatory measures, such as payment institution rating measures, added compliance burdens and operational costs, further straining profitability.
Funding and Liquidity Risks: Regulatory changes introduced uncertainty around funding availability and pricing dynamics, which could impact the company's liquidity and operational flexibility.
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Guidance & Outlook
Regulatory Environment Impact: The regulatory environment in China is evolving, with significant developments such as Notice 9 issued by the National Financial Regulatory Administration. This requires commercial banks to control total borrowing costs, effectively capping them at 24% per annum. This cap may be further reduced, impacting the company's operating results and profitability. Additionally, new regulations require commercial banks to implement white list management systems for loan facilitation platforms, introducing uncertainty around funding relationships.
Future Profitability and Operating Losses: The company anticipates that its historical profitability levels may not be indicative of future performance due to regulatory changes. There is a possibility of operating losses in future periods as a result of these changes.
Business Outlook and Strategy: The company remains cautious in its near-term outlook due to regulatory uncertainties. It is focusing on asset quality, disciplined risk management, cost control, and liquidity preservation. The company is adapting its operations to maintain compliance and safeguard long-term stability.
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Shareholder Return Plan
Share Repurchase Program: As of March 15, 2026, under the company's USD 100 million share repurchase program, the company had repurchased an aggregate of approximately 3.79 million ADS, including approximately 3.37 million ADS and 2.53 million Class A ordinary shares for a total consideration of approximately USD 53.85 million. The company now has approximately USD 46.15 million remaining under the share repurchase program, which is effective through November 30, 2026. This program underscores the company's confidence in its long-term growth outlook and its commitment to enhancing shareholder value. The purchases in the program remain subject to market conditions and other factors and may be modified or suspended at management's discretion.
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Key Q&A
Q:Review of Unclear Management Responses
A:
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Credit
Kan
Notice
USD basis
USD cash
USD decrease
USD increase
activity
approach
balance sheet
bank
basis income
borrowing
cap
chain
condition result
credit pressure
credit provision
decline
degree
example
funding relationship
implementation
income USD
institution
jurisdiction
list
loss
margin
pace
period
posture
provisioning
quality risk
response
scope
shareholder
sheet liquidity
spending
visibility
XYF Transcript
X Financial (XYF) Q4 2025 Earnings Call Prepared Remarks Transcript
Unknown3-26
Despite a strong share repurchase program, the financial performance in Q4 2025 showed significant declines in loan origination, revenue, and margins. Rising delinquency rates and increased credit-related provisions indicate financial stress, overshadowing the optimistic full-year results. The Q&A section lacked clarity, adding to uncertainties. Overall, these factors suggest a negative sentiment, likely leading to a stock price decline between -2% to -8%.
X Financial (XYF) Q3 2025 Earnings Call Transcript
Unknown11-21
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.
X Financial (XYF) Q2 2025 Earnings Call Transcript
Positive8-19
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.
X Financial (NYSE:XYF) Q1 2025 Earnings Call Transcript
Positive5-21
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.
XYF Report
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