Financial Data and Key Metrics Changes - Non-GAAP net income increased by 59.9% year over year to RMB 1.93 billion, while non-GAAP EPADS on a fully diluted basis rose by 78.5% to RMB 13.5 [6] - Total revenue for Q1 was RMB 4.69 billion, compared to RMB 4.48 billion in Q4 and RMB 4.15 billion a year ago [20] - Non-GAAP net profit was RMB 1.93 billion in Q1 compared to RMB 1.97 billion in Q4 [26] Business Line Data and Key Metrics Changes - Revenue from credit-driven services was RMB 3.11 billion in Q1, up from RMB 2.89 billion in Q4 [20] - Revenue from platform services was RMB 1.58 billion in Q1, slightly down from RMB 1.59 billion in Q4 [21] - Loan volume from embedded finance channels grew by 36% year over year, while loan volume surged by roughly 106% [13] Market Data and Key Metrics Changes - The company added 1,540,000 new credit line users in Q1, up 6% year over year [11] - Ninety-day delinquency rate was 2.02% in Q1, down from 2.09% in Q4 [23] - The overall ROA of embedded finance channels improved by 20% on a sequential basis [13] Company Strategy and Development Direction - The company is rolling out an AI plus credit strategy aimed at building the industry's first AI agent platform [7] - Plans to recruit an additional 100 algorithm engineers by the end of the year to accelerate transformation into an AI-native organization [7] - The company expects to maintain a low funding cost in the long run while adopting a prudent lending strategy [66] Management Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the economy, supported by technological innovation and government measures to boost domestic demand [16] - The macroeconomic and policy landscape is showing signs of stabilization, which will provide a favorable environment for the consumer credit industry [16] - The company expects non-GAAP net income for Q2 to be between RMB 1.75 billion and RMB 1.85 billion, representing a year-on-year growth of 24-31% [30] Other Important Information - The company issued RMB 6.6 billion in ABS, a year-over-year increase of approximately 25% [11] - The effective tax rate for Q1 was 18%, higher than the typical rate of approximately 15% due to withholding tax provisions [26] - The company has executed a share repurchase program with a total repurchase expected to be no less than USD 680 million this year [18] Q&A Session Summary Question: Impact of new loan facilitation rules and credit quality trends - Management views the new rules as a positive signal for the industry, promoting orderly development and recognizing the value of leading loan facilitation platforms [34] - Asset quality remains stable, with the C2M2 ratio at 0.6%, significantly better than previous periods [35][36] Question: Asset quality indicators and credit demand trends - The increase in day one delinquency was driven by a change in loan mix, with a higher percentage from embedded finance channels [42] - Credit demand has shown early signs of recovery, but macro uncertainties persist [37][45] Question: Assessment of tariff tensions and ADR delisting risk - The direct impact of tariffs on the business is limited, with only a small percentage of loan volume affected [48] - The company has a clear plan to respond to potential ADR delisting risks, including a secondary listing in Hong Kong [52][54] Question: Customer acquisition costs and strategy adjustments - The increase in customer acquisition cost was driven by a change in business mix, with a higher contribution from API channels [58] - The company will continue to monitor macro changes and adjust acquisition strategies accordingly [62] Question: Loan demand trends and funding liquidity - Recent government policies aimed at boosting consumption have positively impacted credit demand [65] - The company expects funding costs to decrease slightly from Q1 levels and plans to optimize its funding structure [66]

Core Insights - QFIN Technology reported its Q1 2025 financial results, demonstrating a strong performance driven by AI innovations and a commitment to prudent management strategies in a complex market environment [1] - The company is advancing its "AI + Finance" strategy, aiming to create the first intelligent system that empowers core lending operations, which has already begun to enhance business processes and efficiency [1][2] Financial Performance - As of the end of Q1, QFIN Technology connected with 163 financial institutions, providing digital credit services to over 58 million credit users, with a 6% year-on-year increase in new credit users and a 15.8% increase in loan facilitation volume [1] AI-Driven Innovations - The launch of the lending intelligent system integrates various smart modules covering data analysis, operations, compliance, risk strategies, and financial reconciliation, significantly transforming the company's business model [2] - The AI marketing module improved the conversion rate from new credit users to new loan users by 33% year-on-year [2] - The AI compliance module reduced the time required for regulatory document interpretation from 40 hours to 2 hours, with accuracy improving from 68% to 99.2% [2] Risk Control Enhancements - QFIN Technology has developed end-to-end risk control capabilities, achieving an AUC improvement to 0.64 through reinforcement learning on historical decision logs [3] - The user feature verification accuracy reached over 95% through advanced data mining capabilities [3] Strategic Partnerships and Growth - QFIN Technology's subsidiary, QFIN Digital Technology, signed contracts with three mid-to-large city commercial banks, with a 144% year-on-year increase in business scale [4] - The launch of the FocusPRO2.0 platform for digital inclusive credit solutions has led to rapid loan disbursement and exceeded risk control expectations [4] Social Responsibility Initiatives - The company launched the "QFIN Support Program" to assist rural revitalization through interest-free loans for small businesses and farmers, contributing to local economic development [6] - QFIN Technology has been recognized for its efforts in promoting financial technology development and social responsibility, with its CEO participating in high-level forums to discuss opportunities in AI and industry upgrades [6] Future Outlook - The CEO emphasized that AI technology is a core support for the generational leap in fintech, positioning the lending intelligent system as a new growth engine for long-term high-quality development [7] - The intelligent system is expected to facilitate the transition of traditional banks to smart banks, enhancing user experience and commercial efficiency [7]

Company Overview - Qifu Technology is a leading AI-empowered credit-tech platform in China with 584 million cumulative users with approved credit lines[13, 27] - The company has established partnerships with 163 financial institutions[13, 20] - Loan facilitation volume in 1Q25 reached RMB 889 billion, representing a 158% year-over-year increase[13] - Non-GAAP net income in 1Q25 was RMB 1926 million, a 599% year-over-year increase[13] - The company has repurchased US$905 million worth of ADSs cumulatively, leading to a 210% share count reduction[15] Financial Performance - Total net revenue for 1Q25 was RMB 4691 million[62] - Non-GAAP net income for 1Q25 was RMB 1926 million[64] - Platform services contributed 531% to the loan facilitation volume in 1Q25[57] - Platform services contributed 581% to the outstanding loan balance in 1Q25[59] Risk Management - The company maintains robust risk performance, as indicated by delinquency and collection rates[67, 68, 69]

User Growth and Engagement - As of March 31, 2025, the platform has connected with 163 financial institution partners and 268.2 million consumers with potential credit needs, an increase of 11.1% from 241.4 million a year ago[5] - The number of users with approved credit limits reached 58.4 million, up 11.6% from 52.3 million as of March 31, 2024[5] Loan Performance - The total loan volume facilitated reached RMB 88,883 million, a 15.8% increase from RMB 76,784 million in the same period last year[5] - The total outstanding loan balance was RMB 140,273 million, reflecting a 5.5% increase from RMB 132,964 million as of March 31, 2024[5] - The 90-day+ delinquency rate for loans was 2.02% as of March 31, 2025[5] - The first-day overdue rate was 5.0%, while the 30-day recovery rate was 88.1%, indicating stable risk performance despite macroeconomic fluctuations[10] - The weighted average contract term for loans initiated by financial institutions was approximately 10.17 months, slightly up from 10.10 months in the same period last year[5] Financial Performance - Total net revenue for the first quarter was RMB 4,690.7 million (USD 646.4 million), compared to RMB 4,482.3 million in the previous quarter[10] - Net profit for the first quarter was RMB 1,796.6 million (USD 247.6 million), down from RMB 1,912.7 million in the previous quarter[10] - Non-GAAP net profit was RMB 1,926.2 million (USD 265.4 million), compared to RMB 1,972.4 million in the previous quarter[10] - The company reported a diluted net income per American Depositary Share (ADS) of RMB 12.62 (USD 1.74), down from RMB 13.24 in the previous quarter[10] - Total revenue for Q1 2025 reached RMB 4.69 billion (USD 646.4 million), an increase from RMB 4.15 billion in Q1 2024 and RMB 4.48 billion in the previous quarter[13] - Net profit under non-GAAP was RMB 1.93 billion (USD 272.1 million), compared to RMB 1.41 billion in Q1 2024 and RMB 1.95 billion in the previous quarter[18] Operating Costs and Profitability - Operating costs totaled RMB 2.72 billion (USD 374.3 million), a decrease from RMB 2.79 billion in Q1 2024 and an increase from RMB 2.59 billion in the previous quarter[15] - Operating profit margin was 42.1%, with a non-GAAP operating profit margin of 44.9%[19] - The company reported a net profit attributable to the company of RMB 1,800.2 million ($248.1 million), compared to RMB 1,164.3 million in the same period of 2024[20] Future Outlook and Investments - The company plans to continue investing in AI technology to enhance its credit services and improve operational efficiency[10] - The company plans to generate net profit of RMB 1.65 billion to RMB 1.75 billion for Q2 2025, reflecting a year-over-year growth of 24% to 31%[30] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[45] Share Repurchase and Financing - The board approved a share repurchase plan allowing the company to repurchase up to $450 million worth of American Depositary Shares or Class A ordinary shares[28] - The company issued USD 690 million in convertible notes to support its share repurchase plan, enhancing its financial foundation[18] - The company issued $690 million of convertible preferred notes due in 2030, with plans to use the net proceeds for additional share repurchases[29] Cash Flow and Assets - The company’s cash and cash equivalents increased to RMB 8,578,822 thousand as of March 31, 2025, up from RMB 4,452,416 thousand as of December 31, 2024, representing a growth of 93.5%[43] - The company reported a total asset value of RMB 55,627,168 thousand as of March 31, 2025, equivalent to approximately USD 7,665,629 thousand[43] - Operating cash flow for the three months ended March 31, 2025, was RMB 2,805,685, an increase of 43.4% compared to RMB 1,958,267 in 2024[48] Liabilities and Equity - Total liabilities increased to RMB 32,511,226 thousand as of March 31, 2025, compared to RMB 23,886,399 thousand as of December 31, 2024, indicating a rise of 36.5%[44] - The company’s equity totalled RMB 23,115,942 thousand as of March 31, 2025, down from RMB 24,246,219 thousand as of December 31, 2024, showing a decrease of 4.7%[44] - The company’s non-current liabilities surged to RMB 16,133,988 thousand as of March 31, 2025, from RMB 6,414,190 thousand as of December 31, 2024, reflecting a significant increase of 150.5%[44] Non-GAAP Financial Measures - The company emphasizes the importance of non-GAAP financial measures to enhance understanding of past performance and future outlook, despite potential differences in calculation methods compared to other companies[39] - The company’s financial data should be viewed as supplementary to GAAP results, not as a substitute or superior alternative[39] - The company’s net profit margin, calculated using non-GAAP measures, is expected to provide insights into operational performance trends, excluding stock-based compensation expenses[39] Comprehensive Income - The company reported a total comprehensive income of RMB 1,784,813 for the three months ended March 31, 2025, compared to RMB 1,166,297 in 2024, marking a significant increase[49] - Non-GAAP net profit for the three months ended March 31, 2025, was RMB 1,929,789, up from RMB 1,208,932 in 2024, indicating a growth of 59.5%[51] Earnings Per Share - Basic earnings per share for ordinary shares increased to RMB 6.41 in 2025 from RMB 3.73 in 2024, reflecting a growth of 71.5%[46] - The diluted earnings per American Depositary Share under GAAP was RMB 12.62 ($1.74)[21] - The diluted non-GAAP earnings per American Depositary Share was RMB 13.53 ($1.86)[22]

Core Viewpoint - The internet financial information service industry in China is experiencing rapid growth driven by the high-quality development of the securities market and technological innovation, with a projected market size increase from 10.07 billion yuan in 2015 to 63.52 billion yuan in 2024, representing a compound annual growth rate of 22.71% [2][3]. Industry Overview - The internet financial information service industry has emerged alongside the development of the internet, effectively utilizing its convenience and speed to provide investors with enhanced information services. The industry can be segmented into three categories: financial information terminal services, value-added information services, and online financial information services [3]. - Despite the rapid growth and diversification of services, the industry remains relatively small compared to its domestic potential and the more mature international market, indicating significant growth opportunities [3]. Development History - The internet financial sector in China began to take shape before 2005, with traditional financial institutions initially moving their operations online. The introduction of e-commerce in 1993 marked the start of a fully electronic business era, prompting banks to innovate and adapt to the internet [5]. - From 2005 to 2012, the industry saw the emergence of third-party payment systems, P2P lending, and crowdfunding, marking a shift from mere technological integration to actual business models [6]. - The year 2013 is recognized as the starting point of rapid growth for internet finance in China, highlighted by the launch of "Yu'ebao," which led to the maturation of third-party payments and explosive growth in P2P lending [6]. Relevant Policies - The Chinese government has implemented various policies to support the healthy development of the internet financial information service industry. For instance, the State Council issued guidelines in March 2025 to enhance data security and promote technological innovation in the financial sector [8][9]. - In April 2025, a plan was introduced to accelerate the construction of a financial service system that aligns with technological innovation, aiming to improve the quality and efficiency of financial services [8][9]. Industry Chain - The internet financial information service industry chain has matured, encompassing areas such as financial information, third-party payments, and online lending. The upstream includes data providers, banks, and individual funders, while the downstream consists of individual consumers, merchants, and enterprises [10]. - The relationship between merchants and third-party payment institutions is crucial, as the attractiveness and conversion rates of merchants significantly influence transaction volumes [10].

Core Insights - Investors in the Technology Services sector may consider Qifu Technology, Inc. (QFIN) and Symbotic Inc. (SYM) for potential value opportunities [1] Valuation Metrics - QFIN has a forward P/E ratio of 6.38, significantly lower than SYM's forward P/E of 133.59 [5] - The PEG ratio for QFIN is 0.57, indicating a favorable valuation relative to its expected earnings growth, while SYM's PEG ratio is 4.45 [5] - QFIN's P/B ratio stands at 2.10, compared to SYM's P/B of 37.63, suggesting QFIN is more reasonably valued based on its book value [6] Analyst Outlook - QFIN currently holds a Zacks Rank of 1 (Strong Buy), reflecting a positive earnings estimate revision trend, while SYM has a Zacks Rank of 5 (Strong Sell) [3] - The improving earnings outlook for QFIN positions it as a superior value option compared to SYM [7] Value Grades - QFIN has been assigned a Value grade of A, indicating strong undervaluation metrics, whereas SYM has a Value grade of F, suggesting it is overvalued [6]

Core Viewpoint - Qifu Technology, Inc. (QFIN) has demonstrated exceptional stock performance, significantly outperforming its industry and competitors over the past year and six months, driven by strong financial metrics and strategic initiatives [1][4][17]. Company Performance - QFIN stock has increased by 129% over the past year, compared to a 36.8% rise in the industry and 11.4% growth in the Zacks S&P 500 composite [1]. - In the last six months, QFIN has gained 52.4%, while the industry rose by 7.3%, and competitors N-able and NV5 Global saw declines of 22.3% and 11.3%, respectively [4]. - As of the last trading session, QFIN closed at $46.05, down 6.3% from its 52-week high of $48.94 [4]. Financial Strength - Qifu Technology reported strong cash reserves of $1.4 billion at the end of Q4 2024, with only $188 million in current debt, indicating a healthy financial position [10]. - The current ratio of 2.45 exceeds the industry average of 1.76, reflecting the company's ability to meet short-term obligations, with a 22.5% increase from the previous year [11]. - The return on equity stands at 27.3%, significantly higher than the industry average of 5.5%, showcasing exceptional profitability and efficient capital use [13]. Growth Catalysts - China's consumption-driven policies, aimed at boosting income and reducing burdens, serve as a growth catalyst for QFIN [6]. - The company has integrated AI into its operations, leading to a 25.1% improvement in user outreach and a 10% reduction in the average cost per credit line user [8]. - QFIN's loan portfolio, primarily in credit cards, mortgages, and auto loans, aligns well with government initiatives to enhance consumer lending [7]. Valuation and Prospects - QFIN stock is currently priced at 6.4 times forward 12-month earnings per share, significantly lower than the industry average of 24.2 times [15]. - The Zacks Consensus Estimate projects 2025 revenues at $2.4 billion, reflecting a 2.2% increase, and 2026 revenues at $2.7 billion, indicating a 12.4% year-over-year rise [16]. - Earnings estimates for 2025 are pegged at $6.93 per share, a 22.4% increase from the prior year, with 2026 earnings expected to reach $7.77 per share, suggesting a 12% year-over-year rise [16].

Core Viewpoint - Qifu Technology, Inc. will hold its annual general meeting (AGM) on June 30, 2025, to discuss several key resolutions including a name change and re-appointment of auditors [1][4]. Group 1: AGM Details - The AGM is scheduled for June 30, 2025, at 10:00 a.m. Beijing time, at Lujiazui Finance Plaza, Shanghai [1]. - The record date for Class A ordinary shares is set for May 27, 2025, Hong Kong time, allowing holders to attend and vote at the AGM [2]. - Holders of American Depositary Shares (ADSs) must provide voting instructions to The Bank of New York Mellon to exercise their voting rights [3]. Group 2: Proposed Resolutions - Proposed changes at the AGM include changing the company's English name from "Qifu Technology, Inc." to "Qfin Holdings, Inc." [1]. - The company plans to adopt an amended and restated memorandum and articles of association [1]. - Deloitte Touche Tohmatsu Certified Public Accountants LLP is proposed for re-appointment as the auditor until the next AGM [1]. - Mr. Xiangge Liu is proposed for re-election as a director of the company [1]. Group 3: Company Overview - Qifu Technology is a leading AI-empowered Credit-Tech platform in China, providing technology services throughout the loan lifecycle [5]. - The company utilizes machine learning models and data analytics to enhance credit service accessibility for consumers and SMEs [5].

Core Insights - The internet financial information service industry is experiencing rapid growth driven by the dual forces of high-quality development in the securities market and technological innovation, with the market size projected to expand significantly from 10.07 billion yuan in 2015 to 63.52 billion yuan in 2024, reflecting a compound annual growth rate of 22.71% [1][18] - The industry has evolved into a complete value chain from data collection and processing to intelligent information integration, benefiting from the continuous growth of household wealth and increasing demand for financial information from investors [1][18] Industry Overview - The internet financial information service industry emerged alongside the development of the internet, effectively utilizing its convenience and speed to provide investors with enhanced information services. The industry can be segmented into three categories: financial information terminal services, value-added information services, and online financial information services [3] - Despite the rapid growth of the industry, China's market size remains relatively small compared to its potential and the more mature international markets, indicating significant growth opportunities [3] Development History - The development of internet finance in China began before 2005, with traditional financial institutions initially moving their services online. The introduction of e-commerce in 1993 marked the start of a shift towards electronic business operations [5][6] - The period from 2005 to 2012 saw the emergence of true internet financial business models, including third-party payment, P2P lending, and crowdfunding, leading to significant changes in traditional financial models [6] Policy Environment - Government policies have been supportive of the healthy and orderly development of the internet financial information service industry, with initiatives aimed at enhancing data security, network security, and the application of new technologies [8][10] Industry Chain - The industry chain has matured, encompassing financial information, third-party payment, and online lending. The upstream includes data suppliers, banks, and individual fund providers, while the downstream consists of individual consumers, merchants, and enterprises [11] - The connection between merchants and end customers is crucial for the transaction volume of third-party payment services, with small and micro merchants playing a significant role in the market's long-tail effect [11] Market Dynamics - The financial sector is experiencing stable growth, with the total social financing scale projected to reach 408.3 trillion yuan in 2024, reflecting an 8% year-on-year increase. This stable financial environment provides a solid foundation for the development of the internet financial information service industry [13] - The software and information technology service industry, which includes internet financial information services, is crucial for economic development, with revenues expected to reach 13.73 trillion yuan in 2024, growing by 10% year-on-year [16] Competitive Landscape - Leading companies in the internet financial information service sector include Dongfang Caifu, Tonghuashun, and Zhinancai, which have capitalized on the rapid development of internet technology and the liberalization of interest rates to attract investors [20][23] - Dongfang Caifu's revenue from securities services is projected to be 8.494 billion yuan in 2024, while Tonghuashun's revenue is expected to reach 4.187 billion yuan, reflecting growth driven by increased demand for financial information services [23][25] Future Trends - The industry is expected to undergo a technological transformation with the integration of AI, big data, and cloud computing, leading to smarter services and improved user experiences [27] - Regulatory frameworks are becoming stricter, promoting the need for compliance and risk management, which will shape the industry's future development [28] - User demand is diversifying, pushing for innovative service offerings that cater to both individual and institutional investors, emphasizing real-time data and personalized services [29]

Core Viewpoint - The company has successfully completed the issuance of $690 million in convertible senior notes due in 2030, including an upsized amount of $90 million from initial buyers [1] Group 1: Issuance Details - The notes will bear an annual interest rate of 0.50%, with interest payments made semi-annually on April 1 and October 1 starting from October 1, 2025 [2] - The initial conversion rate is set at 16.7475 shares of American Depositary Shares (ADS) per $1,000 principal amount of notes, translating to an initial conversion price of approximately $59.71 per ADS [2] Group 2: Use of Proceeds - The net proceeds from the note issuance are intended to fund a new share repurchase program authorized by the company's board, supplementing the existing repurchase program announced in November 2024 [1] - The company anticipates repurchasing approximately $230 million worth of ADS through private negotiated transactions with certain note buyers at the time of pricing the notes [1]