Investment Rating - The report maintains a **Buy** rating for LexinFintech Holdings (LX US) with a target price of **$2.40**, representing a potential upside of **38.7%** from the current price of **$1.73** [1][2] Core Views - **Revenue Take Rate Improvement**: LexinFintech's revenue take rate increased significantly, reaching **2.91%** in Q2 2024, up **37 bps YoY** and **54 bps QoQ**, driven by lower financing costs, improved asset quality of new loans, and optimized prepayment conditions [1] - **Profitability Trends**: Despite a **36% YoY decline** in GAAP net profit in Q2 2024, the company saw a **12% QoQ growth** in net profit, with revenue increasing **19% YoY** and **12% QoQ** [1] - **Asset Quality Pressure**: The 90-day delinquency rate rose to **3.7%** in Q2 2024, up **70 bps QoQ**, but leading indicators such as the 30-day recovery rate showed slight improvement, suggesting a potential recovery trend in H2 2024 [1] - **Loan Volume Decline**: Facilitated loan volume decreased **20% YoY** and **12% QoQ** in Q2 2024, with the loan balance growing only **0.9% YoY** and declining **5% QoQ** [1] - **International Expansion**: The company's business in Mexico showed strong growth, although the overall scale remains small [1] Financial Forecast Updates - **Facilitated Loan Volume**: Forecasts for 2024E, 2025E, and 2026E were revised downward by **-5.4%**, **-5.4%**, and **-6.3%**, respectively, reflecting a more conservative outlook on loan growth [2][8] - **Net Take Rate**: The net take rate for 2024E, 2025E, and 2026E was adjusted downward by **-0.20ppt**, **-0.21ppt**, and **-0.28ppt**, respectively, due to lower expected profitability [2][8] - **Net Income and Profit**: Net income forecasts for 2024E, 2025E, and 2026E were revised upward by **12.5%**, **9.9%**, and **9.2%**, respectively, while net profit forecasts were lowered by **-12.6%**, **-18.3%**, and **-22.2%** [2][8] - **ROAE**: The return on average equity (ROAE) for 2024E, 2025E, and 2026E was revised downward by **-1.3ppts**, **-2.0ppts**, and **-2.5ppts**, respectively [2][8] Business and Financial Performance - **Loan Balance**: The loan balance grew **0.9% YoY** in Q2 2024 but declined **5% QoQ**, reflecting a slowdown in loan origination [1][5] - **Revenue Growth**: Q2 2024 revenue increased **19% YoY** and **12% QoQ**, driven by higher take rates and improved asset quality [1][5] - **Profit Margins**: The company's GAAP net profit margin declined **36% YoY** but improved **12% QoQ**, indicating a potential recovery in profitability [1][5] - **Dividend Policy**: LexinFintech announced an interim dividend of **$0.072 per ADS**, representing a **20% payout ratio** [1] Industry and Peer Comparison - **Peer Ratings**: The report covers several financial technology and insurance companies, with most receiving a **Buy** rating, including QFIN US, FINV US, and LX US [9] - **Target Price Upside**: Among peers, LexinFintech has a **38.7% potential upside**, which is competitive compared to other financial technology companies like QFIN US (**9.0% upside**) and FINV US (**19.8% upside**) [9]

J Studios/DigitalVision via Getty Images LexinFintech Holdings Ltd. (NASDAQ:LX) stock is still assigned a Hold rating. LX's Q2 loan origination was weaker than the company's prior guidance, and the chances of a meaningful improvement in LexinFintech's near-term financial performance are low. On the flip side, there are positives pertaining to LX's long-term outlook. The company is deriving a growing proportion of its top line and loans from asset-light businesses and non-China operations, respectively, ...

[Executive Summary & Business Outlook](index=1&type=section&id=LexinFintech%20Holdings%20Ltd.%20Reports%20Second%20Quarter%202024%20Unaudited%20Financial%20Results) The company reports mixed Q2 2024 results with controlled loan growth, improved profitability from lower funding costs, and a new dividend announcement [Management Commentary](index=1&type=section&id=Management%20Commentary) Management reports healthy sequential growth in revenue and profit despite a weak credit environment, driven by strategic overseas expansion and record-low funding costs - Despite a soft consumer demand and weak credit environment, the company achieved a **12% quarter-over-quarter growth** in both **total operating revenue** and **net profit**[1](index=1&type=chunk) | Metric | Q2 2024 Value | Change vs Q1 2024 | | :--- | :--- | :--- | | Loan Origination | RMB 51.1 billion | -12% | | Total Operating Revenue | RMB 3.6 billion | +12.3% | | Net Profit | RMB 227 million | +12.4% | - Key strategic achievements in the quarter include: * Accelerated growth in international operations, which is **outpacing the domestic business** * **Funding cost hit a historical low**, effectively boosting profitability compared to Q1 2024 * **Early signs of improvement** in overall risk performance metrics, extending into July[1](index=1&type=chunk) - The company declared a **semi-annual cash dividend of US$0.072 per ADS**, representing approximately **20% of total net income** for the six-month period[1](index=1&type=chunk) [Operational and Financial Highlights](index=2&type=section&id=Operational%20and%20Financial%20Highlights) The quarter saw mixed results with declining operational metrics and net income, despite strong year-over-year revenue growth [Operational Highlights](index=2&type=section&id=Second%20Quarter%202024%20Operational%20Highlights) Operational metrics show a decline in active users, loan originations, and e-commerce GMV, coupled with a rising delinquency ratio | User Metric | As of June 30, 2024 | YoY Change | | :--- | :--- | :--- | | Total Registered Users | 219 million | +10.2% | | Users with Credit Lines | 43.3 million | +5.8% | | Active Loan Users (Q2) | 4.2 million | -16.4% | | Loan & Credit Metric | Q2 2024 | YoY Change | | :--- | :--- | :--- | | Total Loan Originations | RMB 51.1 billion | -20.1% | | Outstanding Loan Balance | RMB 115 billion | +0.9% | | 90 day+ Delinquency Ratio | 3.7% | (vs 3.0% as of Mar 31, 2024) | | First Payment Default Rate (30d+) | Below 1% | N/A | - GMV for the installment e-commerce platform service was **RMB 933 million**, a **decrease of 37.2%** from Q2 2023[4](index=4&type=chunk) [Financial Highlights](index=2&type=section&id=Second%20Quarter%202024%20Financial%20Highlights) Total operating revenue grew 19.1% YoY, but net income attributable to shareholders saw a significant 36.3% decline | Financial Metric (Q2 2024) | Amount (RMB) | YoY Change | | :--- | :--- | :--- | | Total Operating Revenue | 3,641 million | +19.1% | | Credit Facilitation Service Income | 2,669 million | +24.9% | | Tech-empowerment Service Income | 535 million | +36.5% | | Installment E-commerce Income | 437 million | -17.0% | | Net Income (Attributable) | 227 million | -36.3% | | Adjusted Net Income (Attributable) | 250 million | -39.0% | [Detailed Financial Results (Q2 2024)](index=3&type=section&id=Second%20Quarter%202024%20Financial%20Results) This section details the key drivers of revenue growth, changes in operating costs, and factors impacting the decline in overall profitability [Operating Revenue](index=3&type=section&id=Operating%20revenue) Revenue growth was driven by strong performance in credit facilitation and tech-empowerment services, offsetting declines in financing and e-commerce income - Credit facilitation service income **increased by 24.9% YoY**, with loan facilitation and servicing fees **growing 51.5%** due to better control over early repayment behaviors[8](index=8&type=chunk) - Tech-empowerment service income **rose 36.5% YoY**, mainly due to an increase in loan facilitation volume under the profit-sharing model[10](index=10&type=chunk) - Financing income **decreased by 10.6% YoY**, primarily due to a decrease in the origination of on-balance sheet loans[9](index=9&type=chunk) [Operating Costs and Expenses](index=4&type=section&id=Operating%20cost) Operating costs were mixed, with a significant decrease in funding costs being offset by higher servicing expenses and increased provisions for loan losses - Funding costs saw a **substantial decrease of 41.8% YoY to RMB 90.5 million**, driven by lower funding costs for on-balance sheet loans[10](index=10&type=chunk) - Processing and servicing costs **increased by 16.3% YoY to RMB 519 million**, primarily due to higher expenses for risk management and collection[11](index=11&type=chunk) - Provision for contingent guarantee liabilities **rose to RMB 935 million** from RMB 722 million in Q2 2023, driven by increased outstanding off-balance sheet loans and weaker loan performance[12](index=12&type=chunk) [Profitability](index=4&type=section&id=Profitability) Gross profit grew YoY, but net income fell sharply due to a significant loss from the change in fair value of financial guarantee derivatives - Gross profit **increased by 35.4% YoY to RMB 1,348 million**[12](index=12&type=chunk) - A **loss of RMB 368 million** was recorded for the 'Change in fair value of financial guarantee derivatives and loans at fair value', a **reversal from a RMB 130 million gain** in Q2 2023, significantly impacting profitability[13](index=13&type=chunk) - Net income **decreased by 36.3% YoY to RMB 227 million**[13](index=13&type=chunk) [Recent Developments](index=4&type=section&id=Recent%20Development) The company announced the approval and details of its semi-annual cash dividend for the first half of 2024 [Semi-Annual Dividend](index=4&type=section&id=Semi-Annual%20Dividend) The board approved a semi-annual dividend of US$0.072 per ADS, representing about 20% of H1 2024 net income - A dividend of **US$0.036 per ordinary share, or US$0.072 per ADS**, has been approved for the six-month period ended June 30, 2024[13](index=13&type=chunk) - The dividend payout represents approximately **20% of the total net income** for the first half of 2024[1](index=1&type=chunk) - The dividend is scheduled to be **paid on October 18, 2024**, to shareholders of record as of the close of business on September 16, 2024[13](index=13&type=chunk) [Financial Statements and Supplementary Data](index=7&type=section&id=Financial%20Statements%20and%20Supplementary%20Data) This section presents the unaudited condensed financial statements, a reconciliation of GAAP to non-GAAP measures, and supplementary credit performance data [Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The statements show total assets of RMB 23.0 billion and total equity of RMB 10.1 billion, with Q2 revenue of RMB 3.64 billion and net income of RMB 227 million | Condensed Balance Sheet | As of June 30, 2024 (RMB thousands) | | :--- | :--- | | Total Assets | 23,019,381 | | Total Liabilities | 12,928,468 | | Total Shareholders' Equity | 10,090,913 | | Condensed Income Statement | For Q2 2024 (RMB thousands) | | :--- | :--- | | Total Operating Revenue | 3,640,688 | | Gross Profit | 1,348,093 | | Net Income | 226,531 | [Reconciliation of GAAP and Non-GAAP Measures](index=11&type=section&id=Unaudited%20Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Results) Adjusted non-GAAP net income was RMB 250 million after excluding items like share-based compensation, resulting in an adjusted diluted EPS of RMB 1.49 per ADS | GAAP to Non-GAAP Reconciliation | Q2 2024 (RMB thousands) | | :--- | :--- | | Net Income (GAAP) | 226,531 | | Add: Share-based compensation | 23,119 | | Add: Interest expense on convertible notes | 373 | | Add: Investment loss | (260) | | **Adjusted Net Income (Non-GAAP)** | **249,763** | - **Adjusted diluted net income per ADS was RMB 1.49** for Q2 2024, compared to RMB 2.19 in Q2 2023[24](index=24&type=chunk) [Supplementary Credit Performance Data](index=12&type=section&id=Additional%20Credit%20Information) Supplementary data includes vintage charge-off curves and first payment default rates, indicating improved quality for recent loan originations - The **Vintage Charge-Off Curve** provides a visual representation of the cumulative loss rates for loan originations by quarter[25](index=25&type=chunk) - The **First Payment Default (30+) rate** for new loan originations has trended downwards and **remained below 1.0%** through the first half of 2024[4](index=4&type=chunk)[26](index=26&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2024, total GMV of loan origination reached RMB51.1 billion, with a managed loan balance of RMB115.2 billion. Revenue was RMB3.64 billion, reflecting a 12.3% quarter-over-quarter increase, while net profit was RMB230 million, up 12.4% quarter-over-quarter [6][28] - The revenue take rate of the credit business rose to 2.91%, an increase of 37 basis points quarter-over-quarter and 54 basis points year-over-year, despite a 12% quarter-over-quarter decline in loan issuances [29][46] - Funding costs decreased to 5.26%, down 58 basis points quarter-over-quarter and 131 basis points year-over-year, attributed to a relaxed monetary policy and increased demand for high-quality assets [30][48] Business Line Data and Key Metrics Changes - The e-commerce business revenue surged to RMB437 million, up 88.5% quarter-over-quarter, with gross profit rebounding to RMB14 million [33] - Technology-enabled services revenue grew to RMB535 million, up 47.9% quarter-over-quarter, driven by increased GMV in risk-free loans and higher revenue share [34] Market Data and Key Metrics Changes - The overseas business segment, particularly in Mexico, saw loan origination volume increase by 61% and revenue grow by 113% quarter-over-quarter [12] - The risk-free segment of new loans increased from 23% in Q1 to 27.2% in Q2, indicating a growing demand for high-quality assets [31] Company Strategy and Development Direction - The company plans to continue a prudent strategy focusing on risk management while promoting steady growth in scale and enhancing customer acquisition efforts [16][18] - There is an emphasis on leveraging high-frequency consumption scenarios in e-commerce to boost user engagement and retention [17] - The company aims to actively pursue overseas market expansion, particularly in emerging markets, while optimizing asset structure and improving profitability [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the sluggish macroeconomic recovery and low consumer confidence, which influenced their cautious operating strategy [28] - The company anticipates that improvements in risk management capabilities will gradually enhance profitability in the future [11][52] Other Important Information - The company invested RMB143 million in research and development, focusing on AI large models to improve operational efficiency [13] - A cash dividend of approximately US$0.072 per ADS was approved, representing about 20% of total net profit for the first half of 2024 [36] Q&A Session Summary Question: Details on overseas expansion and profitability timeline - Management noted that the overseas business is growing rapidly, with loan origination in Q2 increasing by 60.8%. However, it will take time and investment to scale up and achieve profitability [40][42] Question: Increase in sales and marketing expenses - Management clarified that the increase in expenses is primarily due to investments in overseas markets, while domestic customer acquisition costs remain stable [40][44] Question: Factors driving revenue take rate increase - The significant rise in revenue take rate was attributed to improved operational efficiency, tightened risk standards, and reduced funding costs [46][47] Question: Measures taken to reduce funding costs - Funding costs decreased due to overall market liquidity, high demand for quality assets, and successful ABS issuances [48][49] Question: Expectations for asset quality improvement - Management expects gradual improvements in profitability as risk management upgrades continue, with a focus on leading risk indicators rather than lagging ones like the 90-days delinquency rate [50][53]

SHENZHEN, China, Aug. 27, 2024 (GLOBE NEWSWIRE) -- LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ: LX), a leading technology-empowered personal financial service enabler in China, today announced its unaudited financial results for the quarter ended June 30, 2024. "We harvested a healthy set of operational and financial results with improved risk performance for new loans, uplifted net profit from the first quarter of 2024, and controlled loan origination in the second quarter of 2024," said ...

SHENZHEN, China, Aug. 19, 2024 (GLOBE NEWSWIRE) -- LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ: LX), a leading credit technology-empowered consumer financial service enabler in China, today announced that it will report its unaudited financial results for the second quarter ended June 30, 2024, after the U.S. market closes on Tuesday, August 27, 2024. The Company’s management will host an earnings conference call at 10:00 PM U.S. Eastern time on August 27, 2024 (10:00 AM Beijing/Hong Kong ...

Investor Presentation First Quarter 2024 Results Disclaimer This presentation has been prepared by LexinFintechHoldings Ltd (the “Company”) pursuant to Section 5(d) of the U.S. Securities Act of 1933, as amended (the “Securities Act”) solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any investmentactivity or trading strategy, nor may it or any part of it form the basis of or be relied on in conne ...

LexinFintech Holdings Ltd. (NASDAQ:LX) Q1 2024 Results Conference Call May 23, 2024 10:00 PM ET Company Participants Mandy Dong - Director, Investor Relations Jay Xiao - Founder, Chairman, and Chief Executive Officer Arvin Qiao - Chief Risk Officer James Zheng - Chief Financial Officer Conference Call Participants Frank Zheng - UBS Yada Li - CICC Zoe Zou - CLSA Operator Good day, and thank you for standing by. Welcome to LexinFintech First Quarter 2024 Earnings Conference Call. [Operator Instructions] Pleas ...

SHENZHEN, China, May 23, 2024 (GLOBE NEWSWIRE) -- LexinFintech Holdings Ltd. ("Lexin" or the "Company") (NASDAQ:LX), a leading technology-empowered personal financial service enabler in China, today announced its unaudited financial results for the quarter ended March 31, 2024. "In the first quarter of 2024, Lexin reported total loan origination of RMB58.0 billion, a decrease of 4.8% year-over-year, reflecting a strategy of controlled growth. The outstanding loan balance grew by 13.5% to RMB122 billion on a ...

Core Viewpoint - LexinFintech Holdings Ltd. reported a cautious approach to growth in Q1 2024, focusing on asset quality amid a challenging macroeconomic environment, with total loan origination decreasing by 4.8% year-over-year while outstanding loan balances increased by 13.5% [1][2] Financial Performance - Total operating revenue for Q1 2024 was RMB3.2 billion, an increase of 8.7% year-over-year, while net profit was RMB202 million, a decrease of 38.4% from the previous year [2][9][18] - Credit facilitation service income rose by 25.2% to RMB2.648 billion, driven by increased loan facilitation and servicing fees [12][9] - The company achieved a record low in funding costs, decreasing by 39.7% to RMB90.7 million [14] Operational Highlights - The total number of registered users reached 215 million, a 10.8% increase year-over-year, while active users using loan products decreased by 10.8% to 4.5 million [3] - Cumulative loan originations reached RMB1,171.1 billion, a 26.8% increase from the previous year, while the outstanding principal balance of loans was RMB122 billion, up 13.5% [4] Credit Performance - The 90-day+ delinquency ratio was 3.0%, slightly up from 2.9% at the end of 2023, while the first payment default rate for new loan originations remained below 1% [5] Business Segments - The installment e-commerce platform service generated RMB903 million in GMV, a decrease of 20.0% year-over-year, serving over 300,000 users and 400 merchants [7] - The tech-empowerment service maintained a customer retention rate of over 75% [6] Cost Management - Cost of sales decreased by 49.5% to RMB236 million, aligning with the decrease in installment e-commerce platform service income [14] - General and administrative expenses decreased by 7.5% to RMB89.8 million due to expense control measures [17]