Financial Metrics and Estimates - As of December 31, 2024, the allowance for loans receivable is RMB2,694.4 million (US$369.1 million) and the outstanding balance for contingent guarantee liability is RMB1,820.4 million (US$249.4 million) [679] - A 0.5 percentage point increase/decrease in the overall estimated default rate would result in an increase/decrease of RMB358.6 million (US$49.1 million) for allowance for loans receivable and RMB335.4 million (US$45.9 million) for contingent guarantee liability [679] - If there is a one percentage point increase/decrease in the portion of total transaction price allocated to loan facilitation services, the revenue from loan facilitation services would increase/decrease by approximately RMB23.0 million (US$3.2 million) for loans facilitated during the year ended December 31, 2024 [676] - The fair value of stand ready guarantee liabilities is estimated using a discounted cash flow model based on expected net payouts, which is influenced by the estimated default rate of underlying loans [680] - Allowances for financial assets and contingent guarantee liability are driven by estimated default rates based on historical data and correlation factors such as CPI and delinquent loan collection rates [678] Revenue Recognition and Transaction Pricing - The company recognizes revenues from loan facilitation services at the time a loan is originated, while revenues from post-facilitation services are recognized on a straight-line basis over the term of the underlying loans [671] - The company applies significant management judgment in determining and allocating the transaction price, including estimation of variable consideration and standalone selling price of each performance obligation [672] - The total transaction price includes service fees chargeable from borrowers or partner financial institutions, which incorporates variable considerations such as prepayment risk and future default rates [673] - The estimate of prepayment risk of borrowers is based on historical information and current trends, which can significantly impact the total transaction price [675] Performance Metrics - The company reported a 180-day+ vintage delinquency rate, which is calculated as the total amount of principal for loans delinquent for more than 180 days minus recovered past due principal, divided by the total initial principal amount of loans facilitated in the fiscal quarter [14] - The 30-day collection rate was highlighted, indicating the percentage of principal repaid within one month among overdue loans as of a specified date [14] - The outstanding loan balance at the end of the period included the total principal outstanding for loans facilitated, excluding loans delinquent for more than 180 days [14] - The repeat borrower contribution was noted, with a percentage representing the principal amount of loans borrowed by repeat borrowers relative to total loan facilitation volume [14] Business Strategy and Market Outlook - The company emphasized its capital-light model, which involves technology-enabled loan facilitation services without bearing credit risk [14] - Future expectations include growth in the Credit-Tech industry in China, with anticipated demand for Credit-Tech products [20] - The company aims to strengthen relationships with borrowers and financial institution partners, which is crucial for future business development [20] - Competition in the industry was acknowledged as a factor that could impact the company's performance [20] - Government policies and regulations relating to the industry were mentioned as potential influences on business operations [20] - The company plans to continue monitoring evolving risk factors that may affect its financial condition and results of operations [18]

Have you been paying attention to shares of Qifu Technology, Inc. (QFIN) ? Shares have been on the move with the stock up 8.2% over the past month. The stock hit a new 52-week high of $48.81 in the previous session. Qifu Technology, Inc. has gained 24.2% since the start of the year compared to the 0.2% move for the Zacks Business Services sector and the -27.9% return for the Zacks Technology Services industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises ...

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Qifu Technology, Inc. (NASDAQ:QFIN) Q4 2024 Results Conference Call March 17, 2025 7:30 AM ET Company Participants Karen Ji - Senior Director, Capital Markets Haisheng Wu - CEO Alex Xu - CFO Yan Zheng - Chief Risk Officer Conference Call Participants Richard Xu - Morgan Stanley Alex Ye - UBS Cindy Wang - China Renaissance Emma Xu - Bank of America Yada Li - CICC Operator Ladies and gentlemen, thank you for standing by, and welcome to the Qifu Technology Fourth Quarter and Full Year 2024 Earnings Conference ...

Core Viewpoint - Qifu Technology has reported strong financial results, showing significant growth and a low earnings multiple, making it an attractive investment opportunity despite its stock price more than doubling last year [1][2]. Company Overview - Qifu Technology is an AI-empowered credit-tech platform in China, providing credit solutions to 56.9 million users and a total of 261.2 million consumers, connecting them with 162 financial service providers [3]. - The company primarily serves consumers and small to medium businesses, focusing on credit needs in rural Tier 3 and Tier 4 communities, with 81% of users located in these areas [4]. Financial Performance - Revenue for Qifu rose by less than 3% to $614.1 million, a slight decrease from the 5% growth in 2024 [5]. - Adjusted net income increased by 8% in the fourth quarter, driven by better asset quality and lower funding costs, surpassing analysts' expectations of flat growth [5][6]. - Earnings per American depositary share (ADS) for 2024 increased by 56% to $5.81, reflecting consistent performance above Wall Street estimates [6]. Shareholder Returns - Qifu has been returning value to shareholders through aggressive share buybacks and announced a semiannual dividend of $0.70 per ADS for the second half of 2024, following a $0.60 distribution in September [7][8]. - The company's dividend payouts have increased annually since initiating a variable distribution policy in 2021, more than doubling from $0.54 per ADS in 2021 to $1.30 in 2024 [10]. Valuation - Despite strong earnings growth and capital appreciation, Qifu's stock trades at a compelling valuation of just 7.4 times trailing earnings, having been available at only 2.6 times earnings at the start of the previous year [8]. - The company has improved operations even with modest revenue growth, indicating potential for further upside as demand for personal and small business loans in China increases [9].

Financial Data and Key Metrics Changes - Total net revenue for Q4 was $4.48 billion, compared to $4.37 billion in Q3 and $4.25 billion a year ago, indicating a sequential increase [26] - Non-GAAP net income for Q4 increased by 71.5% year over year to RMB1.97 billion, with non-GAAP net income per diluted ADS surging 91.3% year over year to RMB13.7 [9][31] - Full year non-GAAP net income rose 44% year over year to reach an all-time high of RMB6.42 billion [9] - The company executed a $410 million share repurchase, buying back approximately 12% of its share count [10] Business Line Data and Key Metrics Changes - Revenue from credit-driven services (Capital Heavy) was $2.89 billion in Q4, down from $3.25 billion a year ago, primarily due to a decline in off-balance sheet loans [26] - Revenue from platform services (Capital Light) was $1.59 billion in Q4, up from $1.25 billion a year ago, driven by strong contributions from ICE and other value-added services [26] - The proportion of loan volume from the Capital Light segment increased by approximately 10 percentage points to 53% throughout 2024 [16] Market Data and Key Metrics Changes - The delinquency rate for 90 days was 2.09% in Q4, down from 2.7% in Q3, while the 30-day collection rate increased to 88.1% from 87.4% [29] - The company observed a 10% increase in loan application ratios in Q4 compared to Q3, indicating a recovery in credit demand [43] Company Strategy and Development Direction - The company plans to adopt a one core, two wings strategy, focusing on domestic credit as the core and technology solutions and international expansion as the wings [21][22] - The company aims to enhance its AI capabilities, with plans to build an AI agent platform to empower core lending processes [20] - The management emphasized a commitment to optimizing capital allocation and enhancing shareholder returns through share buybacks and dividends [23][24] Management Comments on Operating Environment and Future Outlook - Management noted improvements in user activities and credit demand since September 2024, with expectations for Q1 loan volume to grow by more than 10% year over year [43] - The company remains cautiously optimistic about 2025, expecting its core credit business to maintain high-quality development while expanding its technology solutions business [22] Other Important Information - The company achieved a record high ROE of 27.9% in 2024, significantly outperforming most financial services and Internet companies in China [10] - The company plans to ramp up ABS issuance in 2025, increasing the share of ABS in its funding mix [15] Q&A Session Summary Question: What areas are seeing the most potential for AI integration and what is the credit demand outlook for 2025? - Management highlighted significant improvements in AI applications, particularly in credit assessment and loan collection, and noted a 10% increase in loan application ratios in Q4 [39][43] Question: What are the drivers for the movement of early asset quality indicators in Q4? - The slight increase in day one delinquency and collection rates was attributed to an optimization in repayment reminder strategies, with overall risk levels remaining stable [48][50] Question: How does the new regulation impact the overall industry and the company? - Management expressed optimism about the regulatory environment, noting that the government's direction to boost consumption through consumer finance is encouraging [56][58] Question: What is the outlook for funding costs? - Funding costs have continued to decline, but management indicated limited room for further decline due to the current low levels [60][62] Question: How does the company plan to deliver value to shareholders? - The company aims to maintain a 70% payout ratio while prioritizing share buybacks, with a new $450 million buyback program in place [67][70]

Financial Performance - Total net revenue for 2024 reached RMB 17,165.7 million (USD 2,351.7 million), an increase from RMB 16,290.0 million in 2023[16]. - Net profit for 2024 was RMB 6,248.1 million (USD 856.0 million), compared to RMB 4,268.6 million in 2023, reflecting a significant growth[16]. - Non-GAAP net profit for 2024 was RMB 6,415.7 million (USD 879.0 million), up from RMB 4,454.2 million in 2023[16]. - Total net income for the three months ended December 31, 2024, reached RMB 4,482,252 thousand, a slight decrease of 0.3% compared to RMB 4,495,503 thousand in the same period of 2023[55]. - The net profit for the year ended December 31, 2024, was RMB 6,248,116 thousand, representing a 46.5% increase from RMB 4,268,577 thousand in 2023[58]. - The company reported a total revenue of RMB 17,165,656 thousand for the year ended December 31, 2024, an increase of 5.4% from RMB 16,290,027 thousand in 2023[55]. - The basic earnings per share for the year ended December 31, 2024, was RMB 21.02, compared to RMB 13.36 in 2023, reflecting a growth of 57.5%[55]. - The company reported a total operating income of RMB 7,528,570 thousand for the full year 2024, compared to RMB 4,856,964 thousand in 2023, indicating strong growth[62]. Loan and Credit Metrics - As of December 31, 2024, the platform has connected with 162 financial institution partners and 261.2 million potential credit-demand consumers, an increase of 11.0% from 235.4 million last year[9]. - The cumulative number of users with approved credit limits reached 56.9 million, up 11.8% from 50.9 million as of December 31, 2023[9]. - The total loan volume facilitated and initiated reached RMB 89,885 million, a 0.4% increase from RMB 89,561 million in the same period of 2023, and a 9.0% increase from RMB 82,436 million in the previous quarter[9]. - The outstanding loan balance as of December 31, 2024, was RMB 137,014 million, a decrease of 5.7% from RMB 145,270 million as of December 31, 2023, but an increase of 7.3% from RMB 127,727 million as of September 30, 2024[9]. - The 90-day+ delinquency rate for loans initiated by financial institutions was 2.09% as of December 31, 2024[9]. - The average contract term for loans initiated by financial institutions was approximately 10.00 months in Q4 2024, compared to 11.47 months in the same period of 2023[9]. - The loan volume under the light capital model, smart credit engine (ICE), and comprehensive technology solutions accounted for 53.2% of the total loan volume, increasing by 23.2% from RMB 38,798 million in the same period of 2023[9]. Cost Management and Expenses - The total operating costs and expenses for Q4 2024 were RMB 2,591.9 million (USD 355.1 million), down from RMB 3,215.9 million in Q4 2023[20]. - The company’s total operating costs and expenses were RMB 9,637.1 million (USD 1,320.3 million), down from RMB 11,433.1 million in 2023, indicating improved cost management[27]. - The total operating expenses for the year ended December 31, 2024, decreased to RMB 9,637,086 thousand from RMB 11,433,063 thousand in 2023, a reduction of 15.6%[55]. - General and administrative expenses amounted to RMB 449.5 million (USD 61.6 million), slightly up from RMB 421.1 million in 2023[29]. Cash Flow and Assets - Operating cash flow for 2024 reached a historical high of RMB 93.4 billion, supporting strategic initiatives and shareholder returns[16]. - Operating cash flow for the three months ended December 31, 2024, was RMB 3,051,606 thousand, up 29.7% from RMB 2,351,791 thousand in the same period of 2023[56]. - The company reported a total asset value of RMB 48,132,618 as of December 31, 2024, an increase from RMB 45,818,572 in 2023, representing a growth of approximately 6.8%[54]. - Cash and cash equivalents increased to RMB 4,452,416 in 2024 from RMB 4,177,890 in 2023, reflecting a growth of about 6.5%[54]. - The company’s cash and cash equivalents at the end of December 31, 2024, were RMB 6,805,800 thousand, down from RMB 7,558,997 thousand at the end of 2023[56]. Shareholder Returns and Dividends - The company plans to distribute a semi-annual dividend of USD 0.70 per ADS for the second half of 2024[40]. - The company has approved a share buyback plan with a total value of up to USD 350 million, with approximately 3.1 million ADS purchased at an average price of USD 34.5 per share[41]. Future Outlook and Strategy - The company expects to generate a net profit of RMB 1.75 billion to RMB 1.85 billion in Q1 2025, reflecting a year-on-year growth of 49% to 58%[42]. - The company plans to invest more resources into AI applications in credit scenarios, aiming for quality growth and innovation[15]. - The company’s strategy includes a focus on growth through partnerships and market expansion, with potential impacts from regulatory changes and market acceptance of its products[52]. - The company is focused on improving operational efficiency amid ongoing macroeconomic uncertainties[42]. Non-GAAP Measures - The company emphasized the importance of non-GAAP financial measures to avoid distortion from certain expenses included in GAAP results, enhancing understanding of past performance and future outlook[50]. - The company’s operating profit margin, calculated using non-GAAP measures, is expected to provide insights into business trends and operational performance[50]. - The company’s net profit attributable to shareholders, calculated using non-GAAP measures, is expected to provide practical information regarding operational performance[50].

Core Viewpoint - Qifu Technology reported strong operational and financial results for the fourth quarter and full year of 2024, despite facing macroeconomic challenges, and announced a semi-annual dividend increase [1][15][20]. Fourth Quarter 2024 Business Highlights - As of December 31, 2024, Qifu Technology connected 261.2 million consumers with potential credit needs, an increase of 11.0% from 235.4 million a year ago [10]. - Cumulative users with approved credit lines reached 56.9 million, up 11.8% from 50.9 million in 2023 [10]. - The company facilitated 24,814,923 loans in the fourth quarter, with total loan facilitation and origination volume reaching RMB89,885 million, a 0.4% increase year-over-year [10]. - The total outstanding loan balance was RMB137,014 million, a decrease of 5.7% from the previous year [10]. - The 90-day+ delinquency rate was 2.09% as of December 31, 2024 [10]. Fourth Quarter 2024 Financial Highlights - Total net revenue for the fourth quarter was RMB4,482.3 million (US$614.1 million), compared to RMB4,370.2 million in the prior quarter [18]. - Net income was RMB1,912.7 million (US$262.0 million), an increase from RMB1,798.8 million in the prior quarter [18]. - Non-GAAP net income was RMB1,972.4 million (US$270.2 million), compared to RMB1,825.1 million in the prior quarter [18]. - Net income per fully diluted ADS was RMB13.24 (US$1.82), up from RMB12.18 in the prior quarter [18]. Full Year 2024 Operational Highlights - Total loan facilitation and origination volume for 2024 was RMB321,969 million, a decrease of 12.8% from RMB369,132 million in 2023 [19]. - The weighted average contractual tenor of loans was 10.05 months, compared to 11.21 months in 2023 [19]. - Repeat borrower contribution was 93.1% for the year, up from 91.6% in 2023 [19]. Full Year 2024 Financial Highlights - Total net revenue for 2024 was RMB17,165.7 million (US$2,351.7 million), compared to RMB16,290.0 million in 2023 [43]. - Net income for the year was RMB6,248.1 million (US$856.0 million), an increase from RMB4,268.6 million in 2023 [43]. - Non-GAAP net income was RMB6,415.7 million (US$879.0 million), compared to RMB4,454.2 million in 2023 [43]. - Net income per fully diluted ADS was RMB41.28 (US$5.66), up from RMB26.08 in 2023 [43]. Dividend and Share Repurchase - The board approved a semi-annual dividend of US$0.35 per Class A ordinary share for the second half of 2024 [57]. - The company repurchased approximately 3.1 million ADSs for about US$107 million in the fourth quarter [59]. - A new share repurchase plan for 2025 was approved, allowing for up to US$450 million in repurchases [60]. Business Outlook - The company expects to generate a net income between RMB1.75 billion and RMB1.85 billion for the first quarter of 2025, reflecting a year-on-year growth of 49% to 58% [62].

Core Viewpoint - Qifu Technology reported strong financial results for the fourth quarter and full year of 2024, despite macroeconomic challenges, and announced an increase in semi-annual dividends [1][8][46]. Group 1: Fourth Quarter 2024 Business Highlights - The platform connected 162 financial institutional partners and 261.2 million consumers, marking an 11.0% increase from 235.4 million a year ago [5]. - Cumulative users with approved credit lines reached 56.9 million, up 11.8% from 50.9 million in the previous year [5]. - The total facilitation and origination loan volume was RMB 89,885 million, a 0.4% increase from RMB 89,561 million in the same period of 2023 [5]. Group 2: Fourth Quarter 2024 Financial Highlights - Total net revenue was RMB 4,482.3 million (US$ 614.1 million), compared to RMB 4,370.2 million in the prior quarter [6]. - Net income was RMB 1,912.7 million (US$ 262.0 million), an increase from RMB 1,798.8 million in the prior quarter [6]. - Non-GAAP net income was RMB 1,972.4 million (US$ 270.2 million), compared to RMB 1,825.1 million in the prior quarter [6]. Group 3: Full Year 2024 Operational Highlights - Total net revenue for 2024 was RMB 17.17 billion, up from RMB 16.29 billion in 2023 [10][32]. - Non-GAAP net income for the year was RMB 6.42 billion, compared to RMB 4.45 billion in 2023 [10][32]. - The company generated a record RMB 9.34 billion in cash from operations in 2024 [10]. Group 4: Business Strategy and Outlook - The company plans to maintain a prudent approach in business planning for 2025, focusing on quality growth and enhancing operational efficiency [10][52]. - Management expects net income for the first quarter of 2025 to be between RMB 1.75 billion and RMB 1.85 billion, representing a year-on-year growth of 49% to 58% [52]. - The company aims to allocate more resources to AI applications across credit scenarios to navigate the current environment effectively [10]. Group 5: Shareholder Returns - The board approved a semi-annual dividend of US$ 0.35 per Class A ordinary share for the second half of 2024 [46]. - The company has initiated a new share repurchase plan for up to US$ 450 million starting January 1, 2025 [50].

Core Viewpoint - Qifu Technology, Inc. will report its unaudited financial results for Q4 and the full year ended December 31, 2024, on March 17, 2025, before U.S. markets open [1] Company Overview - Qifu Technology is a leading Credit-Tech platform in China, providing a comprehensive suite of technology services to assist financial institutions, consumers, and SMEs throughout the loan lifecycle [5] - The company aims to make credit services more accessible and personalized through its Credit-Tech services [5]