X Financial ( NYSE: XYF ) 2024 Q4 Earnings Results Presentation Disclaimer This presentation has been prepared by X Financial (the "Company") solely for information purpose and has not been independently verified. No representations, warranties or undertakings, express or implied, are made by the Company or any of its affiliates, advisers, or representatives or the underwriters as to, and no reliance should be placed upon, the accuracy, fairness, completeness or correctness of the information or opinions pr ...

Financial Data and Key Metrics Changes - Total loan volumes in Q4 reached RMB32 billion, a 24% year-over-year increase, while full-year loan volumes were RMB104.9 billion, stable compared to 2023 [8][10] - Q4 net revenue increased by 43% year-over-year to RMB1.7 billion, and net income grew by 104% year-over-year to RMB386 million [14] - Full-year total net revenue reached a record RMB5.9 billion, with full-year net income at RMB1.5 billion [15] Business Line Data and Key Metrics Changes - The delinquency rate for loans overdue by 31 to 60 days improved to 1.17% from 1.57% a year ago, and the 91 to 108 days overdue delinquency rate declined to 2.48% from 3.12% [10][11] - The company expects total loan volumes to increase by approximately 30% for the full year of 2025, driven by organic demand and a stable regulatory environment [12] Market Data and Key Metrics Changes - China's government implemented monetary and fiscal stimulus measures that lowered funding costs and fostered healthy borrower demand in the personal finance market [9][10] - The company anticipates sequential growth in total loan volume in Q1 2025, despite the usual seasonal impact of the Chinese New Year [12] Company Strategy and Development Direction - The company is focused on leveraging technology to enhance financial services efficiency, utilizing AI-powered risk analytics and automated underwriting models [12][13] - Strategic investments in AI are being expanded, with AI now powering customer service robots and intelligent marketing campaigns [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory for 2025, supported by robust underwriting standards and disciplined risk management [16][18] - The company is confident in achieving meaningful growth in both volume and profitability in 2025, despite some visibility challenges [36][37] Other Important Information - The company returned approximately USD 76 million to shareholders in 2024, including cash dividends and share repurchases [15][16] - A semi-annual dividend of USD 0.25 per ADS was declared, reinforcing the commitment to delivering shareholder value [15] Q&A Session Summary Question: Clarification on share repurchase accounting - Management clarified that the share count calculation is based on a weighted average, which is why the reduction is not fully reflected in the year-end report [21][22][23] Question: New hire's role in the company - The new hire, Noah Kauffman, will focus on deepening engagement with U.S. capital markets and enhancing investor relations [26][28] Question: Drivers behind expected loan volume growth for 2025 - The expected 30% increase in loan volume is attributed to improved customer acquisition strategies and partnerships with more platforms [29][30] Question: Impact of loan volume growth on profitability - Management indicated that profitability is expected to increase at a similar pace as loan volume, driven by lower funding costs and improved risk management [33][36] Question: Capital allocation priorities going forward - The company plans to emphasize share buybacks over dividends, while still maintaining a balanced approach to capital returns [38][42]

Core Viewpoint - X Financial reported strong operational and financial results for the fourth quarter and fiscal year 2024, with significant growth in loan facilitation and net income, driven by improved asset quality and favorable macroeconomic conditions in China [16][30]. Financial Highlights - Total net revenue for Q4 2024 was RMB1,708.7 million (US$234.1 million), a 43.3% increase from RMB1,192.7 million in Q4 2023 [9][17]. - Net income for Q4 2024 reached RMB385.6 million (US$52.8 million), up 104.1% from RMB189.0 million in the same period of 2023 [10][30]. - For the fiscal year 2024, total net revenue was RMB5,871.8 million (US$804.4 million), representing a 22.0% increase from RMB4,814.9 million in 2023 [15][32]. - Net income for the fiscal year 2024 was RMB1,539.9 million (US$211.0 million), a 29.8% increase from RMB1,186.8 million in 2023 [44]. Operational Highlights - The total loan amount facilitated and originated in Q4 2024 was RMB32,297 million, a 23.6% increase year-over-year [2][3]. - The number of active borrowers in Q4 2024 was 2,120,068, a 32.2% increase from 1,603,760 in Q4 2023 [3][16]. - The total outstanding loan balance as of December 31, 2024, was RMB52,327 million, compared to RMB48,847 million as of December 31, 2023 [4]. Delinquency Rates - The delinquency rate for loans past due for 31-60 days was 1.17% as of December 31, 2024, down from 1.57% a year earlier [14]. - The delinquency rate for loans past due for 91-180 days was 2.48% as of December 31, 2024, compared to 3.12% as of December 31, 2023 [14]. Shareholder Returns - The company allocated US$76 million to share repurchases and dividends in 2024, reflecting its commitment to delivering value to shareholders [16][47]. - A semi-annual dividend of US$0.25 per ADS was declared, payable on or about July 2, 2025 [48]. Business Outlook - For Q1 2025, the company expects total loan volumes to be between RMB33.5 billion and RMB34.5 billion, with a full-year forecast of RMB134.4 billion to RMB138.4 billion [49].

Core Viewpoint - X Financial, a leading online personal finance company in China, is set to release its unaudited financial results for Q4 and the fiscal year ending December 31, 2024, on March 20, 2025, before U.S. market opening [1] Group 1: Financial Results Announcement - The unaudited financial results will be announced before the U.S. markets open on March 20, 2025 [1] - An earnings conference call will be hosted by the management team at 7:00 AM U.S. Eastern Time on the same day [1] Group 2: Conference Call Details - Dial-in details for the earnings conference call include numbers for the United States, Hong Kong, Mainland China, and international participants [2] - A replay of the conference call will be available until March 27, 2025, with specific access numbers provided [2] - A live and archived webcast of the conference call will be accessible on the company's investor relations website [2] Group 3: Company Overview - X Financial is dedicated to connecting borrowers with institutional funding partners through its online platform [3] - The company utilizes proprietary big data-driven technology to establish strategic partnerships with financial institutions, facilitating loans to prime borrowers [3]

Core Viewpoint - X Financial has announced a share repurchase agreement to buy back 6,349,206 American depositary shares (ADSs) at a price of US$7.67 per ADS, totaling approximately US$48.7 million, reflecting the company's confidence in its long-term growth potential and commitment to enhancing shareholder value [1][3]. Group 1: Share Repurchase Details - The company will repurchase 6,349,206 ADSs, equivalent to 38,095,236 Class A ordinary shares, for a total of approximately US$48.7 million [1]. - A new share repurchase plan has been approved, allowing the company to repurchase up to US$50 million worth of Class A ordinary shares until June 30, 2026 [2]. - After the current repurchase, approximately US$15.9 million will remain for future repurchases under the new plan [2]. Group 2: Financial Performance and Shareholder Returns - In 2024, the company returned approximately US$76.0 million to shareholders through dividends and share repurchases, including US$16.5 million in cash dividends and US$9.2 million in a tender offer [3]. - The total number of shares repurchased in 2024 was approximately 52.2 million Class A ordinary shares, representing 17.8% of the ordinary shares issued and outstanding as of December 31, 2023 [3]. Group 3: Management's Perspective - The Chief Financial Officer expressed confidence in the company's long-term growth potential and emphasized a balanced approach to capital management to prioritize growth opportunities and shareholder value creation [3]. - The company plans to fund the new repurchase plan from its existing cash balance, with repurchases to be made through various means depending on market conditions [2][3]. Group 4: Company Overview - X Financial is a leading online personal finance company in China, connecting borrowers with institutional funding partners through proprietary big data-driven technology [4].

Financial Data and Key Metrics Changes - Total net revenue increased by 13% year-on-year to RMB1.582 billion, up from RMB1.397 billion in the same period of 2023 [9][11] - Non-GAAP adjusted net income reached a record high of RMB434 million, up 6% year-on-year [9][14] - Total loan amount facilitated and originated was RMB28 billion, down 4% year-on-year but up 25% sequentially [6][8] Business Line Data and Key Metrics Changes - Delinquency rates improved, with loans past due for 31 to 60 days at 1.02% and for 91 to 180 days at 3.22%, compared to 1.29% and 4.38% in the previous quarter [6] - Origination and servicing expenses increased by 14% to RMB458 million, primarily due to increased collection expenses [12] - Borrower acquisition and marketing expenses rose by 21% to RMB507 million, reflecting intensified efforts in borrower acquisitions [13] Market Data and Key Metrics Changes - The Chinese government introduced a comprehensive stimulus package aimed at improving liquidity and stabilizing financial markets, which is expected to benefit the personal finance market [7] - The company anticipates a monthly loan volume exceeding RMB10 billion in Q4, setting a new record [8] Company Strategy and Development Direction - The company is focused on balancing business growth and profitability, continuing to execute its semi-annual dividend policy and exploring share repurchase opportunities [10] - Management is committed to optimizing risk management through advanced technology [6] Management Comments on Operating Environment and Future Outlook - Management views the regulatory environment as stable, with no significant changes expected in the near term [22] - The company expects continued growth in loan volumes due to favorable macroeconomic conditions [23] Other Important Information - The share repurchase program has been extended until March 2026, with approximately USD4.1 million remaining for potential repurchase [15][16] - The total loan amount facilitated and originated for 2024 is expected to be between RMB102.6 billion and RMB103.6 billion [17] Q&A Session Summary Question: Update on capital return program and regulatory landscape - Management confirmed a true repurchase program with about USD50 million remaining and expressed preference for share repurchase over dividends [20] - The regulatory environment is currently stable, with no significant changes expected [22] Question: Thoughts on dividend payout relative to peers - Management acknowledged the potential for higher dividends but emphasized the focus on share repurchase and maintaining a competitive yield [27][28] Question: Challenges faced regarding share buybacks - Management noted low volume as a challenge but expressed hope for increased buybacks as volumes rise [31]

Financial Performance - Total net revenue for Q3 2024 was RMB1,582.5 million (US$225.5 million), representing a 13.3% increase from RMB1,396.9 million in Q3 2023[12] - Net income for Q3 2024 was RMB375.8 million (US$53.6 million), compared to RMB347.2 million in Q3 2023, reflecting an 8.3% increase[8] - Non-GAAP adjusted net income reached RMB433.6 million (US$61.8 million) in Q3 2024, up 15.8% year-on-year[8] - Income from operations in Q3 2024 was RMB509.0 million (US$72.5 million), compared to RMB435.0 million in Q3 2023, reflecting a growth of approximately 17%[25] - Total net revenue for the three months ended September 30, 2024, was RMB 1,582,497, representing a 13.3% increase from RMB 1,396,864 in the same period of 2023[50] - Net income attributable to X Financial shareholders for the three months ended September 30, 2024, was RMB 375,840, up from RMB 347,190 in the same period of 2023, reflecting an increase of 8.5%[50] - The company reported financing income of RMB 335,765 for the three months ended September 30, 2024, which is a 11.5% increase compared to RMB 300,950 in the same period of 2023[50] - Operating costs and expenses for the three months ended September 30, 2024, totaled RMB 1,073,533, an increase from RMB 961,852 in the same period of 2023, indicating a rise of 11.6%[50] Loan Facilitation and Borrower Metrics - Total loan amount facilitated and originated in Q3 2024 was RMB28,338 million, down 4% year-on-year but up 24.6% sequentially[4] - The number of active borrowers increased to 1,965,248 in Q3 2024, up 8.6% from 1,809,815 in Q3 2023[4] - The total outstanding loan balance as of September 30, 2024, was RMB45,766 million, a decrease from RMB49,685 million as of September 30, 2023[5] - The company expects monthly loan volume to exceed RMB10 billion in Q4 2024, raising its guidance based on favorable market conditions[11] - The company expects total loan facilitation and origination for Q4 2024 to be between RMB30.0 billion and RMB31.0 billion, with an annual expectation of RMB102.6 billion to RMB103.6 billion for 2024[32] Delinquency and Provisioning - Delinquency rates for loans past due for 31-60 days improved to 1.02% in Q3 2024, down from 1.11% in Q3 2023[5] - In Q3 2024, the reversal of provision for loans receivable was RMB35 thousand (US$5 thousand), a significant decrease from RMB53.9 million in Q3 2023, attributed to a lower average estimated default rate[23] - Provision for contingent guarantee liabilities increased to RMB56.4 million (US$8.0 million) in Q3 2024, up from RMB41.6 million in Q3 2023, due to higher guarantee liabilities from increased loan facilitation[24] Share Repurchase and Equity - The company extended its US$30 million share repurchase program until March 31, 2026, having repurchased approximately 1.7 million shares for about US$1.3 million in Q3 2024[30] - A new US$20 million share repurchase plan was authorized, with approximately US$10.8 million remaining after a tender offer completed in July 2024[31] - Total equity increased to RMB 6,896,562 as of September 30, 2024, from RMB 5,847,124 as of December 31, 2023[49] Cash and Assets - Cash and cash equivalents decreased to RMB1,044.1 million (US$148.8 million) as of September 30, 2024, down from RMB1,612.2 million as of June 30, 2024[28] - Cash and cash equivalents as of September 30, 2024, were RMB 1,044,144, down from RMB 1,195,352 as of December 31, 2023[49] - As of September 30, 2024, total assets amounted to RMB 11,620,287, a slight decrease from RMB 11,650,023 as of December 31, 2023[49] - Total liabilities decreased to RMB 4,723,728 as of September 30, 2024, from RMB 5,802,899 as of December 31, 2023[49] Financial Reporting and Adjustments - The company utilizes non-GAAP financial measures to assess operating performance, which excludes certain expenses to provide a clearer view of core results[40] - The company has decided to separate borrower acquisition expenses from origination and servicing expenses to enhance financial statement clarity[51] - The company reported a total operating cost and expenses reclassification, which reflects a strategic shift in financial reporting[52] - The company reclassified fair value changes related to financial guarantee services and Consolidated Trusts, which does not impact net income for prior periods[52] Cost Management - Borrower acquisition and marketing expenses increased by 20.7% to RMB506.8 million (US$72.2 million) in Q3 2024, reflecting intensified efforts in this area[21] - General and administrative expenses decreased from RMB 48,588 to RMB 40,200 for the three months ended September 30, 2023, indicating improved cost management[52]

Core Viewpoint - X Financial reported strong financial results for the third quarter of 2024, with significant year-over-year growth in net revenue and adjusted net income, despite a slight decline in loan facilitation compared to the previous year. The company anticipates continued growth driven by favorable macroeconomic conditions and a comprehensive government stimulus package aimed at boosting the economy [1][4]. Operational Highlights - The total loan amount facilitated and originated in Q3 2024 was RMB28,338 million, a decrease of 4% year-over-year but an increase of 25% quarter-over-quarter [1]. - The number of active borrowers reached 1,965,248 in Q3 2024, up 8.6% from the same period in 2023 [1]. Financial Highlights - Total net revenue for Q3 2024 was RMB1,582.5 million (US$225.5 million), representing a 13.3% increase from RMB1,396.9 million in Q3 2023 [3][4]. - Income from operations was RMB509.0 million (US$72.5 million), compared to RMB435.0 million in the same period of 2023, marking a 17.0% increase [3][4]. - Net income for Q3 2024 was RMB375.8 million (US$53.6 million), up from RMB347.2 million in Q3 2023, reflecting an 8.3% increase [3][4]. Delinquency Rates - The delinquency rate for loans past due for 31-60 days was 1.02% in Q3 2024, down from 1.11% in Q3 2023 [2]. - The delinquency rate for loans past due for 91-180 days was 3.22% in Q3 2024, compared to 2.50% in Q3 2023 [2]. Revenue Breakdown - Loan facilitation service fees increased by 5.9% to RMB878.3 million in Q3 2024 [4]. - Post-origination service fees rose by 10.7% to RMB186.1 million [4]. - Financing income grew by 11.6% to RMB335.8 million [4]. - Guarantee income surged by 576.5% to RMB53.6 million, attributed to increased loan volumes covered by guarantee services [4]. Future Outlook - The company expects total loan facilitation for Q4 2024 to be between RMB30.0 billion and RMB31.0 billion, with an annual forecast of RMB102.6 billion to RMB103.6 billion for 2024 [7]. - The management is optimistic about the macroeconomic recovery and plans to adjust loan volumes in line with risk levels [4].

Group 1 - X Financial will release its unaudited financial results for Q3 2024 on November 27, 2024, before U.S. market opens [1] - An earnings conference call will be held at 7:00 AM U.S. Eastern Time on the same day [1] - The company is a leading online personal finance provider in China, connecting borrowers with institutional funding partners [4] Group 2 - The company utilizes proprietary big data-driven technology to establish partnerships with financial institutions [4] - X Financial facilitates loans to prime borrowers through a robust risk assessment and control system [4]

Financial Data and Key Metrics Changes - Total net revenue for Q2 2024 was RMB 1.4 billion, representing a 12.5% increase year-on-year and a 14% increase sequentially [8][9] - Net income grew 13% year-on-year and 14% sequentially to RMB 415 million, marking a record high [8][9] - Total loan amount facilitated and originated decreased by 12% year-on-year but increased by 6% sequentially to RMB 23 billion [6][8] Business Line Data and Key Metrics Changes - Origination and service expenses increased by 19% to RMB 415 million from RMB 349 million in the same period of 2023 [9][10] - Provision for loans receivable was RMB 96 million compared to RMB 55 million in the same period of 2023, indicating an increase in loans receivable [10] Market Data and Key Metrics Changes - Delinquency rates for outstanding loans past due for 31-60 days and 91-180 days were 1.29% and 4.38%, respectively, showing improvement from the previous quarter [6] Company Strategy and Development Direction - The company aims to improve profitability while managing loan volumes based on asset quality dynamics [5][6] - There is a focus on sustainable profitability and refining risk management systems to enhance asset quality [6][8] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in loan volume growth for Q3 due to improved delinquency performance and optimized approval policies [13] - The company does not foresee a significant improvement in the overall economy but believes its risk management efficiency will enhance performance [17][18] Other Important Information - A semiannual dividend of USD 0.17 per ADS was declared for the first half of 2024 [11] - A new share repurchase program of 20 million shares was announced in May 2024 [8] Q&A Session Summary Question: What gives confidence for the increase in loan volumes for Q3? - Management indicated that improved delinquency performance and optimized approval policies contribute to confidence in loan volume growth [13] Question: Can you discuss customer acquisition costs? - Management noted that acquisition costs have remained constant, and with higher approval rates, spending will increase, leading to higher loan volumes [15] Question: Is there an improvement in consumer health affecting approval rates? - Management clarified that while the overall economy has not improved significantly, better customer segmentation and new channels have enhanced customer quality [17][18] Question: What is driving the increase in active borrowers despite lower loan volumes? - Management confirmed that the average loan size has decreased as part of risk management, and as the environment improves, the average loan size is expected to grow [20]