2024-03-12 16:00Financial and Operational Highlights Fourth Quarter 2023 Highlights Qifu Technology achieved solid Q4 2023 year-over-year growth in total loan volume and net revenue, reflecting improved profitability Q4 2023 Key Operational Metrics (vs. Q4 2022) | Metric | Q4 2023 (RMB) | YoY Change | | :--- | :--- | :--- | | Total Loan Volume | 119.0B | +13.8% | | Capital-Light Loan Volume | 68.2B | +16.8% | | Total Outstanding Loan Balance | 186.5B | +14.1% | | Cumulative Users with Approved Credit | 50.9M | +14.4% | | Cumulative Borrowers | 30.4M | +12.7% | | 90 day+ Delinquency Rate | 2.35% | N/A | Q4 2023 Key Financial Metrics (vs. Q4 2022) | Metric | Q4 2023 (RMB) | Q4 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Total Net Revenue | 4,495.5M | 3,906.6M | +15.1% | | Income from Operations | 1,279.6M | 943.9M | +35.6% | | Net Income | 1,107.7M | 867.9M | +27.6% | | Non-GAAP Net Income | 1,150.3M | 919.3M | +25.1% | Full Year 2023 Highlights Full year 2023 saw a 15.4% increase in total loan volume, with improved operational efficiency and profitability despite a slight revenue decrease Full Year 2023 Key Operational Metrics (vs. 2022) | Metric | 2023 (RMB) | 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Total Loan Volume | 475.8B | 412.4B | +15.4% | | Repeat Borrower Contribution | 91.6% | 88.7% | +2.9 p.p. | Full Year 2023 Key Financial Metrics (vs. 2022) | Metric | 2023 (RMB) | 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Total Net Revenue | 16,290.0M | 16,553.9M | -1.6% | | Income from Operations | 4,857.0M | 4,472.2M | +8.6% | | Net Income | 4,268.6M | 4,005.6M | +6.6% | | Non-GAAP Net Income | 4,454.2M | 4,205.3M | +5.9% | Management Commentary Management highlighted successful operational adjustments in a challenging 2023, with a prudent 2024 strategy focused on profitability, efficiency, and risk management - CEO Haisheng Wu stated that despite a challenging 2023, the company achieved its targets by focusing on quality and profitability, building a solid foundation for 2024, with a plan to continue a prudent approach focusing on profitability and efficiency with tightened risk management68 - CFO Alex Xu highlighted strong cash generation in Q4 and announced a new, significantly enlarged share repurchase plan, demonstrating management's confidence8 - CRO Yan Zheng noted Q4 was challenging for risk management, with a Day-1 delinquency rate of 5.0% and a 30-day collection rate of 84.9%, with actions taken to mitigate risks showing positive impacts in early 20248 Detailed Financial Results Fourth Quarter 2023 Financial Results Q4 2023 total net revenue increased 15.1% to RMB 4.5 billion, driven by Credit Driven Services, with income from operations rising 35.6% due to lower contingent liability provisions Q4 2023 Revenue Breakdown (RMB in millions) | Revenue Source | Q4 2023 (RMB) | Q4 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Credit Driven Services | 3,248.3M | 2,776.7M | +17.0% | | - Financing income | 1,485.4M | 1,002.1M | +48.2% | | - Releasing of guarantee liabilities | 1,211.8M | 1,377.0M | -12.0% | | Platform Services | 1,247.2M | 1,129.8M | +10.4% | | - Loan facilitation fees-capital light | 697.0M | 955.6M | -27.1% | | - Referral services fees | 446.5M | 93.3M | +378.4% | | Total Net Revenue | 4,495.5M | 3,906.6M | +15.1% | Q4 2023 Operating Costs & Expenses (RMB in millions) | Expense Item | Q4 2023 (RMB) | Q4 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Facilitation, origination and servicing | 731.8M | 585.6M | +25.0% | | Sales and marketing | 551.6M | 415.2M | +32.8% | | Provision for loans receivable | 639.9M | 481.4M | +32.9% | | Provision for contingent liability | 784.3M | 1,062.3M | -26.2% | | Total operating costs and expenses | 3,215.9M | 2,962.7M | +8.5% | Full Year 2023 Financial Results Full year 2023 total net revenue slightly decreased by 1.6% to RMB 16.3 billion, but income from operations increased 8.6% due to reduced operating costs Full Year 2023 Revenue Breakdown (RMB in millions) | Revenue Source | 2023 (RMB) | 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Credit Driven Services | 11,738.6M | 11,586.3M | +1.3% | | - Financing income | 5,109.9M | 3,488.0M | +46.5% | | - Releasing of guarantee liabilities | 4,745.9M | 5,899.2M | -19.5% | | Platform Services | 4,551.5M | 4,967.7M | -8.4% | | - Loan facilitation fees-capital light | 3,214.0M | 4,124.7M | -22.1% | | - Referral services fees | 950.0M | 561.4M | +69.2% | | Total Net Revenue | 16,290.0M | 16,553.9M | -1.6% | Full Year 2023 Operating Costs & Expenses (RMB in millions) | Expense Item | 2023 (RMB) | 2022 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Sales and marketing | 1,939.9M | 2,206.9M | -12.1% | | Provision for loans receivable | 2,151.0M | 1,580.3M | +36.1% | | Provision for contingent liability | 3,053.8M | 4,367.8M | -30.1% | | Total operating costs and expenses | 11,433.1M | 12,081.7M | -5.4% | Risk Metrics Delinquency Rates Q4 saw signs of risk stress with a 90 day+ delinquency rate of 2.35% and challenging Day-1 and 30-day collection rates - The 90 day+ delinquency rate for loans originated across the platform was 2.35% as of December 31, 20232 - In the fourth quarter, the Day-1 delinquency rate was 5.0% and the 30-day collection rate was 84.9%, indicating a challenging period for risk management8 Shareholder Returns Dividend Policy The company declared a US$0.58 per ADS dividend for H2 2023, totaling US$170 million for the year, reaffirming its 20-30% GAAP net income payout policy - The Board approved a dividend of US$0.29 per Class A ordinary share (US$0.58 per ADS) for the second half of 202325 - The total dividend distribution for fiscal year 2023 is estimated to be approximately US$170 million25 - The company reaffirmed its semi-annual cash dividend policy to distribute an amount equivalent to approximately 20% to 30% of its GAAP net income after tax for the previous six-month period26 Share Repurchase Plans Qifu Technology repurchased US$132 million under its 2023 plan and approved a new US$350 million share repurchase plan for 2024 - From June 20, 2023, to March 12, 2024, the company repurchased approximately 8.4 million ADSs for a total of US$132 million under its 2023 plan28 - A new share repurchase plan of up to US$350 million was approved by the Board, effective for 12 months starting from April 1, 202429 Financial Statements Consolidated Balance Sheets As of December 31, 2023, total assets increased to RMB 45.8 billion, driven by net loans receivable, with corresponding growth in liabilities and equity Selected Balance Sheet Items (RMB in millions) | Item | Dec 31, 2023 (RMB) | Dec 31, 2022 (RMB) | | :--- | :--- | :--- | | Cash and cash equivalents | 4,177.9M | 7,165.6M | | Loans receivable, net (current & non-current) | 27,502.5M | 18,484.7M | | Total Assets | 45,818.6M | 40,343.2M | | Total Liabilities | 23,808.7M | 21,411.9M | | Total Equity | 22,009.9M | 18,931.3M | Consolidated Statements of Comprehensive Income Full year 2023 total net revenue was RMB 16.3 billion, with net income attributable to shareholders increasing to RMB 4.3 billion due to controlled expenses Full Year Income Statement Highlights (RMB in millions) | Item | 2023 (RMB) | 2022 (RMB) | | :--- | :--- | :--- | | Total net revenue | 16,290.0M | 16,553.9M | | Income from operations | 4,857.0M | 4,472.2M | | Net income | 4,268.6M | 4,005.6M | | Net income attributable to shareholders | 4,285.3M | 4,024.2M | | Diluted Net income per ADS | 26.08 | 25.00 | Consolidated Statements of Cash Flows Full year 2023 saw net cash from operating activities of RMB 7.1 billion, but increased investing activities led to a net decrease in cash of RMB 3.0 billion Full Year Cash Flow Summary (RMB in millions) | Item | 2023 (RMB) | 2022 (RMB) | | :--- | :--- | :--- | | Net cash provided by operating activities | 7,118.4M | 5,922.5M | | Net cash used in investing activities | (11,147.8M) | (7,356.0M) | | Net cash provided by financing activities | 1,066.5M | 3,204.1M | | Net (decrease) in cash and cash equivalents | (2,953.4M) | 1,752.4M | Unaudited Reconciliations of GAAP and Non-GAAP Results Non-GAAP adjustments for share-based compensation provide a clearer view of underlying trends, with full year 2023 non-GAAP net income at RMB 4.45 billion Full Year 2023 GAAP to Non-GAAP Reconciliation (RMB in millions) | Metric | GAAP (RMB) | Share-based Compensation (RMB) | Non-GAAP (RMB) | | :--- | :--- | :--- | :--- | | Income from operations | 4,857.0M | 0.19M | 5,042.6M | | Net income | 4,268.6M | 0.19M | 4,454.2M | Q4 2023 GAAP to Non-GAAP Reconciliation (RMB in millions) | Metric | GAAP (RMB) | Share-based Compensation (RMB) | Non-GAAP (RMB) | | :--- | :--- | :--- | :--- | | Income from operations | 1,279.6M | 0.04M | 1,322.1M | | Net income | 1,107.7M | 0.04M | 1,150.3M |