Core Viewpoint - YunYong Technology reported a significant revenue growth of 26.55% year-on-year for the first half of 2025, driven by the release of industrial information security products from previous project reserves [1] Financial Performance - The company achieved an operating revenue of 130 million yuan in the first half of 2025 [1] - The net profit attributable to the parent company was -8.86 million yuan [1] - The net cash flow from operating activities was 16.53 million yuan [1] Business Growth Drivers - The key driver for revenue growth was the industrial information security business, which saw a year-on-year increase of 33.53% [1] - This growth was primarily attributed to the company's ongoing efforts in new power systems in recent years [1] Technological Development Goals - The company has set clear technological development goals, focusing on core technologies such as virtual power plants, microgrid energy management, and energy storage technology [1] - The company aims to rapidly develop these technologies through self-research, joint research, and technology integration [1] Industry Position - YunYong Technology is one of the early adopters of embedded technology in the industrial internet information security sector in China [1] - The company's products include industrial information security, new energy, trusted computing, and integrated archives, serving sectors such as electricity, energy, finance, and transportation [1]

Core Viewpoint - The company plans to issue shares to specific investors, which will dilute immediate returns but aims to enhance long-term financial performance and shareholder value [2][6][10] Financial Impact of the Share Issuance - The issuance will increase the total share capital and net asset scale, but short-term earnings per share (EPS) will be diluted due to the time lag in realizing economic benefits from the investment projects [2][6] - The total share capital will rise from 11,256.15 million shares to 17,583.38 million shares post-issuance, with the estimated issuance of 811.72 million shares [4][5] - Under various profit scenarios for 2025, the basic EPS is projected to decrease from 0.17 to 0.12 if profits remain flat, and further declines are expected if profits drop by 10% [5][6] Assumptions and Projections - The analysis is based on assumptions regarding net profit for 2025, which may remain flat, increase by 10%, or decrease by 10% compared to 2024 [3][5] - The company emphasizes that these assumptions do not constitute profit guarantees and should not be the sole basis for investment decisions [3][6] Relationship of Fundraising Projects to Existing Business - The fundraising projects are aligned with the company's focus on providing customized embedded modules and solutions, particularly in key national sectors [6][7] - The projects aim to enhance the company's research and production capabilities in high-reliability embedded computing, which is crucial for applications in advanced equipment like aircraft and missiles [7][8] Measures to Mitigate Dilution of Immediate Returns - The company will strengthen the management of raised funds to ensure compliance and effective use, aiming to enhance sustainable profitability [8][9] - It plans to expedite the implementation of fundraising projects to achieve expected benefits sooner, thereby reducing the risk of immediate return dilution [8][9] - The company will improve its governance structure to ensure efficient decision-making and protect shareholder interests [9][10] Commitments from Management and Major Shareholders - The board and senior management have committed to not transferring benefits unfairly and to link their compensation to the execution of measures to mitigate return dilution [10][11] - Major shareholders have also pledged to refrain from interfering in company operations and to uphold the interests of the company and its investors [10][11] Approval Process for the Issuance - The proposal for the share issuance and related measures has been approved by the company's board and will require further approval from the shareholders' meeting [11]

Financial Data and Key Metrics Changes - In Q1 2025, total revenue reached approximately $213 million, representing a 67% year-on-year growth [26] - Adjusted EBITDA was $43 million, indicating a significant scaling in operating leverage [29] - GAAP net loss was $2 million, which was better than expectations, reflecting strong performance on net interest income [28] Business Line Data and Key Metrics Changes - Platform originations grew 89% year-on-year, with personal loan originations flat sequentially but up 83% year-on-year [5][9] - Home and Auto lending saw sequential growth rates of 5242% and 42% respectively, with auto lending growing almost 5x compared to a year ago [6][13] - HELOC originations grew 52% quarter-on-quarter and more than 6x year-on-year [16] Market Data and Key Metrics Changes - The volume of loan transactions across the platform was approximately 241,000, up 102% from the prior year [27] - Average loan size increased to approximately $8,865 from $8,580 in the prior quarter [27] - The Upstart Macro Index remains elevated but stable, indicating improving consumer financial health [6] Company Strategy and Development Direction - The company aims to return to GAAP net income profitability in the second half of the year, with a focus on expanding both core and newer products [21][33] - Upstart is prioritizing AI advancements, with a goal to enhance its leadership in AI lending and improve risk models [20][24] - The company is diversifying its funding sources, with over 50% of loan funding now in committed partnership agreements [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to changing macroeconomic conditions, noting that credit performance has remained stable despite recent market turbulence [7][31] - The company is cautious about potential risks from reinflation and is planning for a steady macro environment [31] - Guidance for Q2 includes total revenues of approximately $225 million, with expectations for continued strong demand for credit [32] Other Important Information - The company has signed a one-year agreement with Walmart's FinTech, One Pay, to make its products available to Walmart customers [36] - Upstart's HELOC product has expanded its footprint to 37 states plus Washington D.C., covering almost 75% of the U.S. population [16] Q&A Session Summary Question: Can you talk about the Walmart partnership? - Management confirmed a one-year agreement with Walmart's FinTech, emphasizing the alignment of values in delivering consumer value [36][37] Question: Any trends in April and early May? - Management indicated that guidance captures the current trends, providing limited additional color [39] Question: Thoughts on conversion rates for the remainder of the year? - Management expects conversion rates to improve with better models and automation, aiming to reach around 20% [45] Question: Why is the 2025 outlook not higher despite new funding? - Management clarified that funding is not the gating item for growth; rather, it is the economic acquisition of the right borrowers [102] Question: How are funding partners reacting to market volatility? - Management reported no pullbacks from committed capital partners, indicating resilience in funding sources [70] Question: How is Upstart adapting to macroeconomic changes? - Management emphasized the adaptability of their models and a conservative approach to planning, with no assumptions of Fed rate cuts this year [74]