QFIN(US:QFIN)2025-05-20 01:30Financial Data and Key Metrics Changes - Non-GAAP net income increased by 59.9% year over year to RMB 1.93 billion, while non-GAAP EPADS on a fully diluted basis rose by 78.5% to RMB 13.5 [6] - Total revenue for Q1 was RMB 4.69 billion, compared to RMB 4.48 billion in Q4 and RMB 4.15 billion a year ago [20] - Non-GAAP net profit was RMB 1.93 billion in Q1 compared to RMB 1.97 billion in Q4 [26] Business Line Data and Key Metrics Changes - Revenue from credit-driven services was RMB 3.11 billion in Q1, up from RMB 2.89 billion in Q4 [20] - Revenue from platform services was RMB 1.58 billion in Q1, slightly down from RMB 1.59 billion in Q4 [21] - Loan volume from embedded finance channels grew by 36% year over year, while loan volume surged by roughly 106% [13] Market Data and Key Metrics Changes - The company added 1,540,000 new credit line users in Q1, up 6% year over year [11] - Ninety-day delinquency rate was 2.02% in Q1, down from 2.09% in Q4 [23] - The overall ROA of embedded finance channels improved by 20% on a sequential basis [13] Company Strategy and Development Direction - The company is rolling out an AI plus credit strategy aimed at building the industry's first AI agent platform [7] - Plans to recruit an additional 100 algorithm engineers by the end of the year to accelerate transformation into an AI-native organization [7] - The company expects to maintain a low funding cost in the long run while adopting a prudent lending strategy [66] Management Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the economy, supported by technological innovation and government measures to boost domestic demand [16] - The macroeconomic and policy landscape is showing signs of stabilization, which will provide a favorable environment for the consumer credit industry [16] - The company expects non-GAAP net income for Q2 to be between RMB 1.75 billion and RMB 1.85 billion, representing a year-on-year growth of 24-31% [30] Other Important Information - The company issued RMB 6.6 billion in ABS, a year-over-year increase of approximately 25% [11] - The effective tax rate for Q1 was 18%, higher than the typical rate of approximately 15% due to withholding tax provisions [26] - The company has executed a share repurchase program with a total repurchase expected to be no less than USD 680 million this year [18] Q&A Session Summary Question: Impact of new loan facilitation rules and credit quality trends - Management views the new rules as a positive signal for the industry, promoting orderly development and recognizing the value of leading loan facilitation platforms [34] - Asset quality remains stable, with the C2M2 ratio at 0.6%, significantly better than previous periods [35][36] Question: Asset quality indicators and credit demand trends - The increase in day one delinquency was driven by a change in loan mix, with a higher percentage from embedded finance channels [42] - Credit demand has shown early signs of recovery, but macro uncertainties persist [37][45] Question: Assessment of tariff tensions and ADR delisting risk - The direct impact of tariffs on the business is limited, with only a small percentage of loan volume affected [48] - The company has a clear plan to respond to potential ADR delisting risks, including a secondary listing in Hong Kong [52][54] Question: Customer acquisition costs and strategy adjustments - The increase in customer acquisition cost was driven by a change in business mix, with a higher contribution from API channels [58] - The company will continue to monitor macro changes and adjust acquisition strategies accordingly [62] Question: Loan demand trends and funding liquidity - Recent government policies aimed at boosting consumption have positively impacted credit demand [65] - The company expects funding costs to decrease slightly from Q1 levels and plans to optimize its funding structure [66]