Lexin(LX) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total GMV reached RMB52.9 billion, a quarter over quarter growth of 2.4% [6] - Revenue increased by 16% to RMB3.6 billion [7] - Net profit reached RMB511 million, representing quarter over quarter growth of 19% and year over year growth of 126% [7][24] - Cash dividend payout ratio raised from 25% to 30% starting from the second half of the year [7] - A $60 million share repurchase plan announced to be executed within the next twelve months [8] Business Line Data and Key Metrics Changes - E-commerce GMV increased by 139% year over year during the June 18 Shopping Festival [9] - Net revenue of the credit business increased by 10% to RMB2 billion [25] - Net revenue of the e-commerce business increased by 71% to RMB97 million [25][33] - The capital heavy model accounted for 80% of GMV, up from 73% in the first quarter [28] Market Data and Key Metrics Changes - Day one delinquency ratio decreased by about 2% quarter over quarter [16] - Ninety-day delinquency ratio declined to 3.1% [30] - First payment default over seven days declined by about 5% compared to the previous quarter [16] Company Strategy and Development Direction - The company is focused on a business model driven by data analytics, risk management, and refined operations [6] - Plans to expand into lower-tier cities and enhance service capabilities for small and micro business owners [10][42] - Emphasis on maintaining a user-centric philosophy and enhancing consumer satisfaction [12] Management Comments on Operating Environment and Future Outlook - Management believes new regulations will foster a healthier industry environment, benefiting compliant platforms [14] - The company maintains its full-year guidance for significant year over year profit growth despite macroeconomic uncertainties [14] - Continued focus on risk management and enhancing operational efficiency [22] Other Important Information - The company has developed a proactive consumer rights protection system to enhance user satisfaction [13] - Significant investment in technology for consumer protection, refining over 50 digital tools [13] - The provision coverage ratio reached 270%, indicating a strong risk management position [49] Q&A Session Summary Question: Impact of new regulations on the company - The company observed funding supply tightness and increased funding costs due to new regulations, but believes it will lead to a healthier industry environment [40][41] Question: Development strategy and outlook of the ecosystem business - The company has made significant progress in its ecosystem, particularly in installment e-commerce, and plans to continue expanding into lower-tier cities [42][43] Question: Asset quality and risk management system - The company has tightened re-approval standards and improved early reminders for loan repayments to maintain asset quality amid regulatory changes [46] Question: Drivers of underlying net tariff improvement - The company has successfully improved its net profit take rate due to strong revenue growth from both credit and e-commerce businesses [50][52] Question: Shareholder return and buyback program - The management announced a $50 million share repurchase program and plans to enhance shareholder returns through dividends and buybacks [57][58]