2025-11-19 01:32Financial Data and Key Metrics Changes - Total net revenue for Q3 was RMB 5.21 billion, slightly down from RMB 5.22 billion in Q2 but up from RMB 4.37 billion a year ago [16] - Non-GAAP net income reached RMB 1.51 billion in Q3, compared to RMB 1.85 billion in Q2 [21] - Non-GAAP net income per fully diluted ADS was RMB 11.36 in Q3, down from RMB 13.63 in Q2 [21] - The effective tax rate for Q3 was 20.9%, higher than the typical rate of approximately 15% due to withholding tax provisions [21] Business Line Data and Key Metrics Changes - Revenue from credit-driven services was RMB 3.87 billion in Q3, up from RMB 3.57 billion in Q2 [16] - Revenue from platform services was RMB 1.34 billion in Q3, down from RMB 1.65 billion in Q2 [17] - The average internal rate of return (IRR) of loans originated was 20.9% in Q3, compared to 21.4% in Q2 [17] Market Data and Key Metrics Changes - The number of new credit line users grew by 9% to 1.95 million in Q3, while the average cost per credit line user declined by 8% [8] - The 90-day delinquency rate increased to 2.09% in Q3 from 1.97% in Q2 [18] - The day-one delinquency rate rose to 5.5% in Q3 from 5.1% in Q2 [18] Company Strategy and Development Direction - The company aims to prioritize risk management and enhance AI capabilities to better serve inclusive finance needs [4] - The focus will be on high-quality customers and optimizing the user mix to improve unit economics and user lifetime value [9] - The company is exploring international opportunities and believes its fintech capabilities are among the best globally [14] Management's Comments on Operating Environment and Future Outlook - The management noted persistent headwinds in China's economy and consumer finance sector, with a decline in short-term consumer loans [4] - The company expects the new regulatory environment to impact market size, risk levels, and profitability in the near term but believes it will lead to a healthier competitive landscape in the long run [27] - For Q4, the company expects non-GAAP net income between RMB 1 billion and RMB 1.2 billion, reflecting a cautious approach due to economic uncertainty [23] Other Important Information - The company issued RMB 4.5 billion in asset-backed securities (ABS) during Q3, up 29% year-over-year [8] - Total cash and cash equivalents were RMB 14.35 billion in Q3, compared to RMB 13.34 billion in Q2, indicating a strong financial position [22] - The company has executed a share repurchase program, purchasing approximately 7.3 million ADSs for $281 million [23] Q&A Session Summary Question: Impact of new loan facilitation rules on business model and take rates - Management indicated that the new rules will require time for adjustment, impacting market size and profitability in the near term, but will lead to a healthier competitive environment in the long run [26][27] Question: Shareholder return and buyback plans - The company plans to resume its $450 million share repurchase program after the earnings call, with a focus on gradually increasing dividends [33][34] Question: Asset quality trends and expectations - Management noted early signs of stabilization in asset quality, with a focus on optimizing risk strategies and improving collection efficiency [39][43] Question: Implications of potential APR regulations - Management stated that while direct exposure to consumer finance companies is limited, there may be indirect impacts on liquidity and risk volatility, leading to adjustments in risk management [46][48] Question: Drivers behind technology solutions loan volume growth - The technology solutions business saw a 200% increase in loan volume due to ramping partnerships and expanding collaboration methods with financial institutions [52][55] Question: Capital heavy vs. capital light business mix outlook - The company anticipates a flexible adjustment in the mix between capital heavy and capital light businesses, with a potential shift towards more capital light in the short term [56][57]