PINTEC(PT) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue in the first half of 2020 decreased by 65% year-over-year to RMB251.6 million [21] - Revenue from technical services decreased by 66% to RMB212.1 million from RMB624 million in the same period of 2019 [21] - Cost of revenues decreased by 50.6% to RMB208.9 million from RMB422.8 million in the same period of 2019 [24] - Gross profit decreased to RMB42.7 million from RMB296.9 million in the same period of 2019, with a gross margin of 17% compared to 41.3% in the same period of 2019 [27] - Operating loss was RMB100 million compared to an operating income of RMB73.6 million in the same period of 2019 [30] - Net loss was RMB104.2 million compared to a net income of RMB81.2 million in the same period of 2019 [30] Business Line Data and Key Metrics Changes - Digital technical services are focused on ramping up revenue while refining organizational structure and marketing strategies [7] - Revenue from risk-bearing loans accounted for 24% of revenues from technical service fees in the first half of 2020 compared to 38% in the same period of 2019 [22] - Revenues from installment service fees decreased by 57.5% to RMB34.8 million from RMB82 million in the same period of 2019 [22] - Revenues from wealth management service fees decreased by 66% to RMB4.7 million from RMB13.7 million in the same period of 2019 [23] Market Data and Key Metrics Changes - Total volume of loans facilitated decreased by 83% year-over-year to RMB1.2 billion [14] - Outstanding loan balance decreased by 61% year-over-year to RMB1.3 billion as of June 30, 2020 [14] - Cooperative products with Ctrip and BestPay accounted for approximately 39% and 38% of the outstanding loan balance, respectively [15] Company Strategy and Development Direction - The company is shifting focus to digital-centric services while gradually reducing risk-sharing services [6] - Plans to augment revenue and profitability of digital technical services while stabilizing digital operation services by refining asset quality [6] - Emphasis on optimizing product matrix, employee structure, and costs to improve profitability [7] Management Comments on Operating Environment and Future Outlook - Management acknowledged challenges from COVID-19 and market conditions but remains confident in the long-term strategy [5][19] - The company expects to gradually improve profitability despite near-term headwinds [7][19] - Management believes that significant competitive advantages in technological innovation will fuel business resiliency [19] Other Important Information - The company has established joint innovation centers and partnerships with various financial institutions to enhance service offerings [11][12] - The transition to a profit-sharing model is aimed at reducing risk-sharing cooperation with existing funding partners [16] Q&A Session Summary Question: Differentiation of technical services compared to traditional IT providers and internet giants - Management highlighted Pintec's unique value proposition through hands-on experience and partnerships with financial institutions, emphasizing expertise in business domain and operational excellence [35][36] Question: Progress in international expansion - Management reported successful international initiatives, including partnerships in the U.S. and Australia, and the adoption of digital lending software by various banks [37][38] Question: Outlook for revenue growth and profitability in the second half - Management indicated that despite the impact of COVID-19, the company is well-positioned for recovery and has optimized its business model for future growth [41][44]