Jiayin Group Inc. (JFIN) Earnings

Management highlights

- Strategic Focus & Customer Segmentation * The consumer lending industry remained in an adjustment phase in Q1 2026, with gradual credit demand recovery and continued industry-wide pressure; management focused on refined operations of the high-quality existing borrower base and business model structural upgrades. * Borrowers are segmented via cross-analysis of risk scores and platform behavioral data, with differentiated engagement and credit strategies tailored to each group's credit profile and borrowing intent. * For higher-risk segments, underwriting criteria and credit limits are tightened to facilitate orderly runoff of risk exposure; for high-quality borrowers, management focuses on demand analysis, retention, and refined engagement. - Business Structure Upgrade Initiatives * First initiative: Expand technology empowerment services for partner financial institutions; Jiayin acts as a full-lifecycle technology and operations service provider, providing borrower acquisition, risk modeling, and technical support. The segment continues to grow and is expected to expand further long-term. * Second initiative: Develop diversified product portfolios including auto-backed loans and digital micro-loans to serve niche customer segments. Auto-backed loans operate via a collaborative model where Jiayin focuses on core front-end operations and risk management, while specialized partners handle post-loan vehicle-related services to leverage complementary strengths. * Third initiative: Execute globalization strategy, with growing scale in Southeast Asian and Latin American markets, exporting Jiayin's technology and operational expertise to build a long-term growth engine. - AI & Technology Development * AI integration across operations drives risk management productization and standardized reusable solutions; feature iteration cycles for risk models reduced from days to under one hour, enabling rapid market response that is also offered to institutional partners. * 30% of all AI-assisted code is now generated by AI agents, increasing R&D efficiency by 20%; customer service intent recognition accuracy improved from 78% to 93%, while model inference costs decreased by 90%. * Enterprise-grade AI workplace tools have been deployed across internal operations, driving ongoing productivity improvements and shifting AI from a supporting tool to a core driver of operational efficiency. - Risk Management & Security * Management prioritizes security and user protection, shifting fraud risk strategy from reactive defense to proactive preemptive interception. Multimodal AI (voice print, image, graph analytics) powers an updated anti-fraud system that achieved 90%+ accuracy for detecting fraudulent activity. In Q1 2026, the system blocked 290,000 fraudulent borrowers, 113,000 malicious organized fraud applications, and identified 5 million suspicious fraudulent audio/video samples. - Shareholder Returns * The current share repurchase program has been extended through June 12, 2027, with approximately $49.6 million remaining in authorized capital for repurchases. Management will evaluate market and operating conditions to implement shareholder return initiatives.

Guidance

- Management maintained a prudent outlook amid ongoing macroeconomic uncertainty, consistent with prior outlooks. - Q2 2026 expected transaction volume guidance is set between RMB 9.5 billion and RMB 10.5 billion, reflecting continued industry contraction pressure. - Management will prioritize disciplined operations and sustainable development going forward, aiming to strengthen competitive advantages through deeper operational experience and improved organizational resilience. - Management expects improved cash flow and balanced revenue/expenses in Q2 2026 after implementing cost control measures starting in Q2 2025.

Segment performance

1. Core domestic consumer lending: Total transaction volume of RMB 19.3 billion, a 45.8% year-over-year decrease. Repeat borrowing from existing high-quality users contributed 76.3% of total transaction volume, up 4.4 percentage points year-over-year. Net revenue for the overall firm (dominated by this segment) was RMB 756.7 million, a 57.4% year-over-year decrease. 2. Technology empowerment (joint operations with financial institutions): Transaction volume reached RMB 1.52 billion, representing a 67.6% sequential increase. 3. Auto-backed loans: Launched a fully end-to-end digital Version 3.0 system, maintained strong growth momentum, with user conversion rates ranking among the highest in the market for fully online models. 4. International business: Indonesia loan volume increased 20% quarter-over-quarter and more than 100% year-over-year. Local partner loan volume in the smaller Mexico market increased 35% sequentially, with strong year-over-year growth. Overall revenue contribution from overseas markets continued to expand sequentially.

Risks & headwinds

- Industry-wide risk: New regulatory interest rate caps (lowered from 36% to 24% effective October 2025) caused an estimated RMB 500 billion contraction in overall market loan volume, leading to industry-wide liquidity pressure and performance declines. The large scale contraction led to a faster drop in revenue than cost reduction, driving the quarterly net loss. - Credit risk: The 90+ day delinquency ratio was 2.25% as of quarter-end, up sequentially from prior periods. Credit risk for new borrowers peaked in September 2025, and risk for new loans to existing borrowers peaked in November 2025, though risk metrics have improved steadily since that time. - Macroeconomic risk: Continued macroeconomic uncertainty creates ongoing pressure on the consumer lending industry and demand recovery, which may lead to actual results differing from forward-looking expectations.

Analyst Q&A

• Q: The firm reported a net loss of ~RMB 61.7 million this quarter, the fourth consecutive quarterly loss since listing. What are the main causes of this loss, and what operational adjustments will the firm make to improve profitability going forward? /

  A: The loss is primarily driven by industry-wide contraction following the implementation of new regulatory interest rate caps that lowered the maximum allowed rate from 36% to 24% starting October 2025. The overall market has contracted by ~RMB 500 billion, leading to a sharp drop in Jiayin's transaction volume and revenue, while cost reductions lagged the volume decline, resulting in the quarterly loss. Management implemented cost control measures starting in Q2 2025, and has now balanced revenue and expenses, expecting improved cash flow and liquidity in the upcoming second quarter. The firm has also passed the most difficult period of adjustment, with conditions starting to stabilize in March 2026.

• Q: Can you update on credit risk trends through Q1 2026 and into April and May? Has risk performance improved recently? /

  A: Credit risk deterioration peaked in late 2025: new borrower credit risk peaked in September 2025, and risk from new loans to existing borrowers peaked in November 2025. Both metrics have steadily declined since those peaks, with risk levels by April and May down 25%-30% from peak, falling back to levels seen in mid-2025. Management adjusted borrower acquisition channels, tightened selection criteria to focus on borrowers with stronger repayment capacity and more stable credit profiles, and reduced loan tenures and credit limits for higher-risk borrowers, which has successfully improved overall asset quality while slowing near-term growth.