Pintec Technology Holdings Limited Q2 FY2020 earnings call

• Victor Li noted the company faced challenges in 2019 and H1 2020 including market conditions, regulation, COVID-19, and management changes, shifting focus to digital-centric services and reducing risk-sharing services. - Digital technical services: focused on ramping up revenue, refined organizational structure, marketing strategies, and product matrix; partnerships like InfraRisk launching new digital credit service, working with Judo Bank and Toyota Finance, and collaborating with Hong-Kong Stock Exchange on RPA. - Digital operation services: reduced risk-sharing services, optimized product matrix, improved loan performance with M1+ delinquency decreasing, and maintained relationships with leading funding partners with 94% of funding amounts from top-tier institutions. - Steven Sim discussed financial results, cost of revenues decrease due to changed cooperation model with Jimu Group and reduced loan volume, operating expenses decrease in various categories, and balance sheet details.

For the first half of 2020, total revenues decreased by 65% year-over-year to RMB251.6 million. Revenue from digital technical services (service fees) decreased by 66% to RMB212.1 million. Revenue from digital operation services: revenues from installment service fees decreased by 57.5% to RMB34.8 million, and revenues from wealth management service fees decreased by 66% to RMB4.7 million. Cost of revenues decreased by 50.6% to RMB208.9 million. Gross profit in H1 2020 decreased to RMB42.7 million from RMB296.9 million in the same period of 2019, with gross margin at 17% vs. 41.3% previously. Operating loss was RMB100 million compared to operating income of RMB73.6 million in H1 2019, and net loss was RMB104.2 million vs. net income of RMB81.2 million in H1 2019.

• Focus on ramping up revenues in digital technical services as a key long-term revenue contributor. - Aim to refine asset quality for digital operation services and licensed financial services to reduce risk. - Confident in recovery despite short-term impact, with positive cash flow and sufficient financial position to invest in long-term strategy.

• Impact of COVID-19 on operations. - Changes in market conditions, regulation, external partners, and management. - Deterioration of loan quality and increase in delinquency rates.

Q: Can you talk more about how Pintec's technical service differentiates from traditional IT service providers and Internet giants?

A: Pintec, as a leading digitization technology company for banking and financial institutions, has unique value due to direct involvement in partnerships and own licensed financial services, combining business domain expertise, operational excellence, and technical solutions in big data, AI, and process automation.

Q: Can you provide color on the outlook for revenue growth and profitability in the second half?

A: The business model is optimized, focusing on long-term strategy with investment in right areas, rationalizing business and cutting costs, with positive cash flow and sufficient financial position, well poised for recovery