X Financial Q1 FY2025 earnings call

• Loan originations: Facilitated RMB35.15 billion in loans in Q1, a 63.4% year-over-year increase.
• Revenue: Total revenue of RMB1.94 billion, up 13.4% sequentially and 60.4% year-over-year, primarily driven by higher borrower volumes.
• Operational leverage: Income from operations reached RMB573 million, up 52% year-over-year, demonstrating improved operational leverage.
• Asset quality: 31-60 day delinquency rate improved 22% year-over-year, 91-180 day delinquency rate down 37% year-over-year due to disciplined underwriting and borrower engagement initiatives.
• Borrower experience: Focus on delivering faster decisions, simplifying application processes, and enhancing transparency to improve the borrower experience.
• Funding: Average funding cost improved year-over-year supported by an optimized funding structure and commitment from core institutional partners.

In the first quarter, X Financial facilitated RMB35.15 billion in loans, representing an 8.8% sequential increase and 63.4% year-over-year growth. Total revenue reached RMB1.94 billion, up 13.4% from Q4 and over 60% year-over-year. The 31 to 60-day delinquency rate was 1.25% (a 22% improvement year-over-year) and the 91 to 180-day delinquency rate was 2.7% (a 37% reduction year-over-year). The total loan outstanding balance, excluding loans over 60 days delinquent, was RMB58.4 billion, growing by more than 33% from Q1 2024. Loans are the primary product segment, driving the majority of financial performance.

• Q2 loan amount guidance: X Financial expects total loan amount facilitated in the second quarter of 2025 to be in the range of RMB37.5 billion to RMB39.5 billion.
• Share repurchase plan: Authorized a new share repurchase plan to buy back up to $100 million worth of Class A shares and ADS, effective from January 1, 2025, through November 30, 2026.

• Regulatory uncertainties: The dynamic regulatory environment in China poses potential compliance requirements and industry shocks. New regulations may introduce challenges, though the company remains committed to compliance.
• Delinquency trends: Slight uptick in delinquency rates observed, but expected to be offset by scale, with no material impact on profit.

Q: How does the company view the current macroeconomic environment and loan market, and potential impact on delinquency rates with continued loan growth?

A: Kent Li stated the company manages its portfolio based on risk assessment, seeing the current environment as favorable for growth. Delinquency rate uptick is from a low base and remains healthy, with any uptick expected to be offset by scale. Frank Fuya Zheng added the risk profile is stable, with provision costs adjusted for insurance business impacts.

Q: About loan growth guidance for Q2 and funding partner feedback on new regulations?

A: Kent Li mentioned growth is based on customer acquisition and graduation to better products. Frank noted close conversations with institutional partners, expressing confidence in compliance by the October 1 deadline, though the industry may face shocks from new regulations