X Financial Q2 FY2025 earnings call

• Kan Li mentioned continued momentum in 2025, with loan originations up and supported by borrower demand and risk management improvements. They aim to expand market opportunities via partnerships and technology/enhanced underwriting. - Noah Kauffman highlighted operational metrics: RMB 38.99 billion in loan originations (71.4% YOY growth), total outstanding loan balance (excluding loans delinquent more than 60 days) at RMB 64.91 billion (55.3% increase from Q2 2024), total number of loans facilitated at ~3.72 million (70.8% YOY growth), active borrower base at ~2.85 million (73.7% YOY growth). Financial highlights: total net revenue RMB 2.27 billion (65.6% YOY growth), income from operations RMB 675.1 million (45.8% YOY growth), non-GAAP adjusted net income RMB 593.2 million (58.3% YOY growth), weighted average number of basic shares outstanding declined ~14.4% YOY. - Frank Zheng discussed profitability metrics (non-GAAP adjusted net income up 58.3% YOY, ROE ~27.9% in Q2), liquidity, share repurchase program (repurchased ~16.7 million Class A ordinary shares, new authorization up to USD 100 million until Nov 30, 2026), dividend (USD 0.28 per ADS approved), and regulatory environment (evolving regulations but aligned with responsible lending, etc.).

In the second quarter, X Financial facilitated RMB 38.99 billion in loans, a 71.4% year-over-year growth. Total revenue reached RMB 2.27 billion, up 65.6% year-over-year. As of June 30, the 31- to 60-day delinquency rate improved to 1.16% (down from 1.29% a year ago), and the 91 to 180 days delinquency rate was 2.91% (substantially lower than 4.38% in Q2 2024). Loan originations contributed significantly to revenue, with loan facilitation services driving growth. Revenue contribution from loan originations was a key part of the total revenue figure.

• X Financial expects total return amount facilitated and originated in the third quarter of 2025 to be in the range of RMB 32 billion to RMB 34 billion. - Share repurchase program: new USD 100 million program effective through Nov 30, 2026, with ~USD 68.2 million remaining. - Dividend: Cash dividend of USD 0.28 per ADS approved, payable around Oct 15, 2025, for shareholders of record as of Sep 26, 2025.

• The regulatory environment in China continues to evolve, which may introduce incremental compliance obligations for industry participants, though the company views evolving regulations positively as they support a sustainable industry landscape.

Q: Can you guys provide some light on the pivot that you've made on providing loan growth at the beginning of the year to switching to asset quality? And then the second question is, do you guys see opportunity to run the company leaner through artificial intelligence?

A: Kan Li stated asset quality has always been a priority. At the start of the year, they maintained scale expectations but pay more attention to not growing just for growth's sake while still expecting to meet year-end goals. On AI, they're already leveraging AI in client management spaces like collections and customer service, with ongoing development to reduce costs and align with profitability goals. Additionally, an unidentified company representative mentioned an investor deck highlighting AI capabilities tested internally.