X Financial Q3 FY2025 earnings call

• The company deliberately moderated growth pace in Q3 to navigate a regulated environment, prioritizing asset quality and risk management.
• Facilitated RMB 33.64 billion in loans, up 18.7% year-over-year but down 13.7% sequentially.
• Focused on maintaining prudent risk discipline, enhancing technology platform, data analytics, and underwriting precision.
• Improved borrower experience by simplifying application flows, accelerating approvals, and expanding transparency.
• Refined collection infrastructure and monitoring system to proactively manage credit risk.
• Regulatory environment: China's fintech sector under close supervision, regulators prioritize consumer protection, transparency, and responsible lending.
• Operational overview: Refined risk models, reduced exposure to lower tier channels, focused on higher-quality borrower sources, and strengthened AI-driven analytics for early delinquency detection.

In the third quarter of 2025, total net revenue reached RMB 1.96 billion, a 23.9% year-over-year increase but a 13.7% sequential decline from Q2. Income from operations was RMB 331.9 million, down 29.9% year-over-year and 46.4% sequentially. Net income was RMB 421.2 million, up 12.1% year-over-year but down 20.2% sequentially. Non-GAAP adjusted net income was RMB 438.2 million, up 1% year-over-year but down 26.1% sequentially. Total loans facilitated and originated in Q3 were RMB 33.64 billion, an 18.7% year-over-year increase but a 13.7% sequential decline. Outstanding loan balance ended the period at RMB 62.83 billion, up 37.3% from the previous year. Approximately 3.48 million loans were facilitated, a 32% year-over-year increase, with an average loan size of RMB 9,654. The active borrower base was approximately 2.44 million, 14.4% lower sequentially but 24.2% higher year-over-year. Revenue contribution from loan origination and related activities was the primary segment performance driver.

• X Financial expects total loan amount facilitated and originated in Q4 2025 to be in the range of RMB 21 billion to RMB 23 billion.
• Full-year 2025 loan origination is expected to be in the range of RMB 128.82 billion to RMB 130.8 billion.
• Management focuses on asset quality, credit discipline, and profitability optimization over aggressive volume expansion, remaining attentive to regulatory landscape and credit conditions.

• Early signs of credit pressure observed: 31-60 day delinquency rate rose to 1.85% from 1.16% at Q2 end, and 91-180 day delinquency rate increased to 3.52% from 2.91% at Q2 end.
• Regulatory changes may exert pressure on industry pricing and profitability.
• Broader market trends causing a cautious borrower environment and rising repayment stress among certain segments.

Q: So my first question is around the take rate guidance... And my second question is around the capital allocation.

A: Frank and Kan/Noah discussed take rate being premature to discuss, and capital return through share repurchases and dividends.

Q: How does the team view the regulatory environment going ahead into early 2026? And may we have more color on the uptick in delinquencies?

A: Kan and Noah discussed regulatory focus on consumer protection, delinquencies expected to continue climbing but stabilize in 1-2 months.

Q: I have 2 questions. Well, the first one is given the concerns around the credit quality, I'm curious if any of the funding partners have reduced their funding commitments... And then the second question, which I think, Noah, you did go over, but I want to know if management -- or what would it take for management to consider being more aggressive on the share buyback program...

A: Noah and Frank discussed stable funding position, and ongoing share repurchases with consideration of dividend and buyback balance.