FINV - Earnings call transcript Q2 2024

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Operator

Hello, ladies and gentlemen, thank you for participating in the Second Quarter 2024 Earnings Conference Call for FinVolution Group. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. I would now like to turn the call over to your host, Jimmy Tan, Head of Investor Relations for the company.

Jimmy Tan

Hello everyone, and welcome to our second quarter 2024 earnings conference call. issued services were are today results online. posted company via earlier newswire and The

the and Chief prepared section with earnings the download Mr. with Li, can You release their Officer; Executive will alerts at Mr. Q&A and visiting a start our website call Chief company's Xu, sign conclude by the Officer, our remarks IR our and of Jiayuan ir.finvgroup.com. session. Tiezheng Financial e-mail for up the

financial be measures the will or review referring to we measures call, in non-GAAP performance. financial to substitute financial assess several non-GAAP be this presented and are accordance operating our for During prepared as a isolation and U.S. to with intended information considered These in not GAAP.

and to please GAAP measures reconciliation release. For to our press information refer these measures, earnings about non-GAAP

discussion Act please we made Securities the safe continue, Before U.S. XXXX. provisions that of Litigation under note Private contain statements the of harbor Reform forward-looking will today's

involve Forward-looking statements uncertainties. inherent risks and

company's materially may the As be the different views today. such, results expressed from

Further uncertainties law. except company's are any The obligation statements, other update does Securities under U.S. required not included risks Exchange company and to and information with the the assume filings forward-looking in any and as applicable regarding this Commission.

Tiezheng Finally, details will for Mr. IR the to a now over presentation quarter. turn website, we Li. post of on CEO, our our I slide providing our results the call

Tiezheng Li

Li, CEO Group. thank for call. FinVolution you is joining of and everyone, Tiezheng earnings Hello our This

business borrowers XXXX. strips markets legal made China, great XX, in which of excellence, through rapid We today. growth internationally million Indonesia note, driving China progress maintaining operate. XX.X the market momentum have determining served the half strong local are ended or strategy. positive growth happy a simply speak we on of of across to with L-E-G-O you as our XXXX first June We our in across global we outlook Cumulatively, the execution and the while Philippines strategy, around in We our

for first volume XX.X RMB for the market China the grow international reached continued up XX% billion, X.X of rapidly, to During year-over-year. half to XXXX, volume transaction market billion, RMB Transaction up year-over-year. X% soaring

and that acquisition of and and of brighter billion, RMB key year-over-year. Customer performance a a our of balance, respectively, the slowed it while This billion, X.X commitment growth. strategy. lead percentage X% strategy lends effective up to legal market China testament borrowers to view team. outstanding In RMB is XX%, out execution terms later We XX.X the investment sustainable embedding our to of our element reached our as will of higher legal drive as an a ultimately repeat quality, ongoing international

[ the second quality completed of The new borrowers the in quarter, international to increasing our to new new model. we XX% sequentially, percentage different and again of XX% Furthermore, reached in year-over-year our countries. ability and across continue borrowers to was business borrowers [XXX,XXX], Notably, the and new percentage as to total our Indonesia grow of in build During number ] XX% business by XXX% our number up China the borrowers. better borrowers Philippines sequentially. began robustly quarter, our validating transition second year-over-year the surpassed of diversify

in outcomes. media to positive the markets also yield international strategy Our social continues effective

we XXX,XXX, to have Validating Facebook, and respectively. year-over-year, XX% XXX,XXX in the social of as As deep of Instagram localization and such market. overseas followers and platforms million, the strong up brand TikTok approximately end second awareness and X.X created XX% our our on risen leading media of quarter, the had X%

our primary a the leader, It competitive business our As deeply at technology ingrained edge. of fintech is remains our DNA. in core and

AI internal bots, door expanded include framework and type we XX-hour closed session into across multiple environment. R&D XX included can incorporate together be can Its function for teams quarter, second During the in to which an tools admin called also API tools bringing models. a different competition the internal large a of support hosted platforms. [indiscernible] cause [indiscernible] language project management

] e-slot increase to utilize fragmented AIGC slots standard productivity. leveraged to Another time [

potential projects We efficiency. enhancing our these demonstrate for believe great operations overall implementation and

I'd Next, we the to In as economies. and centered some strategy make principle our in service dedication our We on innovative better ESG technologies of history, share advanced our as well to company's our and ESG like XXXX recently our to ESG technology, updates transparency published progress. our report, on leveraging mission sustainability. green sixth financial highlighting XXXX,

development employees, In carbon management integrity and giving with and emphasize with and efforts. addition in to back to relationships communities ESG innovative partners technologies, compliance, FinVolution harmonious low society its

and we quarter to wins of at business their their congratulate second XX.X facilitate challenges business around quarter's served to the of small owners throughout support owners XXXX. loans want highlight second and recent during RMB neutral the on weightlifting Paris small continue also national Moreover, team gains. accumulated billion with Olympics. longstanding them XXX,XXX the to I cooperation We the our

are business their help team increase proud image product awareness sports the small owners' their to promote We sales. of the public leverage to alongside and

of Our value initiatives to for and the helping society tranche a create embody excellence, respect friendship, all. our Olympic of better shared increase

providing sustainable to ESG the across business continue will and management We development throughout integrate operations our industry. partnerships,

a XXth of like celebrates second towards its look on and to review financial move future. inspires the that operational I'd we during to share CFO us anniversary that milestone quarter, our Before to FinVolution sustainable metrics, our

for our set As such, we XXXX. vision

markets connecting borrowers industry global each the financial To in fintech multiple international an become of institutions them. across in and leading platform,

deployed long-term capabilities to the second sustainably service better macro We technologies will greener dedicated challenges, proposing we in leveraging all and which operation we markets across to remain our achieve solid China's the make innovative summarize, to leading successfully ongoing progress technology FinVolution's operate. quarter in despite growth. To financial and

call resuming results the in over China's operational detail. turn our improved, CFO, multiple as to consistent stakeholders. and I environment and our will for Xu, growth discuss financial Going metrics are will we greater across of macro delivering that, our returns Jiayuan forward, confident faster now all With who

Jiayuan Xu

Lee, Thank you, hello, and everyone.

call in To tricky half go through still XXXX, of environment. I for today, GDP signs quarter. index X% improvement. our China's details. bright items results tourism-related To refer the the listeners the first more XXX remained festival our our further and release and Despite consumption the activities Let's to to growth of quarter macro related of of encourage shopping second holiday, press key mindful in uncertainties persisted second earnings all the showing with be earnings for to May spot the length

does retail trajectory. optimal an slowed overall to growth not sales China's year-over-year reflect June, recovery which in However, X%

manufacturing are index XXX.X PMI recovering. operational range, is at points, will indicating largely Chinese recovery. enterprise compensated technological process. PMI manufacturing within In which short, PMI we July still points. expansion vast also China's tumors, to the of the pockets graduate production PMI manufacturing study Concurrently, remained and China's navigate stable holding and reached and using XX.X need economy both with There is in which experience our

As retail in supported numerous Li mentioned, China performance our loan across lending were of among international both and performance by funding, year with in areas as range. markets volume half the growth the consistent within and the solid transaction was This collection institutional excellence such others. guidance first our

of the some walk details. me you Let through

validating stable to the at inclusion. XX.X%, During strong borrowing commitment our China our second in financial remained quarter, IR advancing average rate

quarter shrinking borrowers platform, obtain of credit Given trusting in bps recording leading first XXXX, our the another our for improvement our of borrowers. of our our the during and significantly, the a bps Such improvement financial institutions costs half enhancement of quality improved in institutions to deep quality XX and in consistent growing take financial designed huge improvement funding to good XXX and annual ongoing capabilities a risk score rate. our cost the funding of cumulative assessment

achieving are improvement the liquidity, in year. and second funding costs ample of the of Given our continued of confident quality half borrowers the marketing we in

drove X rate, enhanced vintage our rate basis at assessment loan progressive from previous efficiency strategy, recovery responsive that our improvement for XX%, vintage risk collection in Regarding in the day sequentially a XXX refining adjustment our delinquency recovery quarter. the to our basis an resulting reach our points risk By of XX to process, we will maintain collection which agile the points stabilize view payment deduction we in management, From X.X%. our the up and loan perspective, have around credit improvement by X.X% delinquency fell our quarter. to economy models

of We half Furthermore, expect optimize our the adjusted this recovery our we adapt strong to continue in the momentum of second year. collection business to will requirements. our loan have we persist strategically partners involving portfolio as operations,

diversification further X.X for strategy, international different our international half our transaction RMB reach reached to we models. up by momentum market sustainable range macro is For business effective environment our of the the and XX% growth global business billion, the our strong upper guidance. year-over-year volume with Supported of legal believe first XXXX, among

volume XXXX the X.X% increased consumer high of confidence overseas Moving and year-over-year market as bike targeted first about international GDP treating remained efforts. year. nation's half index growth its second Indonesia, at expansion for economy XX% XXX% With The for GDP the for the has our to largest has months. data motor XX continued recorded of shown sequential on of customer X.XX% full XXXX. XXX,XXX of year throughout growth Indonesia quarter and of for first a in July this growth our to The and sales macro heightened optimism. XX%

consecutive the above from consumers' operations in are local XX.X% to other to further local to for attracted bad September funding PMI XX% recognition strengthening quality new moderate partners, quarters Indonesia we X.X% unemployment remained reflecting July X This including XXXX, X.X% gain XXXX X the and leading last continue same borrowers a economic share that March new decreased towards correction to digital period years under our we stabilized have in of business manufacturing and bank. adjustment the customers year-over-year sustained pricing After stakeholders. a of our for cap, Besides has in Indonesia The prosperity. recognition XXXX, confidence. proud in rate year, yet since has

building funding steadily more and We local with reputable sources, our relationships diversify funding to costs. strengthening institutions are optimizing also thereby larger financial our and

Next, the second international market, our Philippines.

XXX that volume. strong SeaBank, Notably, volume such with second Meyer will domestic quarter-over-quarter partners transaction local to growing RMB from This quarter for nation's and same XXXX, the of positive months. July Furthermore, X.X% to of momentum contributed with The last second also as the period remained XXXX of in of Union reflecting the of rapid outperform and as from is international to performance exhibiting Bank. reflects nominal the XXXX, quarter, the our year-over-year private XX.X% our year. labor above outstanding PMI dropping XX% further Philippines the robust Philippine's XXX% demand has XX% continued growth. Philippines economic operation As to as XX% support in expectations unemployment consecutive representing manufacturing million transaction consumption the market support X.X% rate GDP XX Bank compared June

with With Our partnered funding USD sufficient XX cooperation in place, with the maximize funding of e-commerce partners shows. we latest million who can recently program. on us TikTok our benefits we a believe

Additional borrowers growth channels sustained continued high rate. diversified from and new

turning Now our to financial metrics.

operational X% financial quarter's for lead X.XX the year-over-year. billion, This RMB reached expenses results. Net better-than-expected revenue to quarter up

million, increase across net our and X% XXX quarter-over-quarter, marketing increased growth Meanwhile, Our we by a markets. to stability. X% XXX sales our to as was underscoring million expenses in income all RMB of RMB operational continue invest sequentially

As growth our adjusted when leverage indicating further tremendous business the we restricted our economy opportunities X.Xx mix, to ratio recovers. for

short-term sheet executing at our X.X to international advance and our flexibility legal level strength strategy our and a balance in expansion security remained RMB liquidity, with reflecting maintaining top our priority robust through billion, Our and capital rewarding markets Consistently incorporating FinVolution, our repurchase market-leading to and shareholders return. dividends. return growth a different business share remain shareholders' for across program, drive at both

shortly share has XXXX, March been embraced program in our first by repurchase and after in Our XXXX IPO our November shareholders. widely began

total million. Our around programs with buyback XXX history X indicates repurchase USD a deployment of

quarter, our USD XX around are to ADS. million. X.X XX million of second in million we We and the now repurchase repurchased conducting up program further Notably, deployed USD

first the half repurchase. have of around For million share deployed XX XXXX, USD we for

of the total cumulative second share quarter. Our end repurchase as of million USD the amount XXX to reached

in increased over steadily past with X the USD total. years has amount million dividend dividend our addition, cumulative reaching the XXX In

to payout USD our XXX net to rising ratio Our program in XXXX. has capital million of return a profit shareholders with returned to XX%

will Going to forward, strengthen for program continue capital our return our we shareholders.

showcase our In summary, second quarter results effectiveness. our strategies legal solid

business nimble technological model and our Our advantages.

to Indonesia to in profitable our a Philippines deploying our contribute boosting expect strategy. confidence XXXX, and to international expansion in proactive We operation more operations in XXXX our profits become

we my opportunities sharing on look growth delivering As we capitalize with massive our markets, all the international sustainable success to the prepared stakeholders. our remarks. in That forward and concludes

will the We the now to questions. open call

Operator

Thank you.

of China question first begin come from Yun-Yin We Our Instructions] the session. Renaissance. [Operator will today now question-and-answer Wang will

Yun-Yin Wang

have I questions X here.

First in in borrower of quarter question and trend some is could you color second on demand give July. China also the us loan your

second the your interest requirement. acquisition in the API rate strategy after on Any customer the question requirement is the update front Indonesia, The the of regulation meet XXXX?

Jimmy Tan

the Let translation. me do

China The improve show year. quarterly daily quarter, application and July in an our rates on is of mid-single the and daily the X% comparison, demand resilience Regarding has economy consumer will borrowers of the second the borrowers more demand. that expect confidence. in demand our we X% residential demand, of basis necessity. our a had observed the by between Therefore, of trend line The borrowers we when repeat concentrated borrower demand X% credit daily In digits, of repeat half weak by is around mid-single-digit basis. the area weakness increased gradually annual declined the it and second with is in application to reflecting weak, will during largely the August, on in rate of

presenting much GDP election, political international macro-environment, Indonesia more situation such positive right, increase. After economy From it an is a improving as the normalized trend. with of has

concentrate us on our in Let Indonesia. performance

During X.XX up sequentially. up reached X% the new reached X% billion, million. Number X%. market the $X.X billion, volume up up loan annually balance sequentially, X% for between borrowers about and of to outstanding Indonesia X% for of $XXX XXX,XXX with number transaction second Revenue reached borrowers reached quarter XXX,XXX, quarter, about

cooperated funding institutions We financial have institutions, with and from our cumulatively local financial all is now. X

X has operations completed months. Our pricing in transition just Indonesia its

reaching cohorts, In credit half rate to risk the the the our entering with a customer and meaningfully over of model online offsetting stable of third of XX% operations. potentially expect high. returned Therefore, Indonesia improved reduction. for operations borrowers, We new consistently rate remain the transaction and iteration quarter, reflecting credit volume space. has interest with record adjustments XX% in resume Indonesia we offline will acquisitions, growth made by our have second impact improving will take year for more risk, business stable operations XX%,

multi-finance with We license a stake a have completed the controlling of acquisitions XX.X%. of

Going explore scenarios online multi-products electric forward, cetera. pipes, will instalments as pay and and proactively for and such off-line we leaders vinyl both et different channels.

in leverage our fully expertise will We our future China to market them growth. and Indonesia ensure leverage

Operator

question will next of come CICC. Yada Our from Li

Yada Li

the the likely the the volume growth the has maintain company's balance I target domestic the gained was wondering the how slightly what's ahead, plan volume business. I've growth noticed company looking a and the and faster And such for can with growth how peers company profitability. company and compared growth? does the

Jimmy Tan

translation let Yada, do Alexis. me the for

changes physical sustainable we you for in of As slowed development half very restructuration in different have market second scale uncertain into of execute down the the the is has for consumer the of China Under players XXXX, and of China during is macro-environment, varying a industry Currently, degree experienced many are it beneficial know, us that stage reduction. vote previous certainty setting competition. has years. China. increased the entered from market and the some this After year, and

few achieve a have ways We this. to

certainty acquiring new First and behavior. we data have on of information borrowers for through feeds, leveraging all, success on

information We algorithms continue to order optimize enhance China conduct feed improve to and and the joint ROI. link the

XX% Transaction are to of customer able was customers up year-over-year. the lifetime strategy. X% the We in and new increase accuracy stable by our contributed borrowers and determining maintain volume acquisition value

our we actively Our information are XX%. a cranes, partners us. with XX% level. Chinas multiple cost Internet work have percentage of also same to new customer acquisition to able and diversifying from new better Apart healthy customers and we feed control At was platform the between have are LTV time, found to

influence are on our leveraging our brand borrowers. to addition, In also we

during weight-lifting we period, traffic example, along the the over for over our team video positive counter achieved image for the remarkable of transmission. also support their with has wins gained national views XXX Olympics, at success a million For promoting game. tremendous with Olympics have results and China XX million Along

and requirements. is have excavating borrowers repeat XX we operating very years of of and familiar certainty our management us, diversified with deeply for are borrowers multilayers and the differentiated Secondly, the history, a through over we

refer users' volume a and has as to the the suitable All repeat We then scenarios behavior characteristics. led first on to with increase will half, impact by promotion which this product for different such profiles our borrowers. in higher XX% user based them us most leads transaction

Thirdly, rate. sustainable our ensure business All our operations above which funding going healthy is cornerstone stable coupled remain performance, improvement take costs, growth on forward. high-quality with to such as with which in lead leads continuous funds the improvement forward the growth multiple industry and these progressive

Operator

UBS. Our of next today Ye from come Alex question will

Xiaoxiong Ye

so indicators quality, the quarter. early first second question improved lined is on asset in have that we My noticed have

wondering are Just the potential in the be like key second trend? the any quarter behind last what worrying question in third year? trend on the recent for drivers What's for the about half in Second we half? the NPL second Should uptake for outlook the been more funding more Is room has the key on improvement cost? the there improvement, sequential drivers take any the What behind? rate. is

Tiezheng Li

asset Regarding our quality. overall

the risk stage last for adjust risk approval delinquencies. tightened and performance risk from of bottle boundary early we different use our lower to during We experience higher and able year, risk recitation are that quickly industry In level. the medium strategies groups pre-empting of risk for in the debt, stages the the and strategies earliest the deploy During platform higher the initial industry rates trends. of leveraged contain of predictions stabilized, are one a and first overall of at we quarter, the

maintaining while volume we the line balancing in adjusted solutions further and growth explore rate users credit of overall different risk. second on quarter, the and types EBITDA During for optimized transaction

delinquency basis delinquency by while points recovery XX%. the to improved as and loan will shared We second stable half remained collection this day have to overall the much more is quarter, environment reduced at during situation information like would that more to think XX you. the share happen with X.X%, X.X% our in vintage second now. I don't We also rate X stable

have Xx. is to lasting lasting to at past industry-wide the years considered and our fluctuation take Such recovery. unique last not already to the in route The for longest fluctuation shortest qualities operating occurred in based months months is X smaller recovery months. and be process on past the is XX this asset X the history, time Over between with and X Xth fluctuations X fluctuations average has of impact this recovery place signs experience. month fluctuation midterm round The shown step, the on normally the Xth around of

We are in experience. fluctuations the any based of confident to our future handle more on such

rates. take Regarding

quarter, second the and During vintage stable at quarter, rate the remained average rate second delinquency optimized at Funding bps X.X% around take XX costs improved our stable further in remained borrowing by XX.X%. while X.X%. to

remain For vintage and we stable average XXXX, the delinquencies of borrowing cost second half further to to optimization. funding rates have expect and

of to costs is for by improved the basis to in basis is by growth. platforms we reason XXX with Our This asset has room maintain costs and we negotiate that the few quality environment, points better are popular first our more funding have and half partners. such are able why improved XX sequentially. the in Funding one cumulated funding

improvement believe it Going just what have forward, room on still said earlier. based have we will I for

Operator

closing Okay, over back I'd are like to for no turn call company remarks. as questions, the there to the further now

Jimmy Tan

for us Thank you joining today. again once

Relations FinVolution If please day. team. Investor Thank and all, you a feel Group any nice to have have contact you free further questions,

FinVolution (FINV) 21 Aug 242024 Q2 Earnings call transcript