Earnings call transcript Q2 2023

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Operator

Hello, and welcome to the LexinFintech's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

It is now my pleasure to introduce IR Director, Mandy Dong.

Mandy Dong

you. Thank everyone. Hello second LexinFintech's earnings call. conference Welcome quarter to XXXX

today, can site. be Our results on it earlier issued Web were found and our IR

Joining CEO, and me our President, today Wu; Jared Jay CFO, Xiao; Zheng. James are

started, get and this statement call. press Safe earnings we remind you I'd Before our applies also our which release, Harbor to to like

may we estimates, During we to refer statements, no may the The and update statements. forward-looking our projections. based any and mentioned are Not stated, on business in which differ actual obligation to unless results call RMB. undertake all current outlook plans, materially, are and forward-looking the figures otherwise

Jay results risk will performance. financial in overall more our detail. management. Jared an first discuss update And on then the James will cover lastly, provide will

to the His Chinese. over follow. will in be translation turn the will I And now remarks English will Jay. call

Jay Xiao

[Foreign Language]

to quarter pleasure quarter environment you my second strong another of It's adopting volumes approach. for In the Loan performance Net second we RMBX.X the XXXX. again everyone. up share current billion, RMBXXX.X up macroeconomic once a guidance. was prudent XX% results for achieved the business with Hello, by have our year-over-year. year-over-year, Loan high was profit billion, up the million, XXX% was RMBXX.X year-over-year. Revenue of quarter balance end year-over-year. up reached XX% RMBXXX exceeding XX% our billion,

[Foreign Language]

identification finance synergies upgraded risk enhanced. focuses And and data, assets. rapidly. the got risk user of pushed with new e-commerce and second the main quality business refined to we grew main quarter operations, more two In consumer further The improved the of iteratively the adhered forward business the systems,

cash profitability improving the We five have for significantly. business achieved consecutive flow quarters, with solid and growth

Chinese and the requirements. importance XX as which attached [indiscernible] end-day June to credit in compliance scheduled disconnect with compliance great reform we financial accordance addition, the in successfully institutions completed with capability-building was to stage-by-stage In

[Foreign Language]

There results. were the of highlights three second quarter

Language] [Foreign

customer segment. of our identification of further we quarter, risk In hone increase continued operations capabilities, the structure and the the to strengthen high-quality optimize to improve and asset to refined iterate accuracy second and we First, proportion models identification. user our

our Marketing telemarketing existing In a quarter. by operations, terms capabilities, XX%, efficiency second higher thanks marketing decreased reached increased in level improving by XX% the while of efficiency costs sequentially. customer to

of operation terms of order delinquency the rate to XX%. the increased which the XX% the operation users improvement. of same In in rate users, settled XX% our decreased from notable day-one manifested And by re-approved month

In by to number operations, compared user new terms second active new quarter, QX. the of customer of in the increased XX.X%

remained a second basically operations flattish, loans in refinement continued brought contributed quality. XX% quarter year. from While cost last high-quality of in proportion the also XX% customer rose us new asset of users acquisition The by to steadily of improvement

on nearly second delinquency While XX% the the by fell rate day-one quarter-over-quarter quarter sequential basis. in a

of loans more the environment, to quality will asset believe overall acquire due more we industry we existing continue fluctuated slightly macro quality improve the as a specific to users. Although event high-quality and and asset

Language] [Foreign

our in the rate XX.X% the segments a business business then year-over-year, exceeding total in volume the and a e-commerce number consumption period. of retail during the of Lexin XX.X% different and rapid year-over-year XX quarter, the users rate Festival also number q-on-q, the And In e-commerce Secondly, XX.X% year-over-year business the and q-on-q, XX.X% substantially. The the e-commerce we the In business sales active up consumer goods. among saw Shopping achieved second XX.X% user June of grew billion, quarter, further growth volume enhanced synergies of second of e-commerce year-over-year. XX then grew growth transaction of RMBX.XX ecosystem. growth the our transaction business achieved of

such more suitable as finance we of The and been groups platform, young number who that users introduced goodies] Therefore, categories a new for revitalized, our and have high-quality ecommerce product fancy luxury business. installment sports more large consumer ecommerce continued (ph). high-growth high-quality and synergy existing and consumer between on fashion, merchants resulting [trendy With merchants international-like e-commerce consumption. been has business are to focusing in the brands on introduce

June June consumption the in to the of XX in to the active business an Festival lead During have consumer the active number approximately the a At consumer ecommerce X% period, traffic growth Shopping consumer compared rise finance ecommerce a significant users further with reinforced business the simulated quality ecosystem. loop mutually finance in resulting same in time, the business in in April. of in increase the users the

ecommerce in ecosystem. customers new consumption In our We have award the won between synergies reinforced best further we consumer finance Asian acquiring bankers. user boosting ecosystem to in existing activities Lexin July, unique and of platform and customer initiative digital by industry-renowned China seen terms of attributing

Language] [Foreign

rose fiscal solid consecutive flow we growth flow. our margin year-over-year of quarters Thirdly, delivered have successfully a of strong to compared year increased In on increase X.X a the strong basis. by XXXX. quarter, XX.X%, to business five percentage net and and the second Cash yearend remained a cash XX.X%

XXXX. taken and drive the data to in of business fueled essentially We firm strategy stand have which risk nadir the our turnaround since always a implement two-way the QX of a of

to shareholders consideration, And, to XXXX the prospects run. and the long the our row. second continue. into our confidence in in to approved recurring The in improve dividend Taking quarter and growing business the expect above-mentioned express the quarter a in we aiming full return distribute to decided Board cash momentum is the fifth

amount a dividend the six otherwise previous approximately for semi-annually authorized XXXX. by $X.X Starting In XX% from of quarter we net an the ADS months of XXXX, of company's net per XX, QX, representing period share ordinary the will period June profit distribute Board. months $XX.X ended XX% we period the recurring or XXXX, second will the per the dividend of six the profit for approximately fiscal to first-half of to XX% in distribute a or as equivalent cash at

Language] [Foreign

that effectively drive continuous our growth of is It (ph) steady the business. a our implementation [voltage] of two-way strategy

front accelerated the worth we AI the technology RMBXXX development industry-leading in QX, case model models the robots of tech of in improvements into service, of On research that sales, more in operation Thanks the sector. our our operational daily level. reached large finance tele This that noting and development maintaining expenses in we investment been and million, language user It's of customer used to are and incorporated ongoing inspection. the operation refined has application, saw efficiency experience. the use

basis. service of customer of terms which human increased in without X.X% year-over-year example, to got percentage cases solved a intervention application, higher on XX.X%, For

efficiency smart quarter reduced to was to in of of boosted management risk the data design, talked last further about addition Regarding and and we data the service, coding analysis, and initiative workload. new the applied case assistant in use which assistant employees' design optimization base, analysis tools

Language] [Foreign

financing but focusing store you give the not to XX let over facilitate we on supporting over cities least, of Since an in have our update launched XXX small Last social owners XXX,XXX helped provinces. project progress SME, me in we needs and responsibility. SME

In front we and industry with work of protection, customer the financial the addition together association institution. on regulators, and police, lawyers,

Security capability China such Communication national got and recognition China and Industry from Cyber of Alliance. terms The Academy further Our of Technology security Information as level The institutions in data

Language] [Foreign

rating remain prudent macro-environment, complex quality we deliver Looking and approach. strategies base growth. uncertain ahead will Continuously in high business and face the and customer the of management ahead of push the upgrading inter risk

Language] [Foreign

CFO, financial Next, I'll pass updates. for to our James

James Zheng

now Jay. on are provide stated. you, Please in Thank our details that RMB note otherwise I'll all results. more financial unless numbers

financial year. delivered The amidst from trough out relatively This an numbers. second We in quarter of in QX quarter and the the achievement marked another quarter. since recovery of last in healthy second fifth both of rebound mild consecutive our consumption growth not we the easy operating is bottomed overall quarter

above to better and on customer cost believe base, to in Thanks capabilities, reap more management the mesh strategies expect benefits initiatives. such and right we upgrading seeds to the have our optimization coming refining operations a risk undertaking of continuous by planted quarters. improvements We efforts reconstructing the the

as RMBXX.X of me increase billion, in year-over-year, this what originations same gave high let with the earlier. XX.X% we level an guidance loan for Total on the of the of happened please First, a at QX compared reached quarter end elaborate quarter high XXXX. beating quarter

mainly the which was RMBXXX GMV reach increased balance, reached by billion the Revenue grew the loan which growth XX.X% and RMBX.X for around year-over-year billion. to by driven quarter,

As base a quality customers the growth. GMV of generate contributing hence upgrading, lows, customer better our size result usually larger ticket

now The around strong QX, one achieved weighted fact was than the growth percentage X over a loans XX% more X% up of in year the than XX% revenue than made average despite with that ago. under higher year below XX% APR lower APR ago. Loans all point fell

roll to coming as Another we was banks X.X% this during stood with a in new partner continue funding the which factor the X.X% costs funding quarter, lower from expect decrease a ago cost at corporations the year contributing funding quarters. out,

loan the revenue tenure XX.X was to the months in growth. months XX.X contributing QX addition, year versus also In last

increased However, potential to macro reduce year we to exposures. earlier the started this amidst the the optimize tenure have uncertainties, structure

to upholding as quarter capabilities business risk sharpen management top continue iterating second on our refining We the and risk in focus priority. management our

trended steadily quality better. Asset

one day rate instance, delinquency For got lower.

improved credit accuracy further and of also efficiency. We profiling management risk

and X.XX% incident, caused a short-term X.XX% to than continue respectively, and company fluctuated cost year percentage of by XX ahead the cost notably total G&A and a delinquency collection year, XX-day push a R&D costs a loan X.XX% indicating better loan balance plus expenses, specific delinquency as efficiency we to turmoil initiatives, bit, X.XX% the at dropped a certain one versus and sales, ago, related processing our Due plus of QX, reduction. including average and marketing, In but as servicing post some rate last basis and operating cost point to X.XX% versus still industry in rate X.XX%. XX-day standing QX in of a

going the long-term initiatives basis, cost the of optimization to committed one forward On are continue as strategies. the fully we

report of million, As XXX% income the of able year-over-year. a a aforementioned, result to increase net an are of we $XXX

versus improved year. to QX last The net X.X% in XX.X% margin

efficiency sustain also year-over-year I of the operational to share through We the V which have would profitability clearly in year our our testament from to shaped improvements strong comparisons. ability perspectives a seen ago, as like some rebound. to compared and serves substantial one above analysis, quarterly Apart

opportunity wary RMBXX.X during it's maintained the and XX mentioning festival. approach considering that fully growth QX, increase our X.X% ecosystem an lurching we of billion, shopping worth captured In total consumer well quarter-over-quarter June prudent the a the spending, as leveraged consumption we growth

As a e-commerce faster able a growth GMV we than result, deliver quarter-over-quarter expected were XX.X% on platform. to

gross and products the expanded offerings line. introduced more business in order to SKUs also high-margin boost profit of e-commerce We

at XX.X versus Consumer installment provisions finance more due Consequently, and results APR tech take in which and The the an empowerment of XX.X% the to lowered from of QX the of increase uncertainty months rate XX.X is from rate and the revenue versus fell quarter-over-quarter from of booked the months slightly quarter-over-quarter. a revenue increase fluctuation among e-commerce X.X% the tenure stood bookings last slight previous X.X% at revenue take market X.X% tenure. the quarter. is service in for The shortened to XX.X% now the an of of X.X% combined registered QX increase X.X% recorded total quarter-over-quarter operating quarter. which overall

GMV sourcing therefore and selling The business service e-commerce lower was booked net basis. pop growth increased is the due than instead the the merchandising, platform revenue or directly growth of more on revenue the to company

Overall related the X% G&A the by expenses is and despite and sales sales R&D the due Offsetting growth. increase operating expenses in flat driven and cost growth costs almost stayed marketing decrease to in user efficiencies. marketing

and growth sequential XX% further XX.X% X.X% in last achieved of Therefore, enhanced quarter. a the the to from net net we in margin income

slowing RMBX.X have under To achieved on RMBX.X from perspective. improvement cash we At both second hand the current the quarter-over-quarter recoveries. the position during the around quarter of company was and billion end position registered net of equity economic and strong macro solid of This quarter, second conclude, and uncertainties a result year-over-year had billion.

confidence healthy cash is business returns. profitability, to facilitation semiannual shareholder required the in plan. board flow cash deposit This sustain thanks demonstrates the increasing efficient overall also loan flow approved the the more and The produce of improving the operations a from situation, view growth, business. continuously our for to guaranteed robust to In dividend future

the to of which GMV like represents the the for and would of growth. the RMBXXX XX% early to billion conditions our update RMBXXX year-over-year situation, year I billion of the on macro current the company's of Finally, guidance preliminary reaffirms a to second-half amount of XXXX. outlook XX% annual company assessment Based the market

in is expect year-over-year. the percentage second-half to year, for reflect single-digit These Therefore of we estimates mid-teens the the subject current change. the company's expectation high to growth which

further in journey both headwinds continued In uncertainties. consecutive despite the financials. results strong solidifies the the and summary, turnaround It quarter the rebounding second our commitment fifth operating continue macro quarter from possible represented metrics of to

will to Jared turn risk I Wu, would over please President, management. to go our our that, who Jared, the call ahead. like With discuss

Jared Wu

Language] [Foreign

promote on effectively The to In days in day continued were notable focusing to drop the a strategies upgrading to down and achieved XX rate rate stabilized of and and manageable our compared second quarter, growth we overall continued risk several within delinquency range. customer one results management days aspects. nearly The QX. XX XX% delinquency

Language] [Foreign

data terms mining In model of business matrix third-party consumption continued each model the of to we line. and data, the from ecosystem and data, of iteration, utilization data PBOC's and internal increase upgraded our

and user result, of a accuracy managed we to needs. risk levels identifying As improve the credit

[Foreign Language]

within system order data can a one operational models. On with simulation business operation system AI making, essentially successfully over bolstered by for for accuracy, The AI XX% minute decisions empowered through the our front and we monthly decision-making big technology. generate which of decision IT developed infrastructure,

Language] [Foreign

pursue To average we structure expect started between generation and and optimize of adjust new to declined, QX. risk plan tenure steadily loans. our the to shorter a overall it loans tenure of and balance portfolios we Thus, trend for the in and return, loan tenure

[Foreign Language]

and out. operations, groups, our aspect carrying impact collection post loan criminal quality extent. some the countermeasures, performance to of industry turmoil anti-collection of the to fading in loan the loan to to gradually Thanks due asset impact related metrics the out post from collection impacted got our is In prompt the

[Foreign Language]

our our capability profile credit Therefore, effectively fundamental and We in identification efficiency in year. risk have we management. management honed improved this capabilities continuously risk

asset on make risk risk whole, we qualitative of progress asset in will in bear certainly a and and we essential front a today improving in As trends remain fruits We capabilities seeing full confidence a forward management are every management lead quality. the to steady more coming quality. leap that and in quarters the endeavor

This can remarks. open prepared concluded we our Operator, the floor now for questions.

Operator

first of with And you. our question comes line Credit Thank from the Instructions] [Operator Suisse. Frank Zheng

Frank Zheng

Language] [Foreign

Thank me you, for two I opportunities questions. the Management, have giving ask to questions.

for question The demand is first the view and operating quality. one well August How around the in in as the macro asset of various outlook headwinds? the on credit is metrics the in in And as second is quarter July third second-half. the

What's As on future asset mentioned also the the industry more to there you so some loan far, and due asset change Thank impact Management are collection could in of previously, quality. in much. share updates fluctuations quality. very outlook

Jay Xiao

Language] [Foreign

James Zheng

Language] [Foreign

RMBXXX add to view more. like in uncertainties GMV macro guidance a to growth. RMBXXX growth. to situation, billion I'd stick the of our little original the year-over-year Basically, to That in of XX% XX% we're going to billion early-of-the-year represents

of point. have of you while achieved up at matter if year-over-year year we the XX% first-half a we completed this look As to already, have the the numbers growth fact,

GMV. GMV prudent teens really of second-half And the in So, that to at basically of whole adopting the look at very high means looking XX% year into kind we because we probably the a growth. a approach business for if the are XX%, of terms is growth mid growth to be we'll single-digit of this

more We growth. overall for really the with where would like second-half. the overlooking kind to at income, GMV the But scale, management the overall as risk net put of operations go our the profitability also the the and first we priority stabilize overall

Mandy Dong

very now, were expecting this still, question. pace. like the and as on prudent mentioned consciously And the the macro Jay [it be recovery approach. business recovery James earlier the we we're RMBXXX optimistic are environment, within the And now, would depending conditions. to macro macro our business so, not RMBXXX And growth more more and second-half, right the for We're now less for guidance hoping right in focusing right I'll our July our just] on operational of Okay, expect similar actually profitability we as of to a maintain full-year from the too do this pace or then depends increase year. company's increasing billion. see think taking to on trend. Frank, is And the for to we or of second do in a priority. controlling the And the is first for really more billion the We we strong year, recovery - translation the don't I August as (ph) And quarter. demand the level, said, range

third the growth, So, quarter will profitability. again or stable. less remain And will more reasonable on more focusing be on it

[Foreign Language]

certain being with quarter, certain with macro from question, puts little, your In before, the of mentioned it efforts economy assets industry second the our quality. more or we on with collection second asset a In some asset collection issues are companies, burden. but collection on impact impact the the some on rate terms putting rate, bear as our pressure did collection our known down further -- having did quality. new I -- It we having improving

quality earlier in mentioned overall further it a lower of our we overall improving. As collection out turn the on in kind for it rate. script, reflected new actually data. then assets And the are our asset And evened

with hope we quality the challenge the difficulty] not there overall the we're recovery [technical confident we're some were that being hoping better. question, on risk macro future, input will new taking will answer But in the asset still be good-quality get assets, level. more Frank? in your In our as we I And to,

Operator

our Thank question of you. [Operator UBS. next line Ye Alex comes from with Instructions] the And

Alex Ye

[Foreign Language]

line. question e-commerce my first So, business is on the

Lexin and line or on Lexin's to the consumption a tell a of some on on Second, So, is the Could as drivers QX. being us mentioning business the you. Thank ecosystem some business? color line e-commerce on there mentioned whole? rapidly get ecosystem. has more the grow in remarks has a update part the plan the about you this elaborate in that bit business future management your you Can

Jay Xiao

[Foreign Language]

that So, and expand been we've festival. And in increased also, quarter, reason to been XXX our category genes leveraging high-quality result. on promotional and the probably more as rooted] of resulted e-commerce last [technical And we're we've shopping have users. to fit our a we high-quality introduce And the focusing today targeted [actually remarkable in operational merchants -- of And and continue the audience. rooted on efforts is well we've potential categories consumer which a fundamental very increasing the for our better our will that to difficulty] range, Group. Lexin as we're

each a potential revitalizing specifically, as to users. our synergies around and We ecosystem And centered other. between between acquisition our that's mutually good-quality, us consumer And synergies actually e-commerce have consumer comes finances the the customers and And that's when platforms further high customer platform helps have they encourage already e-commerce and settled well business business. as created strengthened. it creating two been

[Foreign Language]

with to and will actually scalable share second believe we finance started of in institutions consumer business, services for for accordingly Lexin market which ecosystem innovative quarter, SaaS installed our of in more gradually or your from installment segment line plan. business, -- steadily a and our as business to e-commerce have So, that for consumer providing by includes e-commerce expected, which as you the answers financial [program] the business, just to SaaS to business, business the and notable credit acquisition we prior ecosystem, businesses finance the up [program] institutions e-commerce the more all-round developing offline build are Alex? the future. the a offline our customers. Hope team question, and (ph) which Lexin's business significant that financial business business, as financial providing (ph) main -- is and multi-business And introduced we more accompanied customer results a our -- progress business And

Alex Ye

Sure, thank you.

Operator

of question Instructions] Your comes from Yada Li line you. with Thank [Operator the CICC. next

Yada Li

[Foreign Language]

all. Then, translation. question. on That's are dividend I on And the do the my is can you the Hello, cash current the flow? Thank company policy potential consensus. question about Thank management. impacts there about improving elaborate taking will you. more for My under management reason

James Zheng

prudent Okay, view maintaining in are macroeconomic I'll terms of attack growth. approach of obviously business question. a the In very this uncertainties, we

look to management put So, we focus kind overall at are a trying and stabilized stabilizing really -- of scale, the but on risk profit. more the basically

So, this on risk basically more generate and profit, actually profit. if will you more management focus put

also cost we long So, activities. initiatives profitability This optimization lead down the in continue higher to profit see road. to our as we continue take Plus, the term to of one growth initiatives. will

So from also support flow of to sufficient as kind is announced expansion. basically, a restructured PAG. operation original we our the of robust future bond we cash And and with earlier business year, convertible the have

actually So, issue not us for the an is payment the to PAG anymore.

we bond convertible of paid have of matter a half the amount. As fact, original

this it's way that dividend So, cash direct to And, a more sufficient. tangible the shareholders we at and is feel reward really time.

So, XX% on recurring to Board semi-annual a plan that's as net approved the policy. of the in why dividend basis giving to has income XX% range the of our start a out

management's confidence of operations So, really this in the underscores overall the the business.

So, hopefully, this answers your question, Yada.

Yada Li

very Well, you thank much.

Operator

I'll any call closing you. back hand Thank remarks. for now the

Mandy Dong

again you, for us Thank Okay. everyone, joining today.

our IR have you available contact please on If information via contact everyone. you us Thank questions, website. our further

James Zheng

Bye.

Operator

call. Ladies conference you And, gentlemen, disconnect. now participating. this you concludes for today's and may Thank

Mandy Dong	Director of Investor Relations
Jay Xiao	Chief Executive Officer
Jared Wu	President
James Zheng	Chief Financial Officer
Frank Zheng	Credit Suisse
Alex Ye	UBS
Yada Li	CICC

LexinFintech (LX) 29 Aug 232023 Q2 Earnings call transcript