LX - Earnings call 3 2023 | LexinFintech Holdings Ltd.

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Operator

Good day, and thank you for standing by. Welcome to LexinFintech's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

It is now my pleasure to hand you over to the IR Director, Ms. Mandy Dong. ma'am. ahead, go Please

Mandy Dong

Hello, Conference to Call. Amber. Quarter Lexin's XXXX Earnings everyone. you, the Welcome Third Thank

Our can our be were found results issued on IR earlier website. today and

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

remind Before safe of press which harbor we this to earnings our also our you applies like in call. get I'd release, started, to statement

materially, plans, otherwise During and statements. results are based which and forward-looking the statements, actual obligation no call, we undertake figures Last, The our we may are estimates current to refer may forward-looking projections. to RMB. in differ stated, business outlook any mentioned and on update all unless

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

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

Jay Xiao

everyone. [Interpreted] for of third quarter It's to our you pleasure performance Hello, share the a XXXX. with

and macroeconomic the a data, operations growth solid we forward In slight risk of despite the reasonably the asset of steady our volatility dual-wheel quarter prudent tightened challenges, adopted in face refinement strategy quality. current in quality. third and capabilities, to performance. risk adhered growth third and We strengthen and strategy In drive we balance quarter, of our to and to another continued the fundamental the pushed our industry-wide the the recording

Loan was was and tech year-over-year. In consumer RMB the balance commercialization Transaction capability acquisition was were XX.X% volume XXX.X third management up enhanced, its credit Net the between The up are year-over-year. the being RMB to up customer XX.X synergies of accelerating improved. expansion. and million, XX.X% its further both and we with under and Revenue validated, existing year-over-year. XX% RMB continued business further customer business XXX was grow empowerment operation new e-commerce XX% billion, effectiveness quarter, X.X was up billion, billion, RMB the year-over-year. profit

highlights of main X were quarter results. the There third

operations refined have efficiency led in existing new improved ones. both to acquiring managing Firstly, customers and

a customer customers, on notable new quarter, and of new resulting upgrade major strategy we our terms model In achievements. made in the in third acquisition

The rate quarter. drawdown feed facilitated new through of by borrowers the approval loan to customers improvement group. The of compared channel customers XX.X% compared number first volume of and to showed efficiency attracting the over XX% all control for increased

decreased by indicator delinquency XX%. early-stage Additionally, nearly

finance, upgrading We our further quarter. In and expect accurately fourth management we quality talent to in organizational the new off-line to quarter, Chinese, Language] the acquisition [Foreign enhancing ability cultivation the the team, scale identify the the of off-line customers enhanced structure continue benefit in the off-line inclusive sales customers. standardized third improving of This system, included to strengthening customer and both of capabilities. the

this acquisition overall and direct unique in our declined X.X% in in our growth decrease acquisition These we'll business customer model, in and a compared advantages cost. offline second deepen presence efforts in the customer the We for off-line potential to of opportunities see third Sales by model. quarter. to more quarter expenses the continue solidified future, resulting the

operation maintained service our In of further application, and a existing users, model underlying enhanced steady we for building capabilities. the terms capability strengthened

and increase in WeChat rates groups the the the operations credit of nearly achieved the more our in around introduced and the were increase a XXX% PBOC. identification entire centered target sequencing data for the The order previous XX% high-quality improved the by XX% life model utilized user and volume. version. In enterprise over we by operations, Through system built enterprise the system sources quarter, framework acquisition, operational compared borrowers we XXX,XXX improved stability accumulated which customer third quarter, transaction efficiency WeChat and the satisfaction. to customer for an has and the We traditional management service XX% customer cycle. During to we of improved methods, and model a risk refined

In customer incurred, product, volume volume the per willingness and high-quality active the person X-X, below of delivered total premium experienced third quarter, After been and managing our high-quality segments order average has targeted settled Lexin user order those expanding users' improved. effectively using progress. all increase. to borrowers base. opportunities and users satisfying return of place enhanced and card engagement transaction the rate, The around This our scope more XX%, the the volume the an XX%, priced X-X, the transaction significantly facilitated transaction and for high-quality towards

continued The was and synergies. Lexin further ecosystem of growth the highlight second enhancement of

small quickly with better institutions. and cover and by empowerment tech in scale. more last a In this in growth is a of transformation expansion achieving product XX% banks. The industry with commercialization bring to cooperation empowerment solutions, nearly to can business It synergy currently profit credit and of can line our year, was business, market team the business, validated rate its potential. fourth and Lexin undergo empowerment the XX% market tech broader multiple in the quarter. and also city business collaborations expand empowerment diversified of exploration, it Currently, recognized credit and standardized proportion banks further rural banks the will upgrades the tremendous in accelerating and financial funding scale commercial increase retail portfolio of quarterly sequential the in systems the the deeper rate help our which commercial digitalization rural between and well regulation capabilities further X third drive and refined for completed capability overall after accounts the grew of trend and business. of Firstly, consumer the the urban we tech context After have deliverables, increasingly Lexin's years interest quarter although tech validated downward business, further

division the our to synergies solidify consumer more the authorization for Secondly, our its LXs and level out ones, of Apple supply. TXs advantage initial value highest maintaining business. in e-commerce new with e-commerce scale in core In acquisition business brought further terms our and Huawei quarter, existing activating and continued credit enhancing customer third

as on increase the spending e-commerce year with platform, sales our reached consumer Mate third boosted the further new in Mate an Series in an of the approximately XX%, XX for compared revenue taking X-X, the Huawei product. high XX This a last quarter and record XX example, to year's

introduced in growth number brand ]. to of a favored XX% of such that strength sports electronics young onto platform as categories in new our third addition by In merchants covering in goods, merchants reached the coverage. we XC category, are consumer generation, The packed brands our high-quality quarter, sequential and goods luxury new representing the [ and XXX, more

and merchants existing of credit product With users more of been to stimulation large the activated, a addition expansion categories, between and e-commerce number a have business. consumer of leading

During festival, X At active same a from drove active transaction sequential notable a increase November consumer the to in ecosystem. credit within further cycle approximately user shopping in with the reinforcing period the XX, growth in high-quality customers to resulted time, XX/XX these base the volume consumer a creating XX.X%. operate our the from business e-commerce RRX of e-commerce increase spending,

These quality data-driven operational to included third enhancing quarter, [ series settled the data-driven the system through highlight is our measures to implemented customer as asset of matching Third improve enhancing efficiency. such profitability. and rate we a measures decision for the and further improve tools users. In operations procedure efficiency, improving to approach models of and life-like ] retention the data simulation applying strengthen funds efficiency our

Funding strategic entered further in our into reached a drop drop costs improved third funding The the national cost and record banks. of on has significant optimization the new structure major In including multiple low, Q-on-Q quarter, partnership basis. funding profitability. banks, company joint-stock a achieved wide XX-bip with

and the XXX and quarter, in industry-leading company third of The in business In invested million development continuous our investment and development. relies research rapid position. maintaining on RMB also development, our our technology research

case of of through we our business During models and large data. data accelerated AI in development exclusive the business the of language quarter, fine-tuning use pretraining the

In key loan telemarketing, terms process, AI of such service application, business already the customer fully business as in have model and collection. we implemented

coding is ideas of terms the overall efficiency assistant model and company. In scenarios the the of analysis, design tools, generating data tools, operational such AI widely enhancing in as applied working

and closely the of operational These industry customer case improved risk overall experience. of we trends use the management, significantly exploring terms large have the initiatives and models. In are efficiency language actively AI watching the

time Solid in advantages technology one of companies company been fourth on top Xx. selected as third the making XXX the Chinese service the the for for quarter, only Lexin has fintech list the us

collectively our Upon fourth, to carried corporate in made combat established upgrades customer intensifying consumers. enhancing In security strengthening protection illegal anti-fraud of groups. measures. the Guardian two, comprehensive These major anti-collection our protection measures third management application; our we firewall have capabilities; social service XS safety consumer major terms of one, initiatives: data out rights to efforts and for three, quarter, the X system, we expanding a intelligent responsibility, foundation system;

this XXX ]. system to governance satisfaction maintaining August [ has From RMB XX.X%. over potential year, protection intercepted attacks, The the of data has the and a anti-fraud of prevented logs million system. launch since customer data X January of leak reached record user security for XXX million And Lexin data instances the

uncertain the external in prioritize to risk complex operation and will prudent a the of principle quarter, of fourth face environment, the to management. we ahead Looking and adhere

origination maintain XXX year-over-year transaction to and the quality balance quality. on RMB to while asset to striking will year growth. billion, XX% improve a volume this billion loan a capabilities asset from ranging we representing gave enhance year, RMB earlier between We risk management We fine full guidance continue and XXX XX%

pass our updates. I financial Next, to CFO will for

Xigui Zheng

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

consumer recovery In sustained of sluggish for the first quarter, macroeconomic have a the the growth face signaling and robust straight sixth XXXX. subdued a quarter V-shaped we environment our of since confidence,

improving optimization by the has the and us particularly early been refinement, funding, prepared risk customer forward quarter. Amidst prudent. capabilities, rate this lowering cost economic on uncertainties, focus strategy management optimizing our [ upgrading, ] has ongoing operational our repayment Our initiatives

in impacting made which us in the health. We have moderated originations long-term our term, to while ample conservatively new asset prioritize financials, our financial provisions quality supports near and loan

a context, take year-over-year, QX year-over-year XX% reduced significantly repayment to increased aim and comparisons. keep up let's X.X to XX.X in at at CNY balance early optimal year-over-year CNY the climbed look XXX QX's origination CNY to cut billion, a we of QX. at repayments early ratio to due To and to XX.X% the level largely XX.X% first, of in billion. Total level outstanding provide billion. it about loan by number some loan larger Notably, now Revenue

XX% The from average threshold last total comprising up of year. XX%, under remained loans, this with loans weighted below over APR X%

our months last national banks average the falling down with R&D continue anticipate averaging X.XX% portfolio's in the successful costs. cost point structure to of including uncertainty, a XX.X year, funding Cost QX and processing and XXXX. market further partnerships attributable services, loan to and in from record to of of fine-tuned Loan response which XX.X hit as Our the reduce X.X%, G&A compared the efficiencies expenses, operating in with from a low saving tenders part decreased we balance, year. XX basis we previous marketing, to X.X% to sales

by funding some rose our XXX perspectives share Consequently, net balanced, like rate reduced additional to provisions, our remained quality analysis, XX.X%. early effective margin growth. XX.X% to to costs, improvement and reductions, as net reflects although with GMV asset profitability relatively the improving durations CNY year-over-year, business also a control take year-over-year A increase we repayment would slight provisioning. business from offset heightened the resilient stable shorter and income loan momentum. million, and Apart above from increase the the underscores comparisons. Total pricing I quarter-over-quarter Despite maintaining

recovery rate. metrics remains as X and a industry collection economic loan delinquency the MX affected cornerstone rate collection factors quality days like XX such challenges yet strategy day the Risk reflected the in asset delinquency have and management slightly rate, as within slow

across to a we instance, XX slightly fluctuation total ratio provision a was debt in continue days approximately divided X.XX%, delinquency which principal adjusted provisions, our with QX clout by amount higher loans. in X.XX% of the as rate coverage industry in quality in reaching comparison days QX. is have current For QX. Nonetheless, bad defined to seems the XX asset is which of delinquent amount The XXX%, our

safeguard We level. our all are vigilant quality measures to and have asset taken

spending. and expenses quarter, from by the marketing from X.X% general reduced and Operating fell administrative last sales the primarily

perspectives, the QX, With net sequential maintained we achieved made XX.X% and significant X.X% in growth provisions quarter-over-quarter both QX. during and margin. a income still a net from From have increased year-over-year we improvement

and macro maintained business momentum our pace persist, Although we headwinds the have rebounding of to anticipate business, the continue. growth

annually. XX.X% and quarter-over-quarter credit which billion X.X items. with quarterly facilitation a Tech hit the service high to accounting increase of grew increase revenue both an CNY reclassification. significant Let's year-over-year, XX.X% an the XX.X% review by some mainly e-commerce and QX driven specific platform promotion the services due Despite operating while installment declined financial GMV by for also e-commerce revenue and saw year-over-year. Total business, of empowerment by the XXX grew, QX numbers, orders, driven

in Expense decreased progress costs. decreased where efficiency quarter-over-quarter ratio improved demonstrates marketing, cost of expenses by due continued we mainly was X.X% customer have customer greater acquisition in acquisition and the and year-over-year, marketing lower sales and optimization, our efficiency notably achieved models. by which to RTA upgraded X.X% The

a CNY basis, in users XXX growth In and growth year-over-year. XX.X% credit XX.X% QX. a approved new with steady X.X% a customer profit the increase increased on million, with a new acquisition increased Net for QX, and X.X% approximately users quarter cost quarter-over-quarter lines active marking was quarter-over-quarter indicating lower

plan strong, billion CNY we in of around and million, Our total for USD half paid and solid CNY cash dividend of net first around X.X cash XX of XXXX. out QX, cash XXXX the position with for to a XX% a X profit recurring first a roughly quarter the position equivalent billion. have is amounting In declared ending hand half equity dividend the the of

we to will to for forward, shareholders. more return look value Looking ways to continue

XXXX. to the rest of ahead Looking

represents Given billion to billion current pacing. which conservative our a is quality the asset the the We in year-over-year. subject XXX loan growth, expectations, and GMV CNY pressure of XX% guidance maintained earlier XXX annual which reflect These on CNY industry, the change. estimates to XX% throughout remain of to current we macros origination

marks up, our QX sum growth To sixth quarter. consecutive

operational paying customer key strategies: are Our cost off. all risk management, enhancement, refinement and efficiency

opportunities and we and As challenges, expansion ongoing maintain seize operational we arise. will as poised focus to optimization, industry they measured macro our control, business on navigate asset

hand to over to approach Jared from our I management risk discuss President, it in here. our Jared, Now take will detail. Wu, on please

Yi Wu

base quarter, third you, strategy, and step management upgrading, James. our and Thank customer up management In results. risk the of [Interpreted] ground on efforts system our which corporate risk to base in honing yield the consistent customer we our our continued upgrading holistic optimizing

forward. Meanwhile, a anticipate due our risk management risk to capabilities, loan to continued of experienced the to this recovery and our anti-collection we We of Although slow rate recently. improve management conditions the fluctuations rise collection macro QX, have from countermeasures built therefore, illegal some a loan impacts factors we series may these out into rolled impact mitigate last these of we into on prudent more approach going collection. activities

our leveraged right. For have the collection up in workforce we of advantage of handling collection instance, collection and to proportion we the increased case the and manual the set uphold collection also process, internal internal manpower,

model a quarter, risk line striving professional year efficiency RTA In levels. skills in industry in customer strategies During management continue a foundation we high-quality amplify to to growth. In solid iteration, third through and number the a up We customers reduction management accumulate their this risk achieved continue credit to core enhance principle, QX, to of management-driven assist our the our we gradually and and the new advance industry-leading extensive achieve space, of accelerated quarter, models customer new further the we flow customer will year's rapidly next more build experience in laid sufficient breakthroughs. experimental to and top-notch competitiveness. of third for our risk management us improvement recruitment risk will Adhering anticipate acquisition the talent XX% space XX%, risk team. will our a for continuous We approval. in X-X, risk optimization and

overall of same enhance the the continue to in situation underlying risk prudent principle current a our QX, management adopt the persistently macroeconomic in to at will first, management and continue face we and the capabilities, strategy of of time, to adhere the risk Looking ahead, risk management. our level integrate

Mandy Dong

that remarks. our management all Operator, prepared closed

I think good floor the we now are questions. open to for

Operator

from line [Operator UBS. Alex Instructions] of from first the comes Ye question Our

Xiaoxiong Ye

[Foreign Language] questions. I X have

more one for revenue you repayment in QX? new helped terms is into Could in of QX, control to color measures the color And some regarding the early take your acquisition. the the -- with your about remarks, question ratio in which taken some provide the The management us rate. second customer with is and expectation share about first increase specific the

acquisition progress both in noticed in and customers customer a new We have good lower QX costs of number terms of acquired.

So could on color you also more give this?

Jay Xiao

[Interpreted] Thank you, Alex.

company's such for spanning So operations, first management level multiple quarter, in special the a we the then by customers' directed outstanding up the balance departments task determine as to based on force and are their the better better they to based do credit our to that. strategic whether not on error line process cause strategies decide avoid repayment, repayment own likely to performances approval determine to early or set

issued premium as the our to from suitable which meetings the tasked doing reduce -- a held also and fit rate the to order the as significantly very achieve third and effectively go team early second maintain helps on of rate repayment so, fourth as well adjust quarter, good We quarter. in take improved the third expect quarter, us reoptimize strategy our early the the such them which in to the the quarter. only to to and then the rate review, and deter we coupons we result weekly earning In and in in the level revenue as -- repayment about optimized rate in well which level was X% of

quarter, media own quarter. customers our model new in on new significant usage RDA as and upgrade, well continue the the main acquire iterate model the including model the, as customer risk the -- risk third with say, customer with more channel. previous integrating We to a our upgrade promoting did our in new in reduction we achieve So ability same to with comparison

has XX% pure view, a and from expenses customers new increase but with users new risk X.X% by hitting point user by on active registered XX%. And new line decreased a Specifically, our by much XX.X% earnings users And third the credit and marketing by a over-quarter, lower cost quarter-over-quarter. increased acquisition quarter. X.X% increase customer in acquisition by basis. customer quarter-over-quarter newly improve sales and reduced efficiency will will increased It's of X%

the generation better to pace our increase high-quality of well foundation results of strategy -- been and number volume your the we continue comparison reserve group Alex. before for mentioned which the a as to fourth experimental in of that faster quarter, more the a push a forward better Coming at as will lay to showing answers as model, including questions, next as well the has growth. significant to the customers new prominent pushing year's Hope

Operator

comes Our question of from the CICC. from line Yada Li next

Yada Li

do that's looks Language] the [Foreign October if compared like the quality? quarter, demand November? of translation. was And I'll and about you elaborate current with the all. previous asset the more how the And trend currently, loan wondering I how could in recent is

Jay Xiao

operational so [Interpreted] Okay. is seen and Yada. to you, no significant seen. and see October slightly the compared recovery far Thank November level, quarter At third growth in down the demand we is

demand boost the ranging the probably special average to So now slightly basically with demand the the in third up flattish. point October that third the the of of daily XX.XX quarter, November the from is quarter of e-commerce in And specifically, compared compared level view were in benefiting in level weaker to mid-single from digits.

indicators a of of as the seems government economy quality Jared a conservative still collection capital of the industry to we on stance tightening assets, been and quarter, the real asset cautious factors, flow we assets recovery of a our growth as concerning in on and as the fourth extent. has the earlier, quality, and macro are rate our pressure fourth the that yearly expected, trend the of anti-collection However, volumes. And ]. persisted of because period year's impact the have currently bank's of the been certain the recent asset shifting mentioned the quarter affecting and factors terms in the overall and considering slight the [ rate it well including the maintain in to seasonality various is steady group mainly And under quality estate

risk for various factors in-bound of put by that caused the iterating measures will for volatility model as the question, that's the external your of continuously answers taken countermeasures increasing [ quarter, deal some to on doing and to we risk However, growth sure. have and with But fourth the our Hope actively fluctuations such the Yada. are combat management causes our own we proportion ] pressure that.

we're in for the lower volume in side So progress customers well just with comes new of last as add the to good side looking a it's the promising we're risk us out on terms It with the be as for helping the future. It acquisitions, for it, and getting that new that one customer level, results and getting we good whether promising of very operational point quality hoping asset and being are of should now. -- customer as the new should acquisitions well in our as the cost be right side or future. very factor the the

Yada. question, your answered that hope I So

Operator

Our of next the CLSA. question from Betty comes from Li line

Betty Li

I translate myself. Language] will [Foreign by

The the given in one, outlook I full loan the for have good is year you the current But the loan -- XXXX demand. wonder any loan company track if the just origination. first in think maintaining in guidance,

just is I any company buyback if share the further has one The second wonder plans.

Xigui Zheng

Basically, Okay. outlook. take is question. to first question I will the related the

with okay? factor bit because QX, supply is quarter in of QX of about one. so tight, Basically, for remain in consumption the recovery of lending Second a fourth seasonal to This expect be the time, question believe overall Because little quarter. considerable we broadly still still funding the the the there typical the of right? a perspective, amount relatively kind volume the The overall is macro same the is slow. line is we in at in fourth of buyback, uncertainty

overall -- illicit quality. the And the -- the affecting One financial other of the short-term to this is have collection, bit this, still collection, the within and fluctuations. the of this is show mentioned under pressure kind risk the right? point. related still quality continue collection also of earlier, little debt factors of from of entry we have still exist factors into to the as slight a the loan kind asset combating activities obviously, also is growth some These slow. on impact asset asset seasonal industry, is the based the Two, indicators the kind rate still at The the affecting macro okay? So

So continue we all really have a principles to of QX, approach management. based and basically on to this, for risks prudent of adhering prioritization prudent maintain the

now, a growth. And reminder, pretty good up of to as actually, we have maintained rate a

We CNY far growth, question. growth, have okay? going we're quarters continue this year-over-year in the the completed XX.X% about this XXXX, after XXX year, to guidance. certainty will By RMB we're XXX overall next of about achieve for X close probably continue be going that of more confident year. So to is CNY GMV this billion Really, we're first billion first year the until XX% so about to XXX we'll terms to the billion, That's okay? this give hopefully, to more wait macros we we XX%. And have time, --

question Second plans. terms buyback of in any

the As the in this Board about buyback buyback And year. buyback, CNY X year. November year. XX earlier XX last of plans Board approved has a part of authorized fact, We CNY million then last completed million matter

anything For that, haven't done yet. we

a payout dividend dividend going a from plan. to quarter, range. last income we declared as XX% have to out XX% we declared pay we're our of But Basically, net in

out year, so. dividend paying income, first month net completed in this the have our the of and XX% we of we or out half the paid So last

pay So we planning for to again the we to to the basically of whether to return going dividend is close of out So to for priority come see should Basically, second our value to our will #X for we back look look value us. shareholders. ways this okay? this the at continue the when to upholding half year, dividend for year, end we're continue shareholder the

your answers question. that Hopefully, you. Thank

Operator

the have additional of question-and-answer any closing I'll the to reached for comments. session. turn the We conference now company back end the

Mandy Dong

conference Thank think call I today. closes today. for you our everyone, Well, again, us that joining

you. Thank the If questions, have contact and you contact night. IR a on us you via Have Thank further please website. our good day good all. a information

Xigui Zheng

Thank you.

Okay. Bye-bye.

Operator

Thank Thank for participating. you. That concludes you conference call. today's

now disconnect. may You

LexinFintech (LX) 23 Nov 232023 Q3 Earnings call transcript