Jiayin Group Inc (JFIN) 2025 Q3 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by, and welcome to Jiayin Group's third-quarter 2025 earnings conference call. (Operator Instructions)

As a reminder, we are recording today's call. If you disconnect at this time, I will now turn the call over to Mr. Sam Li from Investor Relations of Jiayin Group. Please proceed.

Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the third quarter of 2025. We released our earnings results earlier today. The press release is available on the company's website as well as from Newswire services.

On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Mr. Fan Chunlin, Chief Financial Officer; and Ms. Xu Yifang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.

As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.

Also, this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP financial measures to GAAP financial measures. Please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that, let me now turn the call over to our CEO, Mr. Yan Dinggui.

Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translation. Please go ahead, Mr. Yan.

(spoken in foreign language)

Good afternoon, everyone. Thank you for joining Jiayin Group's third-quarter 2025 earnings conference call.

(spoken in foreign language)

In the third quarter, China's GDP grew by 4.8% year on year, slowing from 5.2% in the previous quarter, but remaining stable overall. Consumption continued to play a dominant role, contributing 56.6% to growth. Meanwhile, demand for consumer finance has been rising steadily with a narrow consumer credit balance up 4.2% year on year as of September 30.

Signals from the recent regulatory policies indicate that coordinated efforts to stabilize growth, boost consumption, and advance inclusive finance are creating a favorable environment for a long-term healthy and sustainable development of the industry.

In this quarter, the company facilitated RMB32.2 billion in loan volume, a year-on-year increase of approximately 20.6% and reported non-GAAP income from operation of RMB490 million, up around 50.3% year-on-year, achieving our previously issued guidance.

(spoken in foreign language)

During the reporting period, the company maintained cooperation with 75 financial institutions with another 64 under negotiation. We have been included in the white list by most of our partner financial institutions, providing a solid foundation for stable funding supply.

Leveraging our technological strength, capital management capabilities and risk control expertise, we enhanced our funding partners' capital allocation efficiency, accurately aligned with their risk preferences and actively explore new models for business collaboration.

(spoken in foreign language)

Against the backdrop of industry contraction and tightening liquidity, we observed pressure on overall risk indicators and fluctuations in asset quality. In response, we rapidly iterated our risk control models, continuously tightening strategies for high risk, high-volatility users and introduced models combining long-term and short-term perspectives to enhance the flexibility and timeliness of risk monitoring, thereby enabling sharp insights into risk trends and enabling timely responses.

At the end of the third quarter, the 90-plus day delinquency rate stood at 1.33%. We will remain committed to prudent operations and continue to reinforce our competitive edge in risk management.

(spoken in foreign language)

To optimize resource allocation efficiency, we adopted a cautious strategy for new customer acquisition with a stronger focus on high-quality borrower segments. All newly added channels are leading Internet platforms, and we continue to optimize our credit limit management to enhance user stickiness and facilitate repeat borrowing.

Additionally, as the cornerstone of business growth, repeat borrowers saw their share of facilitation volume rise further to 78.6%. This drove the overall average borrowing amount per borrowing up to RMB9,115, representing a year-on-year increase of approximately 19.5%.

(spoken in foreign language)

Since the beginning of this year, the company's AI development has entered a new phase. Through increased resource investment and organizational restructuring, we have achieved multiple significant innovations, establishing a technical benchmark of high performance, low cost and lightweight.

In terms of deepening business empowerment, we focused on deploying multimodal anti-fraud systems and AI-powered agent assistance. Compared to external models, our in-house model not only directly reduced cost by over RMB1 million but more importantly, building our own technological moat while fundamentally enhancing our AI capability.

(spoken in foreign language)

By establishing a historical voice print database and a high-quality voice print processing pipeline, we conducted real-time fraud identification for incoming calls, identifying over 4,000 new fraudulent voice prints to date. For image recognition, by capturing contextual features of applicants and screening clues from high-risk scenarios, we achieved an accuracy rate exceeding 90% in identifying associations with organized fraud.

With the integration of these multimodal capabilities, the timeliness of fraud detection was compressed from a week to within two hours, forging a new tech-driven line of defense against fraud. In the customer service process, our AI product matrix covers the entire business process from initial agent training and real-time conversation support to post-event analysis with 100% agent coverage and over 90% accuracy. It significantly boosted staff efficiency and service quality.

(spoken in foreign language)

In terms of broadening business coverage, the launch of the Tianlu Intelligent Agent R&D platform has significantly lowered the development threshold for AI agents. So far, the number of such agents has exceeded 300 with an internal monthly active penetration rate exceeding 40%, effectively enhancing department efficiency and enthusiasm in independently developing AI agents.

The FUXI model management platform is dedicated to improving model deployment efficiency, reducing the time required for models to go from R&D to production from 32 days to 16 days and nearly tripling the number of models put into production. These two platforms have enabled various business departments to transition from stand-alone applications to an integrated collaborative ecosystem.

Looking ahead, we will continue to further advance the 4 plus 2 strategy, focusing on four major application directions and leveraging two key infrastructure platforms to integrate existing AI models and tools, further achieving an upgrade and innovation from technological breakthroughs to value creation.

(spoken in foreign language)

Overseas markets serve as both a game-changing engine for us to break through regional growth boundaries and a core pillar in building our global strategic footprint. In the third quarter, our Indonesian business maintained engagement with multiple financial institutions, driving business scale increased by nearly 200% year on year, and the number of borrowers rising by approximately 150% compared to the same period last year.

Recognizing its growth potential, we have significantly increased our investment in the local operator, acquiring a stake of more than 20% through capital injection, demonstrating our strong commitment to local market development.

In Mexico, the loan volume and user base have maintained rapid growth with initial success in market expansion. Currently, we remain in a critical phase of product innovation and foundational capacity building, aiming to lay a solid foundation for in-depth local operations.

(spoken in foreign language)

With the implementation of the new loan facilitation regulation in October, the industry is undergoing numerous changes and challenges. The company projects its loan facilitation volume at RMB23 billion to RMB25 billion for Q4 2025, with full-year volume expected to be in the range of RMB127.8 billion to RMB129.8 billion, representing a year-on-year increase of approximately 26.8% to 28.8%.

The full-year non-GAAP operating profit guidance is set at RMB1.99 billion to RMB2.06 billion, reflecting a growth of approximately 52.3% to 57.6%. Amid a complex, volatile, and increasingly competitive external environment, we aim to navigate cyclical headwinds with lean operational capabilities and forge long-term resilience for steady, sustainable growth.

(spoken in foreign language)

And with that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.

Thank you, Mr. Yan, and hello, everyone, for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMBand all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr.

Yan noted earlier, we demonstrated robust business resilience in Q3 and successfully achieved our financial guidance. Loan facilitation volume was RMB32.2 billion, representing an increase of 20.6% from the same period of 2024. Our net revenue was RMB1,470.2 million, representing an increase of 1.8% from the same period of 2024.

Moving on to costs. Facilitation and servicing expense was RMB286.5 million compared with RMB419.1 million for the same period of 2024. This was primarily due to decreased expenses related to financial guarantee services. Allowance for uncollectible receivables, contract assets, loans receivable and others was RMB1.5 million, representing a decrease of 87.1% from the same period of 2024, primarily due to decreased allowance for overseas loans as a result of disposal of Nigeria entities during 2024 and the growth slowdown of receivables from loan facilitation business.

Sales and marketing expense was RMB544.2 million, representing a decrease of 1.1% from the same period of 2024. General and administrative expense was RMB72.4 million, representing an increase of 29% from the same period of 2024, primarily driven by an increase in share-based compensation. R&D expense was RMB108.7 million, representing an increase of 13.3% from the same period of 2024, primarily driven by an increase in expenditures for employee compensation and related expenses.

Non-GAAP income from operations was RMB490.6 million compared with RMB326.5 million in the same period of 2024. Consequently, our net income for the third quarter was RMB376.5 million, representing an increase of 39.7% from the same period of 2024. Our basic and diluted net income per share was RMB1.83 compared with RMB1.27 in the third quarter of 2024. Basic and diluted net income per ADS was RMB7.32 compared with RMB5.08 in the third quarter of 2024.

We ended this quarter with RMB124.2 million in cash and cash equivalents compared with RMB316.2 million at the end of the previous quarter.

With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer your questions. Operator, please proceed.

(Operator Instructions) Yiwen Xu, Guojin Securities.

(spoken in foreign language)

I'm Yiwen from Sinolink Securities. I have two questions. The first one is that after the new regulation took effect in October, what impact have you seen on the business? And could management provide more color on any strategic adjustments and the outlook going forward? This is my first question.

(spoken in foreign language)

I will do the translation for Ms. Xu. So following the implementation of the new regulation, the impact on the industry has been pretty significant. Most of the changes have been primarily on the downward pressure of pricing to '24 and the continued emphasis on consumer protection. So as of October, the asset pricing of our loan facilitation business is fully compliant with the regulatory requirement of our funding partners.

So as liquidity tightened, we've responded -- we've had response to the pricing pressure and liquidity pressure in the broader industry and the volatility industry. So we have really intensified adjustment in traffic acquisition and placed a greater focus on cross-industry platforms and optimizing our traffic mix, adopting a more cautious customer acquisition strategy under the current environment.

(spoken in foreign language)

So for our existing borrower base, we've enhanced borrower segmentation. So really, on one hand, we want to improve our risk identification for higher risk groups. We're utilizing measures such as managing outstanding balances and accelerating runoff based on indicators like risk cycle elasticity, pricing and recent application frequency to address the segments that are more challenging to operate under lower pricing.

On the other hand, through product and pricing adjustments, we've strengthened the efforts to retain and reengage high-quality borrowers who may potentially churn. So taken together, these initiatives are helping us optimize the overall portfolio structure.

And regarding asset pricing, it's foreseeable that the downward trend will continue. Our focus is not only navigating through the current period of volatility, but also continuously strengthening our ability to operate through risk cycles over the long term.

(spoken in foreign language)

That's my answer for the first question.

(spoken in foreign language)

I will do the translation. So given the current environment, how should we think about the revenue take rate and the margin expectations going forward?

(spoken in foreign language)

Thank you, Xu. I will answer this question. So in the third quarter of 2025, the company facilitated RMB32.2 billion in volume and delivered RMB491 million in non-GAAP income from operations, in line with the guidance we previously provided. And the net profit for the quarter was RMB376 million, representing a net margin of 25.6%. So in terms of the net margin, it's a slight decrease from the 27.5% net margin in Q2.

For the first three quarters, we achieved RMB1.435 billion in net profit, up 84% year-over-year and already well above the full year 2024 figure of RMB1.056 billion. For the full year of 2025, we expect profitability to be significantly higher than 2024.

(spoken in foreign language)

So as Ms. Xu mentioned, the new regulation brought short-term pressure to industry-wide liquidity and asset quality. As a highly agile technology-driven company and drawing on our past experience navigating regulatory credit cycles, we made timely and prudent adjustments to our business scale, risk posture, and pricing strategy in response to market conditions.

(spoken in foreign language)

Over the long term, the enforcement of the new regulation will raise industry entry barriers and help drive the sector towards a healthier, more orderly, more compliant and more sustainable development. As the industry shifts towards higher-quality borrower segments, pricing, therefore, revenue take rate is expected to moderate and margins will return to a healthier and more sustainable level. The company is entering a new phase of high-quality development.

(spoken in foreign language)

I want to reiterate Mr. Yan's guidance that he provided earlier. We expect Q4 volume to reach RMB23 billion to RMB25 billion, bringing full-year facilitation volume to RMB127.8 billion to RMB129.8 billion, approximately 26.8% to 28.8% year-over-year growth. And full-year non-GAAP income from operation guidance is RMB1.99 billion to RMB2.06 billion, approximately 52.3% to 57.6% growth year over year.

(Operator Instructions)

There are no further questions for today. I would now like to hand the conference over to Sam Lee for closing remarks.

Thank you, operator, and thank you all for participating on today's call. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Thank you all again. This concludes the call. You may now disconnect.