Sos Ltd (SOS) 2019 Q3 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by, and welcome to China Rapid Finance's 9 Months 2019 Earnings Conference Call. (Operator Instructions) Please note that today's conference call is being recorded. I will now turn the call over to the host for today's conference, Ms. [Cindy Gu]. Cindy, you may begin.

女士們、先生們，大家好。感謝您的支持，歡迎參加信而富2019年9個月業績電話會議。（操作員指示）請注意，今天的電話會議正在錄音。現在我會把電話轉給今天會議的主持人 Cindy Gu 女士。辛迪，你可以開始了。

Hello, everyone. Thank you all for joining our conference call. The company's earnings press release was distributed earlier today and is available on our IR website at ir.crfchina.com.

大家好。感謝大家參加我們的電話會議。該公司的盈利新聞稿已於今天早些時候發布，可在我們的 IR 網站 ir.crfchina.com 上查閱。

Joining me today to discuss our results are Dr. Zane Wang, the Chairman and CEO, and Mr. Steven Foo, our Chief Financial Officer. Management will review the operating and financial highlights of first half and first 9 months of 2019, and then we will open up the line for a Q&A session.

今天與我一起討論我們業績的有董事長兼執行長 Zane Wang 博士和財務長 Steven Foo 先生。管理階層將回顧 2019 年上半年和前 9 個月的營運和財務亮點，然後我們將開放問答環節。

Before we get started, I would like to remind you that our remarks today will include forward-looking statements. Those statements are prospective in nature and are subject to risks and uncertainties that may cause actual results to differ materially and adversely from the company's current expectations.

在我們開始之前，我想提醒您，我們今天的演講將包括前瞻性陳述。這些聲明本質上是前瞻性的，受風險和不確定性的影響，可能導致實際結果與公司目前的預期有重大不利差異。

Further information regarding these and other risks is included in our reports filed with or furnished to the SEC. All forward-looking statements that we make on this call speak only as of the day hereof and subject to change at any time. We undertake no duty to update these forward-looking statements.

有關這些風險和其他風險的更多資訊包含在我們向美國證券交易委員會提交或提供的報告中。我們在本次電話會議上所做的所有前瞻性陳述僅代表當日的觀點，並可能隨時發生變化。我們不承擔更新這些前瞻性陳述的義務。

I will now turn the call over to our Chairman and CEO, Dr. Zane Wang. Zane, please go ahead.

現在我將把電話轉給我們的董事長兼執行長 Zane Wang 博士。贊恩，請繼續。

Hello, everyone, and thank you for joining our first half and 9 months 2019 earnings conference call today. These results reflect both the regulatory changes impacting our industry and the proactive approach we have taken to transition into new business directions.

大家好，感謝您今天參加我們2019年上半年及9個月收益電話會議。這些結果既反映了影響我們行業的監管變化，也反映了我們為轉向新業務方向而採取的積極主動的方法。

As we have previously disclosed, due to regulatory changes, we were required to exit the lending marketplace and lending platform business in April, and we are transitioning to facilitating lending capital from financial institutions. We immediately began a cost-cutting program at the same time to maintaining our core competitive edge to serve financial institutions. These efforts helped us to have improved our cash flow in the first 6 and 9 months of 2019.

正如我們先前所揭露的，由於監管變化，我們被要求在四月退出借貸市場和借貸平台業務，我們正在轉型為促進金融機構的借貸資本。我們立即啟動了一項削減成本計劃，同時保持我們為金融機構服務的核心競爭優勢。這些努力幫助我們在2019年前6個月和9個月改善了現金流。

In the marketplace, the lending platforms are fading away. The market demand for consumer credit and the small business loans are even stronger. We are transitioning into a new business direction, which can be characterized by 3 key elements. First, we will keep serving our existing investors on our platform.

在市場上，借貸平台正逐漸消失。消費信貸、小型企業貸款等市場需求較為強勁。我們正在轉向新的業務方向，其特點有三個關鍵要素。首先，我們將繼續在我們的平台上為現有投資者提供服務。

In the reporting period, we saw our borrowers' overall delinquent rate remain relatively stable, which demonstrates the validity of our predictive selection technology and the automated decisioning technology. As the portfolio went down, its credit quality typically will be deteriorated as the higher-quality borrowers pay off their loans that delinquent borrowers remain in the portfolio. In order to exit the lending marketplace lending platform in an orderly manner, we keep making connections from the existing borrowers to pay back the loans and keep serving the existing investors who have been receiving monthly payments from borrowers.

在報告期間內，我們的借款人整體拖欠率保持相對穩定，這證明了我們的預測選擇技術和自動決策技術的有效性。隨著投資組合的下降，其信用品質通常會惡化，因為高品質借款人償還貸款，而拖欠貸款的借款人仍留在投資組合中。為了有秩序退出借貸市場借貸平台，我們不斷聯繫現有借款人償還貸款，並繼續為一直從借款人那裡獲得每月還款的現有投資者提供服務。

The recent regulatory policy changes created new challenges to our collection efforts, and we are working with the multiple collection partners to enhance our ability to collect the borrowers' repayments. We are also working with the business partners to give existing investors choice, to sell their loans to potential interested parties in exchange for liquidity or to participate in a warrant structure that we announced in June. Currently, several institutional parties have expressed strong interest in working with the company on purchasing existing loans.

近期監管政策的變化為我們的催收工作帶來了新的挑戰，我們正在與多家催收合作夥伴合作，以增強我們收取借款人還款的能力。我們還與業務合作夥伴合作，為現有投資者提供選擇，將他們的貸款出售給潛在的利益相關者以換取流動性，或參與我們在六月宣布的認股權證結構。目前，已有多家機構表達了與該公司合作購買現有貸款的濃厚興趣。

Second, we will work with our data partners and the channel partners under the new regulatory framework, allowing our core technology to facilitate financial institutions' lending capital to serve the unmet financial need of our customers. We will generate revenue and earnings from service in fees and the participations in projected companies that targeted specific customer segments such as SME loans, online consumption loans and the large ticket purchase loans. The servicing fees are expected to be derived from providing technology and decisioning services to institutional lending capital providers.

第二，我們將在新的監管框架下與我們的數據合作夥伴和通路合作夥伴合作，讓我們的核心技術促進金融機構的貸款資本，以滿足客戶未滿足的金融需求。我們將透過收費服務和參與針對特定客戶群（如中小企業貸款、線上消費貸款和大額購票貸款）的專案公司來獲得收入和收益。服務費預計將來自向機構貸款資本提供者提供技術和決策服務。

Our competitive edge resides on our existing customer base, proven technology, licensed entities and established operation framework. Decision technology is in the DNA of the company. As of today, some Tier 1 and Tier 2 banks have been using our decision technology for more than a decade. We are actively exploring new business areas and opportunities, leveraging our proprietary technology and the 18 years of experience, establishing partnerships and facilitating financial institutions' lending capital to serve the unmet consumer financial needs in emerging markets.

我們的競爭優勢在於我們現有的客戶群、成熟的技術、授權實體和成熟的營運框架。決策技術是公司的 DNA。截至今天，一些一級和二級銀行已經使用我們的決策技術十多年了。我們正在積極探索新的業務領域和機會，利用我們的專有技術和18年的經驗，建立合作夥伴關係並促進金融機構的貸款資本，以滿足新興市場未滿足的消費者金融需求。

Our proprietary technology creates the significant advantage of our highly scalable borrowing screening mechanism for these underserved quality borrowers. Through our invested borrower base, we demonstrated good credit behavior. We can effectively counter financial institutions to offer them larger, longer-term loans. In this way, we can continue to engage with these high-quality borrowers with significant lifetime customer value because it is cost prohibitive for financial service institutions to acquire and serve these quality borrowers directly.

我們的專有技術為這些服務不足的優質借款人創造了高度可擴展的借款篩選機制的顯著優勢。透過我們投資的借款人基礎，我們展現了良好的信用行為。我們可以有效對抗金融機構，為他們提供更大、更長期的貸款。透過這種方式，我們可以繼續與這些具有巨大終身客戶價值的優質借款人合作，因為金融服務機構直接取得和服務這些優質借款人的成本過高。

Third, we are developing strategic alternatives. We are currently engaged -- engaging in active discussions with the major financial institutions that have expressed a strong interest in working with us for the market opportunities, including capitalizing our licensed entities, which include the licenses for micro-credit, loan-guaranteed leasing and investment management.

第三，我們正在製定策略替代方案。我們目前正在與主要金融機構進行積極討論，這些機構已表示出濃厚的興趣，希望與我們合作開拓市場機會，包括為我們的持牌實體提供資本，其中包括小額信貸、貸款擔保租賃和投資管理許可證。

Another strategic initiative under discussion is to form a [less] permanent capital vehicle structure. While our strategic partner will contribute a portfolio of our performing assets to the company in exchange for value received, the institution will receive commensurate amount of the shares of the company. The reconfigured permanent capital vehicle will be able to take advantage of a significant tax loss forward -- loss carryforward and utilize the various financial license owned by the company.

正在討論的另一項策略性舉措是形成一個[不太]永久性的資本工具結構。我們的策略夥伴將向公司貢獻我們的一系列優質資產以換取價值，而該機構將獲得相應數量的公司股份。重新配置的永久資本工具將能夠利用重大稅收損失——虧損結轉，並利用公司擁有的各種金融許可證。

We are also exploring new business opportunities in investments, recapitalization, mergers and acquisitions. With these 3 key components as the new business directions, the management believes that the company is on the right track to exit the lending marketplace and lending platform business and the transition into a new business direction. This will help us to address potential delisting due to our current low market capitalization.

我們也正在投資、資本重組、併購方面探索新的商業機會。以這三個關鍵組成部分作為新的業務方向，管理層認為公司退出借貸市場和借貸平台業務並轉向新的業務方向的正確軌道上。這將有助於我們解決由於目前市值較低而可能出現的退市問題。

We obtained NYSE approval for our restructuring plan. And we undertook a change in our ADS to share ratio to increase our share price. And now we have become encouraged in our financial reporting. We may choose to reinstate our previously disclosed share repurchase program.

我們的重組計劃已獲得紐約證券交易所的批准。我們也改變了美國存託憑證與股票的比率，以提高股價。現在，我們的財務報告已受到鼓舞。我們可能會選擇恢復先前揭露的股票回購計劃。

Let me now turn the call to our CFO, Steven Foo, for financial details.

現在，請允許我轉接電話給我們的財務長 Steven Foo，以了解財務細節。

Thank you, Zane, and thank you, everyone, for joining our call today. I will now review our financial performance. Our press release contains all the figures and comparisons. I'm not going to repeat all the numbers. Instead, we are going to focus on the analysis of the factors that influence results.

謝謝你，Zane，也謝謝大家今天參加我們的電話會議。我現在將回顧我們的財務表現。我們的新聞稿包含所有數據和比較。我不會重複所有的數字。相反，我們將重點分析影響結果的因素。

Keep in mind that we're referring to 6- and 9-month figures, and all the comparisons are to the comparable periods in the calendar unless stated otherwise. And as Zane mentioned, due to the requirements from the change in regulatory policy, we stopped matching any loans at our legacy marketplace lending platforms in April. Capital lending existing customers have begun facilitating financial institutional lending capital for our borrowers.

請記住，我們指的是 6 個月和 9 個月的數據，除非另有說明，所有比較均與日曆中的可比較時期進行比較。正如 Zane 所提到的，由於監管政策變化的要求，我們從 4 月起停止在傳統市場借貸平台上匹配任何貸款。資本借貸現有客戶已開始為我們的借款人提供金融機構借貸資本便利。

Our net revenue was $19.3 million for the first half of 2019, down by 37% compared to the same period in 2018, and $23.5 million in the 9 months of 2019, down by 51% as compared to the same period in 2018. In the transition period, we finally control our operating expenses. The cost-cutting efforts we initiated right after we exited the legacy platform business has been very good as shown in our lower operating expenses in the period.

2019年上半年我們的淨收入為1,930萬美元，較2018年同期下降37%；2019年前9個月我們的淨收入為2,350萬美元，較2018年同期下降51%。在過渡時期，我們最終控制了營運費用。我們在退出傳統平台業務後立即啟動的成本削減措施非常有效，這體現在我們在此期間的營運費用降低。

The operating expenses for the first half of 2019 decreased by $31.7 million, down by 44% from the same period in 2018. And for the 9 months 2019, it decreased by $54.6 million, down by 54% from the same period a year ago. Net loss in the first half was $20.6 million, down from a loss of $40.8 million in the same period in 2018. And net loss in the first 9 months, $22.8 million, down from a loss of $51.8 million in the same period in 2018. The loss reduction was mainly due to the termination of customer incentives, reduction in branch operating costs, lower sales and marketing costs and a streamlined business process, with significantly improved operating efficiency.

2019年上半年營運費用減少3,170萬美元，較2018年同期下降44%。而2019年前9個月，這數字減少了5,460萬美元，比去年同期下降了54%。上半年淨虧損為 2,060 萬美元，較 2018 年同期的 4,080 萬美元有所收窄。前 9 個月淨虧損 2,280 萬美元，低於 2018 年同期的 5,180 萬美元虧損。虧損減少主要由於客戶激勵措施的終止、分行營運成本的降低、銷售及行銷成本的降低以及業務流程的精簡，營運效率顯著提高。

On June and September 2019, we had cash and cash equivalent of $12.5 million and $15.5 million respectively. With the tax control -- cost controlling the business transition period, we managed our cash balance growth from June to September, as you can see our continuous efforts on improving operating efficiency and positioning us for the transition in the new business direction. We are confident that this new initiative will create additional growth opportunities for us going forward. The company has also engaged in discussions regarding various forms and mechanisms for operating capital.

2019 年 6 月和 9 月，我們的現金和現金等價物分別為 1,250 萬美元和 1,550 萬美元。透過稅收控制－成本控制業務過渡期，我們從 6 月到 9 月管理了現金餘額成長，正如您所看到的，我們不斷努力提高營運效率，為新業務方向的過渡做好準備。我們相信，這項新措施將為我們未來創造更多的成長機會。該公司也就營運資本的各種形式和機制進行了討論。

Pardon me, ladies and gentlemen, it appears we have lost connection to our speaker line.

女士們、先生們，請原諒，看來我們的揚聲器線路已經斷開。

(technical difficulty)

（技術難度）

Pardon me. This is the operator. Thank you for your patience. We have reconnected with the speakers, and we'll continue with the conference. Please proceed, Steven.

對不起。這是接線生。感謝您的耐心。我們已經與演講者重新取得聯繫，並將繼續會議。請繼續，史蒂文。

Hello, everyone. On June 30 and September 30, 2019, we had cash and cash equivalent of $12.5 million and $15.5 million, respectively. With the tight cost control in the business transitional period, we managed our cash balance growth from June to September, evidenced in our continuous efforts on improving operating efficiency and positioning us for the transition into the new business direction. We are confident that these new initiatives will create additional growth opportunities for us going forward.

大家好。截至 2019 年 6 月 30 日和 9 月 30 日，我們的現金和現金等價物分別為 1,250 萬美元和 1,550 萬美元。在業務轉型期間嚴格控製成本，我們實現了6月至9月現金餘額的成長，這反映了我們不斷努力提高營運效率，為向新業務方向的過渡做好準備。我們相信，這些新措施將為我們未來創造更多的成長機會。

The company has also engaged in discussions regarding various forms and mechanisms for raising capital. We have not done a capital raise since the company's IPO in 2017 and we have no long-term debt.

該公司也就各種籌集資金的形式和機制進行了討論。自 2017 年公司首次公開發行以來，我們尚未進行過融資，也沒有長期債務。

Looking forward, we remain confident in our long-term business prospects and are committed to create value for our shareholders. As they say, the most important takeaway is that we are continuing to operate after our decision to exit the peer-to-peer business, and our cash position has been improving.

展望未來，我們對長期業務前景充滿信心，並致力於為股東創造價值。正如他們所說，最重要的收穫是，在決定退出點對點業務後，我們仍在繼續運營，而且我們的現金狀況一直在改善。

With that, we'll move to the Q&A session. Operator, can you begin?

接下來，我們將進入問答環節。接線生，可以開始嗎？

(Operator Instructions) At this time, I'm not seeing any questions in the question queue. I will turn the call back over to Dr. Wang for the closing remarks.

（操作員指示）目前，我在問題隊列中沒有看到任何問題。我將把電話轉回給王博士，請他作結束語。

Thank you, again, for joining us today. Looking at our 6 months and 9 months financial results, we see that the door of the marketplace -- lending marketplace platform was closed by the regulators. As a result, we decisively cut down our expenses while maintaining our core functions to serve the existing investors and the financial lenders, thereby improving our cash position during the period. We believe we are now well positioned in the transition to the new business direction, and we'll continue our hard work to achieve our transformation to our new business model.

再次感謝您今天加入我們。回顧我們6個月和9個月的財務業績，我們發現市場—借貸市場平台的大門已被監管機構關閉。因此，我們果斷削減開支，同時保持我們的核心功能，為現有投資者和金融貸款人提供服務，從而改善了我們在此期間的現金狀況。我們相信，我們現在已經做好了向新業務方向轉型的準備，我們將繼續努力，實現向新業務模式的轉型。

This concludes the conference call. You may now disconnect your lines. Thank you.

電話會議到此結束。現在您可以斷開線路了。謝謝。