Yiren Digital Ltd (YRD) 2024 Q3 法說會逐字稿

Good day and welcome to Yiren Digital third quarter 2024 earning conference call. (Operator Instructions) Please note today's event is being recorded. I would now like to turn the conference over to Keyao He, IR Officer. Please go ahead.

美好的一天，歡迎來到宜人數字2024年第三季獲利電話會議。（操作員說明）請注意今天的活動正在錄製中。現在我想將會議轉交給投資者關係官員何克耀。請繼續。

Thank you operator. Good morning and good evening, everyone. Today's call features the presentation by the founder, Chairman and CEO of Yiren, our CEO, Mr. Ning Tang; and our CFO, Mr. Yuning Feng. There will be Q&A section after the prepared remarks.

謝謝運營商。大家早安，晚上好。今天的電話會議由宜人創辦人、董事長兼執行長、我們的執行長唐寧先生進行演講；以及我們的財務長馮宇寧先生。準備好的發言後將有問答部分。

Before beginning, we'd like to remind you the discussions during this call contain forward-looking statements made under the safe harbor provision of US Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties, and factors that can cause actual results to differ materially from those contained in any such statements. Further information regarding future risks, uncertainties, or factors is included in our filings with the US Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statements as required under the relevant law.

在開始之前，我們想提醒您，本次電話會議中的討論包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。此類陳述存在風險、不確定性和因素，可能導致實際結果與任何此類陳述中包含的結果有重大差異。有關未來風險、不確定性或因素的更多資​​訊包含在我們向美國證券交易委員會提交的文件中。我們不承擔根據相關法律要求更新任何前瞻性陳述的義務。

During the call, we will be referring to certain non-GAAP financial measures and supplemental measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the US GAAP. For information about these non-GAAP measures and reconciliations to GAAP measures, please refer to our earnings press release.

在電話會議期間，我們將參考某些非公認會計準則財務指標和補充指標來審查和評估我們的營運績效。這些非公認會計原則財務指標不應被孤立考慮，也不能取代根據美國公認會計原則準備和提交的財務資訊。有關這些非公認會計準則衡量標準以及與公認會計準則衡量標準的調節的信息，請參閱我們的收益新聞稿。

I will now pass it on to Ning for opening remarks.

現在請寧先生致開幕詞。

Thank you all for joining our earnings conference call today. I'm pleased to report a stable and healthy quarter with concrete business development and a strategic exploration driven by our quality over quantity strategy. This quarter's results underscore our consistent focus on sustainable, high-quality growth. Before I go into our operational details, I'd like to share some highlights from this quarter.

感謝大家今天參加我們的財報電話會議。我很高興地報告一個穩定、健康的季度，具體的業務發展和由我們的品質重於數量的策略驅動的策略探索。本季的業績凸顯了我們對永續、高品質成長的一貫關注。在詳細介紹我們的營運細節之前，我想先分享本季的一些亮點。

First, our financial services business made notable improvements in asset quality, thanks to our continued focus on strong risk management and the borrower optimization. Second, we've been proactively exploring new online business models for our insurance division and have seen visible progress driving an increase in sales and retirement theme insurance products.

首先，我們的金融服務業務持續注重風險管理和借款人優化，資產品質顯著改善。其次，我們一直在積極探索保險部門新的線上業務模式，並取得了明顯的進展，推動了銷售和退休主題保險產品的成長。

At a tech-powered platform, Yiren Digital prioritizes the use of technology and digital capabilities to enhance our business model. Our growing online business model is expanding from financial services to the insurance brokerage space. Third, our growing investment in AI is already bearing fruit with proprietary AI occasions now largely integrated into our daily operations, driving efficiency and improving customer experience.

在一個以技術為動力的平台上，宜人數位優先利用技術和數位能力來增強我們的商業模式。我們不斷發展的線上業務模式正在從金融服務擴展到保險經紀領域。第三，我們對人工智慧不斷增長的投資已經取得了成果，專有的人工智慧場合現在已基本融入我們的日常運營，提高了效率並改善了客戶體驗。

Altogether, these efforts are laying a solid foundation for the next phase of Cayman quality growth, loan bag that will continue to drive value for our shareholders in the years to come. Now let me go through our key business highlights. First, regarding our financial services business, the third quarter of 2024 saw continued growth with total loan volumes reaching RMB13.4 billion, a 36% increase year-over-year.

總而言之，這些努力為開曼下一階段的優質成長奠定了堅實的基礎，貸款包將在未來幾年繼續為我們的股東帶來價值。現在讓我介紹一下我們的主要業務亮點。首先，金融服務業務方面，2024年第三季持續成長，貸款總額達人民幣134億元，較去年同期成長36%。

The number of borrowers stayed relatively stable quarter-over-quarter at RMB150 million, a 24% growth compared to the same period last year. Meanwhile, our lending platform, Yi Xiang Hua remains highly popular with monthly active users staying steady at around 4.5 million a 52% year-over-year increase.

借款人數量較上季維持相對穩定，為人民幣1.5億元，較去年同期成長24%。同時，我們的借貸平台一向花仍然很受歡迎，每月活躍用戶穩定在 450 萬左右，較去年同期成長 52%。

Growth has been primarily driven by strong demand for our small revolving loan product, and an increase in repeat borrowing from high-quality customers. As I mentioned earlier, we have enhanced the quality of our customer base by focusing on higher-quality customers with stronger repayment capabilities and better risk profiles.

成長主要得益於小額循環貸款產品的強勁需求以及優質客戶重複借款的增加。正如我前面提到的，我們透過專注於還款能力更強、風險狀況更好的優質客戶來提高客戶群品質。

And now those new customers are contributing to a growing proportion of repeat loans, becoming an important growth driver. Over 60% of the loans facilitated during the quarter came from repeat borrowers, up 5-percentage-points from the previous quarter.

現在，這些新客戶的重複貸款比例不斷增加，成為重要的成長動力。本季超過 60% 的貸款來自重複借款人，比上一季增加 5 個百分點。

As our efforts to upgrade our customer segments is success in phases, we are now focusing on increasing the repeat oil rate among existing customers while maintaining a balanced mix of new and returning customers.

由於我們升級客戶群的努力取得了階段性的成功，我們現在的重點是提高現有客戶的回頭客率，同時保持新客戶和回頭客的平衡。

Furthermore, as a result of our customer quality upgrade and highly effective AI-driven risk management. We've seen significant improvements across various risk indicators, confirming the effectiveness of our approach.

此外，得益於我們的客戶品質升級和高效的人工智慧驅動的風險管理。我們已經看到各種風險指標的顯著改進，證實了我們方法的有效性。

In the fourth quarter, our FPD 30s rate dropped by 32 basis points to a record low. As of September 30, 2024, delinquency rates for the 1 to 30 day, 31 to 60 days and 60- to 90-day buckets fell by 10, 20 and 30 basis points quarter-over-quarter, respectively.

第四季度，我們的 FPD 30 利率下降了 32 個基點，創歷史新低。截至2024年9月30日，1至30天、31至60天和60至90天的拖欠率較上月下降10、20和30個基點。

Additionally, M1 recovery rates rose by 1.2-percentage-points, reaching an all-time high. The shift in our borrower structure establishes a solid foundation for our sustainable growth. On the funding side, we made essential progress in expanding our funding partnerships by the end of the third quarter of 2024, we have added nearly 20 new funding partners for the year.

此外，M1復甦率上升1.2個百分點，創歷史新高。我們借款人結構的轉變為我們的永續成長奠定了堅實的基礎。在融資方面，到2024年第三季末，我們在擴大融資合作夥伴方面取得了重要進展，全年新增了近20個新的融資合作夥伴。

Meanwhile, our funding cost saw another 64 basis points reduction quarter-over-quarter. Moving on to our international business. Our growth momentum remains strong. In the Philippines, both loan volumes and revenues posted double-digit increase quarter-over-quarter. We also began optimizing our customer base there. Well, iterating our product offerings, and we expect these efforts to positively impact the profitability in the fourth quarter of this year.

同時，我們的融資成本較上季又下降了 64 個基點。繼續我們的國際業務。我們的成長勢頭依然強勁。在菲律賓，貸款量和收入較上季均出現兩位數成長。我們也開始優化那裡的客戶群。好吧，迭代我們的產品，我們預計這些努力將對今年第四季的獲利能力產生積極影響。

On our AI strategy, we made substantial progress with six proprietary AI systems now, supporting customer acquisition, customer service, asset management and collections in our daily operations. I will now highlight several updates to demonstrate this progress. Firstly, for our domestic business operations, AI has significantly enhanced our collection and quality assurance processes.

在我們的人工智慧策略上，我們現在已經透過六個專有人工智慧系統取得了實質進展，支援我們日常營運中的獲客、客戶服務、資產管理和催收。現在我將重點介紹幾項更新以展示這項進展。首先，對於我們國內的業務運營，人工智慧顯著增強了我們的收集和品質保證流程。

As of the end of third quarter, 77% of day one overdue cases were covered by AI robots rerouting in labor cost savings of nearly RMB2 million in Q3 alone. Meanwhile, to ensure the high professionalism of our services, we deployed 20 AI models for quality assurance in loan collections and eight AI models for quality assurance in customer service with the collection models achieving over 96% accuracy.

截至三季末，77%的第一天逾期案件被人工智慧機器人重新路由覆蓋，光第三季就節省了近200萬元的人力成本。同時，為確保服務的專業性，我們部署了20個催收品質保障人工智慧模型和8個客戶服務品質保障人工智慧模型，催收模型準確率超過96%。

Additionally, we strengthened our AI term pool by hiring over 50 professionals specializing in AI development, data science and modeling further enhancing our digital capabilities. Secondly, in our overseas operations, we fully developed and refined our AI-powered ID verification model in the Philippines, achieving an accuracy rate of nearly 95% in the third quarter with performance now stabilizing.

此外，我們還聘請了 50 多名專門從事人工智慧開發、數據科學和建模的專業人士，加強了我們的人工智慧術語庫，進一步增強了我們的數位化能力。其次，海外業務方面，我們在菲律賓全面開發並完善人工智慧身分驗證模型，第三季準確率接近95%，目前表現趨於穩定。

Moving to our insurance brokerage business. The overall industry has faced the profitability pressure due to regulatory changes including lower interest rates and the policy of unified commissions and fees in reporting and underwriting. Despite these challenges, our total premiums this quarter recovered to RMB1.35 billion, a 27% quarter-over-quarter increase. The rebound was partially driven by our online business initiatives.

轉向我們的保險經紀業務。由於利率降低、報告和承銷統一佣金和費用政策等監管變化，整個行業面臨獲利壓力。儘管面臨這些挑戰，本季我們的總保費恢復至 13.5 億元，季增 27%。反彈的部分原因是我們的線上業務舉措。

As I mentioned earlier, we've made progress in customer acquisition through social media, supported by AI generated content. During the quarter, new policy premiums from social media channels contributed RMB7.5 million at RMB7.1 million, this is a promising start. And we also built a dedicated team to focus on private traffic operations, driving efficient customer acquisition and conversion.

正如我之前提到的，在人工智慧生成內容的支援下，我們在透過社群媒體獲取客戶方面取得了進展。本季度，社群媒體管道新增保費貢獻750萬元至710萬元，這是一個好的開始。我們也組建了專門的團隊專注於私人流量運營，推動高效的獲客和轉換。

Additionally, we are working on creating more synergies between our lending platform and insurance services by offering customized insurance products to our borrowers, and we expect to see growth from these efforts in the fourth quarter. In the consumption and Lifestyle Services segment, our total GMV was RMB508 million for the quarter, a 10% year-over-year decline.

此外，我們正在努力透過向借款人提供客製化保險產品，在我們的貸款平台和保險服務之間創造更多協同效應，我們預計這些努力將在第四季度實現成長。在消費和生活服務板塊，本季總 GMV 為人民幣 5.08 億元，年減 10%。

As our customer base evolves, we are refining our product range to better serve our evolving demographics. Looking ahead, we plan to introduce more high-quality tailored products to meet their specific needs.

隨著我們的客戶群不斷發展，我們正在完善我們的產品範圍，以更好地服務於不斷變化的人口結構。展望未來，我們計劃推出更多高品質的客製化產品，以滿足他們的特定需求。

In summary, our priority remains ensuring long-term sustainable growth. In times of external uncertainty and the market fluctuations, it is critical to stay focused on maintaining the quality of our business. We will continue to expand our online operations and enhance synergies across our businesses while further investing in R&D and increasing AI penetration.

總之，我們的首要任務仍是確保長期可持續成長。在外部不確定性和市場波動的時期，維持業務品質至關重要。我們將繼續擴大線上業務並增強跨業務的協同效應，同時進一步投資研發並提高人工智慧滲透率。

Furthermore, regarding our AI development, I would like to reiterate that we have been executing our AI strategy through the AI lab, which incubates invest in and provide value-added services to AI start-ups targeting enterprises, developers and consumers.

另外，關於我們的人工智慧發展，我想重申一下，我們一直透過人工智慧實驗室來執行我們的人工智慧策略，該實驗室孵化投資並為面向企業、開發者和消費者的人工智慧新創公司提供加值服務。

We have made several early-stage investments this year, and we are exploring business cooperation with them. Additionally, I'm pleased to share that the commercialization of our proprietary AI systems is already underway, and we expect to see corresponding revenue reflected in our P&L in the near future.

今年我們已經進行了幾筆早期投資，正在探索與他們的業務合作。此外，我很高興地告訴大家，我們專有的人工智慧系統的商業化已經在進行中，我們預計在不久的將來會在我們的損益表中看到相應的收入。

Now I will pass it to Yuning, who will go through our financial performance.

現在我將它交給尤寧，他將檢查我們的財務表現。

Thank you. So hello, everyone. On this call, I'll only focus on our key financial highlights. Please refer to our earnings release and IR deck for further details. Those are available on our website. First of all, we are glad to have delivered a healthy quarter with stable financial performance.

謝謝。大家好。在這次電話會議上，我將只專注於我們的主要財務亮點。請參閱我們的收益發布和投資者關係報告以了解更多詳細資訊。這些可以在我們的網站上找到。首先，我們很高興實現了健康的季度和穩定的財務表現。

In the third quarter of this year, our total revenue reached RMB1.5 billion, up 30% year-over-year. In the Financial Services segment, total loan participation continues to grow steadily, reaching RMB13.4 billion, up 36% year-over-year. This is primarily driven by strong demand for our small devotion products and the rising repeat borrowing from our high-quality borrowers.

今年第三季度，我們的總營收達到人民幣15億元，年增30%。金融服務領域，貸款參與總額持續穩定成長，達134億元，年增36%。這主要是由於對我們的小額奉獻產品的強勁需求以及優質借款人的重複借款不斷增加所致。

Revenue from our financial services business increased 25% year-over-year to RMB836 million, maintaining a healthy and steady growth rate, in line with our quality over quantity business guideline given external graduations. In the insurance sector, our gross written premiums were RMB1.4 billion, down 5% year-over-year up 27% quarter-over-quarter.

金融服務業務收入年增25%至人民幣8.36億元，維持健康穩定的成長速度，符合我們外部畢業重質量重於數量的業務方針。保險板塊，總保費14億元，較去年同期下降5%，較上季上升27%。

The annual decrease was primarily due to a significant decline in our life insurance sales resulting from regulatory changes and product adjustment. The quarterly rebound was driven by our online insurance sales as our ongoing online initiatives continue to progress we expect further recovery in our overall insurance volume in 2025.

年度下降主要是由於監管變化和產品調整導致我們的壽險銷售大幅下降。隨著我們正在進行的線上計劃繼續取得進展，我們的線上保險銷售推動了季度反彈，我們預計 2025 年整體保險量將進一步復甦。

So earlier this year, the guaranteed return on life insurance product was further capped at RMB2.5 under the new regulation following a rate reduction from 3.5% to 3% last August, which has further impacted the overall profitability of life insurance sector in China. Moreover, the ongoing invitation of the unified commission and fees and reporting and underwriting regulation is adding pressure to commission rate industry-wide.

因此，去年8月將保費率從3.5%下調至3%後，今年早些時候，新規進一步將壽險產品的保證收益上限限制在2.5元，這進一步影響了中國壽險業的整體獲利能力。此外，統一佣金和費用以及報告和承保監管的持續邀請正在增加整個行業佣金率的壓力。

Consequently, the third quarter this year revenue from the Insurance segment were RMB85.5 million, down 68% year-over-year. In the consumption and lifestyle segment, the total GMV for this quarter stood at RMB508 million, a decrease of 10% year-over-year. The decline was due to already high product penetration among existing customers and our strategic reduction in product offering as we move up market with our customer base. As our customer demographic involved, we are strategically phasing our order product offering and doing new product tailored to their specific profiles and needs.

因此，今年第三季保險業務收入為人民幣8,550萬元，年減68%。消費及生活型態板塊，本季總GMV為5.08億元人民幣，年減10%。下降的原因是現有客戶中的產品滲透率已經很高，以及隨著我們向客戶群升級市場，我們策略性地減少了產品供應。隨著我們的客戶群的參與，我們正在策略性地分階段提供我們的訂單產品，並根據他們的具體情況和需求量身定制新產品。

On the expense side, sales and marketing spend increased 71% year-over-year to RMB336 million. This annual growth was mainly fueled by the swift expansion of our financial services segment and enhanced marketing efforts focused on attracting new and high-quality customers.

費用方面，銷售及行銷支出較去年同期成長71%至人民幣3.36億元。這一年度成長主要得益於我們的金融服務業務的迅速擴張以及專注於吸引新的優質客戶的營銷力度的加強。

Research and development expense increased 287% year-over-year to RMB151 million due to our ongoing investment in enhancement technology advancement and hiring of AI talent. Origination, servicing and other operating costs decreased 16% year-over-year to RMB206 million. This was mainly because of the decrease in the insurance business volume, which resulted in lower China rebates and associated segment costs.

由於我們持續投資增強技術進步和聘用人工智慧人才，研發費用年增 287% 至 1.51 億元。發起、服務和其他營運成本年減 16% 至人民幣 2.06 億元。這主要是由於保險業務量下降，導致中國回扣及相關分部成本下降。

G&A expense increased 50% year-over-year to RMB80 million. The annual growth was mainly due to the increase in incentive on assets and employee benefits. The allowance for the contract asset and receivable was RMB95 million, up 31% year-over-year. The increase was mainly driven by growth in our loan volume facilitated.

一般及行政費用年增 50% 至人民幣 8,000 萬元。年度成長主要是由於資產激勵和員工福利增加所致。合約資產及應收帳款撥備為人民幣9,500萬元，較去年同期成長31%。這一增長主要是由我們促成的貸款量的增長所推動的。

Provision for contingent liability this quarter increased to RMB272 million from RMB11 million in the same period of 2023. This is a result of continued growth in loan volumes and our new restating model, which requires substantial upfront provision according to the current accounting standard. However, this relation will be periodically recognizing in the P&L as guaranteed service fee over time.

本季或有負債準備金從2023年同期的人民幣1,100萬元增至人民幣2.72億元。這是貸款量持續增長和我們新的重述模型的結果，根據現行會計準則，該模型需要大量的預先撥備。然而，隨著時間的推移，這種關係將定期在損益表中確認為保證服務費。

In other words, there is a time difference in revenue recognition under this product model. However, from a loans lifetime perspective, profitability will be -- will show better performance compared to loans under a non-risk taking model. In the third quarter, the revenue from guaranteed service reached RMB137 million, so which is 5 times that in the same period last year.

換句話說，該產品模型下的收入確認存在時間差。然而，從貸款生命週期的角度來看，與非風險承擔模式下的貸款相比，獲利能力將表現出更好的表現。第三季度，保障服務收入達1.37億元，是去年同期的5倍。

Now on the bottom line, net income of this quarter was RMB355 million decreased 66 -- 36% year-over-year. The decrease of net income due to three reasons. So firstly, as noted earlier, overall profitability in the insurance business decreased. Secondly, marketing expense and R&D expense rose as we continue to invest in attracting new high-quality borrowers from our financial service business and investing in developing our in-house AI capabilities. Thirdly, significant upfront provision has been set aside as we increased loan volume and are risk-taking models.

從淨利來看，本季淨利為人民幣3.55億元，年減66%至36%。淨利潤下降的原因有三。首先，如前所述，保險業務的整體獲利能力下降。其次，隨著我們繼續投資於從金融服務業務中吸引新的優質借款人以及投資於開發我們的內部人工智慧能力，行銷費用和研發費用有所增加。第三，由於我們增加了貸款量並且是冒險模式，因此已預留了大量的預付款。

Regarding cash flow. So as our loan facilitation business continue to grow and our loan balance expense are funding sources, which are banks, financial institutions, et cetera, and associated guaranteed companies a request that we provide strategic deposit of common practice in the industries. This quarter, we made a onetime deposit payment based on our current loan balance, resulting in a notable decrease in our operating cash flow. We generated approximately RMB50 million net cash from our operations this quarter. But looking ahead, cash flow is expected to return to normal level next quarter.

關於現金流。因此，隨著我們的貸款便利化業務不斷增長，我們的貸款餘額費用是資金來源，這些資金來源是銀行、金融機構等以及相關的擔保公司，要求我們提供業內常見做法的戰略存款。本季度，我們根據現有貸款餘額支付了一次性存款，導致我們的經營現金流量大幅減少。本季我們的營運產生了約人民幣 5,000 萬元的淨現金。但展望未來，預計下季現金流將恢復正常水準。

On the balance sheet side, our cash and cash equivalents remained strong at RMB3.7 billion, though reflecting a notable decrease. This change related to our long-term investment in business expansion and potential license acquisition, which are still in progress. We will close more details once the deals are secured.

資產負債表方面，我們的現金及現金等價物仍保持強勁，達到 37 億元，但大幅下降。這項變更與我們對業務擴張和潛在許可證獲取的長期投資有關，這些投資仍在進行中。一旦交易確定，我們將關閉更多細節。

Now regarding shareholder returns. Firstly, for share buybacks. In the third quarter of this year, we allocated USD3 million to repurchase shares in the public market. As of September 30, 2024, the company has purchased approximately $5 million ADS in the open market while total approximately USD16.5 million, excluding commissions under the 2012 -- 2022 share repurchase program. Additionally, we distributed a cash dividend in October under our semiannual dividend policy with a total payout ratio of 40% of our earnings for the first half of 2024.

現在關於股東回報。首先，用於股票回購。今年第三季度，我們撥款300萬美元在公開市場回購股票。截至2024年9月30日，該公司已在公開市場購買了約500萬美元的ADS，總計約1,650萬美元，不包括2012年至2022年股票回購計畫下的佣金。此外，我們也根據半年度分紅政策於10月派發了現金股息，總股利支付率為2024年上半年獲利的40%。

Lastly, on our business outlook, based on our assessment of current business and marketing conditions, we expect our revenue for the fourth quarter of 2022 to stand between RMB1.3 billion to RMB1.5 billion with a healthy net profit margin. This represents our current preliminary assessments, which may be subject to change and uncertainties. This concludes our remarks.

最後，關於我們的業務展望，根據我們對當前業務和行銷狀況的評估，我們預計 2022 年第四季的收入將在人民幣 13 億元至人民幣 15 億元之間，淨利潤率保持健康水平。這代表了我們目前的初步評估，可能會發生變化和不確定性。我們的發言到此結束。

Operator, we will open for Q&A section.

接線員，我們將開放問答部分。

(Operator Instructions)

（操作員說明）

Chris Wu, Lake Capital.

克里斯吳，Lake Capital。

Hey, thank you management. Thank you both for sharing. Looking at the financial results, we have actually seen your loan volume or by 3.5% quarter-to-quarter and it's going a bit down from last quarter, which is 9%. And may we know where -- why is there a slowdown? And then also going into Q4, have you seen any further pickup in credit demand and loan application in October and November? And any updates on your new customer acquisition strategy? Thank you.

嘿嘿，謝謝領導。謝謝兩位的分享。從財務表現來看，我們實際上看到你們的貸款量環比增長了 3.5%，比上季度的 9% 略有下降。我們可以知道為什麼會出現放緩嗎？然後進入第四季度，您是否看到 10 月和 11 月信貸需求和貸款申請進一步回升？您的新客戶獲取策略有什麼更新嗎？謝謝。

Thank you. I'll take the first crack and Yuning can add to it, please. I mean we see this demand for credit remains high. And -- but it's a very like uncertain market conditions. And we are focused on this quality -- first, our quality over quantity strategy, which makes it amount to do greater risk management. That's where you see our results are very encouraging. Going forward, we will maintain this strategy, but we are also working harder on bringing in more higher-quality customers with reasonable customer acquisition cost associated with it. So Yuning, please add to it.

謝謝。我來第一個破解，請尤寧加。我的意思是，我們看到對信貸的需求仍然很高。而且——但這非常類似於不確定的市場條件。我們專注於這種品質——首先，我們的品質勝於數量的策略，這使得它相當於進行更大的風險管理。這就是您看到我們的結果非常令人鼓舞的地方。展望未來，我們將維持這項策略，但我們也會更努力地以合理的獲客成本引進更多優質客戶。那麼尤寧，請補充一下。

Yeah. Thank you, Ning. So yeah, I think we are expecting that in Q4, we are still carrying on our strategy in our customer acquisition strategy. As we are a 100% online business model. So this year, we are in operation with TikTok, Douyin and WeChat and co-build and AI-driven real-time analysis model which efficiently screen and qualified borrower based on their credit score and inquire qualified borrowers that as year come -- as this year comes NIMS, I think in Q4, we are expecting the cost of customer acquisition, still a little bit high in this quarter as we see a lot of competition from the market and also to manage our risk level.

是的。謝謝你，寧。所以，是的，我認為我們預計在第四季度，我們仍在客戶獲取策略中繼續執行我們的策略。因為我們是 100% 線上商業模式。所以今年，我們與抖音、抖音、微信合作，共同建立人工智慧驅動的即時分析模型，根據信用評分高效篩選合格借款人，並查詢未來一年合格的借款人——今年NIMS 即將到來，我認為在第四季度，我們預計本季度的客戶獲取成本仍然有點高，因為我們看到來自市場的大量競爭以及管理我們的風險水平。

So we will see how Q2 goes out. But to summarize, I think we are still keeping a steady strategy and we're trying to acquire new customers at a reasonable price cost and trying to enlarge our -- expand our repeat borrowing pool. So that's the answer.

所以我們將看看第二季的情況如何。但總而言之，我認為我們仍然保持穩定的策略，我們正在努力以合理的價格成本獲取新客戶，並努力擴大我們的重複借款池。這就是答案。

Yeah. The idea is we keep our risk management really robust at the trial best to grow. And we have confidence we will have a relatively high growth in the quarters to come.

是的。我們的想法是，我們在試驗中保持我們的風險管理真正穩健，以實現最佳成長。我們有信心在未來幾季實現相對較高的成長。

Does that answer your question. Do you have any further questions?

這是否回答了你的問題。您還有其他問題嗎？

Yeah, sure. Let me follow up. It's encouraging to know that we are maintaining a healthy momentum and also to care for the risk management at the same time. Perhaps the next interesting aspect to look at is AI. Since we are seeing that you are increasing your investment in AI and hiring quite a number of professionals, could you explain what makes you competitive in the AI space especially given that we have so many AI-native companies in the market? And could you also tell us more about the AI systems that will be commercialized as you mentioned in your remarks? Thank you.

是的，當然。讓我跟進一下。令人鼓舞的是，我們在保持健康的勢頭的同時也關注風險管理。也許下一個值得關注的有趣方面是人工智慧。由於我們看到你們正在增加對人工智慧的投資並僱用相當多的專業人員，您能否解釋一下是什麼讓你們在人工智慧領域具有競爭力，特別是考慮到我們市場上有如此多的人工智慧本土公司？您能否告訴我們更多有關您在發言中提到的即將商業化的人工智慧系統的資訊？謝謝。

Thank you for the question. And so we are not a LLM company. We are an application of AI company position. So we have -- like use cases, we have data accumulated through all the years. And so we are uniquely positioned, therefore, to really build like credit-related, like models -- insurance-related models. So this is our edge as an AI application company.

謝謝你的提問。所以我們不是法學碩士公司。我們是一家應用AI定位的公司。因此，就像用例一樣，我們擁有多年來累積的數據。因此，我們處於獨特的地位，可以真正建立類似信用相關的模型—保險相關模型。所以這就是我們身為人工智慧應用公司的優勢。

And as I reported early on, AI models systems have been built across our business like front end to like back end. And so like customer acquisition, marketing intelligence like risk assessment like customer service, like collection, so on. So many of the modules based on our preliminary market research are very workup in the marketplace. So we are working on monetizing these valuable assets. Yuning, can you add to it?

正如我早些時候報導的那樣，人工智慧模型系統已經在我們的整個業務中構建，從前端到後端。就像客戶獲取、行銷情報、風險評估、客戶服務、收集等。基於我們初步市場研究的許多模組都在市場上得到了很好的應用。因此，我們正在努力將這些寶貴的資產貨幣化。宇寧，可以補充嗎？

Yeah, Tango. So as we mentioned in the -- early in the call, we have developed six major AI systems that support our business operations. I think while-- some of them are quite mature in use in our day-to-day business, some are in early development. So we are evaluate which one to maybe can use to in our for our business partners.

是的，探戈。正如我們在電話會議初期所提到的，我們開發了六種主要的人工智慧系統來支援我們的業務運作。我認為，其中一些在我們的日常業務中已經相當成熟，而另一些則處於早期開發階段。因此，我們正在評估哪一種可能可以用於我們的業務合作夥伴。

Some can be used in our peers, some are maybe in financial institutions. We're trying to -- well, the system actually wouldn't be the developers are mostly in-house use, but we are commercializing it to make it more useful in the market and trying to well developed business in our -- especially in our peers and the financial institutions. I think we are going to see some progress in the near future, maybe in six months to a year.

有的可以用在我們同行，有的可能可以用在金融機構。我們正在嘗試 - 嗯，該系統實際上不會被開發人員主要在內部使用，但我們正在將其商業化，使其在市場上更有用，並試圖在我們的 - 特別是在我們的同行和金融機構。我認為我們會在不久的將來看到一些進展，也許是六個月到一年的時間。

Let me add two things, if I may. One is that finance-related like exchanges interactions need to be, in many cases, very precise. So we are prudent in developing and utilizing AI models, knowing that generative AI has certain forthcoming. So we use like REG, so on to mitigate that. But still, certain models are still in the lab phase, and they haven't been fully used.

如果可以的話，讓我補充兩件事。一是在許多情況下，與金融相關的交易（如交易所）的互動需要非常精確。因此，我們在開發和利用人工智慧模型時持謹慎態度，因為我們知道生成式人工智慧具有一定的前景。因此我們使用 REG 等來緩解這種情況。但某些模型仍處於實驗室階段，尚未充分使用。

But many others are in greater deployment stage and ready for external commercialization. Secondly, I'd like to add that the overseas market can be quite good places for AI because they are -- is like China 5, 10, even 15 years ago.

但許多其他公司正處於更大的部署階段，並為外部商業化做好準備。其次，我想補充一點，海外市場可能是人工智慧的好地方，因為它們就像 5 年前、10 年前、甚至 15 年前的中國。

So using AI, we can just leapfrog right? Like in China, we've experienced like Internet, mobile Internet, big data noted graph so on to AI -- different phases of AI until today, generative AI. But in some overseas markets, like in the Southeast Asia, in South America so on. So these markets are really ideal for AI deployment. Of course, we will be careful also in terms of risk management compliance so on. I'd like to just add these two points.

那麼使用人工智慧，我們就可以實現跨越式發展，對嗎？就像在中國一樣，我們經歷了互聯網、行動互聯網、大數據、圖譜等人工智慧——人工智慧的不同階段，直到今天，生成式人工智慧。但在一些海外市場，如東南亞、南美洲等。所以這些市場非常適合人工智慧部署。當然，我們在風險管理合規性等方面也會非常謹慎。我想補充這兩點。

We hope that answers your question, Chris. And thank you very much for your questions.

我們希望這能回答你的問題，克里斯。非常感謝您的提問。

This concludes our question-and-answer session. If you have any further questions, please contact the company's IR team for assistance. Today's conference has now concluded. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

我們的問答環節到此結束。如果您還有任何疑問，請聯絡公司的IR團隊尋求協助。今天的會議至此結束。我們感謝大家參加今天的演講。您現在可以斷開線路，度過美好的一天。