Q1 2020 Earnings Call

[music].

Hello, Ladies and gentlemen, thank you for study by four tedious incorporated first quarter threat to put the earnings conference call.

This time all participants are in listen only mode. After managements prepared remarks. The double your question answer session. That's the these conference calls is being recorded double no turned up all over your host Ms. When do you from GBM stuff it'll marketing Department. Once these go ahead.

Hello, everyone welcome to treat against first quarter, two tranches conference call.

Three south east huge volume was flat.

Earlier today, and we'll post deal.

You can count on it I mean, Chris really insight off when a company gets trued dual gender.

Visiting our website at <unk> I thought you didn't call me, something <unk>, founder Chairman and Chief Executive Officer, and they see seat you only pay off investment relations without a cold with no prepared screen.

Before we continue please know that todays discussion will contain forward looking statements made under the safe Harbor provision for the U.S. Private Securities Litigation Reform Act of 19 occupied.

Forward looking statements involve inherent risks and uncertainties as such the company results may be materially different phone abuse box expressed today.

The information regarding these are low risk and uncertainties.

Could it in a company take half as far outweighs the U.S. Securities Exchange Commission. The company does not assume any obligation to update any forward looking statements, except as under applicable law pace also noted that she didn't any press freedom and this conference call include discussion Oh they tickets.

Financial information as well as all these non-GAAP financial measures.

You didn't depressed for days contains a reconciliation offered all get hit not gotten matters to the out don't all day today, most directly comparable GAAP measures.

We also posted a slide presentation, Oh, I, our website, providing details on our resolving the quota we will reference those three balancing our prepared remarks, although not refer truth, let's see if it's not going out with discussion I would now I'll turn the call I'll, let you always see O. Meanwhile, Please go ahead.

Thank you.

I was getting older and less coast antibodies.

The media well pick and then interest.

Today's call in the first quarter.

Exactly.

I'll look who that studies on loan business and that's too close to you.

You can you show too.

Oh, while facing a difficult operating environment since beginning of 2000 times.

Yes, this ball sort of both the dogs and all but.

Credit cycle, we implemented mall Nicholas credit et cetera.

With his team gives me such measures have was threethree who's doing the long term Texan water you enough book called her kinda Pat can pad, while we love fourth quarter of 2000 vaccine.

And how Oh, maybe 10 or whatever if they feel.

Let me show that's lower than.

For the question.

We believe these actions.

And then maybe up to fishing.

Feels good.

And to protect our met a.

A mine.

Headwinds.

Yeah attrition.

As we have a mentioned previously we'd like to apply our increased.

Could you see that caused him at summit in new areas of growth.

With poppy wheels on long pen growth potential I'll try that lakos construction industries.

In late March.

We also already lost or whatever.

A lot Charlie you corporate.

Pratfall offering a wide range all high and the thought for customers in China.

[noise] reset that.

We expect.

Sought to perform as you know that kind of quarter, all Tucson and time to due to the proactive.

It's actually.

Introduction water.

Hi, pension provisions for them multimode delinquency rate.

As well as well as always restaurants in for Mike My thing you show to you.

As we continue to operate.

My challenging macro headwinds.

We are proactively.

Cooking I'll strategies to Praxair Brookfield Protex.

At that.

And that's a Sim card.

Lay in the fall Lynn.

Politician false broader based or growth in the future.

We are 50 for more detailed.

Our thoughts thank you mean and good morning, and good evening everyone.

The echo what means that we focused on minimizing risk exposure and protecting our net asset with a more test that's exciting light up the challenge and start of trees on tiny where the coding 19 pandemic further accelerating the macroeconomic slowdown and it down a fan copper price cycle.

[music].

These various factors drove up our de wondering can see rates to around 20 seconds as at the end of first quarter.

Representing a considerable increase from approximately 13% at the end up tick on nitrogen.

Under such circumstances.

We remain confident in executing our conservative strategies do more stringent credit standards and assessment procedures.

This practice has substantially reduced the transaction volumes of our loan book business by approximately 53% quarter to quarter.

In particular, we lowered the balance sheet transaction volume by over 90% in this quarter compared with the fourth quarter of the previous years.

How quickly the outstanding on dollar, although our loan book business decreased by over 30% sequentially as of the end of the first quarter.

However, we believe it is the only right course of action floor under that circumstance.

With this prudent strategy, we have stable with <unk>. If you want that inflation rate at around 20 question <unk> April and May so far.

[noise] at the same time financial progress on our open platform also into Medicaid stricter credit standards, even over or high delinquency rate you know credit market.

Switching card decrease younger kids actually open top one by over 68%.

Compared with fourth quarter of 2019.

I've missed on the one mentioned we are exploring additional opportunities and investing in new areas of growth legally in late March we were pleased to introduce our new initiated the wanting ecommerce stock one hockey team to seek a music and luxury consumption market in China.

Well, obviously on a long term growth cost go up with market and believe the one platform well so so with a tremendous.

For all right luxury consumption, especially when traveling and offer high shopping I wish the pit due to the containment measures for Colgate maximum.

In May we engaged with five well known Libre casing, China at our brand ambassadors and launched a like screening South campaign, which has attracted a cumulated viewership of 130 million.

Maybe on his first and then the generated a G.M.D. <unk> from what I'm doing today maybe.

At this problem if it's still in these early development stage, what's going into incurred significant increases in inventory.

And self marketing expenses.

In order to enhance our brand awareness and boost our user acquisition.

Older or we expect the second quarter up through down 20, well still see a tough period.

This is as a result of depleting transaction among a both loan book business and Opensoc, one loan facilitation combined with higher provision.

Guaranteeing a refresher Atlantic city.

Well as increased promotional incentives and the marketing expenses for the development of money.

We believe it is the fact approach to maintain a constructive strategies part on book of business unless the on favorable operating environment.

Given the uncertainties of credit market dynamics. It is also necessary for us to explore other opportunities to supplement our business and for passenger growth.

In addition, our strong cash position enables us to carry out these initiated with sufficient capital support.

Not spend on here, we have to be purchased an aggregate principal amount of 117 million U.S. dollar convertible bonds from the open market. She is the first quarter to capitalize on our undervalued securities at attractive prices.

This repurchase has improved the financial condition for the company.

Now, let me share with you in some key financial results in interest time, I would not go over eight line by line.

For more detailed discussion of our first quarter. Two is on plan anyway. So please refer to our earnings press release.

Our total revenue in the first quarter, what I mean being 957.9 million.

54.3% from the approximately 2.1 billion any beat for the first quarter Uptown 19.

Our financing income totaled them to be 622.7 million a decrease of 38.4 content. So I'm going to be approximately 1 billion for the first quarter of 2019 as an adult all that decrease in others on the balance sheet loan.

Our loan facility to income and other related income decreased by 34, plus 4% to really be 422 million from Andy 644 million, what fourth quarter quarter UQM 19.

As a result of a decrease in the sector in the amount of off balance sheet transaction.

Well she is partially offset by reclassification of Ganji income RMB 387.5 million at the new at Cagny policy as E D to C, which became effective for the company on January difference.

Here requires the fee income earned on the Noncontingent aspects of a guaranteed to be recognized separately from the expected of credit along.

Transaction service fees and other related income was a loss of really need 150, plus 1 million.

Compared with an income off can be 158.7 million for the first quarter of the previous year as a combined result, so number one positive income offer it to be 112.9 million what the transaction facilitate it during the first quarter this year.

Number two its income other than to be 24.1 million water Palm coast originations services upsize actions facilitated into previous years.

And a rebound and number three a revaluation loss RMB 287.4 million for content assets incurred four transactions precipitated in 2019.

The revaluation was due to adverse changes or Cortina first quarter up 220 that back to the deterioration of the estimated likelihood of receiving borrowers ACA repayment of stability as of March 31st 2020.

Provision for receivables and other assets increased by 183.9 clicking through them and B 1.1 billion from really be 300, and Nike put 4 million for the first quarter 2019.

The increase was primarily due to an increase to talk to you on balance sheet outstanding principal receivables compared to the first quarter of 2019 as well as an increase in a loss rate to me.

Alright model due to macro economic and its pratik cycle down 10 in the first quarter 2020 [noise].

Our net loss attributable to a chicken shareholders watching movies.

480.

6.5 million.

Or net loss per diluted Hds, RMB 1.9 to <unk>.

<unk> compared to net income off him and be my contract and the 49.6 million in the same period that here.

Our non-GAAP net loss attributable to treat and shareholders was in the 900 Oh 7.5.

Million or non-GAAP net loss per diluted Adx RMB 3.57.

Compared to non-GAAP net income off even be 974.3 million in the same tours that here.

I also want to add some color on the accounting policy changes regarding eight A.S.C.D. to six measurement of credit losses.

In general this newly adopted accounting policy requires timely a recording of expected credit losses.

I'm wrong and other financial instruments.

And the most significant impacts off this new standard relates to the accounting for restructuring liability.

Therefore, we recorded and MB 1090 3 million increase.

Service assurance liabilities at the beginning of this year.

The other than that of this double in cheap after path tax assessment was recorded in retained earnings due accumulated defect adjustment.

And this region and maybe 1.1 billion well in quotation marks be released into our changes in risk assures liability piano lighten due out the remaining theories of the veteran loan.

The other major impact on our Pan out presentation was as I mentioned above the reclassification off guaranteed income from the change in English with liabilities to the revenue line.

This guaranteed income was deferred at the origination of the onshore long list and I recognize when it down if you saw that gets performed over time.

The reclassification the reclassification were very possibly have limited that the new accounting policy will very possibly have limited impact on our new off balance sheet launch this year because number one we reduced our off balance sheet loan volume dramatically. This year number two from the second quarter are.

Honestly loans will be accounted for as credit derivatives accordance with CST eight one fight and measured at fair value.

So I'm curious all are prepared remarks, operator, please open the floor for pressure.

[noise] [noise] Hello, Albert I used to that.

Ladies and gentlemen, we will now begin the call sort of answered so simple off the question. The star one on your telephone, though when we were they said you know become so goes.

As opposed to bother husky aboard the benefit of all participants on today's call. If you've listed off your question to the mother Smith <unk> lease digitally with your question in English, but then it's far woman the telephones off the question.

Well were first question comes from July those job site for more adept Saudi 11th level.

Hi, Thank you for taking my question I have a few and see the first one is the leases.

We can trend so we have seen sounds easy when delinquency stabilized.

But also the gillam bottoms based on design systems continued to decline. So just wonder [noise], what's the lead whose so you just any update you something they didn't sound such a different volume.

Adam bottoms.

Even on business and open the phone and related to Tennessee is about.

The 60 jumped in the low so.

We're supposed to be expected launch, we Lee shooting for the yield on June 20, trendy and keep them yet already implemented the concepts to strategy.

And then secondly, it's Oh, that's a big Oh, sorry, I can implications.

The reclassification for guaranteed income so I see.

If we take that Oh, you seem to the facilitation incomes is rather low.

That's because of the accounting change.

So is there.

That pool.

Precisions income and see all used Oh, Pete I'm sure pay grade that we can use tool to have enough.

Tony a comparison.

And then finally he is on the depletion so just wondering.

Given we have already make seeking to completion.

For two quarters already we do expect <unk>.

Second quarter, Thank you very much.

Thank you John it's great to hear from you owe a special clashes one my one and different disease. So number one the open the operating chains and our with regard to our delinquency and hours in a body.

So as reported a flight on our website, but the one delinquencies so far remains at around 20% because we started to de lever she's very early last year.

You mean also noticed at a b one delinquency of our loan book business, a hazard has a hazard.

Sign of declining recently because of our de leveraging a strategy.

We continued to adopt this conservative and prudent strategy into second quarter, So all where loan balance for the on balance sheet and all hospitals will continue to decrease and other loan volume for our open top one its can well continue to decrease in the second quarter as well.

As regard to the magnitude.

All the open top one no volume it won't be priest ironic.

60% to 70% in their second quarter.

<unk>.

Our open top hoppers also noted for the hike in our delinquency rate.

And say nasty other players into.

Oh, Hi, an hour opened up on partners would choose to adopt it got a prudent loan origination and facilitate the strategy.

Your second question regarding the new long quantity.

As I just mentioned if you take a closer look to the you went delinquency charts on all our helping.

You may notice.

Our own balance sheet, you want delinquency, Oh, starting to decrease a little bit in the reason for it.

Which is a result of our prudent strategy and our more stringent risk assessment strategy.

Number three the classification on guaranteed income and a apple to apples comparison.

So if we take Oh.

Pick on T. income from the loan facilitation income, we will get a lumpiness inefficient income up 35, approximately 35 million Andy.

So the take rate of this 35 35 million and beat over our.

Flow facilitation volume.

About 58% compared with 8% into fourth quarter, because we apart from the day one recognition of revenue. We also have pool, which the post originations. The other income earned only historical.

That's why our take rate for the off balance sheet facilitation, no but decision. It's got hit the high first quarter or the always been with him disperse Muslim off balance sheet into first quarter.

And Youre. The last question is a rate regarding to the provision. So we actually are we have got revalued eight our balance sheet, both the provision the risk guaranteed I, but if he and I really push rents and IP at each period and so I.

The each as of the the end of each period, we believe our management believe we have incorporated or the data available and all their views for the macro factors available into our goal they models.

So we believe at the end of March we have provide sufficient provisions fabric not.

We cannot diesel sure about the feature.

At each other and we'll reevaluate our risk ushering in a provision out.

To make sure our provisions are sufficient.

Thank you for question.

Hi, Thank you see I'm. So so just to follow up on a thing social reality under the C. So [noise].

Approach right also thing.

[noise] social justice called her position also affecting our expected life cycles for the Oh, Oh for them. So you know portfolio.

That's the library to [noise] two to two just think about it.

Oh, sorry, John I Didnt quite catch your question.

Yeah. So just you know as that's all spend too much I think <unk>, we remain lesion.

All the information available so but.

He is starting this year, obviously, we are under the C. So approach so my thing.

That would mean that we tried to feather in as much as the most over the lifetime include in the future [noise]. So just wanted to you fly understanding correctly. So if if the situation didn't deteriorate further we should make oh supervision.

Even the.

Folio and our expectation of staffing should performance.

Yes, John you're correct, if the situation didn't get deteriorates further we believe we have provided sufficient provision already and you're right Oh Olympic point as well as of end of March we have already adopted a new accounting policy, which requires us to is that what the incurred loss model. We also have.

He'll provide probably last quarter noncontingent part of our guarantees so yes, you're right we have already incorporate already available information into our models.

Okay. Thank you.

Thank you John.

I think you over the next question comes from the line of Vincent <unk> Roll My Me, Tom and company. Your line is open Vincent.

Thank you think imagine for taking my question. So first question is also for the.

A basic for the Q1 I was thinking about if you wanted it came quickly rate how should we.

We expect to be easy.

Oh, we Oh, we seem to be stuff first about like two to two most.

My second question is about wanting new looks and you show a country stuff, but kind of stuff is for these projects and how much more investments. We think are we going to.

Spend on these is the east you. Thank you.

Thank you Vincent.

Regarding almost of England's rate, although we posted 51 delinquency rate online there's no direct baumler for Atlanta doing because he to our final off but we can make a similar to in comparison.

Last year all at the thing they want delinquency rate was only 10% to 13% by this here starting from February Deanna February when the when an outbreak up by what happened, but do you want that includes you raised up to 20% and ask we started to de lever is you're very early.

Oh the impact is limited has been food proven to the limited as we have maintained all are de when delinquency to approximately 20% so far in may.

And with regard to your second question for anymore. We currently are deployed around 200.

Mailing the R&D is not a quarter running with type one I know.

There will be somewhat enough things, but we are very prudent in our U.S acquisition.

We pay a lot of attention to use the retention and ultimately, but the profitability. We're not at company burning cash for G.N.V., that's not our style. We will continue to leverage on our past entrepreneurial spirit and all our technology capabilities to work on this new doesn't.

Opportunities, but we're not spending like or to materially for a huge amount of users will be very prudent.

Got it thank you.

Thank you over that's question on the line up of the fiduciary Jain from RBC capital funds, they let us know open.

Hi, everyone. Thank you for the presentation can you hear me.

Yes, Sanjay How're you doing.

Hi, Thank you.

Two quick questions Oh, so stews on the online lending business would you see that you are gradually exiting the business, particularly the open platform.

Or if you see a rebound and you will focus back on days.

Inboard kind of volumes Oh and abroad, we can expect seed second house or next year.

Sure.

So essentially we are absolutely not accepting our core business the lending segment.

Although we hopefully we'll see a decline in our our loan book of business as well as our open top one business, but we believe this is the only rifle action when now doing this asked macro environment.

In the future when our delinquency rate gets better and when time is right. We will bounce back with a sufficient asset to do this business.

And.

What's your second question again, sorry, yeah. So let me just ask one by one so oh, what kind of growth.

We expect the ones you started becoming more confident about actually qualities and micro backdrop.

Sure.

As.

Oh actually is a very tough question. We we don't have a very good expectation or forecast on how soon the credit cycle. What the older is a very Ah, it's very hard to predict and it is our company's policy not to give guidance. This year. So unfortunately I don't think we have.

That growth number right now, but we will well they'll go actually see if the delinquency get better we'll go Scott I testing or some volumes.

And like that I went back.

And you expect the delinquencies to start improving in the third Gordon or food Gordon.

For our a real book of business, we have already started to see a like a turnaround I just like a signal off from that rents. If you look at Allergan remedy when he talked.

So it is a good guess two to two to say that our second half of 2020 wells will be much better than our first half of this year.

Okay. So that's on our own Lindy and the loan facilitation and open platform also from the third quarter or.

For our loan facilitation portion of the bulk actually with don't have any need to use outside money on to do our business right now because after you as you may also notice we have abandoned the cash on our bulk Ah. So right now we can either we can.

We can just be deploying already own equity to do that loan book business.

Right and if you ever evolved why don't get higher we of course, well welcome all if I'm not often money for open past one business. The delinquency actually went up much faster than our loan book business, but they want the levers if our own fall on packaging business with around 10% at end of last year and others.

To about 20% I recently.

So that's probably why our open pack them partners as well as well as well at ourselves have decided to adopt a prudent strategy right now, but it's going to future delinquency rates get back I would believe that handles the tools I filled there where well conducted a technology packing.

Technology logically so if our open top and partners are happy to come back we're happy to welcome them back.

Ladies and gentlemen.

Okay. Okay. My second question broadly on the open platform. So if I understood your numbers correctly you heard us.

I'm not sure whether you call it a provision or like bucks or in Gulf something 50 million.

<unk>.

This is on on the.

Expected fee income that you had booked but you might notice even though.

Oh, yes, it's fair to say that off the 2.2 billion.

Open platform in gum your book last year, but group opinion, then youre not going to see.

Correct. That's the current expectation aren't you know well maybe core although open top on doesn't pack no credit risk on a pre to post.

We do have a expectation after recoverability of getting our share of facilities.

So previously we estimate that we can well they get discount of 10% to 20% only with your ability of our Oh on the capability of our share of that receivables are covering it would have to make more ah discounts on this number. So that's why it there is a NEXAFED revenue on this line this year.

This quarter.

No I mean bridge there just a bargain.

Yup.

Only do 50 million, which is lost or your expectation about looking at this behavior. What have you could revisit the the income or revenue recognition.

Well paid on a monthly basis, rather than booking a the open platform.

Richard fee upfront, Oh seems to actually remain vital part not happens.

On a monthly basis, rather than upfront, but anyway repeat the question on a wonderful.

Well I mean on some indoor could explain.

His ports that also is behind bags.

More importantly, what synergies do you see.

Dorms all disease in terms of brought up or I know you said technology, but what is Oh. Yeah. That's you know you did and are you going to people waiting for them to those buyers who buy those luxury items on your like home.

Right, so with regard to the senior people wanting more and our like it's a tough warm or you're right about the first point, we have the technology capacities.

Ah that that is as a result of our past experience in building up or technology top ones and we can utilize that Ford and your popcorn not number one and number two yes I'm sure you're at your offer right in the future. It may be a possibility that highlighting a solution can be introduced to the wanting.

One of my right now is go.

Baby, if those too young to to have a financing solution for that.

And number number three we believe.

As a result, as a result at the top entrepreneurial experience.

Some of our founders on our management team, we always have to appetite to try new things and we believe our E commerce background about rather than a management team will be a good panic to the new project.

But you know your biggest trade.

He is basically the 80 million customers.

Users who out on your water just started with you.

Hi, there does not appear to be any compatibility.

Between the ecommerce business look city versus yours, Oh, you know online lending type of customers.

Right there there I'm basically a different type of a users we target at high income group of users, while writing half one so far we have who to the fact that we have the tour and ability to acquire uses effectively.

We lost a live streaming cells are selling campaign during the labor day holiday and results are fascinating we accumulate the accumulated on viewership border selling campaign was 130 million.

So as we have proved our ability to effectively by user. Our next focus is how to retain these users how to make them more Lloyd call platform.

So that's Harley am I thinking about this new product.

[noise], who or what is the yard some pretty constrained. They are you also greenbrier discount than other E commerce.

Here's or you know.

I think brands or what is the differentiation.

Right.

So number one our depreciation number one we have build up a strong supply chain because as our suppliers are either state owned enterprise or directly from a duty free shops, we haven't we have many might fit it into.

The jury would have direct connection to the good for shop, and we'll keep dropping your Sabrina authentic good back to China.

Oh and by doing this we have built up the ability to do that and eat and evaluate the price globally. So that we can offer the basket price available to our users.

And number three.

As we have to costs boarded course cross border cross border ecommerce half. One are you just can't actually enjoy a lower on duties or lower inflict tax.

The the import tax why wasn't more platform is a route nickerson Fokker articles night for us, but it can be 20% in audit scenarios. So that's why we can offer better quite far users and the price of African Pat competitive in the market.

Okay, and just a final question on modeling or is it being done in the mean a company Giuliani soon so what kind of already know cash burn Oh.

No impact on deal are you expecting and eventual do you have any talks in mind about ward kind over they've been you shoes and referred shared would you have all for the two businesses.

So why did who is actually a wholly owned subsidiary on the just on the on the Chilean So regarding the second question for the revenue share. We don't think that actually matters a it why didn't get larger we'll disclose their that the the revenue lines and a second when reporting separately, but.

Right now is only started in late March or not that big right now and we haven't I'm really not spent a lot of money on it.

Except for marketing.

Well so.

Right.

Sure so in relation to them that they didn't you got in revenue of the company and cutting liberal of <unk>, we're going be especially the first year Oh, the losses wouldn't be very big.

Which we don't have the visibility for that yet if we see a good 10 in our user retention and our users loyalty, we may ramp up its business much faster than expected, but calling me or we are still casting differ.

I didn't use acquisition channels and improving our fulfillment service pharmacists.

Okay and final question for me on the convertible bonds, which you heard board, but well see how much is burden billing people during the second quarter.

Right so.

Does the probably the impact have you made already seen from Oh from our table was 430 35.

William Ah you need a first quarter.

One of the second quarter I'm afraid I can't disclose it right now because.

We haven't finished our program yet, but it won't be a good profit increased two hours enough where the results as well.

Okay. Okay. Thank you very much.

Thank you Sanjay.

Thank you over the course of themselves from the lightest Stevenson from a high told you to losses, all your let us know up its Steven.

[noise] evening I'm, just a I think I mean do you have to any follow up.

Based on tolling then on Sundays question.

First of all I'm going back to that.

[noise] revaluation loss of 280 287 million can I have one if I again that 80 is related to some of the.

<unk> revenue.

Only the open platform a business that you have recognized in 2019 and because you think that you are unlikely to.

Based revenue a eventually you. So that's why and you will have two properties revaluation loss of 287 million.

And ER and the fall and I know, we need a question if I heard that Sunday. So you don't see under the new accounting policy, you say that you will no longer but the rough and Neil.

Oh, you you will no longer adopts the so called financial revenue recognition.

Anymore in 2020.

Is that correct and a again that we need a question for that is I still find that we we have around 1.5 billion. Upon trip asset is a in the balance sheet. So does it imply that there could still be transalta revaluation loss Oh, two we book.

In the coming quarters. So that's the first question related to you used to be valuation models.

And the second question I think we later to John mentioned about that.

The provision, but are you a sufficient no not to use the you mentioned that to you know what they did a couple of Dunkin' knock on Interbody enough guarantee and then you know that could be similar to what spends has been adult painful I abolish no I, but I wanted to clarify two things one.

Well what is the current new enrollments delinquency rates.

And to do you have to you make.

Missions.

Oh, the delinquent new loans, even though you mentioned that you'll have my suspicion for wishing for Q1, but in case, if you're doing long life.

Start to become delinquent say for example, 20% do you still have to make further prohibitions.

And in end of second quarter, all we should assume these these number to be zero I into common quotas. So I'm just to use. These two you follow up question.

Sure. Thank you Stephen.

So for your first question regarding the revaluation loss so.

Well, what I want you wanted to clarify that was still half. This they want recognition of revenue Waller open platform and a loan facilitation income however, the new accounting policy good prices to recognize the earnings slower so when youre.

I mean, causing any if that is a a present a timing difference.

Previously on the assay fixed Olympic we'll have to recognize the majority part after revenue a day one right now with this new accounting policy on the recognition will be much slower because APAC underpinned. He can part of the credit loss. We also have too.

Cop out the Noncontingent part of the credit loss at they want and release it gradually and entered into the future.

So if not then you are kind of policy that kinda difference and it makes us feel it makes our earnings recognition a slower.

Regarding the 1.5 billion Contra assets. We believe we had provided sufficient revaluation loss a revaluation to that contract at the end of March already if the macro economic our delinquency assumptions to their only model changed change into the into the feature we may have to either.

I like that's why we have to do to lead arranger at each period.

So for your second question regarding the sufficiency of other provisions.

For the rules.

Also hope to tax clarify one important we in our loan portfolio with don't distinguish of new loans from the Olos.

So at least two weekends when we look at the others of our offering on principle the bottom of approved provision or don't distinguish the old from that then you'll from the old we react that the hope before you are at the same time.

So.

Well now.

Well, we can say if that at the end of March with me I imagine belief and ours is half review that we provide a sufficient provision for that aren't lumbar back then.

If the.

Delinquent situation didn't get any further in west further where should be sufficient on that.

Sure so as they usually do you mean that [noise].

<unk> in case, there is no deterioration, we we may have supervision.

Well, you're going right back down in the coming quarters.

Got it easy our own her Florida, our on balance at each Curry and.

Well, let's see what but.

How should I put that.

<unk>, it's actually a mathematical calculation for the loan provision, we calculate the ballast either at IGI cheers accurate and and the Delta.

Let me to changes in our provision in our PNM yucky sharper and alike.

So if those.

Its actually a combined these factors have too many factors.

We're not sure whether.

There will be Oh right.

Oh, a more progression audio prohibition in into future.

It ought to because my my sort of starting my my feeling is that you like spoken about you know the loan origination real go Don and I know my understanding by this will likely to go dawn sole you, but he's on the loan balance.

Probably.

The lumbar linguists say for example, eat in June compared with much more likely to be declining. So a you've you assumed to publish some balance remained the same ending June then and then compared with March then then probably though you put them.

Well that William probably that they will be suitable we shouldn't unless unless you you didn't do you see a family big right your old which.

[noise], which I don't know that's why I'm asking.

They did you know the way the provisions east related to your also is whether it is also related to the new nice to be made to eat in in second quarter.

I see what you mean, so we actually applied good friends loss rates for different age group of our on loss before the new loans, which are not delinquency, we apply a rapidly smaller losses to that but a lot that delinquent.

Like a bloody pace, we apply it run even larger loss rate for that for the lows in age group of delinquent for over 30 days.

Provides a real upside even larger loss rate on that.

Oh I see solely in other words.

Oh that could still be tons, all fault, but also team.

Solutions.

Even the earn out was ending balance decline.

Right definitely has a pocket or did it all next it British as.

We're happy to look I couldn't care I teach screening.

Great.

Oh, sorry, my no question about the technical one you'll have booked.

The provision adjustment you know retained earnings all around 1.9 billion.

Let me try to still up right back on that part.

Oh, that's as a result or from your kind of policy on three to six and a number I'm inculcation, Mark what released into the future for the remainder period of the rather than go.

So Dan when it will be popping up here now.

Right right you will come back to off you now [noise].

Okay. Thanks.

Thank you [noise].

Thank you.

Oh.

Thank you will remain well some bumps formula you run you have zone from credit Suisse, you're out of snow up and then you had.

Hi, I'm I think my questions are mostly address but yes, because just a small follow up can I verify what you said earlier you see that the future guarantee liabilities would be a talented test.

But does it do you know in accordance with eight one size.

And secondly, I guess, what Steve the Kinda assumption of my cycle last night, you know under the new seasonal say at the end of much that's it.

Right. Thank you again, and so for the future off balance sheet close, yes, you're right well.

Those loans will be counted on their assay 815, I derivatives accounted portion would be kind of a terrific and measured at fair value. So it does not fall into the assay to just take a scope.

And your second question, sorry can you repeat <unk>.

It's a so under the new sees so what's the kind of what can I tell them understanding of whats the lifecycle loss rate that.

Assumes basically at them at the end of much.

Oh.

Actually is not high single number for the life cycle or loss rate, we look into it the portfolio by dividing them up to several dimensions, one the difference financial partners.

The other one is the age group and there are many other factors. It there's no single number what am I correct loss rates, we have different number for the noncontingent are for the contingent par for different age groups at different founding partners.

Okay, Okay got it thanks.

Thank you again.

Your next question does well above the line of Zaki rule from Citi. Your line is all the Jackie.

Hi.

Thank you for taking my questions.

Just have several follow up questions. So Chris one it's on the open platform business.

Observed in the Powerpoint slide or actually the recent they want delinquency rates will open platform business is actually higher than be a local business I'm just wondering why that's ER and.

<unk> back you know, we should see no better as the quoting be open platform business get them, we have those Oh financial institution, Oh funding by married to a sense de risk on top of US all sense and also what is what is the latest thoughts Hey, Craig.

Oh all were open platform.

And the second question is related to seize whats wrong.

So I'm just I'm just wondering because we also increased our on balance sheet position because of Cecil. So just wondering how much or what's the increase because of seasonal.

We can kind of separate the impact Oh for CECO model versus the previous model and the last question is down one of the move up so can you give us some guidance on the us as marketing expense.

We should expect in the second collateral probably before and authors. Thank you.

Thank you Jackie I'll take a crashes one on one so for Olin, let's have a modest yes, you're right our delinquency rate for our open top one business increased after it and our local business one possible gas well. The reason if that the open platform business on ticket size and average hod water is much much.

Larger and our Oh I can see order.

No because business.

In a larger ticket size will attract larger amount of delinquency as he or she started her experience.

Particularly who will open top one business will be single digits, if was around 5% into first quarter and.

It is a good guy to say that he will remain single digit a in the near future.

If he told a S S easy to seek accounting policies the salary impact for that.

As we have also disclosed in our tiny out we recorded a 1.1 billion.

Increasingly for sure it liability at the beginning of this year and this number will get released gradually into this year. So Ah we released a around 287 million.

Millions into first quarter and it might be more in the future into it seems like a border.

So the accounting policy, then youre kind of odd he's actually if you know a positive arbitrage.

And the kind of for wanting more.

Unfortunately, I isn't our company policy not to provide guidance do you see here before running business.

Would you will incur some purchase if that's spending 4000 marketing this year.

In some quarter it won't be a you won't be a maturing on there, but not so significant compared to our core business.

Oh, Thank you see see Joseph a lot. So for the second question also achieved a one to offset the impact.

From Steve So new model on the on balance sheet provision.

A number was about a 1.1 billion.

Provision for the on balance sheet loans in the first quarter. So.

So do we have oh comparisons this need.

Diesel model impact Oh, so it was or what will be the membrane without Cecil.

Oh I see what you mean, the seasonal impacts on our own after provisions relatively smaller is actually there is more because originally even before the season, we already recorded outer provision for loan bhatia business, including but not contingent apart into either nobody Lincoln Park. So that does that impact from Seattle is one of them.

Adjustments on the macro factors you adjustment so the that but I really like it's not that maybe.

Got it. Thank you see thank you [noise].

Thank you Jackie.

Hi, Thank you so much of a lot of questions on top line of does your hoon from.

Well, let us all the death.

Hi, Hi. This is just have one question before you go a buyback program on can you share your philosophy, so okay, Oh deep hurdle.

I see the buyback, whether they'll be where they tend to happen more or will there be any limitation in terms of.

HM the amount that you can be purchased and also if we bring to follow you'll do so passionate whether you were still prefer to use the cash novel buyback or are you prepared to resource small cashman to find your Oh Sushil world.

Two.

Thank you Kathy.

With regard to the buyback program, we will continue to do that.

However, I'm not gonna to dispose the execution on all the price right now the limitation for our I pulled her and will be determined by our lawyers and bankers separately each time.

So I don't have number right now.

They use of cash we always had a profitability focus in our minds. So either what we can do the buy back to <unk> to guard to gain short term property profits.

If we spend this money wisely into the wicking into new business opportunities or even hour or our poor credit business. We can have a better profitability in the future we will consider in or out of their short term and long term profitability internally. Thank you got me.

Thank you there no further questions at this time I'd like to turn the call over but to the company for closing remarks, Sir. Please go ahead.

But I think you. This is good we spoke briscoe dig deeper but did you maybe you may now disconnect your lines.

Thank you everyone.

[music].

[music].

[music].

Hello, Ladies and gentlemen, thank you for southern by Fourq Cdns incorporated first quarter threat to cut the earnings conference call. At this time all participants are in listen only mode. After most of his prepared remarks of double your question answer session that the Beast conference call, it's being recorded a one off.

Turning to go lover, your host Ms., whether need from GDS capital markets departments well be school.

Hello, everyone. Welcome Church, <unk> first quarter, two trends <unk> conference call. The company's results well, it's huge all your philosophy on it today and we'll post the online you can count on any Chris <unk> X. I often are called me <unk> by visiting our website.

I thought you didn't call me, something North <unk>, founder, Chairman and Chief Executive Officer, and they see it you Oh, we pay off in rests on relation with dollar coal with no prepared remarks before we continue please know that todays discussion will contain forward looking statements made on the lets say public for region.

Like you asked why wouldn't the crankcase <unk> <unk> at Nike occupied.

Oh, Okay. They month, invoking <unk> I suppose I too.

The Companys result may be materially different phone a view expressed today.

Amazement regarding <unk>, although risk assessment you. It's included in a company ticket.

Outweighs. The you asked the currency Exchange Commission accommodate does not assume any obligation to update any forward looking statement, except on the applicable. Chris also noted that she did a nice press release and this conference call include discussion Oh, they should get financial information as well as.

Oh.

Financial imagine Trajenta Quest for days contains a reconciliation open audited knockout imagine should all adult all day to most directly comparable GAAP measures [noise].

We also posted a slide presentation, all IR website, providing details on our resulting in a quarter well represents those results in our prepared remarks, although not virtuous what's the baseline during our discussion I will now turn the call I'll, let you always see all Meanwhile, Please go ahead.

Thank you.

I want to thank all in West coast antibodies and the media.

I have taken I'm interested in July.

Today's call in the first quarter.

We expect acuity.

Pete I'll walk through that studies, all along COO business and that's too close to use Jay.

In new initiative.

Oh, while facing a difficult operating environment since beginning of 2000 and talk to you.

Yes, it's Paul sort of both the don't send off.

Graddy cycle, we implemented more color.

Right.

Our taking business.

Such majerus habits with three deals.

Oh transaction water.

As opposed to Qualcomm kind of pass compared while we love fourth quarter of 2000 vaccine.

And how May 10, I would happen if they feel.

Michelle that's lower than.

Welcome to fight.

We believe these actions.

Have been able to top school fishing.

Good deals.

Okay and then.

Our net [laughter].

Yes.

The market headwinds.

Yeah attrition.

We have I mentioned previously we'd like to.

Like our increased.

Could you see that quote investment in new avenues of growth.

With poppy wheel on loan growth potential I'll try that.

Got started construction industries.

Late March.

We also already lost one.

Good luck.

Yeah corporate.

Platform offering a wide range or high end.

A couple promote.

[noise] with that said.

It's Pat.

The performance in a second quarter, all puts uncertainty due to the proactive.

Fashion.

In transaction water.

Hi.

Provision for.

Multimode delinquency rate.

As as well as always investments in for Mike My feeling Michelle queue.

As we continue to operate.

My challenging macro had one.

We are proactively.

Coating I'll strategies to Praxair pro product that at that.

Thats has been caught.

Later this fall.

Foundation for broader based or growth in the future.

A few are 50 for more detail.

Our Utah.

Thank you mean.

Good morning, and good evening everyone.

The echo what means that we focused on minimizing risk exposure and protecting our net asset with a more to aseptic strategy light up the challenging start of 2020, where the cold in 19 pandemic further accelerating the macroeconomic slowdown and adoption of the price cycle.

[music].

These risk factors go up our be wondering can see rates to around 20 person at the end of first quarter, representing a considerable increase from approximately 30% at the end up three down right.

Under such circumstances, we remain confident in executing our conservative strategies do more stringent credit standards and assessment procedures.

This practice have substantially reduced the transaction volumes of our loan book business by approximately 53% quarter to quarter.

In particular, we lowered our balance sheet transaction volume by over 90% in this quarter compared with the fourth quarter of the predict here.

Consequently, the Osbournes minimal dollar of our loan book business.

Creep by over 30% sequentially as of the end on the first quarter.

However, we believe it is the only right quarter action for us on the circumstance.

With this cool the strategy, we have stabilized and you want that inflation rate at around 20 question April and May so far.

At the same time financial progress on our open platform also implemented stricter credit standards, even over or high delinquency rates in a credit market.

Which in turn decrease your mother transaction open top one by over 68%.

Compared with fourth quarter 2019.

As Mr. automation, we are exploring additional opportunities and investing in new areas of growth.

Legally in late March we were pleased to introduce our initiated the wanting will in common stock one targeting the significant luxury consumption market in China.

Positive news on the long term growth because of that market and believe the one platform well so with a tremendous.

For a line luxury consumption, especially when traveling from off like shopping are respected due to the containment measures for Colgate maximum.

In May we engaged with five well known Libre kicks in China as Albert ramp ambassadors are launched unlike screening South campaign, which has a socket cima ladies leadership of 130 million.

Maybe on his first and then generating a GMI, what I'm 30 minute and maybe.

As this problem is still in these early development stage with going into incurred significant increases in inventory.

Selling and marketing expenses.

In order to enhanced our brand awareness in both our user acquisition.

Over or we expect the second quarter, two were down 20, well still be a top hearing.

Good day as a result will be pleasing transaction among both loan book business and open platform nonsense mutation.

Fine with higher provision.

Guaranteeing a refresher at liability.

As well as increased promotional incentives and the marketing expenses for the development of one.

We believe it is the fact approach to maintain a constructive strategies acquired loan book business.

On favorable operating environment.

Given the uncertainties of credit market dynamics.

Also necessary for us to explore other opportunities to supplement our February.

Pascoe truckload.

In addition, our strong cash position enables us to carry out east initiated with sufficient capital support.

Last but not east we have purchased in aggregate principal amount of 117 million U.S. dollar convertible bonds from the open market. She is the first quarter to capitalize on our undervalued securities at attractive pricing.

This may purchase has improved the financial condition for the company.

Now, let me share with you some key financial results.

Interest overtime I would not go over eight line by line.

For more detailed discussion of our first quarter two is on commodity results.

Please refer to our earnings press release.

Our total revenue in the first quarter, what I mean, the 957.9 million Baum 54 politically project.

The approximately 2.1 billion and maybe for the first quarter Uptown 19.

Our financing income totaled.

622.7 million a decrease.

38.4% from going to be approximately 1 billion for the first quarter of 2019 as a result on the decrease in others on the balance sheet.

Our own facilitating income.

Other related income decreased by 34.4% to really be 422 million from going to be 644 million, what fourth quarter quarter UQM 19.

The result.

The decrease in India.

Our balance sheet transactions.

Which is partially offset by reclassification of Ganji income RMB 387.5 million at the new accounting policy ASV, DTC, which became effective for the company on January to first.

Year requires that income earned on the Noncontingent asset public R&D to be recognized separately from the expected credit loss.

Transaction service fees and other related income was a loss offer the 115.4 million.

Compared with income off in the 158.7 million water first quarter of the previous year as a combined results number one positive income operating be 100.

12.9 million, what the transaction facilitated during the first quarter this year.

Number two the income RMB 24.1 million or the pulse co ordination services, all transactions, but dedicated in the previous year.

And number three a revaluation loss offer many 287.4 million for content assets incurred four transactions precipitated in 2019.

The revaluation was due to adverse changes occurred in the first quarter upturn ontelaunee that back to the deterioration of the estimated likelihood of receiving borrowers acura repayment of stability.

As of March 31st 320.

Provision for receivables and other assets increased by 183.9 clicking through maybe $1.1 billion.

I'm going to be 300.

He put 4 million for the first quarter of 2019.

The increase was primarily due to an increase.

View on balance sheet outstanding principal receivables compared to the first quarter of 2019 as well as an increase in a loss rate to me in our roll rate model due to macro economic tenant credit cycle downturn.

First quarter two non client.

Our net loss attributable to chicken shareholders watching movies.

480.

6.5 million.

Our net loss per diluted Adx RMB 1.92.

Our share compared to net income RMB 949.6 million in the same period last year.

Our non-GAAP net loss attributable to Chile as shareholders was 80 907.5 million.

Million or non-GAAP net loss per diluted ATM, RMB 3.57, compared to non-GAAP net income off it would be a 974.3 million in the same period last year.

I also want to add some color on the accounting policy changes regarding eight AMC due to.

Measurement of credit losses.

In general this newly adopted accounting policy requires timely a recording of expected credit losses.

Loans and other financial instruments.

And the most significant impacts of this new standard relating to the accounting for restructuring liability.

Therefore, we recorded and MB 1090 3 million increase.

Service assurance liability at the beginning of this year.

The other than that of this level in sheet. After cash tax adjustment was recorded in retained earnings due accumulated defect adjustments.

And this year and maybe a 1.1 billion well in quotation marks be released into our changes in risk assurance liabilities.

Hi, Eitan due out the remaining period of the relevant and low.

The other major impact on RPM outcomes and patient was as I mentioned above.

Reclassification of guaranteed income from the changes in restructuring liability to the revenue line.

This guaranteed income was deferred at origination of the onshore loans and a recognized when it's time to service gets performing over time.

The reclassification should the reclassification were very possibly have limited.

The new accounting policy will very possibly have limited impact on our new off balance sheet launches. This year because number one we reduced our off balance sheet loan volume dramatically. This year number two from the second quarter are off balance sheet loans will be accounted for as credit derivatives quarter with.

Yes, the eight one site and measured at fair value.

So.

Overall, our prepared remarks.

Operator, please open the floor for questions.

Thanks.

Hello, Albert so that.

Ladies and gentlemen, we will now begin the call sort of ounces sessions off the question.

Our one on your telephone bellwood rates, where they should be about pick up sell yourself.

The problem Husky.

For the benefit of all participants on today's call. If you've listed off your question to the mother Smith, the Chinese leaf images.

Plus shoulder business.

For a woman it's all the ports off the question.

Our first question for relied on slide four more depth about 11 level.

Hi, Thank you for taking my questions.

A few months during the first one is.

The latest upward trend. So we had since day one delinquency stabilize.

But also the.

Bottoms based on those bonuses.

I think it will decline so just wonder.

What's the leases.

So you just update us on data centers in volume.

Bottoms.

Business and open vessel.

Related to that Ensign is about.

The asset quality, often the low so.

We're supposed to be expected loss for me.

We shoot for them.

As you intended Andy.

Keith.

Already implemented the conservative strategy.

And then secondly, it's closer to.

If occasions.

[music].

The because it takes yourself again to income so thing.

Oh since the facilitation incomes Pcs rather low.

Sure that's because condom change so.

Is there.

Put that pole.

Solicitations income.

Oh sure pay grade that we can huge.

Tool to have an apples to apples comparison.

And finally is on the depletion so just wondering.

Given we have already make significant deletion.

For two quarters already so we do expect.

Second quarter, Thank you very much.

Thank you John it's great to hear from you all a vessel crashes one my one under competing.

So number one the open the operating Chen and our.

With regard to our delinquency and hours in the body.

So as with posted a slide.

Website, but the one delinquencies so far remains at around 20% because we're starting to de lever she's very early last year.

You mean also noticed that would be one delinquency of our loan book business.

Hi, there has it has had a sign of declining recently because of our deleveraging strategy.

We continue to our doctors conservative and prudent strategy in the second quarter, So our loan balance for the.

And our hospitals will continue to decrease and our loan volume.

Our open platform is well continue to decrease in the second quarter as well.

As regards to the magnitude.

Off the.

Open platform loan volume it won't be priests around.

60% to 70% in this quarter.

[music].

Our open.

There's also noted for the hike in our delinquency rate.

And.

Yes, the other players.

Okay.

And our open up on partners would choose to adopt it got a prudent loan origination and facilities or strategy.

Your second question regarding or new long quantity.

I just mentioned if you take a closer look.

The one delinquency charts on our call point.

You may notice.

Our on balance sheet.

Starting to decrease on little bit in the region correct.

Which is the result of our prudent strategy and our more stringent risk assessment strategy.

Number three the classification on guaranteed income and Apple to Apple comparison, so if we take Oh.

The county income from the long facilitation income, we will get a lumpy sufficient income.

35, approximately 35 million maybe.

So the take rate of this 35.

$35 million to be over our.

Hello.

For the patient volume.

What about 58% compared with 8% into fourth quarter, because we apart from the day one recognition of revenue. We also have post with the post originations other income earned.

On the historical.

Why our take rate for the off balance sheet documentation or presentation. If you got to the high first quarter, although it's been within disburse marked loans.

Obama.

First quarter.

And Youre the last question.

Regarding to the provision. So we actually are we have got revalued eight our balance sheet. Both the provision there are risks.

Guaranteed identity, and a recurrence and IP at each period.

So as of the each at.

The end of each period, we believe our management believes we have incorporated all the data available and overview for the macro factors available into our goal they models.

So we believe at the end of March we have provide sufficient on provision by breaking up.

We cannot be sold for about the feature.

At each other and we'll reevaluate our risk ushering in a provision out.

On to make sure our provision our position.

Thank you for questions.

Hi, Thank you see.

Please follow up.

I think social we are already under those fees. So.

Approach right now so.

Thing.

Social Dutch called or completion also fat.

Our expected life cycles for them.

For the long portfolio.

Is that the run rate.

To think about it.

Hi, John I Didnt catch your question.

Yes, so just as of end of March I think we remain pollution quality information available so.

But.

Starting this year, obviously, we are under the C. so approach so by saying that.

That would mean that we've tried to bet the as much as the most over the lifetime.

Included in the future soldiers on the fly understanding correctly so.

Yes.

If the situation didn't deteriorate further we should make sufficient provision.

D.

Folio and our expectation of staffing should performance.

Yes, John you're correct, if the situation given get deteriorates further we believe we have provide sufficient purpose already.

And you're right.

On October point as well as of the end of March we have already adopted a new accounting policy, which requires us fuel.

Is that off the incurred loss model. We also have to provide high last quarter Noncontingent part of our guarantees. So yes, you're right. We have already incorporated audit available information into our models.

Okay. Thank you.

Thank you John.

Thank you over the next question comes from the lighter.

Thank you for all my need Tom and company your line is solvent.

Thank you. Thank you mentioned for taking my question.

So first question days also or.

Basically the Q1 I was thinking about the de wanted it Kevin Crissey rate.

How should we.

To be being sick.

Oh, we Oh, we see the please the first about two to two malls.

My second question is about wanting to what percentage countries stuff.

The stuff is for these projects and how much more investments, we think we're going to.

Spend on these are being.

This year. Thank you.

Thank you Vincent.

Regarding our with of England's rate, although with posted the one delinquency rate online there's no direct baumler for the loan delinquency to our final off but we can make a similar in comparison.

The last year, our building they want delinquency rate was only 10% to 13% others here starting from.

A separate the end of February when the London outbreak up by what happened, but do you want that increase you raised up to 20%.

As we started to de lever is you're very early on.

The impact is limited has improved proven to the metric as we have maintained our de when delinquency to approximately 20% so far in may.

And with regard to your second question for anymore. We currently are deployed around.

[music] Hanjin.

Mailing the R&D is now 40 wanting more platform right now.

There will become more investment, but we are very prudent in our these acquisitions.

We pay a lot of attention to user retention and ultimately the profitability, we're not a company that burning cash for GMB. That's not our style will continue to leverage on our path entrepreneurial spirit and RF technology capabilities to work.

All this new opportunities, but we are not spending like to materially for a huge amount of users will be very prudent.

Got it thank you.

Thank you over the next question from relied upon shade Shane from RBC capital on video, let us know open.

Hi, everyone. Thank you for the presentation can you hear me.

Yes, Sanjay How're you doing.

Thank you.

So a few quick questions.

So Steve on the online lending business.

Would you see that you are gradually exiting the business, particularly the open platform.

Or if you see the bone and you will focus back on days.

Onboard kind of volumes Oh and growth, we can expect fade second house or next year.

Sure.

So essentially we are absolutely not activating our core business.

Lending segment.

Although we hardly we'll see a decline in our our loan book business as well as our open top one business.

We believe this is the only rychlak action, we're now doing this app macro environment.

In the future when our delinquency rates gets better and when time is right. We will bounce back with a sufficient asset to do this business.

And.

What's your second question again, sorry, yes, sorry, let me just ask one by one so.

What kind of growth.

We expect once you start becoming more confident about actually qualities and micro backdrop.

Sure.

As.

Actually is a very tough question we.

We don't have 80 acre expectations or forecast how soon.

The credit cycle, what the older a very it's very hard to predict.

It is our company's policy not to give guidance. This year. So unfortunately I don't think we have growth number right now, but we will or will go after we see if the delinquency get better we'll go stock by testing some volumes.

And why stockpiling cash.

And you expect the delinquencies to start improving in the third quarter fourth quarter.

For our our loan book business, we have already started to see a light on turnaround spotlight a signal.

Yes.

Look at our dealing with the cart.

So it is a good guess two to two to say that our second half of 2020 wells will be much better than our first half of this year.

Okay. So that's on our own lending and loan facilitation and open platform also from the third quarter or.

While our loan facilitation portion of the bulk.

Actually we don't have any need to use outside money on to do our business right now because.

You will as you may also notice we have abandoned cash on our bulk Ah So right now we can.

We can.

And just be deploying already on equity to do that loan book of business.

And if you ever evolve bottom gets higher we of course, well welcome all had an up.

Money.

Our open platform business, the delinquency actually went up.

Much faster than our local business.

The wondered if you bought all fall on packaging business, whether on 10% at end of last year, an apples to about 20% recently.

So that's probably why are open platform partners as well as well as well at ourselves have decided to adopt a very prudent factor right now, but in the future delinquency rates get back.

I believe that handles the tools I felt there where well conducted economic packaging technology logically. So if our openstack and partners are happy to come back we're happy to welcome them back.

Ladies and gentlemen.

Okay. Okay. My second question was on the open platform. So if I understood your numbers correctly you heard of.

I'm not sure whether you call it a provision or like Bucks or income off something 50 million.

Indeed.

This is on on the expected fee income that you had booked but you might not is even though.

Oh, Yes, it's fair to say that also 2.2 billion.

Open platform in gum your book last year, while group of 3 million Youre not going to see.

Correct. That's the current expectations are you know when maybe core although open top on that impact no credit risk on the principles.

We do have a our expectation of the recoverability of getting our share of facilities.

So previously we estimate that we can well make a discount of 10% to 20% owner visibility of our Oh on the capability of our share of the.

Receivables of hardware you would have to make more.

Discounts on this number so that's why there is a negative revenue.

This line this year this quarter.

No I mean, but is there still go Barton.

I guess, we'll need to 50 million, which is lost or your expectation.

Looking at this behavior, but perhaps you could revisit the income or revenue recognition.

And well paid on a monthly basis rather than booking.

Open platform no expected fee upfront.

Since the actuarial payment by the partner what happens.

On a monthly basis, rather than upfront or any of it all repeat the question on a wonderful.

I mean on some renewal could explain.

Is.

It also is behind bag, but more importantly, what synergies do Lucy.

Dongles, reducing dozens of product or.

No you said technology.

What is.

Oh.

With that Seanergy bed and are you going to be providing financing.

Those buyers, we buy those luxury items on your platform.

Right, so with regard to affinity for wanting more and our like at the top form or you're right about the first point, we have the technology capacities are.

That is as a result of our past experience in building up our technology platform and we can utilize that for the new platform that number one and number two yes.

Your your offer right in the future in may be a possibility that financing solutions can be introduced to the wanting we'll have one right. Now is go at baby is those too young to to have a financing solution for that.

Number one number three we believe.

As a result, as a result of a pop entrepreneurial experience on our founders on our management team, we always have to appetite to try new things and we believe our E commerce background of owners and the management team will be a good benefit.

The new project.

But you know your biggest strength is basically 80 million customers.

Users, who audio registered with you.

That does not appear to be any compatibility.

I mean, the ecommerce business luxury versus yours.

You know online lending type of customers.

Right there, they're basically a different type of users we target at high income group of users while aligning platform.

So far we have to on to the fact that we have the tour and ability to acquire this effectively.

We lost a live streaming cells selling campaign during the labor day holiday and the results are half an aging we accumulate the accumulated our viewership border selling campaign was 130 million.

So as we have proved our ability to effectively acquire user. Our next focus is how to retain these users how to make them more lawyer call platform.

So thats currently our thinking about this new project.

So what is your competitors trend. They are you offering greater discount then about equal motors.

Here's or.

Differing brands or what is the differentiation.

Right.

So number one our differentiation number one we have.

Build up a.

Strong supply chain.

It is as our suppliers are either state owned enterprise or directly from our duty free shops, we haven't we haven't minimize the intermediaries, we have direct connection to the could differ shop and the boutique shops in Europe to bring the authentic good back to China.

Oh and by doing this we have built up the ability to relax and eat and evaluating the price globally. So that we can offer the battle cry available to our users.

And number three as we have this.

Cost boarded course cross border cross border ecommerce half one our users can actually enjoy a lower on duty or lower import tax.

The the import tax wanting more platform.

Around 9% Fockers articles metric for us, but it can be 20% and other scenarios. So thats why we can offer better price floor users and the price American Patty competitive in the market.

Okay and just the final question on modeling.

Being done in the mean companies will be under soon so award signed off.

No cash burn or.

Impact on BNL are you expecting and eventually do you have any talks in mind about what kind of revenue shares and referred shared with you have all for the two businesses.

So wondering who is actually a wholly owned subsidiary under this on the on the Chilean So regarding the second question for the revenue share, we don't think that actually matters.

One gets larger we will disclose their that the the revenue lines on a segment reported separately, but just right now is only started in late March.

Not that big right now and we Havent really on spend a lot of money on it.

Except for marketing.

Okay. So.

Right.

Sure so in relation to the debit new current revenue of the company and cutting Liberal for altruistic, we're going be especially the first year.

The losses were going to be very big.

With we don't have visibility for that yet.

If we see a good 10 in our user retention and our user loyalty, we may ramp up this business much faster than expected but.

Currently we are still.

Testing different use acquisition channels and improving our fulfillment service pharmacists.

Okay and final question for me on the convertible bonds, which you had bought back roughly how much is buried and believe we booked in the second quarter.

Right so.

Does the public impact as you may already seen from our.

From our table was 430 35.

William.

In the first quarter, one of the second quarter I'm afraid I can disclose it right now because.

We haven't finished our program yet.

But it won't be a good profit increase to our third quarter results as well.

Okay. Okay. Thank you very much.

Thank you Sanjay.

Thank you over the next question comes off from the line of Stevenson from Hypo, you too, though you're allowed to fill up its Steven.

[noise] Oh.

Good evening I'm, just a opinion.

And when do you have Tony follow up.

Based on going then on Sundays question.

First of all going bad.

With that.

[noise] revaluation loss of 280 287 million can I have any fire.

That's a piece related to some of that.

Revenue.

Only the open platform.

But youre.

Recognized in 2019 and be calls are you thinking that you are unlikely to get based revenue.

I'm told you so that's why.

And you will have two properties revaluation loss of 287 million.

And ER and the fall and I know, we need a question if I heard the Sunday say that.

Under the new accounting policy, you say that you will no longer but the rough and Neil.

You will no longer to adopt a so called financial revenue recognition.

Any more in 2020 is that correct and again that we need a question for that is I still find that we we have around 1.5 billion upon trip assets.

In the balance sheet. So does it imply that that could still be transalta revaluation loss Oh, two we booked in the coming quarters. So that's the first question related to these revaluation loss and the second question I think we'd like to to join man.

No, but how does.

The provision, but you have sufficient no not usually you mentioned that you had you know that couple of Dunkin' not come into a bottle of guarantee and then you know that could be similar to what spend this has been adult painful I abolish nice but.

I wanted to clarify two things one.

What is the current new enrollment delinquency rate.

And to do you have she.

So fishing.

Oh, the delinquency new long, even though you mentioned that you'll have my suspicion for wishing for Q1, but in case it no longer.

Got to become delinquent say for example, 20% do you still have [noise].

To further prohibitions.

In the second quarter, all we showed that shouldn't be these number to be zero.

Hey ended up coming quarters. So.

Just two years. These two you follow up question.

Sure. Thank you Stephen.

So.

Last question regarding of evaluation.

So.

Well, what I want you wanted to clarify that we'll still have this they want recognition of revenue Wahler open platform and our own facilitation income. However, the new accounting policy requires us to recognize the earnings slower.

Youre counterparty in if that is a present a timing difference.

Previously on the assay six okay, we'll have to recognize the majority part of their revenue at day, one but right now with this new accounting policy on the recognition will be much slower because.

APAC underpinned he can part of the credit loss. We also have to carve out the noncontingent part of the prior loss at they want and release it gradually and entered into the future.

So if not then youre kind of policy the common difference and it makes us all it makes our earnings recognition slower.

Regarding the one for properly and content assets. We believe we had provided sufficient revaluation loss a revaluation to that hard to assets at the end of March already if the macro economic our delinquency assumptions to the runway model changed change into the into the future. We may have to evaluate.

That's why we have to deliberation.

Each every end.

So for your second question regarding the sufficiency of our provision.

For the new laws.

Also hope to tax clarify one point right in our loan portfolio with don't distinguish of newer loans from the Olos.

So at each period and when we look at the others of our offering on principle the balance of approved provision or don't distinguish the old from that the new from the old we react fast the hope before you are at the same time.

So.

For now.

Well, we can say if that at the end of March with me I imagine belief and auditors half review that we provided sufficient provision quarter aren't lumbar back then.

If the.

Delinquent situation isn't getting any further in west further.

Where should be sufficient on that.

Sure.

You also you mean.

In case, there you know due to recent no. We we may have supervision.

Well, you're going right back in the coming quarters.

But if you see our loan portfolio our on balance at each period end.

Well, let shrink but.

How should I put that.

It's actually a mathematical.

Calculation for the loan provision, we calculate the balance speaker at Eishi shares at period end and the Delta.

Probably the changes in our provision in our PNM HR and online.

So if the.

Is actually a combined these factors have too many factors.

We're not sure whether.

There will be a record right.

On a more progression audio prohibition in in the future.

It ought to be close my.

Sorry, My feeling is that you like square Congrats you know the loan origination real go Don and I know most ending balance will likely to go Don sole you better use on the loan balance.

So let me.

The loan balance say for example in June compared with March will likely to be declining. So are you assuming the publish some balance remained the same ended in June and and compared with March Ben Ben probably though you quit.

Well that will impact that there will be suitable wish him. The Nash unless you didn't you see a if how many big right all of which.

[noise], which I don't know that's why I'm asking.

You know the way the prohibitions east related she also.

Whether it is also related to the no long cash to be made to aid in second quarter.

I see what's your name so we actually applied good friends loss rates for different age group are on loss. So for the new laws, which are not delinquency, we apply a rapidly smaller losses to that for the load that delinquent.

I wanted to date, we apply it relatively larger loss rate for that for the load in age group of delinquent for over 30 days will provide a upside even larger losses.

Oh I see solely in other words.

Oh that could still be tons of all of a whole cities.

Yeah.

Ending balance.

Hi.

Right definitely has a positive or delta on active furnishes.

We are happy look at thank you bye bye.

Okay.

Thanks.

If I remind a question about the technical one you'll have book or the Polish on that just money no retained earnings all around point 9 billion.

And he tries to that but on that part.

Oh, that's as a result of for new accounting policy on three to six and a number importation mark will be released into the future for during a period of the relevant zone.

So Dan.

Be popping up here now.

Right right you will come back drop you now.

Okay. Thanks.

Thank you [noise].

Thank you.

Thank you over the next question Glenn you run you have Zong from credit Suisse Crs opened the euro.

Hi.

I I think my questions are mostly addressed by previous sneakers, just a small follow up can identify what you said earlier cc that the future guarantee liabilities would be a talented.

Do you know in accordance with a one size.

And secondly, I guess, what's the current assumption of lifecycle loss rate.

Under the new seasonal say at at the end of much.

Yes.

Okay. Thank you yeah on so for the future off balance sheet close, yes, you're right we will.

Those loans will be counted on their assay eight one client activity accounted portion will be kind of has terrific and measured at fair value. So it does not bought into the assay three to six.

Scope.

And.

Your final question, sorry can you repeat.

Itself, so under the new C., so, what's the kind of Connecticut and understanding of whats the lifecycle loss rate that.

Assumed basically at them at the end of March.

Oh.

Actually is not a single number for the lifecycle or loss rate, we look into it the portfolio by dividing them up to.

Several dimensions, one the difference financial partners.

The other one is the age group and there are many other factors. It there's no single number for the lifecycle loss rates, we have different number for the noncontingent par for the contingent par for different age groups and different founding partners.

Okay. Okay.

Thanks.

Thank you yeah.

Your next question, Doug will form the line of Zaki Jewel from Citi. Your line is open Jackie.

Hi.

Thanks for taking my questions.

Just have several follow up questions. So Chris one needs to be open platform business. So I've observed in the Powerpoint slide.

The recent they want delinquency rates for open platform business is actually higher than the.

Local business I'm, just wondering why a batch and.

We expect.

We should see better Asacol TMB open platform because since given we have those are all.

Financial institution or funding partners to offset the RIS on top of US all sense and also what is what is the latest take rates all were open platform.

And the second question is related to see so as well.

So I'm just I'm just wondering because we also increased our on balance sheet position because of seasonal so just wondering how much.

The increase because of seasonal.

You can kind of separate the impact of.

For CECO model versus the previous model.

And the last question is down one of the more so can you give some guidance on the sense marketing expense.

We should expect in the second quarter or probably on the following alters. Thank you.

Thank you Jackie I'll take a crashes one on one so for open less happen, but yes, you're right our delinquency rate for our open platform, but increased faster than our local business one possible gap, where the reason is that open platform business ticket size and average on the glory.

Much much larger than our Oh, I can see order.

Book business.

On a larger ticket size will attract larger.

Good afternoon Crazy as in our historical experience.

The take rate will open top one business will be single digits. It was around 5% in the first quarter and.

It could get data it will remain single digit a in the near future.

It's easier to ask as easy to seek accounting policies the separately.

For that.

As we have also disclosed in our tiny App, we recorded a.

1.1 billion.

Increasingly for sure liability at beginning of this year and this number will get released gradually into this year. So we released.

Around 287 million.

Earlier in the first quarter and they might be more in the future into in assessing a bit of water.

So the accounting policy, then you're coming off our these actually piano positive.

Thank you.

And the kind of for wanting more.

Unfortunately I it is our company policy not to provide guidance this year.

For lending business.

Would you will incur some purchases and spending 4000 marketing this year.

In some quarter it won't be a it won't be a material and I'm not so significant compared to our core business.

Thank you see just a follow up so for the second question also.

You want to us the impact.

Steve So new model on the on balance sheet prohibition.

Member was about 1.1 billion.

Provision for the on balance sheet loans in the first colors. So.

So do we have in Paris Office me.

Diesel model.

Impact.

So it was what will be the numbers without csos.

Oh I see what you mean, the seasonal impact on our own after provision to be relatively smaller is actually there is more because originally even before the season, we already recorded outer provision for bhatia business, including that noncommercial car, including but not the Lincoln Park, so that impacts from Seattle is only from.

Adjustment on the macro factors the adjustment home the that that I wrote like it's not that significant.

Got it. Thank you see seats, Thank you Hey, Jackie.

Thank you so much of a last question from top line of does your hoon from Citi. Your line is all the death.

Hi, I'm happy to see just have one question portfolio a buyback program can you share your thoughts about your comments about the hurdle.

Oh, I see the buyback, whether there will be where there's penny to happen more or will there be any limitation in terms of.

The amount that you can repurchase and also if we think about you'll use a passionate whether you were still prefer to use that cash novel buyback or your prepared to respond small cashman to find your Oh sushil both.

Thank you.

Thank you Kathy.

So with regard to the buyback program, we will continue to do that.

However, I'm not gonna do disclose the execution on all the price right now the limitation for our buyback all heard will be determined by our lawyers and bankers on the pretty each time. So I don't have number right now they use of cash well.

We kind of profitability focus in our minds. So either we can do the buyback to guard to gain short term property profits, but if we spend the money wisely into the weekend in into new business opportunities or even hour or our core credit business.

We can have a better profitability in the future we will consider an out of their short term and long term profitability internally. Thank you Stephanie.

Thank you, though no further questions at this time I'd like to turn the call over but to the company for closing remarks, Sir. Please go ahead.

Hi. Thank you. This includes 40 spoke first go figure for participating you may now disconnect your lines.

Thank you everyone.