Q2 2020 Qudian Inc Earnings Call
[music].
At this time all participants are in the listen only mode.
After managements prepared remarks, there will be a question and answer session.
Today's conference call is being recorded I'll now like to turn the call other touchy dense investor Relations representative. Please go ahead.
Hello, everyone and welcome to choose yes second quarter Twentytwenty earnings conference call. The company's without what do you feel bio nuke wire Thursdays earlier today and were posted online you can download the earnings press release and style for the company's it usually by visiting our website at <unk>.
Our success against the call me Sterling law, our founder Chairman and Chief Executive Officer, Admittedly do our VP of Investor Relations.
The call with their prepared remarks [noise].
Before we compete with my bad today's discussion will contain forward looking statements made on the safe Harbor provision of the U.S. Private Securities Litigation Reform Act Oh my team that he by.
Well, one looking statements involve inherent risks and uncertainties as such the call without may be materially different phone bill views expressed the today.
Information regarding these and other risks and uncertainties is included in the company's put the F. As filed with the U.S. Securities and Exchange Commission. The Congress does not assume any obligation to update any forward looking statements except it after the crowd.
People, though.
Please also note that she gets earnings press release and this conference call include discussion, so oddities JP financial information as well as Oh, the kids now <unk> financial measures.
Sure, Yes press release content or the combination of the I'm, obviously, not JP majors to the oddities most directly comparable JP measure.
We also caused me to both blood presentations on our IR website, providing details are resolved in the quarter. We will reference also results in our press prepare to remark, but will not be pursued let's say six blocks during our discussion.
Ill now turn the call over two hours feel mingle. Please go ahead.
[noise], but I will like to sink all anyway, and it kind of media.
Because as interest in Chile.
Oh.
In a tripling that kind of portal hopefuls overtime.
We continue to look at.
Operator, Oh gosh credit.
Well go to college liking.
You mean.
Im ready right.
Oh food in China.
Hi, good thoughtful Craig Dahl cycle and the.
Pardon me.
Dealing goes all industries.
Generally.
In the second to hop offers on embarrassing.
Pardon.
So seldomly.
At spot.
But do you want to do for that too right.
The second quarter.
The fourth so opinion.
Hi level that will result in ARPU.
The deals.
Remains.
Just very stringent all risk management.
Yes.
Hello.
Right.
That's correct.
This approach.
Transaction volume fall, our loan pool, you face delayed.
Braskem path we.
Proceeding quarter.
Let me also address the implications.
Okay.
So crude.
Oh decisions.
Lower cost perspective, why don't you had low interest.
And just the rate cap.
All right then think tool for Todd.
Ultra low prim that.
According to the decision.
Interest rates cat.
Look at peak Paypal.
Lending business of financial institutions.
Rather.
This new policy, it's generally.
In separate.
<unk>.
That's only thing I'd be careful to approve wide lending.
Well I'll pick me, it's almost as house you roll.
Financial institution.
However.
It's important to note that dishes.
Our newly introduced.
The policy.
Subject to further.
Qualification.
I call as regular Lake Erie offer up offer it to.
[laughter] theme.
Interest rate caps.
Hi tool.
Okay.
After oh by robust call or regulatory.
Sorry.
Our profitability.
For stock or other material.
Impact.
And if we put in cool.
Net loss.
Now I would like to turn the call or what's the city for more details.
Our GAAP.
Thank you mean.
Good morning, and good evening everyone.
We have been navigating through the difficult market dynamics with a cautious and conservative approach toward our cashman business.
In the aftermath of cold, calling my team can damage and ongoing regulator development.
The adverse market environment for gifted due out if they don't want her.
Although the do you want delinquency rate for our loan book business slightly decreased sequentially from around 20% in defense whatever it wants to go and a high level up approximately 19% in the second quarter.
In light of the situation, we maintained our de leveraging strategy for our own book business to reduce risk exposure during the second quarter.
Due to continued implementation of pink and credit standards, we maintain the no credit approval rate with transaction volume relatively stable compared with the first quarter and a luxury racial of more than one time.
We believe this conservative approach is the right course of action to basket for Pat on the asset.
The housing in the kind of market.
Similarly, our institutional founding partners also before stricter credit standards for long approvals, even to heighten do you want to increase your rate on the open top one.
Consequently, the among all transactions on the open top one friend I around 70%.
Paired with the first corner ox who's on the tiny.
Aside from our Crane business, our newly initiated the why do you would talk one it's still operating at a small scale and early stage.
He's data lavish tending to boost the G.M.D. money, we are trying to focus more on the housing and prudent growth opportunities.
In addition, we completed our strategic investments into the cool in the second quarter, and we'll look forward to generating synergies even luxury the consumer business.
In conclusion, considering the current environment or kind of downtown with high delinquency rates, we remain cautious in a prudent without cash part of it is in an effort to protect our net assets.
The same time, we won't be prudent and the disappointing into further development in the management of our use of an easier because with the same approach to other its likely future.
It's important to us to state, Michigan, right come to the operating and preparing for different market dynamics.
Maintaining sensibility enormous strategy.
And operations.
While cokemaking opportunities to supplement our country. These arguments.
Now, let me share with you some key financial results.
In the interest on time I, rather not go overnight line by line.
A more detailed discussion on my second quarter 2020 results. Please refer to our earnings press release.
Our total revenues, where it may be 1.2 billion, representing a decrease of 47% coming in the B 2.2 billion.
The second quarter last year.
Our financing income totaled in India, 581 million, representing a decrease of 21 person.
In the 984 million, what a second quarter of 2019 as a result of a decrease in average unbalanced you know balance.
No facilitation income and other related income decreased by 58% to in the B 255 million I'm going to be 610 million for the second quarter 2019.
As a result onto reduction of transaction volume of all flash along with one or partially offset by reclassification guaranteed income in accordance with F.C.C. choosy.
Transaction services fee and other related income decreased during the be 4 million I'm a leap.
298 million for second quarter last year, mainly as a result on substantial decrease in the transaction among oh himself on business.
Self income substantially increase to remedy 293 million, so I'm going to be 122.5 million put us in a quarter of 2019, mainly due to the launch of the one important common stock.
[noise] cost revenues increased by 28% two maybe 366 million from in the 286 million quite a bit of winter of 219.
Amount due to the increase in cost of goods, so to maybe to the money more you common stock one.
Our sales and marketing expenses increased by one has over 2% through them to be 157 million I'm gonna be.
78 million, what a second quarter after her Nike primarily due to the marketing expenses relating to the wanting more E commerce platform.
Provision for receivables in other assets increased by 5% to them in D. 590 million somebody would be 495 million for the second quarter uplift of 219. The increase was primarily due to an increase in past due on balance sheet outstanding principal receivables compared to the second quarter of two online.
Team.
Our net income attributable to treating and shareholders listen to be 179.2 million or even be 0.68 per diluted India.
Our non-GAAP net income attributable to attributable to treatment shareholders, what's gonna be 29.9 million or even be terrible one to personality to Indiana.
So here's our prepared remarks operator, please open for question.
Thank you ladies and gentlemen, we will now begin the question and answer session.
If you wish you asked the question now please press star one on your telephone and bite for name to be announced.
If you wish to cancel your request please press the pound Oh hash key.
For the benefit of all participants on today's call. If you wish you all should question to management in Chinese pleased to repeat your question English initially.
Once again, if you wish you asked a question. Please press star one though.
First question comes from the line the Vinson used from Needham and company. Please go ahead.
Hi management. Thanks for taking my question. My first question is about the sales marketing expenses for.
For the second half 2020 ended the fiscal year to make a new one.
So in terms of our capital investment and for the.
Become much project money move how should we think about the sales marketing investments in like the D. So the thing have somebody into the into next year and my second question is about.
The the corporation old partnership we used the like definition institutions, where the tightening of institutional partners Quest Hi.
<unk> temporary or is it and you know normal.
I know wasn't quite a bunch of Idaho, just forgot what yeah. When geeks why you took the woman's took the Sevena Union that you guys. Just like I was hoping you don't know what you should well, let's take the playing you when you move from in to the didn't know some with the.
You are you a woman she has to kind of the younger ones you should ask why youre kind object.
Oh sure, though just more missile hurdle that you. She is she gets you go to time and a cheaper.
I'm sure that you're going to go through the seem that familiar vessels, you'll know a woman. So me you any kind of actually this is something I suppose she did lunch dinner I see the billings Montana chip.
Thank you Vincent this is 50 or let me address your question number one so forth with regard to their sales and marketing expenses. The second quarter for the final quarter, our self marketing expenses increased increased a lot compared to the to the previous quarter, mainly due to the long tail.
My name is half war, but at the as I mentioned, we are not targets to in that a lot of marketing dollars somebody move past one is that we focus more on a healthy and long term development of this and it doesn't initiated.
So your second question regarding the collaboration with institutional financial institutions. As you may notice that our open top one transaction volume decreased by over 70% instead of corner and our number of number all up an actress children's collaborate.
With us on the open top one on decrease to less than 10.
We believe eat our delinquency rate on that opens up one business continued to be in this heightened staters on the not both the number of collaboration and the among her loan facilities, you volumes will be like stable or even be Christmas future.
Oh, we're currently don't have marketing plans on to increase the number all operators on the top one unless we see a turnaround on the delinquency and plus as you know in August their thier worth a newly newly introduced mobile.
Regarding the four times LPR. So the punishment usually are still waiting to see further clarification, Oh, Oh on owning to track. So right now where we believe are maintaining the status quo on a pre be best practice that that they can do.
Thank you Vincent.
Thank you.
Thank you once again, ladies and gentlemen, if you wish off the question now Please press star one on your telephone keypad.
Our next question comes from the line of Jackie Chan from China.
Renaissance. Please go ahead.
Oh, Hi management, Thanks for taking my questions of several questions here number one is about the recent regulation change as you mentioned basically beat the full time LPR impact.
So oh, we have done any changes to our loan pricing upturn.
You know the decision from Supermom corns or.
Not do you have any plans to change our current pricing.
And probably following back to you saw what he's already Oh, no full name optimal.
For the second half half this year and maybe.
Another small question is so what is the reaction from our existing borrowers.
Oh, you know after this decision from some of them of course.
I believe we see.
Many increase oh, lowering the interest rates on their loans from borrowers.
And second question is about our loan products observed that we squeeze shelton shots and be a long ton or also lowered the average loan balances for existing borrowers or do we see that trend to continue.
And lastly, you saw the as a cold tea.
I see show in the or they want delinquency rate charts.
We haven't seen much improvement on that but observed in the PML, we actually booking a nearly 200, meaning a gains the changing research firm so booties so.
Does that show actually we actually see some improvements or.
As of course, the or a treat does the performance in second quarter.
Was better than Oh, we expect to.
Previously and so just want to no give some color on the asset quality trends going forward. Thank you.
Thank you Jackie.
This is the I can let me address your question is wonder one.
Mhm regarding our strategies to cope with the regulatory development on a fourth what comes out not we actually well Oh, well they very vigilant on the situation and.
And thank you very prudent to put that on the actor.
We're still waiting to see further try reputation and interpretations from the financial sector record incurred because all our our loan but limitation are two different every fusion.
If we need to make it because they were they will be the first one no how to make a change so probably olive garden's just exactly when 10 hours go to call on to our prudent strategy and keep in pricing.
It is extremely hard to quickly predict the future volumes pick it apart from the capital on the topline could possible tapping on the top on the topline.
The delinquency also will react to how other players they are looking.
For example, if all the players in the market dropped their loan volume all at once the blazing the credit availability in the market, what what what will be dropping and people who used to live on his own credit balances will have to default. Therefore, the magnitude of the potential airport cost fighting a war is pretty equal to us.
So that's why I had a wish you stay vigilant on for further changes.
And then for your second question do we received an increase from Mark Yes, we see some increase but on the amount is not that much.
And regarding the do you want delinquency rate it didn't drop a lot from the first quarter because.
You know our vintages, Florida fourth quarter of 2019 and event, he just where first quarter of around 20, I feel very young.
So.
As we are as our loan volume decreased a lot unified top this year, they're bringing the remaining affordable.
That's exactly what delinquency rate actually Oh.
I actually the before I do they make a border consisted more anymore. The forefathers. So that's why our delinquency rate you want them as much like won't see a quick turn around in a in a short sorry.
But yes, I keep estimate also notice that our off balance sheet in an always on the Oh like I'm trying to get a private entities witnessed a again this quarter a that reflect the question that average back the fact.
Yeah.
On the loan balance, while our sheep loans decreased a lot in this quarter and on the delinquency result, it's not as bad as if it does it.
All that carbon policy is to react that the situation at the end up each quarter. So the leases the right way to do it.
Oh, the youngest you make any other questions Jackie.
Yeah just.
Pulling all your Oreo loan product so we actually.
See that no second corner, you actually shorten the long term tender.
Also reduce the operational balance a school bars. So good that trend continue and Oh second half of this year.
Right I guess, you mean, so for the longer tenor actually our policies out has nothing to guidance, but our harvest drives you only longer tenor and and loan balances is still consistent with previous quarter.
Got it thank so much.
Thank you. Thank you.
Thank you once again, ladies and gentlemen to ask a question now piece press Star one.
Next question comes from the line essentially Jan from LNG or cut capital. Please go ahead.
Hi management, Thank you for the presentation.
Hmm questions actually run on the only thing.
Oh luxury ecommerce business.
On the lending side.
This is the third time among the two analysts who loves the question I'm asking the same thing.
Give us some idea about war you are seeing them so things for the second half of this year gross.
Oh, and perhaps or something on a baby Gran <unk> and also on the pricing side.
Oh I'm, assuming there by some continues as it is but if you can talk about that so no one anyone who's doing projections.
Well you how would be how would you want them to.
Oh, C. wonder prospects for your lending business. It can help this year it next year.
Hi, good.
Then secondly on the them to the ecommerce.
Oh, it's where you see no I mean I can see there the.
Oh, the sending revenue and the cost also uses the same so youre not not making any money from the similarities but those same same marketing expense the incremental sales and marketing expense does it all your knowledge if people are saying because on the jungle much system.
So.
On a scale awesome 93 million.
You have.
Sales and marketing expense.
Obviously, the the you know doors you said to me on that business also 75, you'd be meaning that the correctly youre looking at it and.
And second component on the mums in ecommerce businesses, what are the synergies you won't see like now.
They didn't come and I'd be among the you know 80 million registered users are these dozens of buyers. So on your the ecommerce site.
Thank you.
Thank you Sanjay.
So.
The delinquency rate for the future, it's really hard to predict although he is requiring recovery shows what delinquencies or we're not sure about the impact of the possible impact from the new rule.
Is it.
Like I just mentioned is all players dropped their lot and go I want to take up the new capping the delinquency rate might increase.
I do come out because they couldn't do markets locker.
So it it's very hard to predict but I really I would also put on did you want when it hits chart is decreasing oh sequentially from through this quarter and is it also decreased in August and September as well, but it's hard to predict what teacher.
The ecommerce business I was hoping he has already or Youre correct.
It's already doing but.
No delinquencies.
You are now in September and of course were equal Oh in February or March in China economy has restarted only come only thing because then you don't get even see chart suggestion there.
Probably the peak or the.
Credit problems are behind us.
As I mean does.
We wouldn't do it.
Take some forward looking view.
And give us some idea about what kind of growth you want is not open platform what about on balance sheet Lindsay.
Why wouldn't you start growing Walgreens.
No wallboard more vacation you waiting for.
Right. The reason why we want to keep the status quo. It's because we're not sure about what effect of clarification interpretation, some financial factor regulators will or wont be about four times L.P.I. rule.
If that's the case I believe almost all players in the market has a drop in volume, we don't want to run the risk off.
A quick de leveraging <unk> at that time. So that's why we believe keeping that the current why do you eat thereby strategy is the right got action blessing.
Okay fair enough.
You heard any discussion with the regulator on this.
No we haven't because we're not regulated by the financial sector that rig, but our founding partners.
Who has indicated that those are regulated banks and financial regular anchored <unk> if they haven't heard any.
Oh, great tactic class verification and I believe is still ongoing.
And well.
But what about your on buddies, you're getting worried applied to.
Artisan.
Right our on balance sheet, our lending is Joe disbursed are also despite.
All too often are situation. So it is likely to thing.
Well, we believe it's the right course of action to leveraging in all our listeners I was like a one time right now so we should be or should be oh definitely taken.
Okay.
And the luxury commerce.
Right so toward adult marketing expenses that increased a lot from from the previous quarters to the second quarter, it's primarily or Oh, it's kinda already considered the that there was a tough one.
But we do not intend to spend the same among all marketing dollars owned is back on until all we see again, a health well being a healthy girlfriend, Oh, Oh is that like many technology companies in China, I spending lavishly Oh Oh backing.
Got it to boost the GMB or we are already and if the company. We don't have to who the quick Gee I mean can be closely on two of fact, finding so we get better and focus more on a healthy doesn't like often you begin to initiate it's still early oh, and it's more scale business.
So that's why we didn't intend to make segment reporting a fall for this business.
And important number are you serious anikas actual sorry, yeah, we do not intend to reporting separately right now, but oh, a basic this business a lot of integration initiated.
To a larger scale, all who will do I have great secondary accordingly.
[laughter] when do you expect that they know that scale to be big enough and board would be that skiing in your view.
We don't have such predictions right now.
Okay, and any commonality any synergy between the user base that you have versus <unk>.
E Commerce buyers.
There isn't much synergies to be honest, because our previous users for the credibility with our blue collar workers, mainly due to all workers all people working the for the industry. However, our Ah why didn't look back one I mean, what a luxury upscale products offered a rocky group <unk> population in China.
HM Okay, Okay, and finally on the convertibles or do you have bought some mode right double bodies the balance outstanding.
Right. So far I see me, we cumulatively worth 199 million.
And your thought of work Oh face value, So oh, yeah.
Okay. Okay.
Okay. Okay, great. Thank you very much.
And just thinking.
Thank you remind you ladies and gentlemen, if you wish you asked the question. Please press star one now.
Thank you there no further questions at this time I like to turn call back to the company for closing remarks. Please go ahead.
Sure. Thank you. Thank you all once again for joining US today exactly your question. Please feel free to can actually asking back in the relation Department [noise].
Due out to contact information provided on my side. Thank you.
Thank you. This concludes this conference call you may disconnect. Your line now think here.
[music].
[music].
Hello, Ladies and gentlemen, thank you so standing by for cheat instinct second quarter. Two tells US 20, <unk> earnings conference call.
First time, all participants are in listen only mode.
After managements prepared remarks, there will be a question and answer session.
Today's conference call is being recorded I'm not like to turn the call over to chickens investor relation representative. Please go ahead.
Hello, everyone and welcome to choose yes second quarter Twentytwenty earnings conference call. The company's without what do you feel bio newswire services earlier today and were posted online you can download the earnings press release and sign up for the company's institutionally by visiting our website at <unk>.
Our stuff to Dan the comp.
Mr Me law, our founder Chairman and Chief Executive Officer, and missed as they do our VP of Investor Relations.
The call with their prepared remarks.
Before we come team. Please not that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U.S. Private Securities Litigation Reform Act off my team, making five.
Forward looking statements involve inherent risks and uncertainties as such the call easily without maybe materially different from their views expressed it today.
Information regarding these and other risks and uncertainties is included in the company's 20-F as filed with the U.S. Securities and Exchange Commission become does that not any obligation to update any forward looking statements, except as required under applicable though.
Please also note that she didn't earnings press release and this conference call include discussion on Oddities, Jackie financial information as well as Oh, the kids now J.P. financial measures should.
She dance press release content or the combination of the audio keeps now JP majors, Judy oddities, most directly comparable J.P. magic.
We also posted a slide presentation on our IR websites, providing details on our results in a quarter, we will reference those without in our press prepare to remark, but will not till the first two specific slides during our discussion.
I will now turn the call over to our Theo Mingle. Please go ahead.
[noise], but I would like to think all anyway, and it kind of media.
Hey, good interest in Chile.
Oh.
In a challenging second quarter of 2020.
We continue to look at.
Operator out cash credit.
Also the call it liking.
Let me.
Things correctly Larry.
Punch food in China.
Turning to fulfil the credit Dol cycle, and then having me.
Dealing it all vintages.
Generally.
In the second half office on inviting and.
Todd.
So it's all done that.
At spot.
But do you want to do quite a few right.
But kind of core.
Well, that's what sort of opinion.
At a high level as a result in all too.
The deals risk remains.
Just finish stringent all risk management.
Yes.
Recent.
Wrapping that up and.
That's correct.
This approach to test the transaction volume all of our local news lately rapid path we Smith.
If you didn't qualify.
Let me also address the implications.
Okay.
So crazy.
Oh decision.
Hello call perspective, why don't we had low interest.
Interest rate cap I'll provide venting tool for Todd that's all for low printing late.
According to the decision.
The interest rate cap.
Not at peak Paypal sort of them differently.
Sure. It's your children.
Roger.
This new policy, it's generally.
In separate.
That's all it day after careful took rewire lumpy.
Well I'll open it almost as house.
All.
Financial institution.
However.
It's important to note that the dishes.
Early in the field.
And the policy.
He is subject to further.
Codifications.
I call at regular literally offer offer it to.
[laughter] city.
Interest rate caps.
Uh huh.
Our fishing.
After Oh by.
Call or regulatory.
Sorry.
Our profitability.
For example, a material.
What impact.
And if we booked in cool.
Net loss.
Now I would like to have a call or what's the SIFI for more detail.
Our used up.
Thank you mean.
Good morning, and good evening everyone.
Well not being maybe going to do the difficult market dynamics, where they're cautious and conservative approach toward our cash on business.
In the aftermath of both of coking lighting can damage and ongoing congratulate her development.
First market environment, the gifted due out if they don't want huh.
Although to be one delinquency rate for our loan book business slightly decreased sequentially from around 20% into first quarter. It was still at a high level of approximately 19% in the second quarter.
In light of the situation, we maintained our de leveraging strategy, while our own book business to reduce risk exposure during the second quarter.
Due to continued implementation of Pingan credit standards, we maintained a low credit for low rate with transaction volume relatively stable compared with the first quarter and I love the ratio of load on one time.
We believe this conservative approach is the right course of action to back per cap on the asset.
The housing in the credit market.
Similarly, our institutional founding partners also before we turn credit standards for loan approval, even to heighten do wondering click through rate on the open top one.
Consequently, the amount of transaction only open platform from I around 70%.
Paired with the first quarter 2000 tiny.
Aside from our credit business, our newly initiated the one who will talk one is still operating out of more scale and early stage.
If I get up lavish can do to boost the G.M.D. I'm wanting me, we're trying to focus more on the housing and prudent growth opportunities.
In addition, we completed our strategic investments into the cool in the second quarter, and we'll look forward to generating synergies in the luxury the consumer business.
In conclusion, considering the current environment other credit downtown with high delinquency rate, we remain cautious in a prudent without a cash part of it is in an effort to protect our assets.
The same time, what will be crude and and the between into further development in the management of our use of an easy way to with the same approach to other its likely future.
It's important for us to stay, especially when it comes to the operating and preparing for different market dynamic.
Maintaining sensibility in our strategy.
And operations.
Oh wire cokemaking opportunities to supplement our country document.
Now, let me share with you with some key financial results.
In the interest of time I, rather not go right My my line.
For more detailed discussion of our second quarter 2020 results. Please refer to our earnings press release.
Our total revenues, where maybe 1.2 billion, representing a decrease of 44% coming in to be 2.2 billion would have been on quarter last year.
Our financing income totaled in India, 581 million, representing a decrease of 21 person I'm going to meet my hundred 84 million.
Second quarter of 2019, as a result of a decrease in average hours cheese no bonds.
Local facilitating income and other related income decreased by 58% to MB 255 million I'm going to be 610 million for the second quarter 2019.
As a result aka reduction Cup transaction volume of all flash along this quarter.
Partially offset I reclassification of guaranteed income yeah quarters, but I see see to see.
Transaction services fee and other related income decreased during the be 4 million quantum leap.
Hi, Good Nike 8 million for example, the last year, mainly active adult on substantial decrease when the transaction among our open platform business.
Self income substantially increase to remedy 293 million, so I'm going to be 122.5 million put it in a quarter of 2019, mainly due to the launch of the wanting <unk> ecommerce platform.
Cost revenues increased by 28% to maybe 366 million from going to be 286 million quarter second quarter. After 19.
Primarily due to the increase in cost of goods sold the major one important common stock one.
Our selling and marketing expenses increased by 102% through them to be 157 million I'm gonna be.
To be 8 million wait a second quarter Oscar Nike, primarily due to the marketing expenses relating to the wanting more ecommerce platform.
Provision for receivables in other assets increased by 5% Truman beside hunk at 19 million, how many Andy 495 million for a second quarter optimum off 2019. The increase was primarily due to an increase in past year on balance sheet outstanding principal receivables compared to the for the quarter OCTEON lighting.
[music].
Our net income attributable to treating them shareholders would seem to be 179 for Chile, or indeed, they'll 0.68 per diluted India.
Non-GAAP net income attributable to attributable to treat and shareholder switching between 29.9 million or even be.
A couple one to per gallon, Indiana.
So here's our prepared remarks operator, please open for question.
Thank you ladies and gentlemen, we will now begin the question and answer session.
If you wish you asked a question now please press star one on your telephone and bite for name to be announced.
If you wish you can say your request please press the pound Oh hash key.
The benefit of all participants on today's call. If you wish you all should question to management in Chinese pleased to repeat your question in English admittedly.
Once again, if you wish you asked a question. Please press star one now.
Our first question comes from the line of insulin use from Needham and company. Please go ahead.
Hi management, Thanks, what you're taking my question. My first question is about the sales marketing expenses for.
The <unk> for the second half 2020 ended the fiscal year to make a new one.
So in terms of our capital investment and for the.
Come much project money move how should we think about the sales marketing investments in the like the D. So the thing have somebody ended up in the next year and my second question is about.
The the corporation or partnership with the like definition institutions, where the tightening of institutional partners Quest pie.
The the temporary or is it and you know normal Eagle eyes, I know wasn't quite a bunch of Idaho just to go out what yeah. When he spoke of each of the woman tick. The Sevena Union that you guys. Just like I was hoping you don't know you what you should well, let's take the playing you anymore. The Permian so they didn't know some with the.
Sure. Good pull you are you a woman she has to kind of Oh God bless you should apply human candlestick, though.
Geologic we'll miss will hopefully she said she gets you go Tom and Jerry.
To that you're going to that you've.
So in that familiar that social no a woman. So me you any kind of actually this is something I suppose shiga bunch dinner I see the usual chip.
Thank you Vincent diversity in our let me address your question one by one so forth with regard to their sales and marketing expenses.
In quarter four depend on for our self marketing expenses increased increased a lot compared to the to the previous quarter, mainly due to the launch of wanting attack war, but as I mentioned, we are not targets to invest a lot of marketing dollars somebody look back one if god, we focus more.
On a healthy and long time with the development of that he would become initiated.
So your second question regarding the collaboration with institutional financial institutions. As you may notice that our open top one transaction volume decreased by over 70%. It ahead, a quarter and our number of number all finishes children's collaborate.
With us on that open problem on decreased 11, Ken.
We believe it's our delinquency rate on the opens up one business continued to be Oh in this heightened staters on the not forced a number of collaboration and the among her long facilitation volumes will be like stable or even a decrease in the future.
Oh, we're currently don't have marquee clients on to increase the number all operators on the top one unless we see a turnaround on Ah Ah delinquency and Clos.
As you know her in August their thier worth a newly newly introduced rule regarding the four times LPR. So the punishment usually are still waiting to see further clarification oh on on interest or trap. So right now where we believe.
Maintaining the status quo on could be back on track I felt that they can do.
Thank you Vincent.
Thank you.
Thank you once again, ladies and gentlemen, if you wish to off the question now Please press star one on your telephone keypad.
Our next question comes from the line of Jackie draw from trying.
I never Renaissance. Please go ahead.
Oh, Hi management Ah. Thanks for taking my questions of several questions here number one is about the recent regulation change as you mentioned exclude the full time LPR impact.
So oh, we have done any changes to our loan pricing upturn.
You know the decision from Supermom courts.
Or if not do you have any plans to change our current some pricing.
And probably following bad pizza, what he's already Oh loan volume outflows.
For the second half Huff this year.
And Ah maybe.
Another small question is so what is the reaction from our existing borrowers.
You know upturn decision from some of course.
I believe we see.
And they increase Oh, oh, lowering the interest rates on their loans from borrowers.
And second question is passed our loan products observed that we this crucial to shorten the a long ton are.
Also lowered the average loan balances for existing borrowers or do we see that trend to continue.
And lastly, you saw the as a coltie and see show in the they want delinquency rate charge.
We haven't seen much improvement on that but observed in the PML, we actually booked a.
Nearly 200, meaning a gains on the changing recession, so booties so.
Does that show actually we actually see some improvements or.
That's because the or a treat the performance in second quarter was better than Oh, we expect to previously and so just want to no give some color on the asset quality trends going forward. Thank you.
Thank you Jackie.
This is the I can let me address your questions one by one.
Mhm regarding our strategies to cope with a graduate degree development on a floor what comes LPR, we actually whoa.
Well.
They very vigilant on the situation and.
And thank you very prudent to put that on the actor.
We're still waiting to see further clarifications and interpretations from the financial sector regulators, because all our our loan facilitation ARPU the finest resurgence.
We need to make a true they were they will be to first want to know how to make a change. So currently our charges just instructor Lakeland hung out they could go on to our prudent strategy and typically in pricing.
It is extremely hard to her could predict the future volumes pick it apart from the capital on the top line the possible capital cost on the topline.
Delinquency also will react to how other players.
I was looking for.
For example, if all the players in the market dropped their loan volume all at once the blazing due to the credit availability in the market, what what what will be dropping.
And people who used to lead on his own credit balances will have to default. Therefore, the magnitude of the potential before calc fighting a war is could be equal to us. So that's why I had a wish you stay vigilant on for part of changes.
And then for your second question do we received an increase from Mark Yes, we see some increased but on the amount is not that much and regarding that you want delinquency rate it didn't drop a lot from the first quarter because.
You know our vintages, Florida fourth quarter of 2019, and the vintages for first quarter up to around 20, I feel very young.
So.
We are as our loan volume increased a lot in a for a top this year onto bringing the remaining affordable Ah that's exactly what delinquency rate actually Oh.
I actually the before I do they make a border 'cause it gets more and more than $4. So that's why our delinquency rate you want them as much like won't see a quick turn around a in a short sorry.
But yeah I think estimate also notice that our off balance sheet in a loss on the Oh that can drive it it at a private entities witnessed a again this quarter our average like the question that average back the fact.
Yeah.
On the loan balance while our sheep loan it creates a lot in this quarter and on the delinquency result is not as bad I think with it.
All that carbon policy is to do you have got situation at the end up each quarter. So the leasing the right way to do it.
A big government you make any other questions Jackie.
Yeah just.
Pulling all your Oreo low product so we actually.
See that no second quarter, you actually shots in the long term 10 there.
Also reduced the operational balance of school bars, So group that trend continue in the second half of this year.
Right I think originally so.
For the longer tenor I free our policies out Haas and nothing to guidance, but our cartus rising over the longer tenor and and loan balances is still consistent with previous quarter.
Got it thanks, so much.
Thank you. Thank you.
Thank you once again, ladies and gentlemen to ask a question now piece press Star one.
Next question comes from the line of Sanjay Jan from LNG or cut capital. Please go ahead.
Sorry management, Thank you for the presentation.
HM questions actually run on the English I know that on the.
Luxury ecommerce business.
Oh, so on the lending side.
No. This is the third time among the three analysts who asked the question I'm asking the same thing.
Give us some idea about.
Well youre seeing in terms of things for the second half of this year growth.
Oh, and perhaps or something on a baby granting and also on the pricing side.
I'm assuming their pricing continues as it is but if you can talk about that so you know anyone who's doing predictions.
For you how would you know how would you want them to.
Uhhuh proceeds on the prospects for your new business. It can help this year that next year.
Good.
And secondly on the luxury ecommerce.
Oh, you, where you see no I mean, I can see that the.
Oh, the does that mean revenue and the cost also uses that seems like youre not not making any money from the seasonality, but those same same marketing expense the incremental sales and marketing expense does it all largely but they didn't know junk almost no.
So.
On a lump sum up 93 million.
Oh you have.
Sales and marketing expense.
Obviously, the you know door effectively on that business also 75 you'd be money there the correctly youre looking at it and.
And second component on the Legit ecommerce businesses, regardless, you know you youre seeing like now.
Is there any goldman I'd be no. Among the you know 80 million registered users who doesn't the buyers. So on your the ecommerce site.
Thank you.
Thank you Sanjay.
So.
The delinquency rate for the future, it's really hard to predict although was he requiring recovery shows what delinquencies or we're not sure about the impact of the possible impact from the new rule.
It's <unk>.
Like I just mentioned is all players dropped their lottery or wants to take up the new capping the delinquency rate might increase on a like amount because they couldn't be markets Walker.
So it is very hard to predict but I really I would also put on that or do you want than it was chart is excuse me all sequentially from through this quarter and is it also decreased in August and September as well, but it's hard to predict what teacher.
The ecommerce business our itself.
Correct.
It's already doing but.
No delinquencies.
We are now in September and of course were equal Oh in February or March in China economy has restarted all economic indicator than you're only going to jog suggestion there.
Probably the peak or the.
Credit problems are behind us.
As our vendors.
Thank you.
Take some forward looking view.
And give us some idea about what kind of growth you on its not open platform what about the on balance sheet lending.
Why wouldn't you start growing Walgreens.
No wallboard more vacation you waiting for.
Right. The reason why they want to keep the status quo. It's because we're not sure about what effect of clarification interpretation, some financial sector regulators, well well well be about four times L.P.I. rule.
If that's the case I believe almost all players in the market how could trucking volumes, we don't want to run the risk off a quick de leveraging a at that time. So that's why we believe keeping that the current why do you it thereby strategy is the right got action blessing.
[music].
Okay fair enough.
You heard any discussion with the regulator on this.
No we haven't because we're not regulated by the can I get back to regulators, but our founding partners all who facilitated the goals are regulated by the time financial regular anchored pockets they haven't heard any.
Oh, Great Catholic Class clarification, then I believe is still ongoing.
And wood.
But what about your on buddies, you're doing what it applies to.
Artisan.
Right our on balance sheet, our lending is Joe this bird.
Also despite.
Too often are situation. So it is literally to say.
Well, we did it is the right course of action to leveraging you know our leverage ratio. It's like a one time right now so we should be or should be oh gradually taken.
Okay.
And the luxury commerce.
Right. So for the Gulf marketing expenses that increase a lot from from the previous quarters to the second quarter. It's primarily are all it's probably already considered the that they're running a pathway.
But we do not intend to spend same among all marketing dollars. All this back on our until all we see are going to help already a healthy girlfriend Oh Oh.
Is that like many technology companies in China are spending lavishly Oh, Oh backing dollars to boosted dnbi or we are already and if the company. We don't have to who the quick GMI JV growth like to attract finding so we will get better and focus more on a healthy.
And I'm, hoping you can initiate it's still early on.
And it's more scale business. So that's why we're getting in Cancun make segment reporting a fall for this business.
And for a number of users cynics actual sorry, yeah, we do not intend to Ah report them separately right now, but Oh, a basic if they say oh auditing busy initiated gets to a larger scale or we will do I have heard secondary party.
[laughter] when do you expect does they know that scale to be big enough and board would be the excuse me in your view.
We don't have such predictions right now.
Okay, and any commonality any synergy between the user base that you have versus.
The ecommerce buyers.
There isn't much synergies to be honest, because our previous users for the predicated ARPU coworkers, mainly due to all workers or people working in a fair bit industry. However, our Ah why didn't look back one I mean, what a luxury alphacare products offered throughout the group.
Population in China.
Okay, Okay, and finally on the convertibles.
Do you have bought some mode right double bodies the balance outstanding.
Right. So far I see me, we can't make it is worth 199 million dollar work Oh, great value. So oh yeah.
Okay.
Okay. Okay, great. Thank you very much.
Thank you Sandy.
Thank you remind you ladies and gentlemen, if you wish you asked the question. Please press star one now.
Thank you there no further questions at this time I like to turn call back to the company for closing remarks. Please go ahead.
Sure. Thank you. Thank you all once again for joining US today exactly your question. Please feel free to can actually asking back no relation department [noise].
Due out to contact information provided all my Frank Thank you.
Thank you. This concludes this conference call you may disconnect. Your line now think here.