Q2 2021 Jiayin Group Inc Earnings Call
[music].
Yeah.
Good day, ladies and gentlemen, thank you for standing by and welcome to the giant group's second quarter of 2021 on each conference call. Currently all participants are in a listen only mode.
Toby will conduct a question and answer session and instructions will follow at that time.
As a reminder, the.
Today's call is.
You have any objections you may disconnect at this time I will.
I'll now turn the call over to MS. Susie will director of the Blue shirt group each year Michelle. Please proceed.
Hello, everyone. Thank you all for joining us on today's conference call to discuss triangle.
<unk> financial results for the second quarter of 2021.
These results earlier today. The press release is available on the company's website as well as long as wire services.
On the call with me today are Mr. Yung, Kim Chief Executive Officer, Mr. Hu, your balance sheet risk officer, and Ms. Shelly lie enemies CVR.
Chen co Chief financial officers before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 90, 95 forward looking statements involve inherent risks and uncertainties as such the company's actual.
Our results may be materially different from the expectations expressed today further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward looking statement, except as required under applicable law.
Also please note that.
Otherwise stated all figures mentioned during the conference call are in China.
With that let me now turn the call over to our CEO again before we.
Speak in Chinese and then our co CFO Shirley by we will transfer his commentary English go ahead.
[noise].
Hi, Jeff.
You can go.
Got it.
Hi, Bob.
Hello, everyone. Thank you for joining our second quarter.
Our next conference call.
Okay.
Some of them.
Samsung talking about attendance.
So I'll tell you Leo.
You bet.
Uh huh.
Thank you.
So many of them that finishes with our NIM.
So I'm Gonna go that they don't want a year, where you see things all inclusive.
Okay.
People somehow 18 months ago.
Right.
It was an outstanding quarter, achieving a record breaking operational and the financial results.
Origination volume.
They increased by 153% year over year with 100.9% growth in revenue.
This result is a strong testimony to.
Do you have to accomplish in implementing our key strategy driving organic growth in China, while deepening partnerships with financial institutions through leveraging our sophisticated risk management systems and providing individual customize the solution.
It's all my years at a profit.
You.
Thanks.
Richard Parkes was a chunk in the Midland.
It won't be popular.
Bob.
If you are achieving.
So your cable bill.
So to me that he got it.
England.
Notably with a strong top line growth.
And outstanding execution and cost.
Control policy.
Momentum in profitable growth continues.
Net income grew significantly to 208, 5% year over year, reaching RMB $126.8 million.
It's a remarkable improvement.
Illustrates our ability to improve profitability through strong growth and outstanding execution.
And a woman called strategic tie both ways on Tmall com.
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As chair of the wisdom that fulfill quarters.
Paul we are focusing beauty integrated highly automated platform. This glitch risk management intelligence to be injured faithful effective timeline to our institutional funding partners.
Our funding partners increased to $2.32 in Q2, and we are in discussion with another 45 Institute.
Fusion was aimed to further broaden our partnerships for diversifying our funding resources, while maintaining our risks management Excellency.
Lisa.
Okay.
So each of the countries.
Chancellor.
And my quick follow up.
I need to go and shop being charged with yields at a shingle and.
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Honda.
General political.
Our ability to perform.
Provide asset with qualify.
The risk profile that risk.
Our requirement for the respective funding partners lay a solid foundation for higher loan origination in this quarter.
But within the marketing and it began attracting Ebola and a more accelerated pace.
We focus on paying for higher quality.
Barbara.
That portion of our loan volume continues to go to our existing borrowers.
With higher quality.
These are repeat borrowing rates for this quarter at 7%.
0.4% labor.
We believe serving higher quality borrowers will inform our credit risk profile.
Asset quality team.
We are very pleased with the progress.
Excellent financial results illustrate the strength in the consumer market and the growth trajectory of our business.
We remain dedicated to controlling credit quality with our improved credit scoring system and once the technology capability.
Okay.
With.
With that I'll tell you Didnt goes with that.
Just two questions and a charge you will miss was on Twitter and TV.
The way to finish off.
India, Indonesia from Wuxi closely.
Julie I'll have assigned Xiaomi.
Susana Qingdao.
Visibility.
Total engine, so again, a few hundred communities.
Each month with them.
Yes.
And the country you'd crenshaw will be done before.
Jason Simpson goes on the science and the ones in the Gulf.
Sue them and put them on film products with offline.
I'm going to answer your time sheets and should come down.
In terms of the oversea market.
Now taking a more prudent approach with uncertainties caused by the first without have islands.
Margin dilution by heightened.
Sure.
Nigeria, Indonesia, Mexico, Archie Oversea market.
At present, the present promising business potential.
Progress in this market graduate and study.
Trading for a good balance between the investments and the risks.
We expect to have a better picture later this year, depending on geopolitical change changes various control and improve.
Improvements in the global monetary policy changes.
Trinity and the prudency apples critical factor in our business strategy, which will enable us to emerge a stronger and more success in evolving market environment.
Thank you.
If you would've been cool.
Since you called out for Hudson.
So we income as 200, cheesy Bacon, which she walked on cellular phones.
Los Angeles Truecar NIM.
Sure.
India, India decline.
He won't even touch.
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Absolutely.
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He should've Crystal father.
Cgmp, new AUM in the Shanghai <unk>.
Even in these categories.
But on Sundance six.
600 employees.
We have completed the integration with business this quarter as you might be aware the original crackdown.
Bitcoin mining and China has affected the market sentiment and the broker temporary challenges to immediate mining perfect.
However, beyond that is primarily focused on blockchain related technologists and hardware solutions for decentralized applications.
While our clients one stop solution.
One related to cloud storage cloud computing network bandwidth.
Come kind of delivery networks and others.
As blockchain based applications are developing rapidly.
It's going to we can benefit from this growing market with our first mover advantages and technology capability.
[noise].
Right.
Some quick questions.
The equal to opioids in treating their money well.
Keith you want to look at it goes into I'm sorry, Ian.
You got me Sean.
No we don't.
Tom She could see Cuda Josh.
In conclusion, we are.
Excited.
The resumed the high growth in our domestic market with a record breaking operational and financial performance. This quarter, we will continue to roll out initiatives.
<unk> technology across our business to improve operational efficiency and create long term sustainable value for shareholders.
No we're not there.
Overview of Minneapolis, which is held Wednesday, Nelson senior and tissue with that I will now turn the call over to oracles. Therefore selection for that please go ahead.
Thank you Mr. Yang.
Thank you everyone for joining our call today.
Dmitry.
Well your children.
Heartland clutter and agree with Orange in Nevada on by 153% to 5000.663 million RMB with 109% growth in revenue and 208, 5% and net income.
This understanding we have came in well above the upper end.
Our guidance range on year over year basis, demonstrating the success of our business transformation.
As a speed and a strong execution in enhancing our risk management and the improving asset quality.
No that would go through our financial highlights for the quarter.
Please note that unless stated otherwise all numbers quoted are in RMB and percentage changes referred to year over year comparison.
Net revenue was $492.2 million RMB.
109% revenue growth was primarily driven by the SEC.
Growth in loan origination volume, which increased the 153%.
Other revenue was $38.5 million RMB down eight 3%.
This decrease was primarily due to reduced revenue from PTC related services at the company no.
And of course, that's the PPP lending business.
Partially offset by increased the revenue generated from our overseas business.
I think the integration.
Moving onto costs, we also had a substantial improvement operating efficiency, reflecting.
No longer since we took over the last few years to streamline our expense base.
In the second quarter total operating costs and expenses were $342.6 million RMB up 73, 9% from 197 million RMB.
In the out year.
The increase was along with our topline growth.
However, total operating costs and expenses as a percentage of revenue was 59, 6% versus 84% in the same period last year.
Demonstrating our ability.
Lastly to contain expenses growth, which will enable our infrastructure to scale as regroup.
Origination and servicing expenses were $83.3 million RMB.
63, 5%.
Primarily due to the increase in credit assessment.
Resulting car hire along our international volume.
In this quarter, we incurred a cost of sales.
Five 5 million RMB, which is equivalent to 0.8 million U S dollars.
Paired with now from the same period.
Our 2020.
<unk>.
Increase was primarily due to the cost of hardware showed by Green Dot.
Allowance for uncollectible receivables and contract assets loan receivables and others were 15 million RMB up 21, 5% from the same period of 2020.
The increase was primarily due to an increase in loan principal and increased as a result of the higher large inflation volume so over 6%.
Partially offset by the decrease in the estimated default rate on the current business model since we no longer support the Mcafee peer to peer lending business.
G&A expense was $35.2 million RMB down three.
Three 8%.
Primarily due to the decreasing hectare of which has been partially offset by the increase in personnel related costs allocating to general and administration determined.
Yeah.
Our R&D expense was $31.9 million RMB.
Six 5% NIM.
Primarily due to the improved utilization of our facility allocating to the search and development departments.
Which has been partially offset.
By the increase in professional service expenses. After the company continues to enhance the research and development capabilities.
Yes.
Sales and marketing expenses were RMB $174.2 million RMB up 169, 7%.
Primarily.
I'm not really due to our new online advertisement and marketing strategy.
Which has resulted in higher customer acquisition expenses.
As we intend to continuously grow.
Origination volumes, we began attacking new customers at a more accelerated.
Radio pace without superior marketing algorithms and machine learning them into our lawyers customer base.
Yes.
We achieved a noteworthy profitability for our long bought AUM growth and improved operating efficiencies.
We have seen that income.
$126.8 million RMB up 208, 5% year over year.
We ended this quarter with $141.4 million RMB cash and cash equivalents.
Compared with $123.3 million RMB as of March.
Already through 2021.
Moving to our guidance, we expect our loan origination volume of 27 billion RMB 230 billion RMB for the full year 2021, representing 133% to 159%.
The year over year growth.
With that we can open the call for questions. Mr. Yang our chief risk Officer, I missed the sheet and I will answer questions.
Operator, Please go ahead.
Sure.
Ladies and gentlemen, if you ask a question you want me to.
You saw one on your telephone to withdraw your question. Please pushed upon them hash key lease signed by roughly comparable to Q2.
Once again to ask a question it start one telephone.
[noise] [noise].
Chris.
Yeah.
The first question comes from the line of like isn't from Roth Capital Partners. Please go ahead.
Hello, and thank you for taking my questions.
The most.
Exciting number are you sure.
I think with the origination volume.
With more than five 6 million.
RMB in the quarter.
Can you talk a little bit about the contribution of customers new customers added in the past couple of months.
And how quickly.
Sure.
Funding partners.
Contribute to these very high growth rates.
Do we do we see a larger portion added on the front end as new partners or attic or due to the new partners tend to accelerate overtime.
Yeah.
This is Bob this is Tom Thanks quick question I'll take that.
Just doesn't do it no question. So yes, okay and then.
That's Q2.
Was he took a look at them.
Walid.
Green over the time.
That's why we have disclosed.
That's.
The number of the funding put us about what you would have to increase too.
That would be true.
We are lot more diverse and talking with us.
SAP is a way out.
What I thought I'd spend numbers.
Income from as well.
And we are seeing NIM.
Both factors.
The impact coming from bringing on new hunting permits and deepening relationships with our existing.
Please yes, a previous study.
Do you happen to have been punished when we have things that you brought on board.
Last year also.
So that we are managing our partnerships.
No.
Hum.
Within the next several factors installation.
We have to get them to consumers.
Solution of the regulatory.
Regulatory changes all the time.
Yes.
One of the crucial importance.
The crucial component to them to manage and back toward.
To be able to achieve a stable supply of the Congress of the prime funds.
Now we have added a different aspect is in terms of that geographical compatibility.
First Papa.
Phil.
Because what we are seeing some local need you know requirements in terms of the type of customer.
Some of them are fine for us.
And specify.
The laughing.
Also importantly is to continue to improve our overall economics.
And to achieve higher no.
The competitive cost of funds, we have to manage too hot.
Yes.
Yeah.
Wider range of number and that is also a good number of partners working with us to find ourselves in terms of all times.
Hope that answer your question.
Yes. It does thank you. So my next question.
And.
Obviously directly related for sure.
Increased marketing to.
To drive this accelerating.
Origination volume.
You know the marketing spend was up materially.
The quarter over quarter.
And.
Sure No. It's it's amazing that you had such very quick results.
Yes.
[noise] more.
Cranes in the marketing spend.
And the new loan origination with the customers captured.
Can you please describe that process.
Maybe share some of the details of where you're.
Spending these increased marketing.
Money.
And if you could also discuss how your budget on the total market.
Are you targeting you know.
30% operating margins or our.
And marketing a particular expense level as you continue to scale the business.
Yeah. This is that your song again, I'm gonna speaking to that.
So the first part of your question and then maybe you can chime on the last question.
You talked that yes, we are.
You're asking about a higher increase.
Marketing marketing spend which is even on the per unit basis. So we are making at higher selling and marketing.
Part customers acquired.
A couple of reasons formed into why.
Why we are seeing a higher risk higher cost on that item. One is we are continuing to really focusing on the better quality customers and in the market that we are working on right now the current market landscape the cost of a claim such customers.
It's significant higher than 10 compared to what we have seen in probably 2019 or early 2020.
The trial also have supposed.
Significant change compared to the early years as well so we today, we no longer see.
The.
No Mark type of Hum market practice, we are going to like what we are requiring all customers through the COVID-19 direct channel a lot more working with the major internet companies to acquire through that.
Got it.
You shouldn't shoot she expects it to acquire a customer exactly.
We are seeing.
Almost I wouldn't say I'm almost 100.
100% growth, even though it's kind of a thing that's new channels on the cost to us in the new channels.
In both higher but the quantities are significantly better in terms of both approval rates as well as the cause there.
If I'm the founder.
Yes, good evening too we are seeing.
So that's the primary that would be awesome.
The channel mix is shifting to a higher part.
Channel.
And the our focus on better quality customers are also driving the per unit cost.
And and I think from the timing perspective, we are.
We're still thinking that would be a second you're investing a.
Healthy organic growth.
That's really bad we are.
We're planning for the future, especially considering the.
So it continues to use interest interest the trend on the interest rate.
We are the type of requirements as you have seen from our.
Our financial institution partners and just the loan interest.
Rachel.
Oh, we have to work with.
And we are putting a stringent view on our risk spectrum to making sure that they are not compromising.
Or.
More tied on the self marketing per unit cost but.
In exchange for a higher future risk and uncertainty.
Actually we are bouncing back.
Trying to stay on it to keep outgrow for a future more healthy growth to target.
Cockloft, either with quality customers on them.
Trade and trade in trading some.
Some cost increase I guess.
At this point in time and cost.
At that point of view.
So I think I'm talking about higher growth in some of the high cost debt.
Then.
I'll try my sentiment at the same time that I've seen.
In that.
Sales and marketing cost per unit costs are coming down I'm talking about in the Q3.
Have pretty good line of sight of having probably 20% to 30%.
Efficiency improvement in the pipeline right now I'm actually asking the.
Continuous growth on such.
High quality customer channels, although we are ability to manage about copper unit costs down.
Hum.
Second in a good position in trouble so the economics to play by midyear in terms of total budget.
It's really hard to comment on that.
Yeah, Yeah. So this is city. Thanks, Craig for the question I think compare yeah. This quarter your sales and marketing expenses with the last quarter, we've seen like over 90% of the increase I guess it's to.
Add more colors on this I think is mainly due to two reasons. The first is.
That the <unk> settlement the way it.
Different from previous.
In a traditional or in the previous way of this compared with the traditional way. This quarter. We started to launch the information feed advertisements and afford this new kind of development.
Marketing strategy, the free looking ways is totally different than what the previous ways.
Previous waves, we are recorded based on the performance that as if it could be a cost per download or CPI the cost per itself before this information feed advertisements.
When we report the marketing expense upfront.
We recorded in the CPC or 60 underway with.
Shop, or a quick for cost per click or cost per literally so you would see that.
The initial stage that we launched this kind of marketing strategy.
Bill that would be.
What you would see an increase significant.
Significant increase in the south and the marketing increase that is probably the major reason that you'd see that our sales and marketing expense outpaced the loan origination volume growth pace.
And then secondly, I think about it a basic like our new strategy, a new marketing strategy launching logic is that we started upon oversaw our channel providers and we could do the models with them and we do some Taiwan to try.
From marketing strategies than we've got members Thunder from.
From the channel partners and we'd go back to optimize that algorithm and improved our marketing strategy launching launching strategy. So at the initial stage I would say at the copper.
Crocker mute.
Newly acquired customers will be in average I believe higher than.
And then you know so at the initial stages I would say.
Especially this quarter the first quarter that was launched its new marketing strategy.
It's inevitable inevitably lead to see.
Because rice and govern marketing expense, but in the future I would say, we expect to see some room for the improvements in the cost effectiveness.
Thank you.
I believe there are so many like optimization.
Thinking about the marketing strategy right now I'm not accurate as in this but I'm pretty sure our technology team.
A lot of great effort to improve the.
Cost per newly acquired a customer Hum the data on this so I would expect.
VSAT and the macro quarter or and cover off a few months of this the.
On coffee effectiveness will be improved and the cost curve like newly acquired customer will be.
Right now.
And forgot understood I think because there are a lot of movie.
Back then parts.
This quarter.
At this initial stage of launching this marketing strategy, we would not say that we will not set a specific number like absolute number for the marketing Amazon's expenses or just debt ratios.
Of this expenses.
The ratio of the total low origination volumes, but we.
A coffee does that in the future in the short term, we maybe it's not like that's unlikely that these marketing and sales expenses would outpace our long.
Loan origination volume grows a lot.
That'll be all.
[noise] shaken so.
Can you share a little bit more detail around your international expansion.
An update on Indonesia.
Exco and.
Whether or not you can one.
Other markets internationally at this time.
Yeah.
Certainly I won't take on that question too.
So as we try to talk and we remain optimistic.
Hum.
And.
And I thought you know not just shopping she's one of our key component of our strategy, but we are taking a prudent approach in terms of how we are consuming.
So overall a component of the international market expansion.
So there are different setups.
The construction.
I'm sorry to bother you.
The international market.
As we have mentioned hardly the church of England.
And it's having an impact.
But in emerging markets.
Hum.
So I just wanted.
Wanted to know.
The China market.
And the economic growth.
Political or regulatory stuff already.
It's also somewhat more fluctuate compared to AUM mainland China market.
So without kind of managing those factors compared to the gross.
Mainland.
Accomplishment from point of view.
But I'm happy to report in Mexico maintain keeping the top key opinion leaders in the market.
In spite of a machine.
In Boston our stocks.
Newcomers coming into the market well occasionally.
So starting first with the upstream.
And driving the marketing costs up.
Hot some sort of impact have somewhat of an impact on us.
Economics.
<unk> maintained to be the top tier in the market now and then Nigeria, we have.
Have gone through that.
Setting up phase I forgot my kids have changed or not.
Money lending license them for the next stop is you need a box you can start to grow traffic quality.
In a market.
And then in the Asia market, we are seeing.
Houston is I can totally changes.
Yeah related to holiday and managing the license application process.
We are seeing some and end it there.
Any such change does have somewhat impact on us.
We also continue just trying to sort it out.
Some of them just catching medical go in but we are still dedicated to shooting that you show market.
As far as the newer markets and the us.
A couple from the market. So we are in so in investigation and in the early feasibility studies.
Study phase.
But I have to say that most recent political change that may have some impact on us.
Our appetite taking on new markets at this point.
Thank you Jacob.
Thank you for the update and congratulations on the really strong.
Growth and profitability in the quarter.
Thank you.
Yeah.
Thank you.
Once again, ladies and gentlemen to ask a question. Please press.
So one plus one and Keith.
Right.
Okay. Thank.
Thank you operator, and thank you all for participating on today's call and thank you for your support we appreciate your interest and are looking forward to reporting to you again next quarter on our progress.
[noise].
Thank you that concludes our conference for today. Thank you for your participation you may all disconnect your lines now.
[noise] [music].
[music].
Yeah.
[music].
Good day, ladies and gentlemen, thank you for standing by and welcome to the <unk> group's second quarter of 2021 on each conference call.
Currently all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time I.
I should remind you we are recording today's call. If you have any objections you may disconnect at this time I will.
I'll now turn the call over to MS. Jessie Wang director.
The Blue shirt Group Asia Michelle. Please proceed.
Hello, everyone. Thank you all for joining us on today's conference call to discuss <unk> financial results for the second quarter of 2021, we'd released the results earlier today. The press release is available on the company's website as well.
Her office Blackstone listeners on the call with me today are Mr. Yang Chief Executive Officer, Mr. Chi Fong sheep with officer and MS. Shelly lie and we see Dr. Chen co Chief financial officers.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provision.
The U S Private Securities Litigation Reform Act of 90, 95 forward looking statements involve inherent risks and uncertainties.
Such the company's actual results may be materially different from the expectations expressed today further information regarding these and other risks and uncertainties is included in the company's public filings.
Finally, with the SEC the company does not assume any obligation to update any forward looking statement, except as required under applicable law.
So please note that unless otherwise stated all figures mentioned during the conference call I am trying to read that.
Let me now turn the call over to our 6 million difference.
In.
Got it.
Our co CFO of steady by will traffic has promised to English go ahead I'm sorry.
Okay.
Hi, Joe.
Hi, Jeff.
You can go hunting a union.
How about you Julie.
Everyone. Thank you for joining our second.
Okay.
Conference call.
I'm looking at it looks like you did some zone.
Samsung talked about attendance.
So we're telling you there won't be them, though.
Uh huh.
It won't be pinned down.
But as you can.
Okay, No that's fine.
Sundar.
Yeah.
So I'm gonna go that fit on.
You send that out.
Oh Wow okay.
People somehow.
Sure.
Well, you gave us an outstanding quarter, achieving a record breaking operational and the financial results as loan origination volume.
That's it.
Increased by 153% year over year with 100.9% growth in revenues. This.
This results a strong testimonial to the success of accomplished in implementing our key strategy driving organic growth in China, while deepening partnerships with financial institutions.
Through leveraging our sophisticated risk management systems, and providing individual customize the solution.
Yes.
Sure.
So the challenge in the Midland.
I'll be back with them.
Bobby.
Hello.
Yeah.
So your cable Bill do you want me with a new pool of Changi Thunder horse, so she needs and she goes.
Notably we had a strong top line growth and outstanding execution and cost control policy.
Millennium and profit focus because he is.
Net income.
A significant 200 or eight 5% year over year.
RMB $126 eight smoothing.
This is a remarkable improvement and illustrates our ability to improve profitability through strong growth and also in the execution.
On a one quarter or two.
Hi, Bob.
For me the last.
And who is your wallet.
Off income quality sheet.
So our team with some of our money.
So that's your AUM if you go to lunch.
What's your what's the vacuum.
But we'll send out all right yeah.
Especially with that and a good home from diesel.
This should put us.
She goes with ginkgo will prevent us sooner.
So of course.
I need to lose.
So that's a good thing I believe.
As shared with you that fulfill quarters earnings call.
We are focusing building integrated automated platform with greater risk management intelligence to be faithful.
In fact, it's timely to our institutional funding partners.
Our funding partners increased to 52 in Q2, and we are in discussion with another 55 institutions with aims to further broaden our partnership.
Diversifying our funding sources, while maintaining our risk and management Excellency.
Well, maybe you'll absolutely uhm.
People in the auction on the cookies, so each of the countries and the payment of <unk>.
In Q2 of them I'll quit Fuller, Sega eshop being charged with yields of the hinkle.
Absolutely no timeline that they've got senior and keep it at home cooking.
Up until the temperature.
Okay.
Got it.
For <unk>, we've got another 200 people.
Telling you, which I care about one two times for now.
Yeah.
Hi, Josh.
At the moment, they're shelving.
The sleep forming yielded transaction.
Well I'm just confused sleeve combo use.
Session at <unk> changing the coupon.
Nevada.
Okay.
Our ability to port.
Provide asset with qualify the risk profile.
There's a requirement for the respective pumping premise lay a solid foundation for higher loan origination.
Hum.
The resumed the marketing and it began attracting Ebola and a more accelerated pace.
Focus on maintaining for higher quality borrowers.
A large portion of our loan volume will continue to go to our existing borrowers.
Our quality.
We saw repeat borrowing rates.
For this quarter as they went to two.
4%.
We believe serving higher quality borrowers will improve our credit risk profile.
And and insurance as a quality team.
We are very pleased with the progress.
Excellent financial results illustrate the strength in the consumer market.
This call trapped characteristic of our business.
We remain dedicated to controlling credit quality with our improved credit scoring system and advanced technology capabilities.
Pardon.
You cannot tell you didn't go through with another tender.
And it's as you well know don't put on TV.
And a good way to finish off.
Really our English, yes, well see growth from that.
Julie I'll go to <unk>.
Sure.
Thank you Susana agenda with Q1 being the one.
One of the nice things off.
Total patients within a few hundred communities that Union Beach public such reviews.
From a single country, you're Crenshaw will be in terms of the pinnacle I mean, Jason questions and it goes on the science and gives them the one Jim.
Assortment a proton beam.
Susan.
And Joshua time sheets being sure to conduct some go.
In terms of the oversea market.
Taking a more prudent approach with uncertainties caused by the SEC.
With Alfa Wassermann.
Dilution by heightened competition.
Nigeria, Indonesia, Mexico, RP oversea market.
And that presents a promising business potentials with our progress in this market graduate and study.
We are striving for a good balance between.
The investments and the risks.
We expect to have a better picture of it.
This year, depending on geopolitical change changes that have control and improvements in our global monetary policy changes.
<unk> and the prudency are both critical factor in our business strategy well.
Right.
We're off to emerge a stronger and more success is evolving market environment.
I know you'd be willing to put up a lot since you called out for Hudson.
So we've kind of cheesy Bacon, which is C wolfcamp LLS sensitive.
Trying to deal with.
Sure.
Can you define.
Or cohorts.
In Q4.
Their clients CDN some guangxi.
Yeah.
Got you.
And you said personal father.
Are you changing to new AUM in the Shanghai use, but Houston and E cigarettes.
1200 employees.
We have completed the integration with business this quarter as you might be aware the original crackdown on bitcoin mining and China has affected the market sentiment.
A temporary challenges to immediate nine perfect.
And that is primarily focused.
Change related technologies and hardware solutions for decentralized applications.
We provide our clients one stop solutions related to cloud storage cloud computing network bandwidth.
Some kind of delivery networks and others.
As blockchain based applications.
We are developing rapidly we are confident we can benefit from this growing market with our first mover advantages and technology capability.
Some of it was on the wafers.
Due to the Eagles hell be on heat treating them well.
Keith do you want to look at it goes in themselves.
Or even if you're going.
To be sure we will.
We don't have the time she could secure the Jos.
In conclusion, we are in.
Excited over the resumed the high growth in our domestic market with a record breaking operational and financial performance this quarter.
We'll continue to roll out initiatives.
And applying technology across our business to improve operational efficiency and create long term sustainable.
The value for shareholders.
General industrial Heartland in Minneapolis, which is held Wednesday, Nelson senior strategic exactly I will now turn the call over to Iqos. Therefore selection for that please go ahead.
Yeah.
Yes.
Thank you Mr. Yang.
Thank you everyone for joining our call.
F N b.
We achieved a milestone quarter and orange in Nevada, and by 153% to 5000.663 million RMB with 129%.
Solid growth in revenue and 208, 5% and net income.
This outstanding result came in well above the upper end of our guidance range on year over year basis, demonstrating the success of our business transformation as well as our speed and strong execution in.
<unk>, our revenue management and the improving asset quality.
No. It doesn't go through our financial highlights for the quarter. Please note that unless stated otherwise all numbers quoted are in RMB and the percentage changes refer to year over year comparison.
Net revenue was $492.2 million RMB.
109% revenue growth was primarily driven by the significant growth in loan origination volume.
Which increased to 153%.
Other revenue was $38.5 million RMB.
Down eight 3%.
This decrease was primarily due to reduced revenue from pizzuti related services at the company no longer supports the PPP lending business.
Partially offset by increased revenue generated from our overseas business.
I think the integration.
Okay.
Moving onto costs.
We also had a substantial improvement in operating efficiency.
Reflecting actions we took over the last two years to streamline our expense base.
In the second quarter total operating costs and expenses were three.
$42.6 million RMB up 73, 9% from 197 million RMB last year.
The increase was along with our topline growth.
However.
Operating costs and expenses as a percentage of revenue.
<unk> hundred was 69, 6% versus 84% in the same period of last year.
Demonstrating our ability to contain expenses growth, which will enable our infrastructure to scale as regroup.
Origin nation and servicing expenses.
It's where $83.2 million RMB up 63, 5%.
Primarily due to the increase in credit assessment expense, resulting from higher loan origination volume.
And this quarter, we incurred a cost of sales of five 5 million RMB.
Which is equivalent to 0.8 million U S dollars compared with you from the same period.
Our 2020.
The increase was primarily due to the cost of hardware fueled by Green nuts.
Allowance for uncollectible receivables.
Contract assets loan receivables and others were 15 million RMB up 20.
21, 5% so in the same period of 2020.
The increase was primarily due to an increase in loan principal and increased as a result of the higher long duration volume go overseas business.
Partially offset.
This caused by the decrease in the estimated default rate on the current business model since we no longer support the Mcafee PGP lending business.
G&A expense was $35.2 million RMB.
Three 8%, primarily due to the decreasing hectare.
Upset off which has been partially offset by the increase in personnel related costs allocating to general and administration determined.
R&D expense was $31.9 million RMB.
Six 5% NIM.
Good.
Primarily due to the improved utilization of our city allocating to the search and the development of the department of which has been partially offset by the increase in professional service expenses as the company continues to enhance our research and development of that capability.
Marketing expenses were RMB, $174.2 million RMB up 169, 7%.
I'm not really due to our new online advertisement and marketing strategy, which has resulted in higher customer acquisition expenses.
As we intend to continuously grow origination volumes, we began attacking new customers at a more accelerated pace without superior marketing algorithms and machine learning them into our lawyers customer base.
We achieved a noteworthy.
They have ability for our loan volume growth and improved operating efficiencies.
We have been net income of $126.8 million RMB up 208, 5% year over year.
We ended this quarter with 140.
$1.4 million RMB cash and cash equivalents compared.
Compared with $123.3 million RMB as of March 31, 2021.
Moving to our guidance, we expect our loan origination volume of 27 billion RMB.
The 30 billion RMB for the full year 2021, representing 133% to 115, 9% year over year growth.
With that we can open the call for questions.
So again, our chief risk officer, I missed that she and I will answer.
Thanks.
Operator, Please go ahead.
Yes.
Ladies and gentlemen, he wants to ask a question you will need to press star one on your telephone to withdraw your question. Please pushed upon them hash key please stand by while we compile the chemo nave.
Once again to ask a question.
And it's one telephone.
[noise] [noise]. The first question comes from the line of Gregg Hillman from Roth Capital Partners.
Please go ahead.
Hello, and thank you for taking my questions.
The most.
Exciting number.
Third I think was the origination volume.
With more than five six.
In RMB in the quarter.
Can you talk a little bit about.
Tradition of customers new customers added in the past couple of months.
And how quickly.
Your funding partners.
Contribute to these very high growth rates.
Do we do we see a larger portion added on the front end.
There's new parking for at it or do they have a new partners tend to accelerate over time.
Mr. Sam This is Tom Thanks quick question I'll take that.
Just doesn't go the question I'm sorry, yes.
And in that case.
Yes.
Q2 was seen pick them up.
Volume increased over the time I thought we had to discuss an hour a month early.
Early the number of funding punish you don't like it.
Profit increased to 32.
We are lot more diverse in terms of the type of F. EIS and we are working with I feel like the numbers are increasing as well.
And we are seeing.
Both factors have.
Impact is coming.
Right.
I mean are you funding partners and deepening relationships with our existing <unk>.
Pretty good Cleveland, probably have been punished when we have things that you've got bottom for it.
Last year also.
So that we are managing our 500 ships.
Probably not.
Living within a mixed several factors installation.
We have to take into consideration of the regulatory.
The regulatory changes all the time so diversification is.
One of the crucial importantly cush.
Well component to them to manage them back twice to be able to achieve a stable supply of the Congress of the prime funds.
Now we have added.
Aspect is in terms of the seabed geographical compatibility.
Profile.
M a C.
Some local regional requirements in terms of the type of customers some of them.
This requirement and specify them.
I'm the laughing and.
One is to continue to improve.
Crucial overall economics.
To achieve higher little competitive cost of funds, we have to manage to have a.
Wider range of number and then also a good number of partners, who are working with to find ourselves in terms of.
Often times.
Hope that answer your question.
Yes. It does thank you. So my next question.
Obviously directly related or your increased marketing.
To drive this accelerating.
Origination volume.
You know.
The marketing spend was up materially.
Quarter over quarter.
And.
You know, it's it's amazing that you had such very quick results.
I guess that.
[noise] more planes.
And the marketing spend.
And the new loan origination.
Customers captured.
Can you please describe that process.
And maybe share some of the details of where you're.
Spending these increased marketing money.
Money.
And if you could also discuss how your budget.
The total market.
Are you targeting you know.
30% operating margins or are you targeting a particular expense level.
As you continue to scale the business.
Yeah. This is Tom again, I'm not speaking to that.
The format for the first part of your question and maybe you can chime on the last question.
Uh huh.
Oh God, yes.
You got a higher increase.
Our marketing and marketing spend which is even on a per unit basis, we are amazing looking at higher.
Welcome to marketing part customers acquired coupled with leasing spend into why we are seeing a higher risk higher cost on that item. One is we are continuing to really focusing on the better quality customers.
And in the market.
We are working on right now.
The landscape there.
Cost of a claim such customers.
It's significant higher than 10 compared to what we have seen in probably 2019 or early 2020.
So chao.
Okay.
Significant change compared to the early years Wow.
Today, we no longer see them.
Hmm.
The loan Mark type of Hum market practice.
Two I'll call, we are requiring all customers through the direct channel a lot.
More working with the major internet companies to acquire through that.
Recall that information to me she expects it to acquire a customer exactly.
We are.
<unk>.
Almost I want to say almost.
100% growth in those channels in the new channels on the cost of the new channels that are higher but the quantities are significantly better in terms of post approval rates as well as the cause of.
The phone the Thunder from the earnings could eat into we are seeing.
So that's the primary that would be awesome.
The channel mix is shifting to a higher cost channel and our focus on better quality customers are also driving the per unit cost.
And and I think from the claims perspective.
We are still thinking that would be a second you're investing a.
Healthy organic well, that's really bad or we are.
Planning for the future.
Specially considering the.
Continuous interest interest the trend on interest rates, what we are.
There's a requirement that we have seen some of our financial.
Cushing partners until just the loan interest rates are up you are or we have to work with.
We are putting a stringent view on our risk spectrum to making sure that it would be not compromising.
The tongue or.
More tied on the sales and marketing per unit cost, but in exchange for a higher future risks and.
Uncertainty so we actually we are bouncing back.
Trying to stay on its to keep outgrow for a feature more.
All of these wells to target set a clock better risk quality customers.
Trade trade in trading.
Cost increase I guess at this point in the current cost on the cone cost point of view.
So I think I talked a bit about.
Wholesale gross income of the high cost segment.
Our China segment at the same time, but I've seen that.
Selling and marketing cost per unit costs are coming down what's driving down the mature trees, we have pretty good line outside of having probably 20% to 30%.
Sure.
The improvement in.
The pipeline right now I'm actually asking the.
Continuous growth on such high.
High quality customer channels, and the way our ability to manage about copper unit costs down.
Something like it's definitely in a good position in terms of the economics.
Hi by midyear in terms of total budget.
For us, it's really up to a comment on that.
Yeah.
Yeah. Yeah. So this is really a thanks Craig for the question I think compare yeah. This quarter your sales and marketing expenses with the last quarter, we've been like over 90%.
The increase I think it's to Adam.
Got it.
More colors on this I think is mainly due to two reasons. The first is that the fee settlement in a way it's a.
Different from previous because it either traditional or in the previous way this compare with the traditional way.
This quarter, we started to launch the information feed advertisements and afford this new kind of development marketing strategy are there pre looking ways, it's totally different whereas the previous ways.
Previous waves, we are record of things based on the performance.
Got it the PPP cost per download or CPI with a cost per itself.
This information feed advertisement we record the marketing expense upfront that means we recorded in the CPC or 60 underway, which is shop or a quick for cost per click or.
Needlessly. So you will see that the initial stage that we launched this kind of marketing strategy I'm bill that would be.
What you would see an increase significant.
A significant increase in the south and the marketing increase that is.
Probably the major reason that you'd see that our sales and marketing expense outpaced alone originated volume growth pace.
And then secondly, I think about it Ah Ah Ah basically like a new strategy, a new marketing strategy launching logic is.
Is that really started upon oversaw our channel providers and we could do the models with them and we do some taiwan's to try some marketing strategies and we've got numbers Thunder from the channel partners and we'd go back to optimize our algorithm and improved.
Our marketing strategy launching luxury strategy. So at the initial stage I would say, it's the copper like health care newly acquired customers will be inevitably higher than.
Than usual so at the initial stage I would say.
Especially this quarter the first quarter that would launch this new marketing strategy.
And that would have been inevitably lead to a significant rise in the southern marketing expense, but in the future I would say, we expect to see some room for the.
In the coffee effectiveness.
Thank you.
Future as we there are so many like optimization of our marketing strategy right now of going out I'm not accurate as in this bar.
I'm pretty sure our technology team spend a lot of great effort on this too.
And for.
The cost per newly acquired a customer.
The data on this so I would expect that in the next quarter or in a couple of a few months.
The.
Coffee effectiveness will be improved.
Kasper.
Our newly acquired customer will be drafthouse.
And for the understood I think because if you are a lot of moving parts.
This quarter.
At this initial stage of launching this marketing strategy, we would not say that we will not set a specific number.
Remember like absolute number for the marketing Amazon's expenses or just debt ratios.
Of this expenses the ratio of the total.
Loan origination volumes.
We.
Our confidence in the future in the short term we may.
It's not like that's unlikely that the marketing and sales expenses would outpace our loan origination volume grows a lot.
That will be all.
Yeah.
Thank you. Thank you so.
Can you share.
A little bit more detail around your international expansion.
Update on Indonesia.
And whether or not your company.
Other markets internationally at this time.
Finally, I want to take them back to a question.
Too.
So as we try to talk and we remain optimistic.
Hum.
And the concern about you know not just shopping she's one.
A key component of our strategy.
We are taking a prudent approach in terms of how all of them.
Hum.
Bob.
So overall.
That's about even after market expansion.
So do I.
So that is a function.
So probably unmatched in international markets.
As we have mentioned hardly the church of England.
And he is having things Glenn.
Impasse.
That emerging markets Hum.
So I would definitely call them.
Yes.
And China.
And the economic growth and political or regulatory stuff that they.
It's also somewhat more fluctuate compared to AUM.
China market.
So without kind of managing those factors when compared to the gross economics.
Accomplishment from point of view.
But I'm happy to report in Mexico maintain keeping the top key opinion leaders.
Got it.
In spite of we have seen a.
Profit in stocks and all sorts of.
A few new players coming into the market occasionally.
In certain markets, we have seen them driving the marketing costs are up but you have some sort of impact it had somewhat of an impact on us.
Sonics fuzzy on stone maintained to be the top tier in the market now and then Nigeria, we have gone through that.
Setting up phase that's about market.
Teams are monitoring money lending license.
For the next stop.
If you need a box you can start to grow traffic well.
But in the market.
And then in the leisure market.
Some have used them as necessary changes.
You made it to holiday managing the license application process, we are seeing some.
And.
Such change that's had some impact on us.
We are still confused I was trying to figure that out just country medical go but we are so dedicated cheating Michel market.
As far as the newer markets and the us.
A couple from me how much it can be.
Right.
So in investigation and in the earnings.
Pick up already study phase.
But I have to say that most recent political change that many have some impact on us.
Our appetite it you'd be taking on new market discipline.
Thank you David.
Thank you for the update and congratulations on the really strong AUM.
Growth and profitability in the quarter.
Thank you.
Yeah.
Thank you.
Once again, ladies and gentlemen to ask a question. Please press star one on the telephone and Keith.
Right.
Okay. Thank you operator, and thank you all for participating on today's call and thank you for your support.
We appreciate your interest and are looking forward to reporting to you again next quarter on our progress.
Thank you that concludes our conference for today. Thank you for your participation you may all disconnect. Your lines now thank you.