Q3 2021 Jiayin Group Inc Earnings Call
Good day, ladies and gentlemen, thank you for standing by and welcome to the join groups third quarter of 2021 earnings 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 as a reminder, we are recording today's call. If you have any objections you may disconnect. At this time I will now turn the call over to MS. Suzy Wang director of the Blue shirt Group Asia Ms. Wang. Please proceed.
Hello, everyone. Thank you all for joining us on today's conference call to discuss giant groups financial results for the third quarter of 2020. One maybe released the results earlier today. The press release is available on the company's website as well as some newswire services on the call with me today I'm used to being great Chief Executive Officer, Mr can be found.
Chief Risk officer, and you can see that changed post financial officer before we continue. Please note that today's discussion will contain forward looking statements made on the safe Harbor provisions of the U S. Private Security Litigation Reform Act of the.
Reform Act 90, 95 forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from expectations expressed today further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
<unk> does not assume any obligation to update any forward looking statements.
As required under applicable law also please note that unless otherwise stated all figures mentioned during the conference call I am trying to I mean be it with that.
Let me now to the call over to our CEO Union Great go ahead.
Hello, everyone. Thank you for joining us, though Carla <unk>, earning conference call.
Delivered another outstanding quarter with impressive financial results, reflecting the success of our growth studies.
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We continue to diversify our mueller sells and a burden.
Collaborations with institutional partners, our alloy, although realizing volume has doubled from last year to support U S total I'm, beating with.
43.8% increase in our revenues. We believe we are on the right track for our legs to stage all of our tools.
Leverage to buy our continuously a quality expanding our nearest sauce, while maintaining raised management.
Economists or a.
Founding partners increased to 36.
With another 42 institutions in discussion we are confident we will have continued topline growth and capture a massive opportunities in the early consumer market.
In this corner, whereas when you're zoomed, all our marketing program and have begun acquiring new customers.
More accelerated pace that is focused on higher credit quality customers.
Delinquency rate well, yes, that's 10, new rapid portfolio growth. We started a long program for small business owners small business are the backbone of all countries, the clomid development and our common prosperity.
The initiatives that <unk>.
Of the option for our sales he pepto two cruise presents a great opportunity for US. However, we are very cautious about what we are offering.
I know the use of a loan granted and a repayment capabilities.
Well gradually eroding out this program I know, we're gathering more data and develop.
Initial 18.
Alrighty criterion of tours to ensure our laws alcohol borrowers.
Quality and a good critical today.
Today, a large portion of our loan volume continues to go to our existing borrowers with higher quality with our repeat borrowing rate for this quarter.
50, 941%, we believe serving a higher quality boroughs, well improve our credit risk profile and ensure affect quality.
We remain dedicated to concerning credit credit.
Quality with our improved credit, scoring system and advanced technology capabilities capabilities.
I want to mention our approach in corporate social responsibility or CSR, which is one of the most important aspects of our corporate culture since <unk> was founded.
We have been dedicated to creating value for society adhering to charity.
Various of the infill, but others you'll help yourself.
Well all of our amazing brands are for the schools program designed for providing better school you my revenues, while their children in need Sofa giant has methylations to 40 stores across the country, including durations of the score surprise books Cassia was in law. In addition.
Towards the Air formation, we also applies.
Various of the events in order to so more people's lives and contribute a better Harris, but remaining committed to launch more initiative and are continuously promoting so U S. Ah awareness by mobilizing and are participating in a wide of that.
80 of the social and public events.
In closing, we achieved yet another solid quarter with impressive financial growth wave.
We will continue to advance our technological capabilities and solidify our operation in China and in your overseas market.
We are working with our institutional partners to further explore all opportunities. So that's what enable us to diversify our business model. We are confident to maintain skillful equals quota attained.
<unk> robust consistent and our long term growth with that I'm allowed to harden the COVID-19.
Our C CFO sitting out.
Please go ahead.
Thank you Mr. Yan and thank you everyone for joining our call today is.
Mr. Yang mentioned, we ended another great quarter on a strong note.
Total loan origination volume maintained their strong growth trajectory, reaching $6 7 billion RMB, representing an increase of 142% year over year, and a 17, 7% sequentially.
Net income came in at $124 8 million RMB 41, 2% year over year increase compared to $88 4 million RMB in the same period last year.
With the clearance of P to P balance and diverse financial institution partners. We are able to continue our upward trend in this quarter and we are confident to resume high quality growth in the years ahead.
Now let me 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 $577 1 million RMB 43, 8%.
Revenue growth was primarily driven by the significant growth in loan origination volume.
Which increased to 142%.
Other revenue was $40 3 million RMB down 47.7%.
This decrease was primarily due to reduced revenue from PTP related services that the company no longer supports the legacy peer to peer lending.
Business.
Partially offset by themselves are hardware by Shanghai Peanuts.
Integration in May.
Moving onto costs, we have step up the overall spending on customer acquisition since last quarter.
Third quarter total operating costs and expenses increased to 68, 4% year over year, reaching $423 2 million RMB.
The increase was along with our topline growth as well as the significant increase of spending on sales and marketing.
As we began to attract new customers at a more accelerated pace.
Total operating costs and expenses as a percentage of revenue was 73, 3% versus 62, 6% in the same period last year.
Origination and servicing expenses were $88 3 million RMB.
48, 4%, primarily due to the increase in credit assessment expense, resulting from higher loan origination volumes.
We incurred a cost of sales of $9 4 million RMB compared with Neil from the same period of 2020.
The increase was primarily due to the cost of hardware so it by Freenet.
Allowance for uncollectible receivables and contract assets long suitable and others were at $6 2 million RMB down 16, 8% from the same period of 2020.
The decrease was primarily due to the decrease in the estimated default rate under our current business model since we no longer support the legacy PTP London business.
G&A expenses were $45 3 million RMB up 21, 4%.
Primarily due to increased expense expenditures and employee benefits and professional service fees.
R&D expense was $37 1 million RMB down four 5%.
Lift was from Meritage due to the interest of the utilization and the productivity of our facility and our employees allocated to the research and development Department.
Of which has been partially offset by the increase in professional services expenses as the company continued to enhance our research and development capabilities.
Sales and marketing expenses were $236 9 million RMB.
138, 1%.
Primarily due to our new online advertising and marketing strategy, which has resulted in higher customer acquisition expenses.
As we intend to continuously grow our internet org.
Intonation volumes, we've again, attracting new customers at a more accelerated pace with our superior marketing algorithm and translating them into our loyal customer base.
We have achieved another attractive profitability.
Loan volume growth with the posting net income of 120, $124 8 million RMB up 41.
Present skewed over years.
We ended this quarter with $178 5 million RMB cash and cash equivalents.
Compared with $141 4 million RMB as of June 13, 30, 2021.
Our improved cash position gave us greater flexibility, while enable us to invest in initiatives that will drive long term growth.
Yeah.
Moving to our guidance.
Due to the slower than expected growth from our loan origination volumes on a full year 2021 large AG volume is revised downward to the range between 20 billion RMB 223 billion, RMB, representing 72% to 98% a year over year growth.
As we follow and achieved our long term growth objectives, we are still confident in that.
Our business model and our ability to bounce back strongly.
With that we can open the call for questions.
Again, our chief.
Risk officer, Mitch she and I will answer your questions. Operator. Please go ahead.
As a reminder to ask a question you will need to press star one on your telephone.
Draw your question press, the pound or a husky once again to ask a question at star and the number one on your telephone keypad.
Yeah.
Your first question comes from the line.
Andrew Scott of Roth Capital Partners. Please ask your question.
Yeah.
Good evening and congrats on a strong profitability.
My first question revolves around.
Your increased acquisition of new borrowers and it looks like you guys are making strong traction on the sales and marketing spend you guys had made in the last few quarters. So can you just kind of talk to the success you've seen in the new online advertising.
Yeah. So this is Andy I will take this question. So yeah, so sales and marketing expense were $236 9 million RMB. So if you compare it to the last year I think.
It's primarily due to the increase of loan facilitation that Mt.
But if you if we look at the last quarter's number this quarter represents a 36%.
So amount to 36% increase I think it was roughly half it's a marketing fee.
The remaining half is driven by the marketing initiatives and the strategy that we launched.
So as I mentioned in the last quarter I think the second quarter is the quarter that we scale launching dos information feed advertisement.
Compared with the last quarter, we are pretty happy to see greater.
Great improvements in our in our coffee in fact, it's the ratio of this initiative.
So in terms of the cost per new borrowers in a cockpit solicitation.
So sanitation of mouth, but they are both edging downward.
We've also seen a great breakthrough at the end of September that's the cost of these initiatives.
Our comparable to our existing marketing channels.
So if we look at the.
Total selling and marketing expenses at this moment.
I would say there are lots of moving pieces and the result will be affected differently.
Different customer mix I'm in a repeat borrowers.
Or the new newly awarded borrowers.
The channel mix, but.
The numbers and the performance come in.
This quarter we are.
Pretty COVID-19 and just see that this new initiatives that will help our.
Green bean target customer and the more effective economic and efficient way. So there will be definitely that there will be room for efficiency gains as well as our volumes grows and we will continue to work to optimize the cost.
So hopefully that covered by the trends that we are seeing now.
Great. Thank you for the information stretch near the efficiency and the initiatives is.
Improving so my second question revolves around the new products you guys have for small businesses. It's exciting to hear you guys are rolling that out can you maybe provide some details on maybe the size of the loans what type of businesses you guys are targeting and any other detail you can provide there would be great.
This is CFO I'm going to take a question. Thank you and you. So regarding the SME. We have started to focus on SME is still primarily focusing on acquiring these customers to our online acquisition channels.
We stay where we are familiar with and where we are highly cost effective there with them into a channel wise.
In terms of the type of customer, we're playing are really micro to small.
Businesses as part of the acquisition process. We are asking these potential customers have to submitting their pets as licenses as well as their personal quaint credential, which helps us to evaluating their.
They have quite a credit worthiness.
At this point, we have both targeting them.
Perhaps more cost to identify the customers who are part of giant giant customers, but also our small business owners.
In addition, as I said before we also are trying to our online.
Customer acquisition channels.
In terms of loan size wise, it's staying a little bit.
On site.
Long sizes, a little bit higher than what we are having now it's about 20% to 30% higher in terms of a thumb average credit lines.
Awesome. Thank you that was very helpful. My next question has to deal with that international expansion.
You guys are still seeing great partners.
That shows the top three lender.
Recently, she Tuesday.
And Tonight.
So just wondering if you guys had any updates on the various markets you guys are entering into.
Oh thank.
If I'm again I'm going to take all your questions on the market expansion.
Absolutely we have shared a lot of time, we're making solid progress in our international markets.
For the Mexico market, Mexico market, we're seeing new commerce.
Into the Mexico micro lending business, but we remain the leading position in the Mexico. Our volume our total total volumes may not having increased dramatically, but we are making solid progress in terms of preparing ourselves towards a product per se.
Felipe proliferate patient in terms of the Nigeria.
I believe we shared that we have obtained the lending license.
Now, we're trying to achieve our scalability.
And we put it back on Indonesia.
We are still in the process of trying to sell.
Modify our positions in terms of our lending licenses.
Okay.
Great. Thank you.
That's it for me if I may on on your credit Cross the your your charge for allowance.
Uncollectible receivables as a percentage of loans funded has dropped substantially.
Is there kind of a level that you guys see it normalizing.
And do you guys feel comfortable with the average.
Quality of the customer you guys are funding today.
We're not able to catch up question can you say that again Andrew.
Yeah.
Yeah, sorry.
Just on credit cost your.
Charges for uncollectible.
Counts per loan funded has dropped substantially so can you just talk to where you see credit costs going in and.
And how do you feel about the average credit quality of the standard customer today.
How I would talk about the general directions are the REIT.
For the for the tropics, the credit cost on the uncollectible loans is primarily driven by our improvement on the credit quality.
Hum.
Because there are lots of your we've changed our business model.
<unk> substantially so most of the collective.
Collective allowance.
For this quarter due to the related party I mean, the it's.
Financial institutions that we provide a service to so most of it most of them are licensed.
Financial institutions, so they have a pretty.
Pretty good like credits so we.
We basically you can see the remaining part on the.
Mexico and that was our from our off on the previews of business the remaining on that.
Look.
Yeah.
Awesome. Thank you and last one if I may.
It looks like you guys are are beginning to generate some revenues from them.
Can you just speak to how the integration is going.
And how you see that business working over the next few quarters.
And that's all for me.
Oh, Yeah, Yeah right. So this is city again, so because of the reason the crack down on the blockchain and a bitcoin mining brought it to market.
A lot of challenges to this business segment. So as a result of its Merrill Lynch.
We just did stop if there's a settlement operations in mainland China, but we are actively seeking opportunity to move it to the overseas.
We'll be closely monitoring the regulation.
And the remainder alert to adjust our plan.
And in the end.
We will we are assessing this investment according to this ever.
Evolving policy and we will update the market when there is a progress.
Great. Thank you for the responses and once again congrats on the strong quarter.
Yes, Thank you Andrew.
Okay.
Once again, if you wish to ask a question. Please press star and the number one on your telephone keypad.
Seeing no more questions I will turn the call to MS. Shen. Please go ahead.
Thank you operator, and thank you all for participating on today's call and thank you for your support we appreciate your interest and look forward to reporting to you again next quarter on our progress.
Yeah.
Okay.
This concludes today's conference call. Thank you for participating you may now disconnect.
Oh.
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