Q3 2021 Qudian Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by.
Third quarter 2021 earnings conference call at this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded I will now turn the call over to our host from <unk>. Please go ahead.
Hello, everyone and welcome to Chilean third quarter 2021 earnings conference call. The company's results, what you sort of beyond newswire services earlier today.
You can download the earnings press release and sign up for.
The company's fifth personally by visiting our website at IR stuff.
Mr Min Luo, our founder Chairman and Chief Executive Officer, and Mr. Siegel, our VP of Investor Relations will start the call with prepared remarks, and then we will open the call to Q&A.
We continue please note that today's discussion will come from forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995.
Looking statements involve inherent risks and uncertainties as such the company's results may be materially different from the views expressed today further information regarding these and other risks and uncertainties is included in the company's SEC Yep, that's filed with the U S Securities and Exchange Commission.
The company does not assume any obligation to update any forward looking statement, except as required under applicable law.
We also know that she does earnings press release and this conference call include discussions of unaudited GAAP financial information as well as non.
Non-GAAP financial measure.
Chilean press release content, a reconciliation of the audited non-GAAP measures to the unaudited most directly comparable GAAP measure.
We also posted a slide presentation on our IR website.
Details of our results for the quarter, we will reference those can result in our prepared remarks, but will not refer to specific slides during our discussion I will now turn the call over to our CEO. Please go ahead.
Hello, everyone. Thank you for joining us on today's call.
Amid a fast evolving market conditions in the third quarter, we continue to execute crude dent a pressure.
No strategy in our cash credit business.
Surely our asset quality.
A stable level.
The transaction volume for our loan book.
<expletive>.
Preceded it.
It Couldnt Shelly.
Bi tool point of 1% to $3 4 billion RMB only in this quarter.
And our own balance sheet loans.
Better decrease it.
Depreciation.
The 14th.
The 4% to 3 billion RMB.
During the quarter.
Renewed to make.
Steady progress with our <unk>.
While the kids business as of December tool.
Keep Honeywell, we had seven centers operating in Sherman.
Alright and incentive.
Alternate delivery high quality.
Ex China.
Korea.
Collocutor.
Activities.
Services and products to children and families.
The ramp up of Baltimore Keith Center.
It's slower than expected.
To complete the <unk>.
Hi, Tim.
Resurgence.
We are continuing to closely monitor ongoing COVID-19 cause.
Additionally, and proactively.
Taking.
The caution.
Nathalie <unk> as our Heidi.
Priority to ensure the safety and healthy offer children.
Families and stuff in our centers.
Also fully support that within the government.
Regulatory changes amount to announce it.
Paul.
A supplemental lending industry.
And we are strictly complying with that.
Cable regulation.
Yeah.
Moving forward, we will continue to focus on improving the.
The quality of it.
Of our product and service.
While also exploring new investment and business opportunities.
Now I would like to turn the call over to <unk> for more detail.
Our results.
Thank you mean.
Morning, and good evening everyone.
I mean, all of our loan book business, we continue to uphold rigorous standards or credit approvals in the third quarter.
We focused our new loan origination on better quality borrowers with strong credit profiles and I'm a day one delinquency rate continues to remain below 5% at the end of the quarter.
Additionally, more than 99% of our outstanding loan balance well founded by our own capital and our M. One plus delinquency coverage ratio remained high at two three times.
Looking ahead, we will continue to prudently operate on a cash loan business, while simultaneously pursuing new potential growth channels.
Our strong balance sheet. We believe we can continue to grow our all of our business and deliver sustainable value to our shareholders over the long term.
Now, let me share with you some key financial results in the interest of time I will not go over them line by line for a more detailed discussion of our third quarter 2021 results. Please refer to our earnings press release.
Our total revenues for the third quarter, we're going to be $347 4 million, representing a decrease of.
59, 1% from RMB $849 4 million for the third quarter up 2020.
Our financing income totaled $285 5 million, representing a decrease of 41, 4% from RMB $487 million for the third quarter of two young 'twenty as a result of the decrease in the average on balance sheet loan batch.
Loan facilitation income and other related income decreased by 95% to be $8 8 million.
From them would be $177 million for the third quarter of 2020 as a result of the reduction in transaction volume of off balance sheet loans during this quarter.
Transaction service fees and other related income increased to them to be 29 million from RMB of $6 6 million for the third quarter of last year, mainly as a result of the reassessment of variable consideration.
Sales income and others decreased $7 3 million from here, maybe $139 million for third quarter of 2020, mainly due to the decrease in sales related to the wanting more e-commerce platform, which we are in the process of winding down.
Sales Commission fee decreased by 55, 5% to maybe 8 million from RMB 18 million was third quarter of 2020 due to the decrease in the amount of merchandise credit transactions.
Our cost of revenues decreased by 47, 4% in two of them would be $104 6 million by Rimini 190, 818 million for the third quarter of 2020, primarily due to the decrease in costs associated with the loan book business and a decrease in cost of goods sold related to.
E Commerce platform.
Selling and marketing expenses decreased by 49, 3% to RMB 32, 9 million farmer B $664 8 million for the third quarter of last year, primarily due to the decrease in marketing and promotional expenses.
General and administrative expenses increased by 170.
4% to it maybe $157 7 million from RMB $58 3 million for the third quarter upfront in 'twenty as a result of the increase in staff salaries, primarily relating to <unk> business.
Research and development expenses decreased by 21, 6% to Renminbi 40 million farmer, maybe $51 million for the third quarter of last year as a result of the decrease in staff salaries.
Net loss attributable to Chilean shareholders, which can be $94 2 million.
And our non-GAAP net losses attributable to Chilean shareholder, what's it going to be a $99 million for this quarter.
With that I will conclude my prepared remarks, we will now open the call to questions. Operator. Please go ahead.
Secondly.
Participants who wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you would like to withdraw your question. Please press the pound or husky.
For the benefit of all participants on today's call. If you wish to ask your question to the management in Chinese. Please immediately repeat your question in English.
<unk> followed by one to ask a question. Thank you.
Your first question comes from the line right Zhang from Credit Suisse. Please go ahead.
Thank you management for taking my questions. This is factored in from credit Suisse. I have two questions. The first one is on the one the more kids program.
Could you please provide more color on what's how many more in the pipeline maybe into next year and also how's the payback here currently as far as the unit economics.
And the second question is on cost of revenue.
I noticed that on a sequential basis coast revenue increase could you maybe break down a little bit on what's driving the increase thank you.
Thank you Frank Thanks for the questions.
So to address your first question with regard to our variety more kids business.
We actually had three centers in operation during the third quarter and seven centers now there will be over 10 centers in the pipeline for next year.
The performance as we mentioned in our prepared.
March is not as good as we expected because of the on and off original Covid breakout.
You know when we see positive Covid cases inner city Keith activity centers are to first wants to be shut down and the last one to be opened.
And therefore, our centers have been shut down for almost two.
Two months period during the third quarter.
Because of Covid.
So.
Our and once our center core down because of Covid, we need another two or three months to heat. It up again, it's really hard to answer your question regarding to payback periods and the stabilized because we're not at that stage yet.
And and our other current imminent goal is to bring our centers to breakeven point as soon as possible before we do any further expansion.
Hope that answers your questions.
With regards to our cost of revenues.
Just one moment please.
So the cost of revenues because we didn't provide the breakdown in our and things.
The segment reporting is not required under certain accounting rules, but.
The majority of the increase.
Increase of our cost of revenues is because of you know we are.
When we when we do the kids business will have to hire teachers and instructors in our centers. So their costs are in the cost of revenue.
Hope that answers your question.
Thank you very much.
Yeah.
Thank you.
Once again, if you wish to ask a question. Please press star one on your telephone.
Thank you.
As there are no further questions now I would like to turn the call over to the company for closing remarks. Thank you.
So thank you everyone once again for joining us today.
It's a relatively short call if I have further questions. Please feel free to contact our investor relations team. Thank you.
Yeah.
Thank you.
This concludes the conference call you May now disconnect. Your line. Thank you.
Thank you all.
Okay.
Yeah.
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Hello, Ladies and gentlemen, thank you for standing by Puget.
<unk> third quarter 2021 earnings conference call at this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is.
<unk> recorded I will now turn the call over to our host from Killion. Please go head.
Hello, everyone and welcome to Chilean third quarter 2021 earnings conference call. The company's results. What are you sort of weigh on newswire services earlier today and our public online you can download the earnings press release and sign up for the company's fifth Theres only by visiting our website at IR <unk> com.
Even though our founder chairman and Chief Executive Officer, and Mr. Siegel, Our VP of Investor Relations will start our call with prepared remarks, and then we will open the call to Q&A.
We continue please note that today's discussion will come from forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of Nike Marquee fights.
These statements involve inherent risks and also compete.
As such the company's results may be materially different from the views expressed today.
Make them regarding these and other risks and uncertainties is included in the Companys. Yeah. That's filed with the U S Securities Exchange Commission. The company does not assume any obligation to update any forward looking statement, except as it was well under applicable law.
Please also note that she does earnings press release and this conference call includes discussion of <unk> GAAP financial information as well as what do you see the non-GAAP financial measure.
Todays press release contact a recalculation of the audited non-GAAP measure to the unaudited most directly comparable GAAP measure. We also posted a slide presentation on our IR website, providing details on our results for the quarter, we will reference those results in our prepared remarks.
Will not refer to specific slides during our discussion I will now turn the call over to our CEO Milo. Please go ahead.
Hello, everyone. Thank you for joining us.
Today's call.
I made a fuss that evolving market conditions in the third quarter, we continue to execute prudent dent.
No strategy in our cash credit business.
It's surely our asset quality.
A stable level.
The transaction volume for our loan book business.
Decrease it.
It Couldnt Shelly.
By 12, 1% to $3 4 billion RMB only in this quarter.
And our own balance sheets long.
It created.
I appreciate it.
By 14.
The 4% to 3 billion.
During the quarter.
Can you just tell me.
That program with our <unk>.
Well I need more kit business as of December tool.
2021 we had seven center operating Sherman for adult saw an incentive.
Delivering high quality.
Ex China.
Korea.
Uh huh.
Activities servicer.
Services and products to children and families.
The ramp up of Baltimore Keith Center.
It's slower than expected during two COVID-19.
It's okay.
We are continuing to closely monitor ongoing COVID-19 <unk>.
Conditions and proactively.
Taking.
But I'll caution.
Hey, Matt.
Our Heidi.
Priority to ensure the safety and healthy offer children fell.
And it's tough in our centers.
We also fully support that we send to comment.
Regulatory changes amounted allows it.
Paul.
A supplemental lending industry.
And we are strictly complying with that.
Cable regulation.
Moving forward, we will continue to focus on improving the.
Quality.
Our product and service.
While also exploring new investment and business opportunities.
Now I would like to turn the call over to <unk> for more detail on.
Our results.
Thank you Megan and good morning, and good evening everyone.
Echoing meaning all of our loan book business, we continue to uphold rigorous standards for credit approvals in the third quarter.
We are focused on new loan origination on better quality borrowers with strong credit profiles and I'm a D. One delinquency rate continues to remain below 5% at the end of the quarter.
Additionally, more than 99% of our outstanding loan balance well founded by our own capital and our one plus delinquency coverage ratio remained high at two three times.
Looking ahead, we will continue to prudently operate on a cash loan business, while simultaneously pursuing new potential growth channels.
Supported by our strong balance sheet. We believe we can continue to grow our all of our business and deliver sustainable value to our shareholders over the long term.
Now, let me share with you some key financial results.
In the interest of time I will not go over them line by line for a more detailed discussion of our third quarter 2021 results. Please refer to our earnings press release.
Our total revenues for the third quarter, we're going to be $347 4 million, representing a decrease of <unk>.
59, 1% from RMB $849 4 million for the third quarter up 2020.
Our financing income totaled $285 5 million, representing a decrease of 41, 4% from RMB $487 million for the third quarter of two young 'twenty as a result of the decrease in the average on balance sheet loan batch.
Loan facilitation income and other related income decreased by 95% to be $8 8 million.
Some of them would be 177 million for the third quarter of 2020 as a result of the reduction in transaction volume of off balance sheet loans during this quarter.
Transaction service fees and other related income increased two of them would be 29 million, if I'm going to be $6 6 million for the third quarter of last year, mainly as a result of the reassessment of variable consideration.
Sales income and others decreased 7.3 million from RMB $139 million for third quarter of 2020, mainly due to the decrease in sales related to the wanting more e-commerce platform, which we are in the process of winding down.
Sales Commission fee decreased by 55, 5% to it maybe 8 million from RMB 18 million was third quarter of two on 'twenty due to the decrease in the amount of merchandise credit transaction.
Our cost of revenues decreased by 47, 4% to them and be $104 6 million by RMB 190, 818 million for the third quarter of 2020, primarily due to the decrease in costs associated with the loan book business and a decrease in cost of goods sold related to one.
E Commerce platform.
Selling and marketing expenses decreased by 49% to M. B 32, 9 million farmer B $664 8 million for the third quarter of last year, primarily due to the decrease in marketing and promotional expenses.
General and administrative expenses increased by 174.
4% to them would be $157 7 million from RMB $58 3 million for the third quarter uptime 'twenty as a result of the increase in staff salaries, primarily relating to wanting more kids business.
Research and development expenses decreased by 21, 6% to maybe 40 million farmer, maybe 51 million for the third quarter of last year as a result of the decrease in staff salaries.
Net loss attributable to Chilean shareholders, which can be $94 2 million.
And our non-GAAP net losses attributable to Chilean shareholder, what they're gonna be a 99 million for this quarter.
With that I will conclude my prepared remarks, well now open the call to questions. Operator. Please go ahead.
Secondly pop.
Participants who wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you would like to withdraw your question. Please press the pound or hash key.
For the benefit of all participants on today's call. If you wish to ask your question to the management in Chinese. Please immediately repeat your question in English.
Followed by one that you ask your question. Thank you.
Your first question comes from the line of <unk> Zhang from Credit Suisse. Please go ahead.
Thank you management for taking my questions. This is factored out from credit Suisse I have two questions. The first one is on the one that's more kids program.
Could you please provide more color on what's how many more in the pipeline maybe into next year and also how's the payback or apply currently as far as the unit economics.
And then second question is on cost of revenue.
I noticed that on sequential basis coast revenue increase could you maybe break down a bit on what's driving the increase thank you.
Thank you Frank Thanks for the questions.
So to address your first question with regard to all Vattimo kids business.
We actually had three centers in operation during the third quarter and seven centers now there will be over 10 centers in the pipeline for next year.
The performance as we mentioned in our prepared remarks, the margin is not as good as we expected because of the on and off promotional COVID-19 breakout.
You know when we see positive Covid cases inner city kids activities centers are to first wanted to be shut down and the last one to be opened.
Therefore, our centers.
Have been shut down for almost two.
Two months' period during the third quarter because.
Because of Covid.
So.
Our and once our center core down because of Covid, we need another two or three master heat. It up again, it's really hard to answer your question regarding to payback periods and the the stabilized because we're not seeing that as yet.
And and our other current imminent goal is to bring out our centers to breakeven point as soon as possible before we do any further expansion.
Hope that answers your questions.
With regards to our cost of revenues.
There's no more than a moment please.
Okay.
So the cost of revenues because we didn't provide the breakdown was in in our and things.
The secondary reporting is not required under certain accounting rules, but the majority of the increase of cost of revenues is because of you know we.
When we do the kids business will have to hire teachers and instructors in our centers. So their costs are in the cost of revenue.
Hope that answers the question.
Thank you very much.
Yeah.
Thank you.
Once again, if you wish to ask a question. Please press star one on your telephone.
Thank you.
As there are no further questions now I would like to turn the call over to the company for closing remarks. Thank you.
So thank you everyone. Once again for joining US today today is a relatively short call. If you have further questions. Please feel free to contact our investor relations team. Thank you.
Okay.
Thank you this.
This concludes the conference call you May now disconnect. Your line. Thank you. Thank you all.