Q1 2022 360 DigiTech Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to <unk>.

First quarter 2020 earnings Conference call. Please also note.

Parents being recorded at this time I'd like to turn the conference call victory Ms. Mandy Dong final director. Please go ahead.

Thank you.

Hello, everyone and welcome to our first quarter 2022 earnings Conference call.

All results are you sure the earlier today and can be found on our IR website joining.

Joining me today.

I show, our CEO and director.

So Alex Chi our CFO and thereafter, and then Mr. Don Yang our CFO .

Before we begin to propel the remarks I'd like to remind you of our safe Harbor Dana.

The press release, which also applies to this call. We may refer to forward looking statements based on our current plans estimates and projections.

Also this call includes discussions of certain non-GAAP magic.

Please refer to our earnings release.

The Asian between non-GAAP and GAAP one now.

Unless otherwise stated all figures mentioned are in RMB I will now turn the call over to our CEO Mr. Haisheng.

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Hello, everyone I'm very happy to report that scale start to 2022.

In Q1 total loan origination and the facilitation volume reached RMB 98, eight net.

Up 33% year on year, and 2% Q on Q.

Outstanding loan balance reached RMB, $146 7 billion up 44% year on year and 3% Q on Q.

Despite the seasonal impact on the Chinese new year, and the macro and coding hotline, our solid performance continued to demonstrate our resilience.

Flexibility of our operations.

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Thank you Linda.

So it has to be like when you go through.

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Suddenly Toyama cope with a few thoughts here.

It's women, but they will be able to do it.

And then switching gears.

Yes.

Yeah.

I read some of the major concern to the market right now is they'll call me outbreaks to deal with the situation. We created precautionary player to market response magic to make the impact on our business under control.

And in fact kept response derived from our successful experiment handling the pandemic hit.

In 2020.

Back then our response was seen as very timely and effective in the industry.

At the call me resurgence in Q1, and a number of Chinese cities, our team well saft and implemented a land jobs quite empty counter measures.

For example, we launched a multi period of pandemic alert system for the cities that are key to our business.

In addition, please <unk> scaled back our business score high risk customers in the industry got hit by the outbreak.

Such as the creation and hospitality.

Mainly while we proactively communicated with major founding partners about potential extension for long as a payment.

For a borrower who are able to make repayments on time or lost the capacity to repay in the near term due to COVID-19.

Our customer service team step in and help them to apply for repayment expansion.

In the city is severely affected by the Lockdown it was very difficult for our offline team to acquire new customers.

In such cases, we quickly ship allergen okay.

Offline customer acquisition to serving existing customers.

This allowed us to uphold the morrow and sustained business performance.

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With element.

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Amit listen globally.

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Hi, Bob.

<unk>.

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Thanks to the factory managers to mitigate impacts from.

Colby and our strategy to optimize customer base.

We successfully keep the impact to our asset quality under control.

In the first half of this year.

We're working to upgrade our customer base. This includes to acquire more high quality users PR team they source to better serve high quality users and then reducing exposure to high risk borrowers.

With these measures in place.

Percentage of our category.

Those with the best credit.

Profile greatly increase some.

Budgeted level.

Our first payment for 30 days, which represents the percentage of our first payment default for 30 days.

Neil organization.

Also dropped Q on Q.

At the same time we.

Upgraded our cloud bank systems.

Which connects consumer demand with institutional offering.

Meaningfully improved asset quality of online loan facilitation segment.

For example, expected vintage loss rate decreased to two four to two 7% recently ramp to eight 3% in Q4 last year.

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Joe will then get there could you just hold the genome with a yoga.

So in conjunction with your fleet.

But I do agree with you.

The credit quality of our new customers in Q1 was better than our previous quarters.

Even with the impact of Covid risk of formats was significantly better than last year.

We believe it will continue to improve.

Although there was some fluctuation quarter asset quality of our existing loan book Yoko Colby.

Over or impact is still within the control.

Currently the day, one delinquency rate of existing loan book is 497%.

It had been last year.

At a relatively low level one backward.

Our collection rate dropped in Q1 with <unk> in the Lockdown cities, such as Shanghai and Julian.

However, well noted that by May <unk>.

Ray has stabilized in this region.

And it started to improve national wide.

As our user base continued to optimize our risk performance will keep improving gradually.

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Kim Brown, Inc, with a sharper editors et cetera.

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So they've got time agility, it's always do more youre, giving yourself with a shelf life.

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Because it's a little bit from going to jump in.

And as a remainder hits in Chile, we can work with you on that.

Yeah.

In Q1.

Offline operation.

Fix it in some cities and our Colgate lockdown such as gaming.

The lockdown will temporarily put some pressure on offline user acquisition.

Overall impact on our user base was limited.

So they do notice some of them were less willing to spend in the challenging environment.

<unk> with its relatively low lockdown, our total transaction volume only showed a small decrease compared to the pre lockdown levels.

Currently most municipal districts in Shanghai have reached zero Colgate at the community level and the businesses are expected to resume operations in the near future.

As such our operations in this region unlikely to gradually return to normal.

Julia.

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In the eastern region.

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Although call me and related uncertainties are likely to persist throughout this year.

With the set of counter solutions, we have Detroit overtime, and our enhanced ability to effectively respond to new outbreaks. We are confident that we will continue to keep the impact of the pandemic to a manageable level.

What are you going to plan.

That's a good thing for me the distributor.

What do you think you are from here.

Next let me provide an update on industry policy, which the market follows closely.

Jonathan Thank you Jennifer I will mention that controller.

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We have seen positive top down policy development for the industry.

On April 29, our political Bureau, making patched support.

As a development platform economy and to complete Bachelor rectification measure for the platform economy.

<unk> and see the IRC made similar comments at following special meetings.

Both regulators about to complete rectification of financial operation of platform company employee.

Implement normalized supervision and support healthy development of the platform economy.

Senior note that the current rectification of the industry is close to an end.

Related Internet platform company will complete roughly indication process under the guidance of financial regulator and it will be under recognized the provision afterwards.

After over a year long Massification. These companies will be the guy in the industry to be fully compliant and there will be well positioned to develop in a healthier and more sustainable framework.

Or how many are there to get it to perform it.

Johan <unk>.

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So far easier for our shareholders.

Can you project forward or Tunisia.

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John .

Stoppage in Florida.

Florida divisions oil.

We can visit during Q3.

Generally they went to.

The team has been here.

Could you go into you don't present in many countries.

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And the industry policy level.

In early April this year to be Oc and state jointly issued a notice to enhance financial service to support pandemic control and economy and social development.

The documents mentioned leveraging the benefits of financial service provided by Internet platform company why are promoting the discipline and how does the battle commence up such as services.

This is a recognition by the financial regulator of the positive well Internet platform companies play in financial services.

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On the business front, our strategy focus this year is to structural optimization of our user base and funding sources.

To enhance the lifetime value and increase the sustainable contribution of high quality founding.

Therefore further improve our operational resilience.

In Q1, we achieved a noticeable progress in some key areas.

So to do from here.

Or what's the vehicle Goldman strategic thinking.

Thank you.

But the teams.

During the year with a zinger, yes Johan.

Youll have.

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The pension the biggest hit in Q1 and needed a renewed it at that.

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To conclude and we can turn into digital.

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So what do you do to their consumers.

On the funding front, we continued to optimize our funding structure.

We insured execution expanding supply to support business growth.

Second we continuously optimize the funding costs and the contractual terms with our funding partners at.

Our high quality assets in high demand by financial institutions.

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<unk> founding partnership with joint stock Bank, and the major urban and rural commercial Bank.

Rich.

A broader regional coverage and a strong funding supply.

Such expansion will prepare us to better serve business growth and deal with economy uncertainty.

So far we have connected with approximately 70% seven zero percent of national wide financial institution.

Although it should add three more national joined banks or private bank into our partnership.

And have another seven in pipeline.

So if I'm hearing from you.

You shouldn't need to implement.

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On the dosing you seem to be trading income, which includes as you move into new technologies.

Yeah.

At the product front, we have followed a regulatory guidance closely.

Specifically starting in April .

All loans are originated through our platform is within 24%.

After regulatory timeline.

Regarding <unk>, we proactively and have defined a robo.

Spector with credit agencies.

When you turn to gradually implement these procedures.

For you.

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In addition, we have also adjusted product offerings to align with our optimized our funding structure, reflecting the asset preference of new national funding sources.

This allowed us to improve our loan approval rate.

In Q1, we connected with more national joint stock banks. Meanwhile, given the preference of big banks, while higher quality assets and the increase the risk of near Prime borrower in the current macro environment.

We've restructured our asset distribution engine to optimize the margin between loans and the founding institutions we are.

Also introduced a dynamic adjustment in Canada for the return of financial institution.

The mechanics that allows banks to get our syn loan that are aligned with their preference while ensuring their expected return.

The loan approval rate our partner bench goes above 75% in kilowatt ground roughly 77 zero last December .

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Turning on the Georgia coast initiatives.

For the year.

Without that job and do good things you can have a major co leader attributable.

Some of the digital adoption.

Okay.

Okay.

As for our yogurt, our key strategies is.

To improve the quality of user base. So far we have achieved a very noticeable progress specifically, we leveraged a combination of newly developed a model RTA real time, API technology, and the capacity expansion to effectively optimize.

Quality of user acquisition.

Amount of customer that you're lying into one.

<unk> received the highest rating down the financial institutions. They are low the credit profile.

Multiple key indicators of yoga quality continue to improve.

Is that ratio up user with fewer multi platform <unk> lines.

With mortgage and the car loan yields already does stable income and tangible assets.

The improvement of these indicators show that we have greatly in house every business of our business and increase user time value.

Thank you <unk>.

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100 <unk>.

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As our usual data.

Eastern Europe , which is again something that will linger.

They couldnt missiles your box your Goldman Guangdong.

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When done about 100 engineer, good, which you don't seem to be concerning mobile.

The external environment brought a lot of challenges to our business in Q1.

However, our team once again met the challenge and delivered a solid result.

Given the ongoing uncertainty related to the Covid.

We will continue to stay vigilant on potential risks and maintain prudent operations.

Harder to accomplish our strategy objectives in this transitional year.

Continuing the growth.

Thank you Michael.

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Youll Juggle chart every year.

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Now turning to our shareholders.

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Good luck this year.

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Could you help us there.

Johan Youll hold this year.

Have you thought of duty issue.

Okay.

2022 it will be a quite challenging year for both our company and the industry.

There is pressure from the Sino U S relations on ADR regulatory developments toy industry and impact from the pandemic.

Nonetheless, we believe these factors are gradually turning around especially with recent positive policy signals.

In addition, our consumer loan assets demonstrate very strong resilient during the pandemic.

Our current data comes out for the time.

<unk>.

Hi.

Consequently, we are quite confident some business prospects.

At the most recent wave upcoming outbreak Bradley's got the sites in China.

He's back with the business activities returned to normal.

The structural upgrades, we have made this year.

Our user base and the founding network will put us in a more competitive position.

We have seen greater demand for our services both from end users and the sound financial institutions.

And that precisely reflect our growing value.

Going forward, we will invest more in tech knowledge to boost our operation efficiency. This.

Will enable us to continually build our competitive advantages.

In a market of great scale and mechanistic.

Yeah.

For Assembly issue, even though it's helpful. Alex.

Certainly the freezer.

Next I will turn to our CFO Alex.

Okay. Thank you hi, Sean good morning, and good evening, everyone welcome to our first quarter earnings call.

As John discussed earlier, we had a pretty solid quarter in a row, rather rough period of time from microeconomic perspective.

Consumers' demand for credit came in more or less consistent with normal seasonality.

<unk>.

Well, we did experience some impacts from the resurgence of Covid in some regions in China.

Overall asset quality of what's actually modestly improved during the quarter.

As the optimization of our risk model and the contribution from high quality, new borrowers more than offsetting COVID-19 related fluctuation among existing partners.

After two leading indicators of asset quality overall day, one delinquency improved to five 2% from five 4% Q on Q.

More importantly day, one delinquency for new borrowers in Q1 came in well below 4%.

Indicating clearly better quality versus existing borrowers.

Overall 30, the connection rate declined modestly to 86% from 87% Q on Q.

Mainly because we have to make necessary adjustment to our collection operation in regions being significantly impacted by Covid.

Again, we see clear deviation between new borrowers and existing borrowers.

New borrowers 30 day production rate remained above 90% in Q1.

These risk metrics further validate the effectiveness of our user acquisition strategy, which focus on our high quality segment of the market.

Total net revenue for Q1 was $4 3 billion.

Or is this $4 4 billion in Q4, and $3 6 billion a year ago.

Revenue from credit driven service capital heavy.

It was $2 9 billion.

<unk> to $2 7 billion in Q4, and $2 5 billion a year ago.

Year on year, and sequential increase was mainly due to longer average tenor of the loans.

Gross in on balance sheet loans, as well as releasing guarantee liability on previous loan balance.

More than offsetting the negative impact from decline in average prices of the loans.

Have a facilitation revenue take rate actually improved modestly versus Q4 also due to longer long tenor.

Revenue from platform service capital Light was one 4 billion compared to one 7 billion in Q4, and $1 1 billion a year ago.

The year on year growth was mainly driven by a significant increase in capital light loan balance.

The sequential decline was due to a decrease in capitalized loan volume along with the decline in capital light revenue take rate in Q1.

During the quarter <unk> and other technology solutions contribute roughly 54% of the total loan volume.

As we discussed in previous calls, we expect capitalized and other tech solutions percentage contribution to our total volume to remain fluctuating around current level throughout this year.

Longer term, though we will continue to pursue tech driven business model and expect capitalized to become a larger portion of our business in the long run.

During the quarter average prices of our loan portfolio dropped by 50 basis points.

<unk> below 24%.

In fact, all new tap heavy on capitalized loans are already priced below 24% at this point in time.

We are very confident to achieve the rate cap requirement ahead of the regulatory deadline.

Okay.

During the quarter sales and marketing expense declined approximately 12% Q on Q.

Mainly because Chinese because of the Chinese new year holiday as well as our prudent control of the pace of our user acquisition.

On a blended basis average cost per user with approved credit line was 417 compared to $3 19 in Q4.

Again, this blended calculation given the script sales marketing expenses among users with high credit line of between 100 to 200000, RMB as well as the dose regular users with credit line between 10 to 20000 RMB.

Logically unit cost to acquire those high ticket size users should be justifiable, a much higher than the regular users. Therefore make a comparison of blended user acquisition cost become neither relevant more reliable so on the Apple to Apple.

Basis, excluding large ticket size users average cost per approved credit line of regular users was approximately 322 in Q1 compared to 246 in Q4.

More importantly average cost per dollar amount credit line remained relatively stable Q on Q for regular users.

As always we will continue to use lifecycle, ROI and LTV as key metrics to determine the pace and the scope of our user acquisition strategy to ensure the sustainability and the profitability of our operations.

Although overall risk profile of our user of our loan portfolio modestly improved in Q1 due to the contribution from high quality users.

The impacts from micro uncertainty and Covid resurgence.

Still noticeable among existing users.

Therefore, we continued to take a prudent approach in booking provisions against the potential credit loss.

Provision for contingent liability for loans originated in the quarter was approximately $1 4 billion.

Meanwhile, approximately $440 million of provisions for contingent liabilities.

Previous period loans was rhythm back as actual performance of those loans with better than expected.

With strong operational operating results and a stable contribution from capital light model, our leverage ratio, which is defined as a risk bearing loan balance divided by shareholders equity was at historically low at four two times in Q1 compared to.

254 times a year ago.

We expect to see rather stable leverage ratio for the time being until capital light contribution resumed growth in the future.

Okay.

We generate approximately $1 4 billion cash from operations in Q1 compared to 2 billion in Q4.

The decline in operating cash flow was mainly due to some COVID-19 related timing issue.

Shanghai being locked down late in Q1, we were unable to complete some administrative procedures that normally I required near the end of the quarter to collect receivables from some financial institutional partners as such a price had been lay 400 million tier one.

Receivable are pushed into Q2 connect assuming the lockdown in Shanghai Gratulate easy.

Total cash and cash equivalents was $9 8 billion in Q1 compared to $9 6 billion in Q4.

Non restricted cash was approximately $6 2 billion in Q1 versus $6 1 billion in Q4.

As always a significant portion of our cash would normally be allocated to support the security deposit and other usage.

In our normal business course.

As we continue to generate healthy cash flow from operations. We believe our current cash position is sufficient to support the growth of our business to invest in key technologies to satisfy potential regulatory requirements and.

Return to our shareholders.

<unk> was the dividend policy approved by our board last year, we declared another dividend of U S. Dollar 22 cents per avs for Q1.

The cash dividend represent approximately 20% of our Q1 earnings.

Finally regarding our outlook for 2022.

As we communicated to the market previously.

We believe 2022 will be a transitional year for the industry.

The participants are adjusting to the new regulatory settings.

Meanwhile, the unexpected outbreak of Covid as well as associated measures to control the outbreak create additional macro uncertainties there.

Therefore, we want to maintain a prudent approach to plan, our business and mitigate potential risks.

At this point in time, we would like to keep our full year loan volume guidance of between RMB 410 billion and RMB 458 billion.

<unk> <unk>.

Representing year on year growth of 15% to 26%.

We view this transitional year as the opportunity for us to optimize our operations strengthen our technology platform and upgrading our customer base to build an even stronger foundation for our future growth.

As always this forecast reflects the company's current and preliminary view, which is subject to material change.

With that I would like to conclude our prepared remarks.

Operator, we can now take some questions.

Thank you management will now begin the Q&A session. If you have any questions. Please zero one on your telephone keypad.

And zero to two cancelled for those who can speak Chinese. Please ask your question in Chinese first followed by English translation.

In order to have enough time to address everyone on the call. Please keep it to one question and one follow up and were trying to call. If you have more questions.

So once again zero one follow up questions.

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Then I'll do the translation part so the first one is about we have made a capital injection last year for our micro loan license and could you. Please elaborate more about how we plan to use it.

Preparation for prior even for a national license or are we actually starting to using it as an alternative funding source maybe.

Maybe in the very near future.

And the second one is considering the resurgence of COVID-19, and uncertainties in the economy or there will be some challenges, especially in the loan collection and the offline business development. So it could be more specific how are we going to dealing with the situation.

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How do you look at the exhibited.

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Okay.

Hi, Ralph Lauren queue up your question.

Two one.

Yes, you are right.

My opinion technology that can be used to inject into the micro handy.

On the other hand, we also leveraged our capital.

At the founding recently through the channel.

<unk> joined <unk> London.

Products, both of which can put our leverage ratio.

For your second question.

First off why aren't we do not do that post.

Collection for offline.

And then the impact.

Only through the offline Cathy Mark revision.

Our loan collection process conducted through online and they provide that amendment, which it sounds pandemic.

Yes.

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Presumably nuclear.

I hope this clarifies your question.

Yes.

Our next question is Thomas Chong of Jefferies.

Yes.

Tom.

Well the <unk>.

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Well Linda.

Yes, Thats fine.

Guidance.

Thank you Joe.

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Thanks, guys.

Business trends.

Thanks management for taking my questions.

I have a question.

Brian .

On a month by month basis, starting in April and how should we think about the low end and high end of the guidance.

And our assumption about a couple.

Couple of Richmond.

In the coming quarters, and how should we think about in terms of the consumer sentiment in coming quarters.

Second question is about.

How are we seeing the business trend.

Top and lower tier cities given.

Impact more on the tier one cities. Thank you.

Okay great.

Similarly in Europe with ice.

Okay.

Okay.

Hi, Thomas Thanks for your question so.

From the overall business trend, we look at our current assumption is that.

You know that Shanghai will be gradually.

We're going to reopen.

Starting from maybe June and so we are assuming a certain level of activity return.

<unk> Shanghai maybe.

Maybe starting next months.

And.

We don't expect a sort of a V shaped turnaround.

It away I don't think thats build into our model, we are expecting a rather compared to say 2021.

Pandemic happened it was a reshape turnaround but at this time, we are expecting a rather slower gradual kind of.

Recovery.

After the after the Covid. So that's what that's what we are building.

In our in our forecast.

In terms of tier one cities.

Again, the Shanghai situation.

Well published that and.

Like I said.

We at least according to the official media.

Is gradually reopening and we expect to get some kind of a return.

Yes.

Operating normal operation starting from June .

For other city like Beijing.

For one we from operation operational Wise, we're probably don't have much.

A large exposure in Beijing, but too.

The Beijing situation is slightly different from Shanghai, or I wish a quite different from Shanghai, meaning like.

A significant portion of the normal life and city still remaining.

And yes, there are certain kind of a community lockdowns and so on so but.

The situation is much better than it was in Shanghai at the peak of the pandemic.

Last much and so.

We are again for this kind of situation.

Obviously, we're closely monitoring that.

<unk> Beijing.

But I don't think it will be anywhere near the Shanghai situation in terms of impact to our business in Asia.

Thank you.

Thank you.

Okay.

The next question is Alexey from UBS.

Great.

Hello.

Neither one of us.

Fernando.

Morning, Ken Goldman.

They are kind of growing.

But.

Yes.

1000 <unk>.

And one connection.

<unk> trend.

DSO.

Yes.

Excitement in Q2.

Wait wait.

It's great to see what kind of spoke.

Thanks Wendy.

Uh huh.

Okay.

Sure.

Excitement is largely what you Chi Tung.

Ill touch on touch on the audience through into 2000 children.

It's in the loan book I, just wanted to Sunoco.

Sunoco.

The other one is acquiring APR.

Okay.

Because the capital is the shallow.

Since you've only got about <unk> of course, the whole team.

Obviously, it's a whole number of Wheeler.

Sure.

On Castle Mountain.

Right now you go outlook.

We deeply.

I just saw.

Q did you guys say.

Okay.

Hi, This is Alex.

Just as they do it when we see them as a cohort.

Pattern.

That kind of how that's looking.

And is that going to go up.

That's helpful.

And so we do at home.

Got you.

Sam.

It goes into production.

Okay I will translate for my question first on court.

I think give us some color on your latest trend they want and then one collection rates.

We would expect them to remain stable or some deterioration in Q2 and also just wanted to clarify that Michael mentioned executive into loss, we will incur.

Comparable 8% coupon for the 27% just wanted to confirm whether that referred to the total loan book.

And second question is on <unk>.

Right.

Yes.

So I'm wondering what's your average API now and whats the current 10 from coming onto Q2 expected to further decline and.

Do you expect Youll take rate to Q1, or maybe continue to edge down.

And then.

Or your new users.

With lower risk.

They will also have a lower APR.

With Jetblue perspective, how does the.

Return compared to a deal.

Sure.

Okay.

Okay.

Until then so can you say that you have to use again.

From Florida.

So if you can answer.

Z clients.

We would tell you that.

Sure.

<unk>.

So Jason I think.

Indeed, the secret.

Yes, since this has begun to ship.

Is it seasonal.

Just a woman who truly.

Yes.

And that's where those tenants.

Just kind of materially.

So.

Is it also thanks, Scott Sandy hook load should be clearly does that since you've been a yieldco.

Again.

Numerous <unk> on that.

That sounds good.

With that that is essentially already because of the distributor.

No.

Like kind of thoughts generically they leave and.

When you kind of exist.

It is truly satisfying.

Z.

So in that bucket.

Some of it you can see kind of doing the Chileans IPC Fernando.

Great detail.

And my comment to me.

No.

Well my easy source.

Right right.

To assist with based on weather.

But in that.

Hi, Alex.

The tissue side itself.

Hudson.

Thank you.

Okay. Thank you for your question so regarding to the vintage loss.

In the case of new transactions and drop out in the first quarter.

For the new customers, we acquired I think in the first quarter actually the performance will be better than the new transactions in the first pillar. The council we have seen the quantity of our new quest customers have been improved.

For your first question the delinquency rate also referred to the existing loans on book and we have seen that it has been decreased in April and May and E checks for new transactions and will be decreased two 3%.

Regarding to the recovery or collection rates and apart from regions like Shanghai, Beijing, and Hong on for other regions.

Our recovery rate is better than April so we foresee that.

Overall risk performance or cover rates of manufacturing in the second quarter help me clarify your question.

Yes.

Okay.

No.

<unk> got to be doing here.

Goldman.

Okay.

Silicon module.

Hum.

And we can see Katherine Hogan.

Continuing to total between the high yield.

Forgive me, but we can see.

Clinical in terms of the degree.

I'm thinking about Jack up.

Wheeler.

Excuse me.

Hmm.

Thank you Doug.

Joining forces.

We ended up.

Thank you.

Good afternoon.

Sure.

Okay.

Yes, starting in April .

Our.

Next question.

Already making our paths one is about 22% in the near term leaseback base rates.

Relatively stable, we do not expect to EBITDA.

Alright.

Glen.

Sunil.

And anytime youre going to Cushing.

Yeah.

Okay.

The bigger impact is identical.

What was the topic.

Thank you Sir.

<unk>.

Sandeep Sandeep.

And to your question maybe they don't.

Got it.

So really a good deal and we wont be Theresa this would be kind of like having bigger.

For the time.

Great.

Okay. That's helpful.

And then I kind of hope we can do this year.

I guess I mean <unk>.

We ended up with that kind of what's embedded.

If you look at the Kansas City Port.

Sure there are new customers, we've acquired in the first quarter.

If we only look at the short term yes.

Yes, compared to previous debate is relatively lower.

However, we value more oil and gas or lifetime value net new users contribute a lot much better than the previous quarter.

Eric.

Okay.

Okay.

Yes.

As a reminder, please press zero one follow up questions.

Operator, we probably have time to take one more.

Yes.

If any.

Yes.

Okay.

Our next question is Ethan Wang from CLSA.

Okay.

What emission compliant philosophy is that just going to take advantage of the lenses.

Yes.

Pro forma accomplish a wind up $2 1 million.

And just in time funding closer to Andre.

You've been Boston Logan.

We do use it.

So some shutdowns and they're born to.

Womens Susan.

Susan.

Thanks, Susan.

Yes.

Okay.

Just one quick follow up question on the take.

Great.

Take rates also.

By funding costs just wondering.

Plus the environment, where the defense will approximately platform pressure on this.

Okay.

Just wondering if management can offer more color on that thank you.

Let me close the woman.

Susan I kind of like those within pool.

This new tool.

Got it.

Sure.

<unk>.

<unk>.

And there will be an angle to begin with.

Yes.

Thank you over to able to carefully balance the heart huh.

We're kind of done it's just another example.

Examples would be because your body.

Between the two.

Good for you.

Okay.

If I recall for the quarter.

Can you get to the other.

In the quarter.

Yes.

Yes.

You can't answer your question first we do notice we have sufficient funding supply this year.

We now take.

Funding costs declining trend, we feel like and we do not.

Now just about decline actually happen this is Kent.

In <unk> 2021 we have already brought down I'm not all our funding cost.

And next.

Two please.

We focus more on our CAC.

For example capital like Richie that's impacted by funding.

Yes.

Okay.

I just wanted to add.

A quick point there so basically it means that as we expand into the large national banks.

Thats actually our focused shop for this year.

Along the way there will be modest.

Drop in funding cost, but not as significant as what we did in the last year or previous couple of years.

At 7% actually we are already probably one of the best.

Funding costs among our peers.

Thanks.

Alright.

Thank you.

Okay.

Yes.

And this is the end of the Q&A session now I hand back to management for closing remarks. Thank you.

Okay. Thank you again for everyone to join our conference call.

Have additional questions. Please contact us offline. Thank you.

This conference call you may disconnect Goodbye.

Okay.

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