Q2 2022 Lexinfintech Holdings Ltd Earnings Call

Okay.

Thank you all for standing by and welcome to the Lexicon Fintech second quarter 2022 earnings Conference call.

At this time all participants are in a listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

Ask a question at that time, you will need to press Star then one one on your telephone keypad.

Please be advised that today's conference is being recorded.

I'd now like to hand, the conference over to your Speaker Ms Echo Yan IR director of Lex and Fintech. Thank you. Please go ahead.

Thank you operator, Hello, everyone welcome to.

Second quarter 2022 earnings call with us on the line today are CEO .

L J.

It's almost any funds under C. R O G than.

Before we get started I'd like to remind you that the call and presentation contain business ultimately.

Forward looking statements, which are based on assumptions as of today actual results may differ materially and we undertake no obligation to update any forward looking statements.

<unk> will first provide an update on <unk> performance.

I'll cover the financial results in more detail and lastly, Jay and done well discuss risk management.

Over to Jay Keiths remarks in Chinese and English translation.

J P.

Hello.

Thank you ladies and gentlemen.

Hello, everyone. It is my pleasure to talk to you again I'm sure all of our second quarter 2022 earnings performance.

Okay cool.

So that you'll see I mean things are so Sunday Joe.

This will be a need.

So Daniel and he didn't do it here.

You bet.

Although you'll have questions, so well, yeah, youll pool Dolby easier.

So again some of that so if you say, okay. So what do you so hope CFO .

Okay.

In the second quarter total loan originations reached RMB 49, 1 billion up 13, 9% quarter over quarter.

Operating revenue was RMB 2000, 410 million up 49% quarter over quarter net profit was RMB 167 million up 105, 5% quarter over quarter numbers of both active users and the new active user.

There were higher than in the first quarter funding costs continued to decrease on the risk indicators remained stable, although honestly our al will provide more details later.

A couple of years he pinzon throughout though you women Yo Yo tornadoes here, you'll get closer towards Yeah. You bet. So you don't get to your phone. So you Cook with Jim <unk>.

Some of them.

Syngenta.

Thank you Sir.

Tinder and sometimes they happen to us this is being done.

We can talk off the bus familiar linear Michael Kim.

So that's all good.

Well, it's also quite well both in the other way I'd say it turns out they don't.

The growth in the second quarter was mainly due to the recovery performance of our business in June in July .

The company delivered RMB 18.

Our origination the contribution percentage of loan originations from low risk trading customers increased by 15 in June compared with that number in March well the wave of new normal was continued to be improved.

The second quarter the percentage of 24 weeks was over 80% and we are capable to meet all relevant compliance rules and regulations.

Data has shown that we have returned to a steady growth trajectory and the golf trend will continue.

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Synergy Antonio maybe what's easiest way to equivalent.

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In Q4.

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Sure.

The growth in June is mainly due to the timing of adjustment.

Mr strategy in there.

The first five months of this year with the resurgence of the pandemic and associated macroeconomic pressure really not only pay attention to this but adopted a more prudent business strategy.

End of May with adjustments of pandemic prevention policies.

Social and economic recovery, we gradually adjusted average strategy and split it was towards the potential of our existing high quality customers.

So all the huge user base, we achieved notable results.

The team sort of further creating.

Don't give away some doctors.

Houston deals for a couple of attempting to both hold a golf course.

Yeah, Youll just have you seen your interests.

So we have a wellness et cetera.

So we'll go through.

<unk>.

<unk> can you talk to easy to look at it.

So going to the full year.

Syngenta a sensor.

He was the guy can continue.

Hey, Neal.

Have you told Union.

So you get a little easier.

Easy to opinion, so I don't think we'll see signs of health with <unk>. So is that 10% Youll see yourself do you guys see.

So to your point gains adult side.

Kevin just said.

This is jasmine can be summarized as the three major initiatives.

This is to increase the proportion of high quality customer well be closing high risk customers in there.

The past few months, especially in April and May when the pandemic was severe on the macro economy was under pressure we were prudent in loan originations and took the initiative to control the sale.

The impact of the pandemic was in fact, a greater in the second quarter that in the first quarter. Other risk performance was generally stable and the quality of new loan originations was better 90 day delinquency rate was two point.

3% so over all day, one delinquency rate has continued to decrease since last December .

And then July dropped 11% compared with the average number in the first.

Bank collection rate was consistently above 90%.

Paired with me remotely.

The cadence of new loan originations in July .

By over 15%.

<unk> walk us through the year.

So I'm kind of just have Chinas, Southern Virginia, Pennsylvania.

Cushman <unk> I'll focus on <unk> per.

Paul quick no simple with Hyundai in Chicago, you shouldn't you also window that I'm here with your dog poop off.

He also mentioned since you're not going to let you go without seeing imports he isn't a couple dancing game.

You can do it go to another so would you judge the total let's say that Vincent.

Well no country, each and told you chose the bottom davidoff core cutover Youll show that we'd be okay. So don't count tofu, yes woman.

We also intend to await women's hockey that any civil money could you go harder.

Besides we further improved the quality of customer acquisition number one we have launched targeted high quality customer acquisition programs for <unk>.

Professional smart how are you.

Let's call it.

Number two most important team has.

Rich.

First off it's off my staff to attract more high quality customers.

Micro loan, we love that product.

Number three we have upgraded the co modeling capabilities with partner institutions to further improve the quality of our Africa.

At the same time, we have introduced new high quality data sources to strengthen our ability to identify cross platform users.

Number four.

The customer acquisition spend based on demographics the defenses in place.

So the impact of pandemic resurgence.

These are the main magic that we respond to the colleagues.

Surgeons and have made us better prepared to cope with challenges in the future.

Hello user cohort the tissue.

Well then you lose since you did a year ago.

For the full junior Oc cushion.

The bulk of Pizza hut.

Jonathan could you mean that you will talk to you.

So before that I would say so.

So Angela <unk> user engine content.

So both of them to do it.

So but in the us.

Third we strengthened the segmentation operation of existing high quality customers.

Based on the user data accumulated to find out to.

External data sources with.

The customer into server and have conducted several benches of passing.

Fully validates the effectiveness of the operation strategy of customer groups, which helped us to me. They can play improve operational efficiency. For example, the per cabinet have contribution of the premium customer groups was 60% higher and Apple was 20% higher.

Do you see that you talked about book.

And finally in Chile in South Carolina.

Thank you and La Quinta forgot how are you.

Because youre not chasing them working towards them.

He also submit any if you send them to us.

Luisa.

It's useful from here will most of them will go to more severe that need.

Well I can send you that these people have been watching.

The cool thing just finishing Bonnie.

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Proposal <unk>.

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Those were closer towards that LIBOR.

So I'm Gonna motion Goldcorp, let's go do it.

Sense Halloween function cohort us that would be of any digital do you embark.

And you sell more things in the <unk>.

Kinda incipient Gulf Gulf without a yieldco so again.

It seems like momentum each end of it so that you're talking about.

Thanks Nisha Keith include number one in terms of data we have a comprehensive has strengthened the coverage and applications.

Application of the PV Oc cloudy model.

Which we were able to establish a new model that contains more complex lethal dimensions.

We improved the accuracy of identifying high quality customers.

More than 25%.

Number two in terms of technology, we have improved.

And that's the patient capabilities and operational efficiencies through various models.

The weighted average probability of default risk model and thanks to more customers.

Customer took them under management also M P monetization.

Introduction of more data sources that currency of Moodle identification was improved by more than 20%. We expanded the abbvie 10 patients of external data with financial institutions and various ranges.

Federated learning on the joint model.

Improved the identification of ability of neat buckets customer group model integration on the strategy application.

<unk> developed the use of reading it.

Strategy motor et cetera, we can more accurately identify high wing and high quality users that we weren't able to save advertising cost by 50%, while achieving same loan volume.

So we go to the Internet Hogan, who saw your clinical solution.

To ensure that we all hope so.

We want all of them of course with Union.

So dose dependent so okay. So youre getting into New Orleans judge how long ago, you were too.

Coke with Athene recipient, but since you're lagging.

So for my rule of thumb and put them together in the future.

The business strategy, but the Jasmine.

But with good or was that mainly due to the four core capabilities, we have accumulated in the past 90 days.

First user accretion capability is mainly reflects.

Hi, Dan.

Identification of high quality cost and the fragmentation operation, which allows us to meet them at different stages through different products and services.

Yeah. So overall I think well my rule of thumb talk also down the levels will be Tulsa concerned or the larger label your quarter suddenly you're supposed to let's say a gun door continue and this will be greatly assisted us.

That phone call a voice what don't you think so yes.

Sylvia Hudson.

Okay.

With control is mainly reflected in our ability to continuously improve our user and densification and offering operation. We have introduced more high quality external data further analyzed internal user behavior.

It sounds like the risk control model I don't pay and continuously improve the efficiency and accuracy of hypothetical tasking.

Besides that.

Also the timber ridge.

Well, it's a union.

So those are all about such as India.

You bet.

I'll talk first of all should abate.

Our founding days, reflecting our funding cost control and the partner expansion.

Funding costs continued to decrease since February of this year and over the past one year. The number of other financial partners have continued to expand.

We have cooperated with more than 130 financial institutions.

So what I'm, telling you I'm sure that's useful lemme looking so young for.

Total use of hernia teacher Archie to impact total what <unk> told me it turns out that well remember Tanya it's either that's useful.

Thank you Lee.

Talk to you then pay to get people used to talk to them potentially hurts you at sort of the contract.

Although of course, we'll give that you talk to you soon.

Jim.

How do you.

Okay.

So we pulled out 10 minutes he thought that Didnt ship I mean, you shouldn't count.

Yes, yes, yes.

Jim the sorts of hygiene.

So yeah the charts you send button.

Coffee creamer, here's somebody Louis finally, I would like to elaborate on data.

Let's see R&D investment has been industry, leading in the second quarter, we invested RMB 150 million RMB.

18, 5% year over year, and we have integrated that.

It can be called technical capabilities, we have accumulated over the years and upgraded into looking smart business.

It is not only provides a full set of intelligent.

And did you say about making too but also help the business to that rapid operations and iteration.

And the great thing to improve the efficiency of decision, making and the business operations.

This is Andrea has already taken effect.

Daily operations, Yeah ambition to the afore mentioned the customer settlements operation strategy that tomorrow.

Also brought great efficiency improvements to our offline.

With the help of the digital accretion twos of the engine the contribution of each employee of other probably team has increased by 30%.

<unk> has increased by 50%.

Tony Hawk Cook and you also said that the tenant needs.

Yeah, well you did you.

Those haynesville shale well in central ILUVIEN.

A woman, but you're also losing deal with center.

Sure.

Consumption scenarios customer settlements.

So the ability.

Integrated into our business.

It's a self reinforcing loop that'd be call it lucky ecosystem.

Toyota essentially my other golfing donations hunting looking going to those without a cushion you also go without cookies, especially if they're losing their sofa.

And then just one more could either so we agree more.

Looking at our portfolio.

So let's use a motion that's useful to knee, that's usually a frugal and they need us. He said no one looks at your table, but any suitable for them.

The in house, the so called it an equal Youll all women she couldn't daughter Susan Okay.

Suddenly he also low woman.

Got it on the engine types agenda.

Yeah, well, sometimes silvan.

Each of the scenarios.

Unix high frequency and high repeat rates consumption scenarios.

Such has since you're not yeah I.

However installment.

Raymond E Commerce platforms put nothing in the advantage of having more high quality customers.

High quality customer base will continue to increase the scale and the profit.

The core business.

The increase.

It seems like the scale on the policy of core business.

Oh yeah.

But to improve the model on the technical capabilities.

It was the technology and the risk control capabilities allows our team to further provide the services to other financial institutions on the margin.

Sharing capabilities with financial institution partners and the Martian stand alone seem to come up with more funding pool I'm just nervous.

So the one page of abandoned navios allow us to gain more high quality customers on the cycle.

This is also our unit and a long term competitive advantage.

The human dilutions hung Tucson with Copa towards changing also using debt financing.

So therefore, you won't go into the future.

Our confidence.

And the long term development the company and the management imagine when Pete share repurchase program remains an execution Stefan will provide more details later.

Oh, what sounds like some other things that you get from industry.

What you think it puts us a way to get a good answer.

So as you know the product.

Well the thought is to show their yogurt CFO .

But as you saw we chose our wait to hear that.

So with OCA.

What's the C. Centrally so eating Angel you enjoyed a couple for me equate close out towards the puzzle Coca Cola light.

Finally, I would like to talk about corporate social responsibility initiatives.

Respond to the unbundling of research in the second quarter, we launched a specific program.

To help as a means to deal with their cash liquidity challenges.

The second quarter, the amount of small and micro loans was $5 4 billion RMB for us that means more affected by the pandemic have occurred.

It took a number of matters to have them tied over the difficulty.

So I'm in a way that will then conduct <unk>.

You'll hear the alcohol or other types of jeez well, maybe it she has some people looking to buy two center continuous empathy, we've essentially.

Uh huh.

China in June continued in Q3, and the other loan origination guidance in Q3 will be RMB 53 billion. All about this guidance reflects the companys common stock patient, which is subject to change.

What about if I answer your question, Doug a woman the CFO here.

Let me now hand over the call to other Sapphire falls that might show up it. Thank you.

Thank you Jay.

Morning, and good evening, everyone. It's my pleasure to speak to you again.

Our business was under pressure due to unforeseen regional Covid surge in April and May.

Thanks to the determination and effective measures taken by the government and society as a whole.

Danny has been contained rapidly.

In addition, we are also encouraged and inspired by multiple micro stimulus adopted by various coming the bodies that will boost consumption and credits.

We stay committed to our strategic priorities I'll be enhancing and diversifying the revenue structure.

Strengthening operational efficiency.

And optimizing our risk assessment capabilities.

Our sustained effort on technology innovation and digital transformation.

Showing more visible results this quarter.

Let me now go through some key financial performance of the second quarter.

I'm delighted to report that total loan origination in the second quarter was $49 1 billion RMB.

Presenting a 13, 9% increase quarter over quarter.

The outstanding loan balance stood at $86 6 billion RMB, representing a three 3% increase compared with last quarter.

Well the management team is not completely satisfied with the top line results. We are encouraged by the positive momentum.

Yeah.

Total operating revenue was $2 4 billion RMB.

Representing a 49% increase quarter over quarter.

Revenue from new consumption driven location based services.

538 million RMB, an increase of 69% from the first quarter of 2022, an increase of 32, 2% from the same period of 2021.

Revenue from technology, driven platform services was 436 million RMB.

Representing a 12, 3% decrease quarter over quarter.

Revenue from credit driven platform services.

One 4 billion RMB, representing a 64% increase quarter over quarter.

Yeah.

As you might have noticed.

We reorganized our revenue segmentation since Q1 this year.

This is a better reflection of the quality of our revenue and the diversified nature of our businesses.

The contribution from nine credit driven services with more than 40% of the total revenue this quarter at 974 million RMB.

Having grown at 19, 4% quarter over quarter.

This is in line with our long term strategic goal of building up a more risk tolerance and high quality running yield structure.

Compliant with government guidance.

Loan pricing in Q2 continue to fall and Gulf Coast.

To the end of June .

Mix within 24% APR reached 81, 1% a 3.3% increase.

For the quarter.

Let me move on to the expense side of the second quarter.

Sales and marketing expenses increased by 32, 5% quarter over quarter, but decreased by 3% year over year to 477 million RMB.

As you know in Q1 guided by our quality over quantity operational priority, we scaled back our advertising costs, especially in areas that were likely affected most by COVID-19.

This quarter together with the report.

The macro environment and the containment of Covid situation.

We increased our marketing promotion expenses at certain levels compared with previous quarter to drive future growth, but still they could.

We're all spending.

Research and development increased by one 3% quarter over quarter, and eight 5% year over year to RMB 555 cities.

Reflecting our continuous investments.

Upgrading of our technology capability.

G&A expenses went down by three 3% quarter over quarter, and six 4% year over year 230 million RMB.

Just like the first quarter, it went down both year over year and quarter over quarter, demonstrating the continuous improvement of our operational efficiency.

Net profit was <unk> hundred 67 million RMB in the second quarter.

This is 105% increase quarter over quarter.

Since we have taken a more prudent approach to reflect risk in the first quarter by stepping off the day, one provision based on the current external situations.

We expect that our profit will continue to follow an upward trend in the second half of this year.

Next quick update on our share repurchase program.

On March 16 2022.

The company's board of directors authorized a $50 million share repurchase program.

As of June 32022, the company had repurchased approximately 13 million ABS for approximately 31 million U S. Dollar under this program.

The share repurchase program, demonstrating our confidence in the long term potential and the management team remains open minded about expanding the share buyback program in the future should we deem appropriate and as.

As a way of giving back to shareholders.

I'd like to emphasize our laboring determination to see through both the current execution and our long term strategy of adequate investment in technology and operational optimization as priorities.

To drive long term sustainable business development.

Finally, as we mentioned earlier and also mentioned by Jenny.

Even though we have experienced some headwinds in the first few months this year due to the resurgence of Covid, we never stopped our efforts on advancing our capabilities in better serving our customers and advancing our business model.

Looking ahead based on the current information at hand, we are cautiously optimistic about the performance of second half, we expect that the Lamar originations for the third quarter to reach 53 billion RMB.

We will continue to pursue a sustainable and resilient business approach.

And well also be alert us of any material signs of external changes that might impact our business and while it reflect and well react quickly and responsibly.

With that I will turn the call over to our C. R O J them freedom Keith. Thank you Tony Good morning, and good evening, everyone. Let me elaborate more on the risk management front in this quarter remained cautious or credit risk approach with several major cities and their surroundings hit by Covid for the first half of the quarter.

Customer acquisition side, we have prioritized for quality over quantity detected by adopting a more.

Comprehensive and robust monitoring system, which allowed us to adjust our strategy in response to COVID-19 dynamically throughout the process from acquisition to portfolio management, we have been seeing positive results from such actions as our risk level with control to a rather small compared with our peers.

Overall day, one delinquency rate has been down for seven consecutive months and down by 11% compared with the first quarter. This year.

Our customer portfolio have has grown stronger a 24% adjustment progress. Moreover, as Jay mentioned earlier, the enhancement and customer segmentation and risk assessment models enabled us to focus on high quality customer segments and increased loan volume contribution from lower risk borrowers.

30 day collection rate has recovered since may from a modest decline in March and April as the impact of the Covid hits subsided.

We have been making investments in our customer behavior analysis model to provide higher collection efficiency, while simultaneously carrying on with the practice would be more spread out collection team to reduce the impact brought by potential regional COVID-19 searches in the future. We are in a solid position to respond more rapidly and accurately with fewer possible ups.

<unk>.

Increasing 30, plus delinquency was within the range of expectations to $4 84, 5% versus four 4% at the end of March It was mainly due to the impact of Covid related circumstances reporting to me and a more prudent credit policy, leading to modest growth the outstanding loan balance compared with the first quarter.

But as Jay mentioned earlier, we're putting more effort and resources in 2016 customers with whom we have a clearer credit performance record.

To strengthen our resilience early indicators have already demonstrated that our risk level on new loans has been lowered by over 15% of the trend expected to continue in August we expect the 30 plus delinquency to have peaked in the second quarter.

Finally, I'd like to stress that we have evolved with the more sophisticated risk management system from our experience dealing with the Covid outbreaks and economic fluctuations. We are now better prepared for any external uncertainty and complexity that should happen in the future.

<unk>.

This concludes our prepared remarks, operator, we are now ready to take questions.

Thank you we will now begin the question and answer session.

If you'd like to ask a question. Please press Star then one one on your telephone keypad and wait for your name to be announced.

Please standby, while we compile the Q&A roster.

Our first question Jim comes from Yodlee at Sea ICC. Please go ahead.

Okay.

Oh goodness.

For the Q&A to what Theyre doing and thinks about you can.

I'm kind of I'm going to kick it off.

That wouldn't be able to maintain a gotcha gold mines in Canada.

Do you think I'm grant congrats.

Stephen I'm sure you can kind of go.

So we're going through somewhat Gainesville, Georgia, but if you can help me here with a final one.

Turning to Tulsa, Oklahoma.

So it sounds you got my I don't give it seems okay.

Which I'm sure you're watching to see creep.

Oh My God.

Thanks, John .

People weren't here without doing it. So you can kind of you to go.

Sure will come you don't want to go check it out.

And I'm talking to the computer called Jim how.

You don't you want is that we like having that what.

Well, what you're going to need to come up yet.

And then they.

They got into some kind of impact have you seen so far.

How did she holiday.

Pete.

Oh, Okay, then I would put out a chunk of it is in part to the first one is about our new consulting services and I was wondering how you view the development so far into Q2 and going forward and could you. Please give us more color about our business model will open right now and Oh I'd like to know like how much they will contribute to our total revenue in the field.

Sure Andrew.

Second question is about the change of our operational data this quarter.

For example, the total G M B and I was wondering if you could elaborate more about it and what are the main drivers Opex management.

Yeah.

What are you going to you Bob.

But are you seeing to Oklahoma.

Somebody else will mentioned MTV dialogue.

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Other than that the Yugo Melissa.

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Thanks, guys.

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Susan.

Yes.

Okay.

Yes.

Let's let me, let me try to translate.

In the first half of this year it wasn't the only chip how do we are experiencing some headwinds off the call with which definitely bring some refreshments.

<unk> business however.

Meanwhile, in the first half minus with Africa.

And the tragedy at Chapman.

Actually drive the other.

Assumption business.

Quite well and we can see that even under pressure I'll reference my happiness.

Delivered us on a quarter over quarter, both quarter over quarter on a year over year increment.

Actually during the mid year promotion of June 18th compare with the same period last year.

Performance actually increased by 30% to 40%.

With our continued.

The investments.

Anytime a adjustment of our strategies to these new consumption business will be definitely they see other performance in credit.

Gradually.

And we have no cough I'll remind you offline business, where not only provide services offline.

<unk>.

And we actually.

Issue would have launched the offer.

To help with brand as well.

And.

The second quarter, our <unk> after it was launched and was well received.

With this.

Offline to online.

Capabilities, we can provide more diversified and better services to our margins.

<unk> and.

We have seen that.

After the launch of <unk>.

Oh, well over 50% of our transactions have been delivered by <unk>.

And we are also seeing that this model is well welcomed by our common customers and we can Meanwhile, also see that we're paying.

It is also very.

And actually we can charge a 30% take rate.

The progress we are fully our confidence is our new consumption business well in the future.

Thank you Heiko.

Well, it's actually back on times, if you're going to see you go ahead, Jimmy Jo Jan think appeal costing them nationally.

<unk> Joshi contacted you hold onto it.

A woman from QE Casher, our Linda Ingersoll Knutsen from Knutsen until the sunlight Michael Lasser.

Lastly, any woman timber.

Yeah. There you go bonds Jacobi issue a woman Showtime in Australia come go down So Luke do you want to put on soon to go through the year based on upside down in <unk>.

John It wasn't about DMV the.

And that's all a cell based on <unk> Silicon <unk> E Commerce, a big appeal on the T cells have all women new consumption driven the team quite a take a year or share, especially a bunch and zynga.

Uh huh.

We also have new new new consumption quite a heel yamana pulmicort geologic history about ECS he'd have huntington.

<unk>. Thank you Ethan Allen Michelle by GM leader come good there you've got El Yeah. So on the shore with that I'm going to tell you round up.

You got some pay down and you got 21 to one turnkey pay shop at our Chicago.

So let me translate it myself I think the.

The question earlier was about the new.

Disclosure our approach towards the Dnb ecommerce D&B and this is a reflection of our a reorganization of our revenue and that this is.

New.

Disclosure approach reflect only our new consumption driven lbs services. So.

<unk> and also our revenue exposure.

The adjustments are the same and the approach other thing.

Thank you operator next question please.

Okay.

Certainly.

Okay.

Our next question comes from Alex Ye from UBS. Please go ahead Alex.

Great.

Going back to your answer you quite a while now Glenn did go through.

Well I think Oh telecom market.

Hum.

And Oh Gee I'm about to go me Christian.

Magazines and things that they go.

We'll get them back to the beach.

Onions.

Okay.

Uh huh.

We've got the email.

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This has been done continue.

Hi, This is Paul.

So would you focus on PEO.

So I think again our whole.

Heightened.

Yeah, Yeah, you do.

So you can calculate as opposed to save.

So you're quite right.

Yes.

We've got one once you're in kind of our journey.

Uh huh.

So they go sapiens.

Jose.

Jose goes home.

Zero complaints you got somebody got Pingo <unk>.

The other one is.

Alright take a garden center quite them again gentlemen.

Women's <unk>.

Hong Kong, Yes, all right.

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Commendation will tell you.

Yes.

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Vintage.

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A woman of SPD signs of childhood with torches and I'd say no.

So I'm glad that <unk> mentioned.

Hi, Ken.

<unk> went bust.

Obviously, though you always you guys Anthony.

Okay, Okay, that's where that comes out.

Somewhere around that you can take away the cause it could have been on the guidance.

So I was hoping it was well attended.

And find out what the take up.

It sounds like the.

Top line does come in light.

Okay Thats all my question first one is on the Seltzer marketing expense.

Per our new borrower, Oh, selling and marketing expense has increased.

Quite significantly compared with two years almost doubling.

Our growth so I'm wondering what are the key drivers behind is the Mark Youtube.

Competition or due to a tightening of credit approval always Danielle.

More of the one off what are you seeing and looking at what should be the kind of a normalized level, we should expect.

And second question is on asset CT piece. So the company has been focusing on quality for a while.

Magna has mentioned about some improvement in Taiwan.

Delinquency, but so far we haven't seen much improvement from the vintage curve or all your disclosed a PD.

Mm.

Delinquency charge, so im wondering.

When could we start to see it kind of asked the court to improvements starting to be reflected into your financials, including your take rate and your top line. Thank you.

<unk> went up with ICR.

Well no pockets.

So that <unk> <unk>.

Thank you Angela and good.

Thank you Jean <unk>.

Good day.

Women titled I can jump out of our centers in Victoria.

<unk> is a great you guys hi, Dr. Paul Thompson.

Good luck <unk>.

So do you guys use or other uses such as a woman to quote you that.

Sure.

Essentially all <unk>.

You got to PV, let intentions of women's and so while the levels of <unk>.

Got a cohort of chain.

Got it.

I think that Asia washing.

And then data Shouldnt, yes could be held in a quarter level, so as well with us.

Chris I will just I will call that somebody within central this asset.

Let me take the first question in terms of CSF market.

Acquisition cost.

There are many two reasons of the increase of customer acquisition cost. The first one is definitely the macroeconomy pressure, our social weighted associated Wednesday of Colgate resurgence.

In the period, we were taking a prudent approach to.

Controlled.

And be more prudent in terms of the approval rate because we consolidated.

And.

Manage the quality of average weekly.

Originated loans.

And the second as you all know we are adjusting our pricing from 36% to 24% during the process we are in the.

Progress also optimize other.

Model, the RTA and the fifth in the certain period of the process.

Acquisition costs also increased.

Well the truth of that color.

Thanks, guys element that whether it's a focus on Asia.

So women that Tony.

Please come in as a charterer woman-day co for the audience.

One of the <unk>.

Thank you.

They look under all cases that you called out the whole Gothenburg video realization, partly salvation tool that hasn't been as interchangeable. So no woman who's here with us to outgrow the bulk of them are safer.

Lewis in young children.

Cohort that shows a woman is essential for our team as a whole will move with our own sales forecast on that.

Thank you Bob.

And then.

Great.

You also the.

China digital entrants come in place with Elpida holiday.

Agenda.

We shut down for a minute ago forgotten, but needless all Mackenzie Timothy <unk> am sorry.

With our Schindler.

She is shopping engine.

I cannot say when the <unk> cellular is also desktop so it's a lot harder than you got somebody it sounds Mackenzie So what did I say that another woman emotional because.

The lithium business.

Gotcha.

Yeah.

I'd like to take the opportunity to share at the trough.

We are going to take I'm going to take in the future first I'll call we will.

It may increase added capabilities of the futurization and improved articulation of our customer and we are continuously inputs.

<unk> model. So we can more accurately to identify our customers quality of the behaviors.

And a few other supplementation management of our customers.

We can provide better services to our high quality customers.

And.

As we just mentioned that we have divided more precisely of avocado and customers into several.

Such as the.

Tung youth.

Although my calls.

Comparatively speaking.

Customer groups the quality is.

Good one.

Computation.

That is rather stable.

Will also help us to control the cost.

No woman.

It's other poor weight change other than good.

<unk> posted a total so you might ask a quick question on just the focus on <unk> financial has based on.

You also saw a woman that poor weather, but weather legend legoland painting.

So, let's see I'm, sorry, Hello.

So that kind of to the focus of most of the schedule and within country Thats, a TV toddler deliberate wholesalers to Dow for the bulk of that so the way that the woman.

You guys finished out under the <unk>.

Gotcha.

Yes, Bill Macacos I meant that AEP and the guys in Colombia.

That's definitely going to.

Just a woman with I.

While metrology Quangos copilot and good day.

<unk> your body.

So sure that <unk> got to nail down the pins hydrocodone.

And if you'd be able to nail down.

Got you got Guangzhou political hurdles.

Steve a couple of consultants in charter, Utah, So I'll talk to you.

Enrollment and whether you've got forgotten, but that's a good overview.

So is that also I will say that what I mean.

Sultan July hazard, either you're a woman one Linda.

Cohort.

Our cohort both in the hip Hilda Please Hogan golf without a cohort.

So I would say that you got.

<unk> got 10 minutes.

So turning to <unk>.

I'm, Washington club utilization at any type of throughput.

Tell them that way.

Although somewhat stable.

The second initiative, we are taking is to leverage our offline.

Currently each offline with him employee Pat you average probably one or two.

Two customers.

If we calculate the cost per person.

Coffee is actually on for Doug.

Right.

<unk>.

Understood.

This continued optimization of our online investments we are also.

The opportunities to develop some non standard lines of channels to acquire traffic.

Traffic and this move down that line.

And traditional channels to get traffic is not that much impacted by the bidding policies shelter.

Short term appear in credits off of our customer acquisition cost is still mainly due to offer modeling adjustments.

Too.

Better understand customers and to pursue a high quality customers from the long term path to use up too.

Together with our process of optimizing every one of them modal approaches we believe our customer acquisition costs declined in the future.

Okay.

Okay.

Oh, no oxidize hydrocarbon Q to.

Quito warmed up vintage curve hail poco of PD shouldnt need to curb Cologne console digital how trends in Colombia and Peru.

It sounded like that to share maybe some cheese competitors youre, telling me a shallow woman tissue, Tom cure more tea bulk or merchandise from TSA.

<unk> <unk> shareholder not just your thoughts either from Tien should be able to tell hall not top $10 <unk>.

Vintage that chico's could it be our tendency.

Baltimore IPD essentially <unk> Assembly.

<unk>.

And kind of the vintage curve well maintained and in Colorado.

<unk> had to be all tangible that nobody else can achieve now with some gloomy assume somebody I don't want to say F&B sure Ipd's actually sat down with them. This year now can we S&P lung tissue <unk> with S&P.

As Jim Gabel tell me right now.

IPD essentially decides on tissue and toga understood and Jake I should say a woman that Nick deviation fuel.

Let me touch on venue British meal.

So I invite you to vintage or May also on the auto it goes til, which went to the vintage of Youku.

Can you tell me about your reach and that kind of the photograph Shanteau hydrogel meeting TTM.

Sunday.

Cody Please do show them as simple logistics, Henry Youll pass <unk> Assembly till holiday shift from Kenzo she'll conduct with assignments equal Q&A O'connell.

Okay.

Going to translate what I just said.

Jim mentioned.

His presentation all our early indicators.

Towards the end of the second quarter, especially in June and August July and August have indicated down.

Downward trend so basically all the early indicators.

The risk performance indicators have pointed to improving credit quality.

However for these early indicators to translate into a longer term.

A more stable indicator it takes time for example.

What do we released.

PD 30 indicator is.

With.

Members that has full performance.

Period only showed.

Performance in May.

If you look at the May performance compare with March end of March the improvement is around 10%, but if you look at the June performance, even though the <unk> 30 has not.

<unk> not yet fully.

Revealed.

The improvement is close to 18% so what I'm, saying is for the.

IPD 30 indicator in the vintage loss numbers to fully reflect our recent quality improvement. It takes time. So in the next two or one or two quarters. You can see you can expect to see the improvement.

Thank you.

Next question please.

That's good for me thank you.

Thank you. Our next question comes from Sam at CLSA.

Go ahead <unk>.

Yeah.

Hi.

According to how well is it fair to say enhance cash again with <unk>.

<unk> has been in Shanghai Shanghai.

Okay.

What I'm, saying is I would characterize it that way.

Hey, guys.

Youre Squireen Timberlands, you say acquired do you guys see.

APR.

Sure.

Why do you think you would also understand that the jobs are you a shot at it and talk about your best shot.

Well most of them will be I'll say I'll call, so I'm not sure how Suzanne.

<unk> should note that class dosage answering I think Jonathan Shaffer.

Yeah.

Hey, guys the woman.

Great.

I was trying to relate the queries somatic <unk> great. Thank you so much.

<unk> then.

The other ones you said one woman silicon.

Julianna.

I mean, obviously there's tons of data.

And then with Encana and Goodrich and how Youre. Following now the country has it seems abidjan matter.

It would be on the phone that can.

So I mentioned was about Hong Kong, Shanghai, and they've been a talking point to me I'll just sit within that warranty.

So I got a question regarding the regulations.

The first one.

He has an APR cap management, just mentioned that the APR less than 24% what accounts for more than 80% which is good.

Just wondering when are we targeting to achieve.

Full compliance in terms of all the existing loans priced at below 24%.

So that's the first question.

And second question is more about the decoupling of direct link.

Data feeds from listening to the banks.

The progress we learned from peers it looks like it's pretty slow. So I was just wondering what's our plan and when do we expect to.

Complete.

At least have some kind of.

Practice regarding the decoupling of direct link and how is the rig later.

Viewing our plan that's our question. Thank you very much.

Okay.

Although I don't think that whatever data they always have.

Quite a few things out of Italy.

So those are the things out there.

Sure.

Okay got it.

The central office or <unk>.

<unk> that kind of Merrill Lynch.

<unk> saw soy or that time will be issued to us.

So I think hopefully you'll use and because of that.

Good.

Because of the foundries in Asia.

Two of them first of all look at this as a woman you assumed one pillar and got a cushion to help them in the past with us.

We as I say, this formula, especially a woman to be us.

But lithium Yamaha acetyl chain.

Can you tell us about what a solid Donna and good day.

You saw that.

So the yeah. So too is the founder of <unk>.

You've got <unk>, North Dakota Central Bank data you guys there was suddenly.

<unk> BV.

We also saw the things I'll take them.

Women.

Travel channel the citizens, yet where global the mill layoffs.

That's one.

So this will total about a template hilla.

Now as for the Philippines, and some women I can't tell you with integrity to the user such as ourselves.

So that is the yogurt and whether you guys have already.

So that youll.

She bought her young.

So the target with almost a yellow pad project.

Okay, So pretty young.

Women with elements of enable that Lithia again, just how that kind of tactic also the cole Taylor.

Uh huh.

Okay.

So momentum is a woman working in India.

Our system is in place on getting your <expletive>.

Also the employees' endeavor.

Yes.

When we talk to him so.

So 10 of them and they buy it.

The answer is I think also that 17 I think Josh.

Voice has opened up.

Talking about the 24 pricing policy.

It's rather a guidance from government <unk> Macquarie.

The requirements.

No.

Right.

The difference of local authorities have different directions in terms of this policy and you can see that in the second quarter. We have already has had more than 80% of our pricing.

Within 24%, which demonstrate our capabilities to the jet.

Our pricing Florida.

Currently we still keep.

More amount of the business.

Pricing is about 24% it's a studio.

You too.

There are some local demand.

So.

As we just mentioned that the company is simple enough to further adjust.

Thank you Tony.

Within 24 months.

Currently we have no.

Is there any target timeline of that and in terms of the <unk>.

To the take rate I would say it does.

There is not much different.

Of the.

Uh huh.

In the.

Performance.

Bob.

And.

The impact to profit is also kind of.

Stimulus.

In Q2.

Other pricing is already very close.

And then in the future.

We definitely have the capabilities to further adjusted to 100% but.

Currently we have no.

They also have done sort of into the woods.

Thompson to enter the virtuoso tailwind I'll tell you a woman doesn't.

Because I'm quite yet in bookings.

Other.

Yes.

So thats all in.

Thank you guys.

<unk> will then consult us on the call. If you won't answer that you've got attention <unk> disorder behind until until that dialogical without <unk>.

<unk> is articulating in detail at the medical meeting troubled will cover so philosophically as a base in Canada.

<unk> Tim.

Tim Fawaz to solve any of it.

Boston Good tons really answered, yes, we can hear you entered I E.

So there'll be a whole lot.

Until now that you got you got you.

However.

So when I take a look at us within that suddenly so.

So a lot of.

And as a follow up.

Tim.

To what level.

So that those will go down so does that also gives us a lot.

The life Sciences.

Thats what I.

That is the manager.

Rather than delay the causal divert the model. So it didn't hear women for the follow up okay. So that's helpful, but kind of a follow up lately, you've got past the center. So a lot of the Denver police or the length of the Angola.

Certainly <unk>.

This one into one thats ocean this incentive assumption.

You May talk with you and so this was in <unk>.

So.

What are you guys didn't die.

<unk>.

So thats <unk>.

How do you think youll get a good I think why you couldn't do this without a dichotomy authorities about our financials.

Hello <unk>.

So youll just have to work with him at <unk>.

<unk> you can do the cloud.

And then Gulf power five hours with you.

So it's all been at Macy's.

Hello.

What are you guys.

Okay.

You think that telecom Vodafone or the other.

Listen with me I may look that way.

Hello, Jonathan.

Thank you, Tom and certainly the Ebola so women.

Totally.

Well it is.

Right.

The escalation in terms of the disconnection I wanted to have a census that other progress is actually very fast pace. His notes tomorrow.

Slower than our peer companies.

In the industry.

Does anybody know that won't be in our two partners Bureau can provide relevant cooperations with as we actually already have already have cooperation with them and have a different plan ready to connect it.

The official requirement issues. However, we have no coffee a recent issued 14 document.

Sorry can you actually.

We have discussion.

Connection policies actually.

Expanding for more than one.

We actually interpret.

This.

Policy.

Positive.

To be honest there is no official requirements all instructions have been issued by the authorities. We believe that it is undervalued with government Bureau also considering.

These kind of requirements.

And considering the impact to the players in the industry, especially the medium and small.

Thanks.

I'll ask the impact to the economy.

China, especially such a special PMA.

However, as I just mentioned.

This policy from a positive perspective, and we are fully prepared to corporate.

With the tightness in the future.

And other.

Our current plan.

<unk> policy is Paul.

Actually.

Got it.

This isn't a requirement issue.

Thank you that's all the time, we have for questions today, I will hand back to management for closing comments. Thank you.

Thanks again, everyone for joining us today, if you have some.

Please.

Well.

Yeah.

Information available from others.

Okay.

Thank you. This concludes the call today. Thank you all for joining you may now disconnect.

Okay.

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

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