Q3 2022 360 DigiTech Inc Earnings Call
Ladies and gentlemen, thank you first ending by and welcome to the 362 did you attack third quarter 2022 earnings conference call.
Please also note today's event is being recorded.
This time I'd like to turn the conference call over to MS. Mandy Dong our yard director. Please go ahead Monday.
Thank you.
Hello, everyone and welcome to our.
Third quarter.
Earnings.
Results for Asia.
They can be found.
Yeah.
Joining me today.
Our field.
Mr.
Our CFO .
Before we begin.
I'd like to remind you.
Our.
Earnings Press release, which also applies to this call.
Refer to forward looking statements based on our current plans estimates and projections.
Also this call includes certain.
Certain non-GAAP measures. Please refer to our earnings release, Laura currently Asia between non-GAAP and GAAP one.
Last unless otherwise stated all bigger mentioned are your RMB I will now turn the call over to our CEO Mr. Haisheng.
Hello.
Regarding the Monday afternoon, gentlemen, and thank you to the year.
Hello, everyone I'm very happy to report another strong quarter.
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Jonathan This is open game account.
First of all floor, let me share some recent developments in the market environment.
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China's consumer finance industry has reached <unk> brown rapid expansion to quality growth in the past two years.
Thus far at Greenway.
<unk> has achieved substantial gains in preventing systematic risks protecting consumer rights and benefits driving compliance business operation and promoting failed competition. This has created a healthy ecosystem.
The development of the consumer finance market.
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Over the past two years, the industry regulatory framework gradually come into shape.
And the rectification project of the platform economy.
To progress.
I see the regulatory landscape has settled down.
In an article titled strengthening and improving modern financial supervision population in the guidebook of the 20th National Congress of the community Party of China. Mr. <unk>, The chairman of C. D. IRC that financial innovation must be conducted under the <unk>.
<unk> of prudent supervision.
We shall impulse normalized supervision on the financial business of the Internet platform companies and promote the healthy sustainable development of the platform economy.
This implies that the fintech industry enters into the stage of regular supervision.
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Since the beginning of 2022.
Macro economy.
The hotel has put pressure on China, consumer and SME credit market in terms of market demand and asset quality.
However, the market started to slowly improve in Q3, and we saw credit demand began to gradually recover and asset quality it became relatively more stable than Q2.
Meanwhile, financial institutions be Mount for high quality assets continue to inject liquidity into the industry boosting funding supply efficiency.
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Given the macro environment with complexity and uncertainties, we maintained a prudent operating strategy and the leverage technology to drive quality growth then.
Thanks to our practical prudent and risk management first operating philosophy, our business demonstrated resilience and the strength in several key areas. Despite the macro headwinds.
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Third we achieved solid progress in balancing growth with asset quality.
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In Q3.
No Wonder nation, and facilitation volume was RMB $110 7 billion.
One 3% both year on year and Q on Q.
Ending loan balance was RMB 150 billion.
Two zero percent year on year, and 6% Q on Q.
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And the leading brand for credit tax service in China, Our <unk> brand become more and more well known.
As of the end of June .
Cumulative number of registered user exceeding 200 million for the first time.
The accumulated number of users receiving credit life and conducted drawdown on credit was approximately 43 million and $26 3 million respectively.
17, 6% and 12, 8% year over year.
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Since the Q3 of 2021, we have proactively reduced pricing and optimize user structure in response to market and the regulatory change.
The decent progress in these areas effectively mitigate the negative impact of the macro environment.
Our existing loans gradually reaching maturity our average price decreased slightly from Q2.
Our asset quality significantly improved.
Delinquency rate went down to four 5% in Q3 from four 9% in Q2 and is still improving.
The M. One collection rate increased to 86, 4% in Q3 from 85, 2% in Q2.
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While upgrading customer base, we continue to optimize business operations on high quality users to increase their lifetime value.
Based on our experience.
High quality users are usually more table in credit demand and the repayments capability.
Therefore, they generate more considerable long term value for our business.
In terms of key operating metrics the average liquidity lines per user and average ticket per drawdown in Q3 were more than RMB 14000, and RMB 8000, respectively.
93% at 39, 8% year on year.
The average loan tenor also increased to 12 months in Q3.
Roughly one month longer compared to the same period last year.
We believe that an upgraded customer base will translate into enhanced operating efficiency and a more stable business performance in the long run.
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On the CASM upfront as we upgraded our customer mix and accumulated batter knowhow about our high quality users with optimized the structure of our customer acquisition channels.
This greatly improved our capability and efficiency to acquired heavy users.
In Q3, the number of new user with granted credit line increased to $1 seven 1 million up by 19, one 9% Q on Q, while our marketing expense remained almost flat compared to Q2.
The acquisition cost per user with granted credit line declined by 15, one 5% from Q2.
Meanwhile, we further expanded and diversified the customer acquisition channels by working with different types of traffic.
Including short and long form videos, social media search engine and boat the labor etcetera.
In addition, we improved our ability to identify users, especially high quality users and enhance the efficiency of user acquisition by upgrading our RTA models and the jointly developing models with these partner passport.
Boynton empowered by our upgraded RTA models, our ability to identify device improved to 90% Nigeria present in Q3.
And our ability to identify high quality user improved by more than 20% Q on Q.
This greatly magnified and effectiveness of our online advertising.
We also applied such capabilities to other channels such as App stores.
Which will further improve our efficiency in these channels as well.
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As we continue to advance our tap upgrading strategy.
Our capital light and other tap solution business accounted for more caution in Q3.
We are a tax driven company empowered by innovation with Sandburg security in our DNA and a strong capability in big data and talented.
We help financial institutions established their credit infrastructure and empowered them in the fall business operation flow with our big data analysis and tap solutions.
In Q3, low ordinated and facilitated under the capital light model and the other tap solution accounted for 58, 4% of the total loan volume up by two six percentage points.
As of the end of June we accumulatively partnered with 58 financial institutions under the capital light model.
We also refined and upgraded our fintech that product line.
<unk> transformed our end to end credit system into module like product based on functionality.
Additionally, we know Ratably support a hybrid cloud model, where financial Calgary and the local deployment work side by side.
Featuring did have up retail credit infrastructure across rack in 20 days.
Online and offline coverage and system deployment in full compliance.
Our new solutions offer small and medium sized banks, one stop solution of transforming and grow in their retail credit business.
Going forward as we facilitate more transactions.
With stable asset quality and good track record.
We're going to expand our collaboration with financial institutions in depth and breadth.
This will further boost the percentage of our capital light and the tap solution business in the total mix in the long run.
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Thirdly, our funding structure and funding costs, both improved significantly.
With ample liquidity in China's financial system this year.
Financial institutions have strong demand for high quality assets.
As a leading credit tax service private neither our assets are in high demand given our strength in scale data and the risk management.
These allow us to optimize the mix of our founding partners of them more flexible funding options and reduced funding costs.
As of the end of Q3, we partner with 141 financial institutions, including more than 10 joint stock banks, and a major ruler and urban commercial bank with over RMB one trillion.
Giving us a highly diversified funding source.
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No base rate by roughly 30 basis points sequentially to six 5%.
And we expect it to sustain at a low level in Q4.
We issued RMB two 7 billion of ABS in Q3 at an average funding costs up five zero percent.
As we continue to optimize our customer mix, our funding advantage will bring out more.
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Firstly on the regulatory front the recognition pro depth of the platform economy has entered the ending base, we maintain close communication with our regulators as we implemented our renovation plan.
We have completed most of the required a rectification of items and have received positive feedback from our regulators.
For the credit agency reform or essentially are in Chinese we are implementing the transforming plans together with credit agency and our founding partners.
In Q3, we facilitated the very long in the new credit rating system and the blend Julien and received recognition from the regulator.
Now proactively implementing the plan.
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Here, let me provide an update on our secondary listing in Hong Kong stock market.
This morning, we submitted our post hearing information pack.
In short to the west side of the Hong Kong stock exchange, we have taken the interest of our current shareholder into full consideration in pursuing this they stick.
We believe that we will be able to optimize our investors sector and boost our liquidity through the Hong Kong secondary listing.
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While enhancing our operations, while always keeping in mind, our social responsibility.
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Our mission is to enable a better life for people by providing safe convenient and inclusive fintech service to consumers and households through technology innovation.
By empowering financial institutions, who are stood up pack.
Solutions powered by our AI and cloud computing, but help to improve the quality and efficiency of financial service.
Thank you <unk>.
Service to consumer needs to be underserved or.
Or are unmatched, while maintaining the highest vendor of risk management.
And to make financial services accessible to all our moorefield and efficient manner and to better serve the real economy.
I will mention shortly powerful royalties from Chi.
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But bear in mind of our social responsibility by giving back to society and providing support to the disadvantage as part of our effort to drive ROE ROE revitalization and a common prosperity in China in September this year, we donated RMB 1 million to <unk> E.
And the MEO Autonomous County, England nonprofit.
That will be used to building the content into a demonstration model for raw revitalization.
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Looking back at the past three quarters, we navigated through a constantly changing market by <unk>.
Danny and prudent operating strategy, despite multiple headwinds in the macro environment, we achieved solid growth and improved our risk performance demonstrating the strong resilience of our business key message show that our business is on track and we are confident we will meet our guide.
For 2022.
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Going forward, despite the ongoing challenges in the macro environment longtime things remain unchanged that is promoting Brian neutral inclusive.
The core technology to better support a real economy and create more value for society.
There is still tremendous unmet demand for credit from both consumers and the financial institution.
Based on our prudent approach to operations and our risk management, our business can ride through the current business cycle and capitalize on the growing momentum once the market recovers.
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We put on Condor Jonathan.
Only under the prudent strategy, we can navigate the fluctuation and actually a steady and sustainable long term prosperity will mean, we will continue to generate value for our shareholders through our solid performance.
As I mentioned when the CFO Alex.
Thank you I'm going to work.
Okay. Thank.
Thank you Michele good morning, and good evening, everyone welcome to our third quarter earnings call.
Before I start my.
Regular update let me first introduce a new member of our capital market team miscarriage G T and <unk>.
<unk> joined us as our senior director of capital market.
We will be providing valuable insights experience and leadership to our capital market and the IR team.
With our upcoming listing in the Hong Kong stock exchange, we really look forward to having Karen and other team members offer better services to our shareholders and the broader investment community.
As John discussed earlier, we delivered another solid quarter.
Changing macro environment.
From July to September demand for consumer credit through our platform grew sequentially each and every much although the velocity and the magnitude of such improvement or modest.
During the quarter, we continued to push for steady improvement in overall asset quality.
Further engaging high quality, new borrower base.
Overall day, one delinquency has been on a steady declining trend months after much so far in 2022.
Against a difficult macro trend early in the year.
It was four 5% for Q3 versus four 9% in Q2 and further declined to four 3% in October .
The continued improvement in day, one delinquency further validate our strategy.
This strategic focus on high quality user segment.
30 day collection rate also improved in Q3 and reached the best level in 2022 during the quarter.
We resumed most standard collection activity.
To the pre Covid lockdown level, which drove the improvement of the metrics.
Once again.
We were clear output, we see clear outperformance by new borrowers versus existing borrowers.
Total net revenue for Q3 was $12 1 billion versus $4 2 billion in Q2, and $4 6 billion a year ago Red.
Revenue from credit driven service capital heavy was $2 9 billion compared to 2.9 billion in Q2, and $2 6 billion a year ago.
The year on year growth was mainly due to growth in on balance sheet loan volume more than offsetting the negative impact from decline in average pricing of the loans.
After heavy facilitation revenue take rates improved slightly versus Q2, mainly due to lower funding costs and longer long tenor.
Revenue from parking service kept on light was $1 2 billion compared to $1 2 billion in Q2, and 2 billion a year ago.
Year on year decline was mainly due to product mix change and platform services and decline of average pricing of capitalized loan facilitation.
During the quarter capital light loan facilitation.
<unk> and other technology solutions combined account for roughly 58% of total loan volume.
Given the still changing macro environment, we continued to increase the portion of loans processed through IC and other technology solutions to further mitigate potential risks.
These solutions normally have different commercial terms compared to the regular capitalized loan facilitation.
In the long run we will continue to pursue tech driven business model, we're striking a balance between various form of non risk bearing solutions based on macro environment and operational conditions.
During the quarter average IRR prices are the loans, we originated and facilitated declined modestly to just below 22%.
Well within the 24% rate cap requirement.
We expect pricing to be relatively stable for the coming quarters.
Sales and marketing expenses increased by approximately 2% sequentially in Q3.
Slower pace of increase reflect our continued effort to improve the efficiency or effectiveness of our user acquisition system and drive cost efficiencies.
Please note during the quarter, we added approximately $1 7 million new credit line users compared to approximately $1 4 million in Q2.
Unit cost to acquire acquire a new credit line user declined approximately 15% sequentially.
As such average cost per dollar amount your credit line also declined by a similar magnitude Q on Q.
As always we will continue to use lifecycle, ROI and LTV as key metrics to determine the pace and scope of our user acquisition strategy to ensure the sustainability and the profitability of our operations.
Overall risk profile of our loan portfolio continue to improve in Q3 due to the contributions from new loans from higher quality users.
But impacts from micro uncertainty and the latest outbreak of Covid case across the nation, we're still somewhat visible.
Although we continue to take a prudent approach in booking provisions against the potential credit loss.
Evaluation of previous quarter's provision yield sizable write backs at <unk>.
Micro condition improved Q on Q.
Total new provisions across four different categories for loans originated in the facility during the quarter was approximately $1 8 billion well approximately 300 billion previous provisions were written back.
With strong operating results and the increased contribution from capital light model, our leverage ratio, which is defined as risk bearing lung balance divided by shareholders equity was at historical low of 3.8 times in Q3 compared to four.
Three times a year ago.
We expect to see rather stable leverage ratio for the time being until capital light contribution grow beyond current wrench bonds in the future.
We generate approximately $1 6 billion cash from operations in Q3 compared to $1 1 billion in Q2.
Significant sequential increase in operating cash flow was mainly driven by better working capital management. If you recall last quarter due to some COVID-19 related administrative procedure delays, we were unable to collect certain receivables in time those receivables or eventually.
Settled in Q3, pushing our cash flow.
Total cash and cash equivalents was $10 8 billion in Q3 compared to $11 4 billion in Q2.
Nonrestricted cash was approximately $7 2 billion in Q3 versus 7 billion in Q2.
Last couple of quarters, we took a more conservative approach to deploy to deploy our cash in day to day business, mainly due to macro uncertainty.
Ideally a significant portion of our cash would normally be allocated to support the superior security deposit with our institution partners or to fund on balance sheet lending in normal business course.
non-GAAP net profit was 1.14 billion compared to one point or two billing in Q2.
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.
West in key technologies to satisfy potential regulatory requirements and to return to our shareholders.
Cortez with the dividend policy approved by our board last year, we declared another quarterly dividend of U S. Dollar 16 cents per ads for Q3.
Finally regarding our outlook for the fourth quarter.
Although we managed to deliver a solid operating and financial results. So far this year in a very challenging macro environment, we still want to maintain a prudent approach to plan our business for the near term, particularly given the recent resurgence of Covid cases nationwide.
And the subsequent restrictive measures taken by local authorities.
At this junction we expect total loan volume for Q4 to be between RMB, One O two 5 billion.
RMB $112 5 billion, representing year on year growth up 6% to 16% as always this forecast reflects the company's current and preliminary views, which are subject to material change.
With that I would like to conclude my prepared remarks, operator, we cannot take some questions.
Yes.
Thank you.
Ladies and gentlemen, if you wish to ask a question. Please press zero one on your telephone keypad. If you wish to withdraw your question you may do so by pressing cero too to cancer.
For those who can speak Chinese please kindly ask your question in Chinese first followed by English translation.
In addition in order to have enough time to address everyone on the call. Please keep it to one question and one follow up and return to the queue. If you have more questions once again.
Please press zero one on your telephone keypad to ask your question.
Okay.
Your first question comes from Jay Li Please go ahead.
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Okay I'll do the translation part so the first one is about the lowest structure of the origination volume.
So I know I noticed that away disclosed our origination volume of the risk management staff and I was wondering if you could elaborate more about the growth trend and its contribution out of the total in the future and how we balanced contribution between the capitalized and the risk management, when we cooperated with a new.
Financial institution.
The first one and the second one is about the customer acquisition.
You'll notice that our cost control of selling and marketing expenses this quarter been effective and the average customer acquisition cost on the new users with credit line has dropped a lot. So can you give us more color on what have been done differently on the customer acquisition strategy. This quarter are compatible with before and what is the trend in the future.
Thanks.
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Okay. Let me translate has upgrading has always remain our long term strategy for our company in the recent year, we gradually advanced to more tax solutions, starting brown capital like two IC two I am sorry models.
Currently we are going out.
Hi, Great New business model that provides both our leading credit tax system and the operation agents of it.
All of these tax service caters to customers a customized needs of different financial institutions.
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It was achieved for that total.
In this year, we are exploring different models together with various financial institution.
Bulwark as we sell more financial institution customers and transact more long bottoms under this new model. We can further honing our our products pursuing higher take rate model and serve more customers.
A woman turnkey suite with Utah.
Moshe.
Sure.
Tracy I'll answer that.
Seagull.
Okay.
Thank you Kim.
No.
I was wondering maybe taken Moshe Jon.
Yeah.
Okay.
Good luck.
Emily.
You can read what he did.
Could you Moshe.
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And I think our Columbia.
This new tech model cannot only boost our tap solution business portion and sustain our business doesn't ability, but also open additional markets for our long term growth.
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Yeah.
Thank you.
What condition would you yes, yes.
Yeah.
Zero.
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Yeah.
I was thinking that it sounded like a huge cushion.
And then for that.
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Sure.
Sounds good.
Is it getting worse.
Now come into the laser printers occlusion.
If I Miss it.
You can see that volume.
The reason to our tectum acquisition.
Effectiveness.
Study around the end of last year, we spent a lot of effort.
Upgrading our infrastructure online customer acquisition, which start to bear fruit recently.
Johannes.
Sure.
Yes.
Yes.
I think that from an image.
Sure.
There's a whole bunch of them.
Sandy.
I'm looking at.
Thank you.
The bulk of the day.
Yes.
Hey, guys.
Sure.
We think that you'll see issues there.
Nicholas Woodman.
He was on.
Ocular.
<unk>, which is a big handlers in the economy hit a younger young.
And if we can neither guardiola table.
Yeah.
Thank you Michelle.
Moreover, we also further expand and diversify our customer acquisition.
Acquisition channel for Us.
Somehow when not only upgrade our online advertising channels, but also apply RTA model own App store channels and also we cooperate with a lot of traffic platforms, including the take our platform App daus, etc.
In addition, we pay close attention to the market. For example, this year. There are there is a very popular mobile game in Chinese yards, yeah on Wechat, we closely watch the market there is that opportunity to acquire a good quality customer.
Good day.
He is a cumulative 100 goodness.
And we got it.
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Tuition that critical to the portal.
Julian eager eager portfolio you could antibody.
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The agenda I'd answer it.
A woman.
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<unk> doshi judges will equal sitting in the gigawatt Jabil jabil.
Switching to Monaco and Kashi.
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We can do this or mizuho, you'll know that it's a little too.
The yields of the cohort cohort. Thank you Alicia.
Yeah.
As you.
In terms of the judge.
Do you think that the bill.
Now that we're behind him.
Thank you.
Great.
Can you.
So the yeah yeah.
<unk> will continue to take the put that business approach and are at high cost long term.
Value of customer in our operation.
We not only just care about the short term cost for our customers.
With that good quality customers will bring down cost and create more value.
Okay.
For the year.
Hello, everyone.
That is helpful.
Next operator.
Thank you.
Your next question comes from Hans <unk> from CLSA. Please go ahead.
Hi, there.
Good morning. Thank you work you want if you will.
Joining me on the spot.
Sure.
Well that sounds good.
Do you guys see some bigger towns.
Mark.
Yes.
Online lender without equal account with Oxford.
She does home depot.
Oh, no woman without <unk>, it sounds like they occur to Congress.
Great. Thanks, good evening.
Yes.
The APR just a couple of things one.
It wasn't that long.
That's huge for a while I think all of them.
I cant when he altered under a woman the HRT Teresa Yeah, yeah quarter.
Thanks Scott.
Sure Yes.
Yeah.
So I have two questions. Please.
Thanks, Chris.
One is it.
In.
The.
Hong Kong listing plan.
Congratulation to that because this is the first online lender in ADR of China to go back to Hong Kong for releasing.
Wondering about the details regarding time lines and also is there any plan to go for primary listing because currently the factory yeah. So that's the first question. The second one is more about APR.
Currently we're saying in the past few quarters, our API has been on a downtrend.
But just wondering what's the outlook for ADR, Oh, sorry, APR, if we consider that the demand side and also relates to the direction and also our strategy.
Strategy. Thank you very much.
Huh.
Lindsay kinetics were you hammer.
Okay sure so for the Hong Kong less team timetable.
You know, we just released the PRP.
This morning and.
<unk>.
Basically our intention is to follow the.
The normal procedure of the Hong Kong exchange.
To push for the final official prospectus relief and then the.
Marketing Road show.
And then the listing so that's our intention in terms of exactly how many days or how long it would take.
You can refer to some other cases I believe are the normal course.
Regular basis somewhere between two weeks timeframe, so thats roughly and secondly.
Secondly is about the.
The two primary listing in the future.
Is that area or the direction, where kind of are looking at seriously.
Because there are certain benefits to become mature primary listing.
Hong Kong, but I guess first you need to finish the secondary listing.
Then when it meets certain criteria is then you can apply for the for the dual primary so it was kind of a step by step, saying, we're just right now to try to finish the first step and somewhere down the road when the condition ready we're pursuing that.
Excellent.
Hi, Julien.
Uh huh.
Yeah.
I wouldn't say sandy demand.
Arguably.
<unk> shutdown.
And you have seen me.
Let me now.
Was she assemblies on garden Agco Booth Archie.
Okay, I'm going to wait until you guys John Kim.
And Hulu.
The history on that would be good.
We don't see human community.
Could you live Giggled a woman.
Woman.
It tends to be a junk ritchie with you.
In Q3, we see the overall pricing got a little bit compared to Q2. This is Matt.
Or is this wrong or gradually ramp.
Maturity going forward as we see the loan mix Brown, our new customers and old customers are relatively stable leasebacks based pricing to remain relatively.
April .
Hey, guys.
Thanks very much.
Thank you.
Your next question comes from Dan.
<unk> from <unk>. Please go ahead.
Hey, guys good morning.
Oh sure.
Leon Qi.
I think the other five years your pension discount change always Oh.
Yeah.
Oh geez.
It's all the more machine blah blah that Biogen goes through the Odyssey shallow number number then.
Could you discuss that at all and you talk about that box touchy T. J shall be August it washout blah blah blah.
Yeah.
Okay.
The I'll go back to why are you seeing that truthful unless you're the only a young adult study.
That future will be argued we all recently here.
You already talked about on Macondo, Okay, hopefully for a long time.
He hit to also hit the Mildenhall yeah.
The borrower profile that guy.
Congratulations.
Congratulations nice results.
Uh huh.
Jonathan I'll bunch here, okay. Thanks Giovanni.
Hi, Thanks management for taking my questions.
This is Leon Qi from Daiwa.
I have two questions regarding the results itself. The first question is regarding the loan pricing.
Just want to know what exactly is the neuro and pricing for the launch quantity throughout the third quarter. This year and the second question is regarding the loan demand as Mr. She just mentioned, we've seen better loan demand in the third quarter compared with the second quarter.
In our view what is the typical borrower profile.
It is oh Daemonian warn you along.
Well all of this.
At the low end demand come from for example, which sectors all segments. Thanks a lot.
Yeah.
Huh.
Uh huh.
Okay.
Either clean kindergarten teacher.
And a woman.
Secondly, I saw that women with him.
Hmm with Alabama, and Josh I think that's a good fit.
But on that issue.
Yes.
Although our price entailed the way is a little bit lower than 22%.
Tiago is going to go.
Corporation.
Two women, who go see so lesion is a good question.
Showcasing their Christmas shopping.
Sure.
So he was out.
For sure.
Could we have immediately which obviously the persistent residual woman.
They can do it in a second.
So tiger who used it.
January is a weak co issue.
What kind of data here.
Good all right.
I won't get it this year.
She showed a clear push if for some reason.
In terms of the business nature actually consumer alone is quite non zinc nickel. We we see this demands a gradual recovery is come comes from the.
Customers in the area that previously husky by Colgate.
Okay.
Yeah.
Okay.
Just want to probably add a little bit of color on that so.
Leon to your question.
Really on the consumer side, we don't really particularly tracking.
They are professionals they.
Our kind of our categories and everything so that's that's not the kind of the focus points and then also that's not.
That's kind of a data we can provide in terms of which professional getting better in terms of the improvement.
But just like I mentioned.
You you sort of you can imagine that.
You know for those areas that being locked down for example in Shanghai during the.
March April may period.
When the Lockdown get released.
It will be a pretty notable rebound.
You know in demand so that's kind of a German edition part driven this recovery in the in the third quarter.
Okay. Thank you.
Okay. Thanks, a lot.
Understood found that yet.
Okay.
Yeah.
Thank you.
Your next question comes from Thomas Chong from Jefferies. Please go ahead.
Why is that.
So all of that to you and borderlands.
<unk>.
Thanks Judah.
Yes, hi, guys.
Oh sure.
Thanks Hal.
Oh Boy Joseph.
How should we stay open wallet.
Sure.
One.
Alongside Edelman come down level.
Goodbye.
<unk> sure well continue to.
Two quick, which we'll send something up and.
Youll just aren't going to get asked you Guangxi woman to date.
I think our guidance.
Since I see things either missing rungs, all that woman.
Nick.
I'll take the low end is the high end the guidance.
The guide you guys on Whatsapp, So im wondering hung probably towards the low end I suggest all of it but what was that about.
Hi.
You can find it and like you said Joe.
Got it.
Thanks management for taking my questions.
My first question is about other competitive.
Hi model, then given that the acreage.
He is traveling bronco.
Our companies.
Wanted to get a sense about how we should think about the landscape in the future and the second question is about.
The ticket size can management comment about the trend in recent quarters and my third question is about the Q4 guidance.
Given the pandemic situation.
Well with Atlantic.
Just wanted to get a sense about the high end and the low end of the guidance and.
First.
Under what scenario should we expect it to hit the low end should we expect the pandemic.
To worsen.
The pilot situation. Thank you.
Uh huh.
We're essentially right.
Igo going to.
Could you then.
Which antigua geography.
Tim on your October you mean.
Hmm.
With regard to Manhattan, with England Eli.
No.
Thank you Suzanne Gucci to Clinton.
Thank you Kim I agree with you the provision that you always have.
Provision there.
Okay.
You're really good at getting value it didn't do neither.
Gotcha.
Tissues without impact.
John .
I will act to incubate.
<unk> got pretty good how quickly can they do it.
First of all from the point of regulatory.
Therefore for.
For 2009 in last year, we believe the 14 task one that is damage for this meeting are more competitive in compliance deals in the future.
Yeah. This is Dan.
So as that goes.
Hmm.
Regardless right now.
Uh huh.
I suppose that.
There could be.
The way you here's a good.
Hi, Kimberly that lunch and when you don't have it because you didn't shoot attempted kingdom.
Sure.
Yeah.
<unk> Shandy like Dr. Christian <unk>, who will be going down this year.
Sure.
She juggles lapping count them with your not just your time, sometimes they get delayed and put them in.
I have been pushing.
The museum.
Hi, Kelly.
If you look at the 14 task one around two point out number one the credit Mark the credit market is that right.
A large market with multiple layers different players may cross over across the different layers a little bit secondly, this these mass market that we do not see that different players will compete directly head to head.
Yoga glean from.
The mainland ticket side.
Hum.
Zakaria Hawaiian suite, a woman the tickets that Jim.
Boys, who Twilio transit system.
A woman.
So if we sold them in cooking, but it's in the gigabit in Denmark.
What kind of other Jewish woman kitchen, the Tampa.
One of them.
So Washington, Canada installments will get what I'm kind of eliminated the use of abengoa.
Okay.
He like Honeywell.
As a teacher in a woman.
Hum like cookies children's indoor Cheetah, let him do that Kimball.
Kimball.
There are two factors when we consider ticket side number one factor considering the macro environment. Since we took the prudent approach that our risk management strategy, we are not drive our ticket side.
<unk> point as we are continuously upgrading our customer base. This year, we're seeing the good customers can bring more value create longer alone.
Time value and the larger ticket size.
And the design going Q4 to the outlook.
You unequivocally yes.
We ask that you do so.
<unk> you recently, yeah sure Matt Yeah, a woman can be here.
And then the only thing the usual.
With that since it continued into women and men Loanda yoga.
So we are today.
Eli the digger each vegan soup.
Zero Linda.
When you get into the game plan.
As for our outlook for Q4.
There are several factors, we take into consideration a number.
Number one there right there is seasonality in funding supply in Q4 due to the operation of banking industry. However, as everyone knows there are sufficient staff in China financial system. This year, we do not see these that are coming to effect this year.
Second reason is the macro environment and our colleagues.
One why is.
Is the major.
Major a major concern for our guidance.
I assume you can hear me.
Sure Thomas I, just wanted to add a little bit to your last question regarding the Q4 guidance.
Basically the guidance reflects our view.
View of the current sort of micro condition. Obviously, you know the you know the Chinese.
Chinese market. These days are very dynamic given the.
Covid related policy, changing or pending changing as well as a reaction by the local authority to those kind of the new coverage policies, we heard a different kind of messages. Some say the low some certain local areas or more aggressive to kind of a reopening.
Whereas some others still maintain that kind of restricting kind of stance. There. So it's kind of a.
Changing dynamic.
But based on what we can see today.
I think the guidance we provided in the Q4 is within a comfortable level. Then obviously if say for the second half of this quarter seems getting better than you know well, we'll probably see a better performance.
Ice versus so that's only based on information we get today.
Thank you.
Thank you.
Yeah.
Thank you very much there's no more questions.
Management back to you for the conclusion remarks.
Okay. Thank you again, everyone to join US for this conference call. If you have any additional questions. Please feel free to contact us offline. Thank you have a good day bye bye.
Ladies and gentlemen. This concludes today's call you may now disconnect.
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