Qifu Technology Inc. Q1 2023 Earnings Call

May 19, 2023

[music].

Yes.

Okay.

Ladies and gentlemen, thank you for standing by and welcome to Chefoo Technologies first quarter 2023 earnings Conference call. At this time, all participants are in listen only mode.

To answer questions. During the session you need to press star one on your telephone you were down here, an automated message advising yohan its rate.

Richard Your question. Please press star one again.

Please also note today's event is being recorded.

At this time I'll like to turn the conference call over to MS. Karen G Senior director of capital markets. Please go ahead Karen.

Thank you operator, Hello, everyone and welcome to achieve food Technologists culture of 2023 earnings Conference call.

Our earnings release was distributed.

Okay.

Joining me today is Mr. Watson.

Okay.

Yeah.

Mr Jin Yan RCI.

We've always thought I would like to refer you to our safe Harbor statement in the earnings press release, which applies to this call as we will make certain forward looking statements.

Also this call includes discussion.

Got it.

Please refer to our earnings release, which contains a recalculation of the non-GAAP measures to GAAP measures.

Also please note that unless otherwise stated all figures.

Okay.

What you are CEO Mr. Wilson. Please go ahead.

Okay.

Oh excuse me.

For example.

So like I said I've got for you.

Okay.

Joining us.

Paul.

Kids adult woman.

And I used to do more women.

Uh huh.

You bet.

Correct.

Well I guess, we can do about one month ago.

Okay.

You can do the scorecard there from my Grandma died down.

Turning to Hawaii.

Good to see.

Like do the sourcing of what can be done back in just so we don't know.

Okay.

No.

One for Sundar.

And that's for sure.

You've got a tug of war.

It's Linda.

Or will they come back to me right.

That's exactly right.

But that's not true.

You bet you bet.

So she did that Ghansham this is Chris.

Yeah.

At the end of Q1, our platform Cumulated Lake connected approximate today 46 million users with approved credit lines and a total of 100.

Christian.

No loan facilitation and origination volume on our platform.

I N C Y 095 billion.

By 10, 7% year over year and work with it and pay downs totaled over culture.

Well as you remember.

Yes, absolutely.

And I can see it.

Eight 6% year over year.

I wish it was better than our initial expectation I guess.

The rate of recovery in China's macro economy.

Since the beginning of this yet we have seen positive overall trends in our business, including private demand from new debt steadily increasing and continuous improvement across multiple risk indicators.

So at a woman.

Christian you.

You'll find them on to them.

For women.

Susan.

Got it.

She talks a lot about it.

Oh isn't that big.

It wasn't a get back from them very soon.

Sure.

Oh Boy you Kinga.

I'm going to give up.

And so it doesn't get done quicker.

Come on board.

You bet.

Yeah.

So you can catch that woman.

No.

Sure.

Hi, good morning.

Those are two of them.

You can tell us what you typically do at all.

And then.

Gotcha.

Who isn't done yet.

No.

Yeah.

That's a good sort of going to the potentially some.

Yeah.

Dr. Smith.

When the music.

You bet.

Are you on that.

So I don't know.

She got Youtube.

It sounds like you end up with something that you.

You bet.

Yeah.

Okay.

Mhm.

Talk to me a couple of metrics that you're going to move out.

Or do you have that CEO .

Uh huh.

It's been pretty much since then.

Right.

To mitigate the effect.

Got it.

It seemed like it always is.

Pricing remained stable during a culture with all of these other states haven't been.

Substantially optimized at the same time, we continue to upgrade our risk management models, including the release of more than 1000 version update and iterations of over 30000 strategic rules.

Sure our credit officers in the model over the past 12 months. We also further upgraded our T O C credit daytime modules.

Q3 last year, we have started to incorporate people, you'll see quite a bit they tightened to our ongoing post credit assessment process.

A large scale.

With over 20000 device that they took that mentioned not able to unlock the value of our existing users with enhanced credit assessment capabilities.

Supported by our constantly improving our ability to accurately identify risks or they want their delinquency rates in April of 2023 decreased by 37 basis points from December 2022 while our production.

Collection rates increased by 189 basis points for the same period.

With our risk Cooperman Huntington essentially reached our targets we are more confident in gradually ramping up investments in customer acquisition in the near term.

Yeah.

Hum.

Okay.

Did you do it.

Certainly not too bad.

So just curious about your ship.

I'm not.

Sure.

Shoot.

Yeah.

Great.

Or go girl.

I've got no problem.

Goodman Jones, you go with that.

What's different.

No.

Sure.

You can keep all the different John .

Sure.

I was at the beach.

Maybe as a parking lot count.

Two backwards again, sometimes you end up doing.

Gaslog.

We conjecture.

What should I couldn't do that you.

If you go back to you Mike.

Right.

Yes.

Thank you.

You get a woman if I can.

Yes.

I can give you more.

And John Richardson Chief.

You can call your shopping center in Korea.

Uh huh.

You bet.

Super.

He'd been stocking their opinions from bank, yeah, keep which Angela sugar beet.

Hum.

We don't think that there could be some but.

So we like that.

Yeah.

Yeah sure sure.

Only a purchase you'd shoot you.

Karl can do good.

If you go that.

Children in Ghana.

Sure.

Liquidity in the financials due to the late <unk> during the quarter with total social financing and M. Two money supply increasing by 10% in California, and 7% year over year, respectively.

Enable us to further diversify our funding sources and reduced our funding costs by 30 basis points sequentially. In addition, with our solid performance in the loan facilitation model, we have obtained more allocation from our financial institution partners.

Or is it should thereby accelerating our pace of issuance.

We issued two.

<unk> 3 billion or eight yet.

77% year over year outpacing.

Outpacing the growth of overall consumer loan ABS issuance in China.

Our funding cost associated with it yes issuance also decreased by 17 basis points sequentially, how much of the change to a further reduction in overall funding costs.

The board will continue to deepen our partnerships with financial institutions and strengthen our competitive edge in terms of funding.

We expect over not only has to remain generally stable over the next two quarters.

Okay.

Uh huh.

You do.

Hey, good daily constantly you sure.

Okay.

And so when we are allowed to come in so what he's doing in craigie told them to go hard to pull back.

Oh man I wish them luck.

John and Tom.

Bushel Gpus.

Uh huh.

I told them that they don't see supportable.

Moshe.

Since you hope where women's yoga yoga.

The Santa Ana Hooker.

Charlotte.

No.

For women and.

In kindergarten.

The company.

You bet.

Okay.

It's a good time.

Okay Moshe Dayan.

Sushi.

John .

Arthur.

Alright sounds good.

I mean is it which is what they can do that for you.

And then did you guys switching Huntington.

Huntington Duck it should go down.

Tell me if that translates into your thinking that take the whole consumption.

Uh huh.

Okay great.

You've had a good beginning.

Thank you.

And you should be great entrepreneurs.

It's a board matter.

That'd be great.

It's good.

Washington.

Matt Mcnulty with Jaguar.

Has it been I'm interested in your house.

Go ahead go ahead.

In terms of customer acquisition in Q1, we entered into a co operation agreement with CDP Redoing the culture. The company one of its first batch being tech marketing pilots.

Also launched precision marketing.

Model and absence of major mobile phone.

Yes.

We did marketing model will help us improve our marketing efficiency all irrelevant at stopped pack one.

Our customer acquisition cost.

Okay.

Oh Wow.

But 20% lower than it had been into the traditional model.

Within our embedded finance business, we connected with additional topics tackled which results.

Let me use this receiving credit lines.

In addition, we have been exploring innovative ways to acquire new customers.

Official like screening accounts for our <unk> product was launched on a short form video platform.

Hum.

After that our expectation.

Okay.

Hum.

With that Jim Jones from.

And patanjali.

They don't put their data.

Forget who's here with me.

Yeah.

You don't put it on how hard it was true.

He did a woman.

Great.

It's a way of me and I, even today, even without the immediate short term.

Sure.

So who wants to go.

Thank.

So you can figure out that they don't see young.

Gentlemen, hey.

Joe mentioned that you don't forget our Oxford to London.

And what are you going to generation to eat.

I think that's all they do a good job.

Oh My bad.

Dan.

So that you don't tell you because I'm not there yet.

She got Johan.

Oh well if.

Sure.

We further expanded our outreach to existing leases and optimize attrition those strategies to boost user conversion and retention.

We introduced the enterprise reach out as a new channel or engaging with our existing users, which drive user conversion by offering a step by step guide to that level.

Application drawdown and the submission process.

As of today, we have engaged with more than 200000 exit to users.

Furthermore, we also improve user retention by optimizing our product offering and music theory based on extensive surveys of our existing users.

Okay.

It could change either sooner or me.

Okay.

Thank you Amit I think it should show.

San Francisco.

Excellent.

James.

Thank you all right switching Mississippi.

Two more one time.

A couple of years yet.

Oh sure Yeah.

Yeah.

Well my question would be and integration work that you've done.

With that she said none of them just especially itself.

No more question.

But that's the way you should think of tissue holding shall we.

Thank you Rachel good question. So can you just how you've had a term sheet, but I'm not sure Goldman.

The only thing you can rely on one particular kitchen medical.

<unk> John here for you.

Jim.

As the macro economy gradually that correct. We have noticed that demand has been rebounding fast along broadly defined S. N E borrowers to patch. It you get the Maui Chick placements in our ability to identify and manage this specific settlement.

We enhanced our customer profiling capabilities by <unk> data have that notion such as credit history.

E Commerce transaction building industry, they start which allow us to accurately identify customers within the broadly defined SME segment, which accounts for more than 40% of our current user base. Our next step is to conduct pilot has.

Selected a group of users aimed at developing you finished each of the product and the fine tuning. This management strategy for the broadly defined segments, which we believe has the potential should drive meaningful growth for our business.

Yeah.

John .

So could you do the metro again, I haven't done that.

Yes.

Our machines there for them for that.

Do you go for the cricket you would hear from them.

Okay.

Hey, Doug.

And of course the team there.

It was just you know what that is.

So your Toyota Honda.

The bushel furniture or.

He's working hard.

Thanks.

And then when she goes into a couple of minutes ago.

Sure.

Many a bunch from that Christian was different than either the government I'm Jim.

Capex for that.

Chicago.

Midnight forgot.

Quote Cook, a phone call and talking about them.

Good good.

In digital empowerment passion that integrate youll see that they are getting them and knowhow. Yeah. It means you got to get shipped.

Oh yeah.

Thanks, you too.

Second switches.

Without your gas on your agenda.

Yeah, that's a good suggestion.

For our technology solutions business, our focus in Q1 with our.

Our product capabilities specifically.

Specifically, we extended scope.

The other question that comes from that at all.

Individuals.

Our diversified deployment method allow us to better.

<unk> of each of our nice to show institutions, we work right.

So far we have developed standardized products based on our core technology co capability and it's created a standardized modules.

In every aspect of their credit business, including.

With management operation and accounting et cetera, We also incorporated our extensive credit industry knowhow into the merger, which empowers financial institution.

And also from the moment they onboard.

Okay.

A question there.

It's generally been a good.

Chuck did you reach you guys yet.

Goodbye.

Hmm.

Go ahead and go yeah.

For me I'm sorry.

Sometimes into AI.

Right.

Three times or English.

He was dying to hockey chicken.

Cultural change at all.

Excuse me about one year.

Yes sure Great question that's useful.

So that's the issue.

I'm, sorry, I'm going to talk in food I met you don't question Patrick.

No argument.

From Corinna van der <unk>.

Sure Yeah Craig.

Chile, Japan woman she left to go.

Thinking bumgarner deduction this year.

Yes.

She Goldman.

It should be in my shoes.

Jimmy enrollments at <unk>.

You can see it's really easy.

Easy to implement.

Now most important.

So do you want to give them in Chicago couldn't shouldn't groceries, you forgot introducing that'd be great I'm wondering in tissue.

Generally creating that they don't.

Yeah.

Hum.

Are you still there good to meet you.

Oh my.

Just curious around that change all aircraft rather than quantity engineer.

And as you integrate <unk>.

You did increase your question yet.

And to what degree of activity.

Each for each and every one of them.

Yeah, I mean, Nashville Creek kind of push.

We mitigate catch them in court.

I think three somewhere around that changed our aircraft we're taking.

I mean, how do you go to <unk>.

Thanks Hillman.

What you don't see it for now.

Yeah, we don't want to get close to the Giga Gini Jody.

You know what I mean.

They don't realize they are women.

In Korea, we saw food.

No.

Okay.

We don't think that's one of them.

Yeah couple of installations, you could tell you in court.

A couple of months.

800 golf.

Over the past few months Chesapeake TSP, having significant impact on various industry. Since its release, we believe that is generated AI technology has many natural.

For example in areas such as intelligent customer service to the marketing and the loan collection chassis PT can better understand the emotions and facilitate natural seamless and personalized interaction with users.

Management is just kind of derive useful information from credit reports and identify relevant.

As for our risk management models.

In April .

That leads to a lot of language model departments. This new strategic activation is dedicated to developing their risks.

Deep learning.

And the generation of AI technologies, specifically for applications in the financial sector.

We have already launched the first version of GPT for Internet internal use which is designed to perform semantic analysis in our loan collection and the telemarketing closer.

So with TPG analysis, you did intention in the label and what we can see that he uses it bring labor have clear variation in the effectiveness of passion and telemarketing.

Apart from applying AI to enhance the user experience and our operational efficiency. We also plan to gradually expand.

Such capabilities to our financial partners.

Uh huh.

Yeah.

Tangela.

Okay.

Yes.

Okay.

Right.

John Bunch of Magic Dungeon Ghansham.

And from here to come I'm sure.

Sure.

Sure Julien.

And for Jim Jim you found out that the goods and when she came on sooner.

Hi.

If you turn to when your sugar.

Are you guys doing kind of a contract.

On the regulatory front, we continue to make steady progress in gaming complies with Ben Chilean credit agency risk borne in Q1, we have substantially completed the.

The integration of systems with our financial panic. According to the plan, we submitted to the regulator so far our loan facilitation progressed to the Chilean model.

Given the current regulatory focus on promoting economic development.

Believe the industry will be able to deliver healthy growth in a stable regulatory environment.

Hmm.

All right.

I realize you've got Youtube.

And then after that it gets easier for some of the algebra.

And then if you could choose to.

Users can chugging right.

Well, thank you Danielle.

Jim will get started.

In India.

And when you're thinking about.

So to the contrary I know a bunch of women to mobile.

Okay.

The economic recovery is still in its early stage, but the trend for recovery is clear.

We believe that the macro economy environment will gradually improve throughout the remainder of the year. We are also confident in our ability to capitalize on the recovery momentum and to deliver on our growth effectively.

Okay.

Hum.

There are challenges.

A woman.

Uh huh.

Seagull woman.

You did 10 points.

Just a moment.

That concludes that Brito.

Culturally I know, you're you've been done a solution now.

EMEA continues to achieve such a machine.

Do you want to go with tissue that you don't you put on that Frito construe that maybe you guys have.

It goes all the way you see it when you call me going through the downturn.

And in your home.

Yes, so if.

Got you.

And that's something that sensor rich.

I mean, there's some room there to go.

I will come in Asia.

Finally, I have some news to share with you.

For the directors has just approved a resolution to increase our dividend payout ratio.

We continue to drive quality growth.

What about it.

It's also important to listen to the market and share the benefits both within our shareholders.

We believe this will enable us to enhance the value of our company Alex will share more about this later with that I will now turn it over to our CFO Eric <unk>.

We're still with our financial results for the culture.

Okay.

Thank you.

Good morning, and good evening welcome to our first quarter earnings call.

Quarter set a positive tone.

Discovery.

Yes.

The improvement in many aspects of our operations user activity levels continue to improve in recent months aside from normal.

Although we still wanted to expand a recovery a modest one things are indeed trending a little bit better than we initially thought.

That's right.

Hernia with micro conditions, improving throughout 2023, we intend to focus on an effort and deploy our resources to drive back to growth, while maintaining desirable asset quality.

In Q1.

It's high quality and low risk user base and drive further improvement in risk performance.

Key leading indicators and day, one delinquency has been on a steady.

Steady declining trend in recent quarters.

Four 1% in Q1.

One versus four 3% in Q4 and further decline to approximately 4% in April .

The continued improvement in day, one delinquency, mainly reflect the macro improvement.

As further optimization of our algorithm.

30 day collection rate was 86.

Q1 versus 84% in Q4.

This sharp rebound from the Covid disrupted Q4, mainly reflected back to normal collection operations as they can.

Amit recovery continues we see further improvement in this metric by late April early May collection rate already at near 87%.

Total net revenue for Q1 was $3 6 billion versus $3 9 billion in Q4, and $4 3 billion.

Okay.

Please go ahead.

Okay.

Thank you.

Alright.

Thanks, Chris.

Okay.

During the quarter.

Okay.

Right.

Chinese new year spillover effect for our mortgage early repayment momentum.

Oversupply of liquidity at the beginning of the year.

Looking ahead, we expect early repayment level to stabilize in Q2 as above mentioned matters or factors gradually easing.

Our balance sheet loans continue to grow at a faster pace and account for nearly 20% of the total loan volume.

We continue to drive for better utilization of our capital as well as our micro lending license.

Revenue from platform service capital Light was 969 million in Q1 compared to $1 1 billion in Q4, and $1 4 billion a year ago.

One year and the sequential decline was also mainly due to overall decline in the expected average tenure of the new loans as well as further adjustment to existing loans expected tenor.

For Q1 top line loan facilitation, ICD and other technology solutions combined.

For roughly 56% of the total loan Bonnie roughly flat versus the prior quarter.

We expect the reserve ratio will be relatively stable throughout this year.

In the long run we will continue to pursue tech driven business model, we're seeking a balance among various forms of non risk bearing solutions based on macro environments and operational conditions.

During the quarter average IR prices of loans, we originated and facilitated remained stable Q on Q.

Well within the regulatory cap requirement rate cap requirements.

Looking forward, we expect pricing to be relatively stable for the coming quarters.

Marketing expenses increased marginally Q on Q as a recovery in our user activity.

Offset by seasonal impact of Chinese new year.

Approximately one 5 million new credit line users in Q1.

<unk> versus Q4.

Underlying user also increased marginally well, we will continue to drive for efficiency in our operations.

They adjust the pace of new user acquisition as the economic recovery continues throughout 2023.

We will continue to focus on reenergizing existing user base as a repeat borrowers historically contribute vast majority of our growth.

Although we will continue to take a prudent approach to book provision against potential credit loss, we should expect increasing write backs from provisions.

Prior periods.

Its overall risk profile of our loan portfolio gradually improve along with medical conditions.

Hello, new provisions for risk bearing loans in Q1 was approximately $1 7 billion and the write backs.

Previous provisions were approximately $411 million.

Provision coverage ratio, which is defined as total outstanding provision divided by total outstanding delinquency.

Balanced between 90, and 180 days or 432% in Q1 compared to 456%.

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

Okay.

You'd rather stable leverage ratio for the time being and chew.

Non risk bearing contribution resumed growth in the future.

We generate approximately $1 8 billion cash from operation in Q1, roughly flat Q on Q.

Total cash and cash equivalents was $9 billion in Q1 compared to $10 9 billion in Q4, non restrict cash was approximately $5 1 billion in Q1 compared to $7 2 billion in Q4.

The year the sequential decline in cash position was mainly due to increased cash usage in our balance sheet.

As we discussed earlier with economic conditions, improving we may look for opportunities to deploy resources to launch new initiatives and develop new technologies.

Our service offerings.

non-GAAP net profit was $976 million in Q1 compared to 919 million in Q4.

As we continue to generate healthy cash flow from operations. We believe our current cash position is sufficient to support our business development.

And to return to our shareholders. Since Q3 of 2021, we have paid out a total of 134 billion cash dividend to our shareholder in six consecutive quarters to.

To generate high returns to our investors and to solidify and expand our long term investor base. The company's board of directors, a new dividend plan yesterday.

A new plan increased our dividend payout ratio to 20% to 30% from previous 15% to 20% of net profit.

Also to reduce the transaction costs for our shareholders Newport and the new plan approves our semiannual dividend distribution is scheduled to replace the quarterly dividends schedule of the old pads.

First semiannual dividend payout will be declared in our Q2 earnings release.

Finally regarding our outlook for 2023, where we start to see a gradual recovery of micro economy and our business activities are also trending a bit better than previously thought and may still take extra time for consumers' confidence and the behavior returned to normal at this junction we.

Still see a modest recovery in consumer credit demand with growth rate potentially accelerating throughout the year as such we would like to maintain our full year total loan volume target for 2023 and between RMB 455 billion and RMB 495 billion.

Representing year on year growth up 10% to 20%.

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

Is that I would like to conclude our prepared remarks, operator, we can now take some questions.

Thank you <unk>.

A reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again for those who can speak Chinese kindly 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 return to the queue. If you have more questions.

Once again Thats star 114 questions.

Our first question comes from the line of Frank Chen from Credit Suisse. Please ask your question Frank.

Yeah, Glenn anytime Youre, what you will see a white horse racing John Hall.

<unk> D go once you see your quarry.

Hi, Josh.

So I'm thrilled with your term debt.

Sure Okay. John <unk> question could the horseshoe quarter sit too long could are you guys seeing for your Opex you've got there now.

Yes for sure.

Sure.

<unk>.

<unk> got a team that you ship cohorts in quantities.

Jim could you just how is that.

Once you see required junior in the meantime.

Linda.

So it means how many.

Predominantly you'll note.

For sure to team with that development shortly.

Thanks, John .

Thank you management for taking my questions. This is <unk> from credit Suisse I have two questions. The first one is on the strategic focus for the rest of the year could management provide more color on four measures for instance.

More aggressive acquisition optimization on existing clients and potentially further operating and client segments and second question is on operating expenses.

What are some of the measures the company has taken to be operationally more efficient. Thank you.

Okay.

Oh <unk>.

It doesn't sound like the Rihanna Alex.

Oh God Musica Kubota.

Minimum wage.

Stinker aggregates for young cohorts.

Sure.

John J Magee.

I think if I may.

I mean that goes well.

Yes.

Can you say, what the inquiry tissue.

All women.

Okay.

Got it.

When looking at video and what they're going to accrue to us from <unk>.

Damian.

Mr Baur for years.

Obviously, the Coca Cola system.

So a likelihood of currency.

<unk>.

Great.

Jonathan and I will Miss you towards your goal.

What's your mitigation.

With regard to women.

So you got a lot of them and see whether it would be good.

And I think this year.

Looking down at Zynga Youll Parliament.

Altra.

So volumes with us.

Macedonia to Ghana.

And the teams and the LTV.

I would like to develop.

So that's a great core credits.

We're going to conduct and go from there.

Alright.

Thank you.

Okay.

Alright, Thanks, Frank and I will ask you to answer your first questions.

Ill pass the second question to Alex.

First about the.

Oh, sorry.

For this year.

The new customer and existing customer, but equally important trends.

In terms of the new customer acquisition.

Afterwards, we will be focused on.

Two aspects first we will continue to expand our cum Ed.

Our partnership with different channels and.

Increase the depth of the partnership.

For example, we have been tightening.

Screaming.

Sure shop on video platforms and do we.

And the way <unk> modeled into our App store marketing.

Without it better than our initial expectation.

And the second part.

You still are chain model too.

Our explanation about to date.

Yes.

Optimize our offering and the increase I will use this conversion ratio.

Therefore, we can increase the LTV of our users.

And so we will increase our competitive edge.

In terms of customer acquisition. This is about the new customer.

New customer acquisition.

Lockup.

Okay.

Linda.

And I couldn't agree more.

Pretending to your targets.

And I can tell you that going on.

Yes.

Got it.

For the other bigger sheltered.

So in that kind of terms of towards a good situation.

Real quick.

Hello, and then figure out what I showed you.

Okay.

Thank you for women.

Is it.

What you sometimes.

Santosh.

It could be a push from could you clarify John .

The human shoots you input will now offer human functionality.

Thanks Ali.

Yes.

Okay.

Yes.

But you shouldn't Alabama Fisher.

So you can play with women coldly in particular could you mitigate offered I think of Johan Sverdrup.

How does it fit.

Regarding our existing news, it's actually we have a very significant user base of our <unk>.

He can do that.

So it's very important for our breast to increased effort on existing users to improve the coalition if activity. For example, we have tied to use enterprise wechat to color our existing users to increase increased effectiveness.

Sure I'll reach our existing users.

And we.

Buoyed by our risk management modules shoots.

To better understand.

Our users and I think if I did.

All of our users for example fluid.

Okay.

Yes.

Okay.

Yes.

Sure.

What is it 40%.

So later a weekend.

Our offering and improve our.

Hi.

User engagement.

To better engage to existing users to ensure that long term value.

So my last one.

Cushing is on the woman.

No major him that vigor.

So there is a good business.

You can go back and do the chimney fun day soldiers are kind of neat.

She'd element of digital full credit due to COVID-19.

Yes.

Chinese semiconductor to be without it.

Sure.

Okay.

Good morning.

Gentlemen, you kind of it.

Great. Thank you for that.

Well, then you can totally get firsthand agenda to get.

Okay.

Well for me at the time.

Turning to able to fulfill or Magellan for you.

Because I have it here.

She came with a court argument there are couple of BMO.

So at this point.

Moderate macro economy recovery in March.

We.

It's very unfortunate for us to increase our efficiency at this stage so we.

We'll increase our coverage in terms of the channel and partnerships.

So we can better.

<unk> marketing efficiency.

I think we are.

Actually in <unk>.

Thank you.

Okay.

It's part and we believe will further increase our user base Wednesday and macro grading.

Sure.

Yes.

Good evening gentlemen.

So for example.

Okay, Hi, Frank.

So basically for the operating expenses trend going forward there are a few aspects one.

Some of the operating expenses are variable cost for example.

Yeah.

The one we used to.

Okay credit scores.

Cost and.

And we do the transaction or sending the message to ask them.

SMS.

Those variable costs.

Have a long term relationship with those suppliers.

Every year, you can always squeezed a little bit.

From the cost base on a unit basis, but the room for that is not really that much.

And then the other big part of the variable cost is really customer acquisition.

I think we are.

This kind of discussion earlier before last year, our unit or per credit on users customer acquisition cost was about 370 360 RMB.

RMB per user.

This year we.

We intend to lower that unit cost number to somewhere around 330.

The first quarter was only about 200.

280.

Less than 290 so.

The following quarters.

The kind of increase the pace of customer acquisition, you may see some increase in.

In the.

In SaaS marketing spending, but overall on a full year basis, we lowered unit costs for <unk> and users acquisition costs other back office related fixed cost.

Have a pretty tight internal control, including cost and also on the it spending there.

Thank you.

Great. Thank you.

Next question comes from the line of Alex Ye from UBS. Please ask your question Alex.

Alright, great.

<unk> Guan Yu.

Take a deep dive, it's a quite a second London just a moment.

Simeon home buttons on this yet so you can update us.

So they need also has a bellwether in a hole.

Well, Mike we will conduct.

Brian and Peter I guess, obviously.

Okay.

<unk>.

Or do you sense, you're anti woman sorry, it's a good thing.

The Sendai soon.

<unk> got some concert alcohol I think at home because of what home ladies and that Syngenta.

Johnny.

John the whole DLH outdoors.

Women Youll mill at source.

When a <unk> cohort.

Yeah.

Don John John .

Yes.

Can you.

While that light switching.

What I can tell you that somewhat.

What I comment, though you take type of detail.

So my question is mainly on the loan pricing outlook.

Firstly in terms of the competitive landscape, we have seen the overall.

Consumption.

Recovery in consumer credit data has been quite modest.

In April so could you share some color in terms of.

What's the.

Carrying trend you have seen.

Regarding the competitive pressure from different players and secondly would you would you consider lowering your loan pricing.

Two.

Stimulate.

<unk>.

Loan drawdown demand from your existing customer base. Thank you.

Okay.

Hey, Alex.

With ICR.

<unk>.

Great.

Thank.

<unk> once.

Yeah.

Three women.

Hi, John .

Sure that'd be therefore sooner.

Kind of any channel could be.

Kind of Louisiana.

Gotcha.

Yes.

Alright. Thanks.

Thanks.

Thanks, Alex.

Recovery of the credit demand is more important for the competition the impact from the recovery.

Many of you that the model is more important from that.

Part of that competition.

I want to Huntington.

I agree with you.

Sure sure.

If I may answer the C&I on a year to go.

Good humor keybanc.

I mean, you guys someday.

<unk> excuse me 100 gig.

The IMF.

Crazy.

So there isn't a whole lot.

Towards that.

That's a great indicator.

60 basis.

We did have you opened on Covid takeoff.

Uh huh.

Maybe if I may.

Women vigor.

Chris you're going to go for them.

We'll move to Doug obviously industrial spend.

Hey.

Could you.

Pizza bundle.

Women Creatives you forgot indeed, you do there.

Yeah, No you forgot.

Sandy talked about IMU dose cohort.

Women and if we can do.

Jude.

Thank you Katrina.

Tore.

All right.

Given what you're measuring its inventory.

While.

Wait a moment, which room for insulin <unk>.

Yes.

The agenda.

Sure.

The seemingly held.

And then with the offer.

Alright.

On the other half we believe.

Segmentation of this industry is very clear at this stage.

I'm actually quite differentiated from the large banks and it is.

Also the smaller players.

We are targeting different target customers and the pricing segments.

There is limited overlap over that amount.

That debt.

The competitors.

And on the other.

Hello.

Ali.

Service capability.

We think we can have a wide range of different kind of users.

We can cover the lower pricing.

Pricing you were just and also the higher price increases so we can further refine our.

At risk risk management model to provide the differentiated products and offerings to better serve our users so TRA articulate it.

It all as our model.

Accurately next weekend.

Very strong competitors.

Okay.

Hmm.

I mean, I'm glad you're all doing that.

The woman she's really <unk>.

John you want to go home.

<unk>.

To put some no question, Chris the only sugar variants are you talking about.

And a question.

<unk> been working with CBD hotels.

Yeah.

Because that's a good syndrome.

This is kind of your other question <unk>.

So you get somebody on the Internet.

Okay great.

You could send me on this show.

Can you give any children on that well.

It is a way.

Can you how should we pursue the standard if you wanted to EBIT.

Okay.

Pricing perspective, actually we can tie donnelly.

And we reduced the pricing to better it activates and engaged some will probably use it as long as our model is excellent in that we can.

Our bedroom.

It increased.

Ed.

Add increased value from the startup strategy. So from an overall pricing perspective, we think.

Future pricing will maintain that.

At the provincial level.

We will maintain a stable level compared to the current state.

No.

Well look without jeopardy here.

Give me a quick one.

Thanks, operator.

Our next question comes from the line of Richard <unk> from Morgan Stanley . Please go ahead Richard.

Okay.

Hello, guys here just to maybe start with you guys streetwise.

Just two for health and safety in cardiology.

<unk> is one of the huge wholesale unit had been a while.

When we say that kind of negotiation Michelle papers, we assure to you guys.

So far this combination of women's Honeywell <unk> would you like to achieve.

And Jane J J good pipeline.

The Eagle Ford.

With home.

So it was 100 and that labor.

Tricia.

Within the third quarter.

So essentially my question is on the loan demand.

Particularly on the sequential change from the potential borrowers in recent months on any diverging trends among the different region groups of borrowers in terms of loan demand income growth and credit quality.

Perfect.

And I understand your issue.

And Mr S.

Canada.

It's a great singer.

So we see a woman.

We would like to have them back.

You guys suggest to go one question as well you guys did you guys.

<unk> had exclusive.

So I guess, how do you want to.

For your sense of if.

If I'm in the data center.

Okay.

John So sunbow Roubaix Sanitizers issue and Sanjay.

Yes.

Figure for hook without combo that they're easy to cause issues with our partner <unk>.

Somebody has to be guidance either.

That's one question is how high that kind of.

And then kind of harder to get Christian pleased with it.

Yes.

Do the switchover.

Yes.

Alright.

Could you kind of are all ready to go to Kristina.

Sure.

Sandy.

So doesn't that addresses a shelf full yes.

Cisco facility becomes.

In terms of credit demand recovery, we have seen two trends one is moderate recovery.

Alright.

Beverages.

So in <unk>.

Terms of the diversified recovery.

We look.

Look at this property.

The aspect.

We can put it back to John solution Shanghai.

Those regions are recovering fast.

Clustered in either region, which is in line with the incremental social financing by region published divided government, Inc, Q1 customer.

Customer secondly perspective, we have seen higher quality user recovery relatively faster.

Increasing credit side.

And.

We have seen the broadly defined as an equal.

Robert relatively faster, especially for Jody.

From the service industry.

Thank you.

Okay.

Great. Thank you.

We have reached the end of the question and answer session. Thank you very much for all your questions I'll now turn the conference back to the management team for closing remarks.

Okay. Thank you. Thank you for everyone joining us.

You have additional questions.

Can discuss offline.

Have a good day.

Okay.

Yes.

Okay.

[music].

Sure.

[music].

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