X Financial Q4 2024 Earnings Report

X Financial EPS Results

• Actual EPS: $1.13
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

X Financial Revenue Results

• Actual Revenue: $234.09 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

X Financial Announcement Details

• Quarter: Q4 2024
• Date: 3/19/2025
• Time: After Market Closes
• Conference Call Date: Thursday, March 20, 2025
• Conference Call Time: 7:00AM ET

X Financial (NYSE:XYF) provides personal finance services in the People's Republic of China. The company offers services as an online marketplace connecting borrowers and investors or institutional funding partners. Its loan products include Xiaoying credit loan, which consists of Xiaoying card loan; and Xiaoying preferred loan to small business owners. The company also offers Xiaoying housing loan, a home equity loan product for property owners; investment products through Xiaoying wealth management platform, such as funds, money market, and insurance products; and loan facilitation services to other platforms. In addition, it engages in the technology development, service, and sale of products; and provision of guarantee and consulting services. The company was incorporated in 2014 and is headquartered in Shenzhen, the People's Republic of China.

X Financial Q4 2024 Earnings Call Transcript

Key Takeaways

• Total loan originations in Q4 reached RMB32 billion, a 24% year-over-year increase, bringing full-year 2024 volume to RMB104.9 billion, in line with 2023 levels.
• Q4 net revenue rose 43% year-over-year to RMB1.7 billion and net income more than doubled to RMB386 million, driving full-year revenue of RMB5.9 billion and net income of RMB1.5 billion.
• Asset quality continued to strengthen, with the 31–60 day delinquency rate improving to 1.17% (from 1.57%) and the 91–108 day rate falling to 2.48% (from 3.12%) year-over-year.
• For 2025 the company forecasts ~30% loan volume growth, supported by Chinese regulatory easing, macroeconomic stimulus and enhanced AI-driven underwriting, with sequential Q1 growth expected despite seasonal headwinds.
• X Financial returned about US$76 million to shareholders in 2024 via US$6.5 million in dividends and US$59.4 million in share buybacks, declared a US$0.25 per ADS semiannual dividend and has US$15.9 million remaining under its repurchase program.

Presentation

[Operator]

Hello, and welcome to the X Financial Fourth Quarter twenty twenty four Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Victoria Yu.

[Operator]

Please go ahead.

[Victoria Yu, Investor Relations Manager at X Financial]

Thank you, operator. Hello, everyone, and thank you for joining today's call. The company's financial results were released earlier today and are available on our Investor Relations website at ir.xiaoyingrowth.com. Our call today from X Financial are Mr. Kent Li, President and Mr.

[Victoria Yu, Investor Relations Manager at X Financial]

Frank Suiagian, Chief Financial Officer. Additionally, we are delighted to welcome Mr. Noah Kauffman to our company. He brand's twenty years of experience in growth strategy, corporate and financial transactions as well as financial and operational improvements in the global financial markets. Before joining X Financial, he served as Head of Strategic Strategic Financial Planning and Analysis at the InterContinental Exchange, where he plays a key role in capital allocation and global business strategy.

[Victoria Yu, Investor Relations Manager at X Financial]

Mr. Kaufman will be responsible for leading our engagement with The U. S. Capital markets, including Investor Relations and strategic financing initiatives. Mr.

[Victoria Yu, Investor Relations Manager at X Financial]

Li will provide a brief overview of our operations and business highlights, followed by Mr. Zhen, who will review the financial results. Afterwards, Mr. Li, Mr. Zhen and Mr.

[Victoria Yu, Investor Relations Manager at X Financial]

Kaufman will be available to answer your questions during the Q and A session. I remind you that this call may contain forward looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Private statements are based on management's current expectations and involve knowing and unknown risks, uncertainties and other factors. These factors are difficult to predict and many are beyond the company's control, which may cause actual results, performance or achievements to differ materially from those described in these statements. Further information on these and other risks can be found in our SEC filings.

[Victoria Yu, Investor Relations Manager at X Financial]

The company undertakes no obligation to update any forward looking statements as a result of new information, future events or otherwise, except as required by law. It's now my pleasure to introduce Mr. Ken Li.

[Kan Li, President & Director at X Financial]

Thank you, Victoria, and hello, everyone. We are very pleased to conclude the year with outstanding operational and financial results in the fourth quarter. Total loan volumes exceeded our guidance with RMB32 billion facilitated in Q4 amounts, a 24% year over year increase for the quarter. For the full year, total loan volumes reached RMB104.9 billion, reflecting a stable performance compared to 2023. This growth was fueled by disciplined underwriting, strengthened asset quality, positive macroeconomic tailwinds that supported borrower demand and lower funding costs.

[Kan Li, President & Director at X Financial]

In the second half of twenty twenty four, China's government implemented monetary and fiscal stimulus measures aimed at stabilizing core economic sectors, notably real estate and enhancing market liquidity. These policies lowered funding costs and fostered healthy borrower demand in the personal finance market. As a result, we saw meaningful revenue and profitability growth with Q4 net income more than doubling year over year. Strong asset quality performance. Asset quality continued to strengthen significantly throughout the year.

[Kan Li, President & Director at X Financial]

At the end of Q4, the delinquency rate for loans overdue by thirty one to sixty days improved to 1.17% from 1.57% a year ago. The ninety one to one hundred and eight days overdue delinquency rate declined to 2.48% from 3.12% last year. These improvements reflect effective risk management practices and disciplined underwriting standards. 2025 outlook and growth strategy. Looking ahead into 2025, the Chinese government has reiterated the importance of the private sector as a key driver of economic innovation and sustainable growth.

[Kan Li, President & Director at X Financial]

Recent regulatory guidance from the National Financial Regulatory Administration, NFRA, further reinforces this stance, with policies aimed at expanding access to consumer credit, lowering borrowing costs and supporting consumption driven economic growth. While this development created a more accommodative environment for financial institutions, our primary focus remains on leveraging technology to enhance financial services efficiency Through AI powered risk analytics, automated underwriting models and embedded fintech solutions, we continue to empower our financial institutional partners in optimizing loan origination, credit risk management and borrower engagement, ensuring they can navigate this evolving regulatory landscape with precision and agility. Accordingly, we expect total loan volumes to increase by approximately 30% for the full year of 2025, supported by both organic demand and a more stable regulatory environment. Despite the usual seasonal impact of the Chinese New Year, we anticipate sequential growth in total loan volume in Q1 twenty twenty five as digital financial solutions become increasingly integral to expanding responsible credit access, while maintaining disciplined risk management. Strategic AI investments.

[Kan Li, President & Director at X Financial]

At X Financial, we continue to expand our strategic investments in AI, leveraging cutting edge models such as DeepSeek, Alibaba's Tongyi, Chenwen and Baidan's Daobao across our operations, AI now powers, advanced customer service robots, intelligent agent assistance, targeted marketing campaigns, including AI generated short videos for platforms like TikTok, streamlined early stage collection efforts, significantly enhanced efficiency and customer engagement. In software development, we have implemented AI driven auto coding tools such as Cursor, accelerating development and system optimization. Additionally, our multi model AI risk management system delivers over 95 accuracies through sophisticated contextual analysis and advanced image recognition technologies to identify early indicators of credit risk. Looking ahead, we remain committed to furthering to grow AI into our strategic decision making process, particularly in risk modeling and credit policy, to continue enhancing operational effectiveness and customer experience. With that, I will now pass the call to our CFO, Frank Zhen, for detailed financial results.

[Fuya Zheng, Chief Financial Officer at X Financial]

Thank you, Ken. Good morning, everyone. We are pleased to report strong financial results for the fourth quarter. The total net revenue increased 43% year over year to RMB1.7 billion. The net income grew 104% year over year to RMB386 billion.

[Fuya Zheng, Chief Financial Officer at X Financial]

Throughout the year, our top and bottom lines expanded quarter over quarter, bringing full year total net revenue to a record RMB5.9 billion, full year net income to RMB1.5 billion, strong balance sheet and capital returns. Our balance sheet remains strong with total shareholder equity at the year end increased by 19% year over year. Leveraging this solid financial foundation, we returned approximately US76 million dollars to shareholders in 2024, including US6.5 million dollars in cash dividends, US9.2 million dollars in our tender offer and $50,300,000 invested in share repurchase. Dividend announcements. Additionally, our Board of Directors has approved a declaration and payment of a semi annual dividend of US0.25 dollars per ADS.

[Fuya Zheng, Chief Financial Officer at X Financial]

Reinforce our commitment to delivering shareholder value. Share repurchase program. In Q4, we repurchased 38,400,000 Class A ordinary shares, while equivalent 6,400,000.0 ADS for $49,000,000 For full year 2024, total repurchase reached 52,200,000.0 shares with 50,500,000.0 in ADS four, amounting to US59.4 million dollars As of today, our previous US30 million dollars and US20 million dollars repurchase plans are fully utilized. We have US15.9 million dollars remaining under our US50 million dollars repurchase program, effectively through June 2025 outlook. Looking ahead, we remain optimistic about our growth trajectory.

[Fuya Zheng, Chief Financial Officer at X Financial]

For the first quarter of twenty twenty five, we expect total loan amount facilitated and originated to be between RMB33.5 billion and RMB34.5 billion. This positions us to achieve a full year total loan amount facilitated and originally between 134,400,000,000.0 and RMB 138,400,000,000.0. Closing remarks, as we progress to 2025, we remain confident in our strategic direction supported by robust underwriting standards, disciplined risk management, operational efficiency improvements. With a strong financial foundation, disciplined capital allocation and a clear commitment to enhancing shareholder value, we are well positioned for sustainable and profitable growth. Thank you for our shareholders, partners and especially our dedicated employees at X Financial.

[Fuya Zheng, Chief Financial Officer at X Financial]

We appreciate your trust and support as we execute on our strategy and driving long term value creation. We look forward to delivering continued growth and success in the quarters ahead.

[Operator]

Okay. Operator, we can transfer to

[Operator]

the Q and A session now.

[Operator]

Thank you. We will now begin the question and answer session. The first question comes from Ramsey Manor with Blackbird Capital. Please go ahead.

[Ramsey Manor, Analyst at Blackbird Capital]

Hello. Congratulations guys on a great quarter and happy to be a shareholder. My question is during the fourth quarter, the company repurchased approximately 6,400,000.0 ADSs on December 16. However, the share count on the financial report as of December 31 does not fully reflect the reduction. So I'm not sure if this is an accounting discrepancy.

[Ramsey Manor, Analyst at Blackbird Capital]

And if you could clarify that, that would just be better for me. Thank you.

[Fuya Zheng, Chief Financial Officer at X Financial]

I'd be happy to answer your question. And since we bought last year back in the last quarter of twenty twenty four, but the share count calculation is based on weight average. So, say, you own that share in twenty four, among three hundred days, out of which is three sixty five days. So that share account is still where we account for three hundred days. So that share account calculation is weighted average.

[Fuya Zheng, Chief Financial Officer at X Financial]

That is why you see do not see that big reduction in the year end because it's a weighted average. So in 2025, you will see those share totally disappear from the shared account. I hope I answered that question.

[Ramsey Manor, Analyst at Blackbird Capital]

Absolutely. Thank you.

[Ramsey Manor, Analyst at Blackbird Capital]

Yes.

[Operator]

The next question is from Mason Byrne with AWA Capital. Please go ahead.

[Executive]

Hi. Thanks for taking the questions. I guess just to start, it sounds like you have someone new who's joined the company is on the call. Could you just talk about that a little bit, please, in his role?

[Kan Li, President & Director at X Financial]

Well, why don't we ask Noah to tell you himself?

[Fuya Zheng, Chief Financial Officer at X Financial]

Yes. Noah, could you answer that question by yourself?

[Executive]

Yes, sure. Yes, good morning and evening, everyone, and thanks, Mason, for the question. Yes, I'm excited to be here and to officially join X Financial. I'd also like to thank Victoria for the introduction and express appreciation to Ken and Frank for their entire leadership. From my early conversations with the team, I was deeply impressed with the strategic vision of the team and the foundation they built.

[Executive]

X Financial sustained profitability and growth speak for themselves and I look forward to playing a role and strengthening that. My focus is going to be on deepening our engagement with U. S. Capital markets. I'm sure Mason will be speaking to you in the near future and enhancing investor relations, driving strategic financial initiatives,

[Executive]

and I'll

[Executive]

be working closely with the leadership team to optimize the financial strategy and capital allocation and ensuring the continued delivering of long term value for shareholders.

[Executive]

Great. Well, welcome to the company. I had a couple more. Just to start, it sounds like pretty strong loan volume growth is expected for 2025. Could you just talk about drivers behind that and how you expect that to impact profitability this year?

[Kan Li, President & Director at X Financial]

Sure. I'll take that question. The reason that we forecast the 30% increase in terms of the loan volume really is coming from the two strengths that we are creating in the past year. The first one is the way that we are able to reaching better and more consumers customers by ourselves. This obviously has always been the key focus of our acquisition strategy.

[Kan Li, President & Director at X Financial]

The second part is that during the also in 2024 and actually continue into 2025 that we are able to partner with more partners, more platforms that based on our track record, they are more willing to cooperating with us. So basically open a new acquisition channel for the company. That's why combined with the two strengths that we foresee a fairly good increase in our loan volume.

[Fuya Zheng, Chief Financial Officer at X Financial]

Jason, did I answer you all the question? If they're missing some part, could you repeat that? I will answer for you.

[Ramsey Manor, Analyst at Blackbird Capital]

Yes.

[Executive]

Just the last part of it. I was asking how you expect the loan volume growth to translate to profitability this year? If there's any large items to think about?

[Kan Li, President & Director at X Financial]

Yes. I will mention that even though that we don't give the forecast of the profitability, but as the for our company as a whole that we always focus I think our number one focus has always been the profit. So not guaranteeing anything, but we think that our profit will be increasing at the same pace as our volume.

[Fuya Zheng, Chief Financial Officer at X Financial]

Mason, if you're looking in 2024, and our work basically have almost the same volume as '24 and '23, just also a little bit down a few billion or something like that. And but we have half of this increase, I believe, is almost RMB300 million on net income. And the reason is mainly just by two factors. One is, if you remember back in 02/2004 and the beginning of 02/2004, the risk level for our sector. Our industry is at the highest level.

[Fuya Zheng, Chief Financial Officer at X Financial]

We are manager from the risk level on a quarterly basis, always manage to lower that credit risk. That's why we have more profitable than originally much thought. Another big factor is the funding cost. The funding cost is down on a yearly basis in 'twenty four. It's down more than 2%.

[Fuya Zheng, Chief Financial Officer at X Financial]

And looking to 2025, the trial is more or less the same. The funding costs are not going to lower, but more or less remain in the lower level as current right now. And risk fact risk effect profile also more or less remain the same. But also, visibility may be short, maybe one quarter or two quarter. We cannot guarantee the full year, but that's basically as the situation right now.

[Fuya Zheng, Chief Financial Officer at X Financial]

So as that is the situation based on the current situation, we are very comfortable in which very meaningful growth, both in volume and profitability in 2025. Thank you.

[Executive]

That's very helpful. Thank you. Last thing from me. Really appreciate the capital return to shareholders, both through dividends and buybacks. You're still fairly low on the dividend even after the raise as a portion of net income, but I know you're returning a lot through buyback activity.

[Executive]

Just wondered how you think about capital allocation priorities going forward, whether you continue to expect more on the buyback or if you would maybe lean into the dividend more? That's all. Thanks.

[Fuya Zheng, Chief Financial Officer at X Financial]

Yes. Mason, I thought you were asked this question. I'm ready for you. You see, when we introduced the dividend like $0.7 annual yearly and $0.34 a year, At that time, our stock has been in mild around about $3.04 dollars range for several years. And so and we pay like $0.34 for less than $4 stock price.

[Fuya Zheng, Chief Financial Officer at X Financial]

Basically, what we try to tell all the investor and potential investor, say, if you buy our stock, we pay you more than you can get from short term U. S. Treasuries. And we definitely don't know when the stock price will appreciate. But in case the stock fluctuates, you will have a double gain and double sweep, something like that.

[Fuya Zheng, Chief Financial Officer at X Financial]

So but since last September, because Chinese development policy change, the stock price basically from $5 around $5 to up to $8 Then after there's a major event happened excited by Deepsea and the whole Chinese asset, especially technology, all be revalued at the time. It is just like a suddenly for no particular reason besides Deepsea. Now all the concern remain issue, which attacked our Chinese stock at a very fixed low level and are all being blown away. So I don't know. So but that's what happened.

[Fuya Zheng, Chief Financial Officer at X Financial]

So based on this situation change, we want to give the stock since last September, our stock is up almost more than 2%. We want to give them extra kick, so which means we want to put more weight on stock buyback, less a little less on dividend payout. And you see in 2024, we in combination of both, we pay out US76 million dollars and we hope we can accomplish even more percentage. 34% is about over 30% payout for income of earnings for 2024. And 2025, we hope we have a bigger payout, combination of both, but more weight on share by that.

[Fuya Zheng, Chief Financial Officer at X Financial]

And I think even though our stock has been appreciated 200%, our stock still is very, very cheap. I'll just give you one number and you see around $24. Our earnings per share in U. S. Dollar is $4.83 and our stock is based right now, what, dollars 0.3 or $13 something like that.

[Fuya Zheng, Chief Financial Officer at X Financial]

And you can I challenge anyone who have around $4.05 dollars range earning per share? You find much stock in The U. S. For all sectors below at the $100 So we believe our staff still very have a long way to go. So we will have more emphasis on share buyback in 2025.

[Fuya Zheng, Chief Financial Officer at X Financial]

I hope I answered your question. Thank you.

[Executive]

That's great. Thank you.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Victoria Yu for any closing remarks.

[Victoria Yu, Investor Relations Manager at X Financial]

Thank you, everyone, for joining us today. If you have additional questions, please reach out to our Investor Relations team directly. We appreciate your interest and look forward to speaking with you again. Operator, back to you.

[Operator]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Victoria Yu, Investor Relations Manager
• Kan Li, President & Director
• Fuya Zheng, Chief Financial Officer

Analysts

• Ramsey Manor, Analyst at Blackbird Capital
• Executive