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) (NYSE:XYF) is a Beijing-based online credit marketplace focused on providing diversified financing solutions to individuals and small- and medium-sized enterprises (SMEs) in China. The company was established in 2014 and completed its initial public offering on the New York Stock Exchange in 2016. Since inception, X Financial has built a technology-driven platform that connects borrowers with a network of institutional investors, banks and other funding sources, aiming to streamline access to credit and improve lending efficiency.

The company’s core offerings include consumer loans, SME loans, real estate-secured financing and wealth management products. Through its proprietary credit-scoring and risk-management systems, X Financial assesses borrower profiles and matches them with appropriate funding partners. This end-to-end digital approach spans loan origination, underwriting, servicing and collections, enabling the company to support a wide range of credit needs from personal installment financing to working‐capital loans for businesses.

Serving clients across major urban centers and second-tier cities throughout China, X Financial emphasizes strong compliance with local regulations and prudent risk controls. The company’s leadership team comprises executives with deep experience in finance, technology and regulatory affairs, overseeing ongoing platform enhancements and geographic expansion initiatives. By leveraging data analytics and strategic partnerships, X Financial continues to scale its credit marketplace with the goal of addressing underserved lending segments in the Chinese market.

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 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Victoria Yu. Please go ahead.

[Victoria Yu, Head of Investor Relations 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.xiaoyingroup.com. Our call today from X Financial are Mr. Kan Li, President, and Mr. Frank Fuya Zheng, Chief Financial Officer. Additionally, we are delighted to welcome Mr. Noah Kaufman to our company. He brings 20 years of experience in growth strategies, 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 Financial Planning and Analysis at the Intercontinental Exchange, where he played a key role in capital allocation and global business strategies. Mr. Kauffman will be responsible for leading our engagement with the U.S. capital markets, including investor relations and strategic financing initiatives. Mr.

[Victoria Yu, Head of Investor Relations at X Financial]

Li will provide a brief overview of our operations and business highlights, followed by Mr. Zheng, who will review the financial results. Afterwards, Mr. Li, Mr. Zheng, and Mr. Kaufman will be available to answer your questions during the Q&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. Such statements are based on management's current expectations and involve known 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, Head of Investor Relations 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. Kan Li.

[Kan Li, President at X Financial]

Thank you, Victoria. 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 RMB 32 billion facilitated in Q4 amount, a 24% year-over-year increase for the quarter. For the full year, total loan volumes reached RMB 104.9 billion, reflecting a stable performance compared to 2023. This growth was fueled by disciplined underwriting, strengthened asset quality, and positive macroeconomic tailwinds that supported borrower demand and lower funding costs. In the second half of 2024, 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.

[Kan Li, President at X Financial]

Strong asset quality performance. Asset quality continued to strengthen significantly throughout the year. At the end of Q4, the delinquency rate for loans overdue by 31-60 days improved to 1.17% from 1.57% a year ago. The 91-180 days overdue delinquency rate declined to 2.48% from 3.12% last year. These improvements reflect effective risk management practices and disciplined underwriting standards. 2024 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. 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 these developments create a more accommodative environment for financial institutions, our primary focus remains on leveraging technology to enhance financial services efficiency.

[Kan Li, President at X Financial]

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 volumes in Q1 2025, as digital financial solutions become increasingly integral to expanding responsible credit access while maintaining disciplined risk management. Strategic AI Investments. At X Financial, we continue to expand our strategic investments in AI, leveraging cutting-edge models such as DeepSeek, Alibaba's Tongyi Qianwen, and ByteDance's Doubao across our operations.

[Kan Li, President at X Financial]

AI now powers advanced customer service robots, intelligent agent assistants, targeted marketing campaigns, including AI-generated short videos for platforms like TikTok. Streamlined early-stage collection efforts significantly enhance 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% accuracy through sophisticated contextual analysis and advanced image recognition technologies to identify early indicators of credit risk. Looking ahead, we remain committed to further integrating 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 Zheng, for detailed financial results.

[Frank Fuya Zheng, CFO at X Financial]

Thank you, Kan. Good morning, everyone. We are pleased to report a strong financial result for the fourth quarter. The total net revenue increased 43% year-over-year to RMB 1.7 billion. The net income grew 104% year-over-year to RMB 386 million. Throughout the year, our top and bottom lines expanded quarter over quarter, bringing full-year total net revenue to a record RMB 5.9 billion. Full-year net income to RMB 1.5 billion. Strong balance sheets 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 $76 million to shareholders in 2024, including $6.5 million in cash dividends, $9.2 million in our tender offer, and $50.3 million invested in share repurchase. Dividend announcements.

[Frank Fuya Zheng, CFO at X Financial]

Additionally, our Board of Directors has approved a declaration and payment of a semi-annual dividend of $0.25 per ADS, reinforcing our commitment to delivering shareholder value. Share repurchase program. In Q4, we repurchased 38.4 million Class A ordinary shares, while accruing 6.4 million ADS for $49 million. For full year 2024, total repurchase reached 52.2 million shares, with 50.5 million in ADS form, amounting to $59.4 million. As of today, our previous $30 million and $20 million repurchase plans are fully utilized. We have $15.9 million remaining in our $50 million repurchase program effectively through June 30, 2026. 2025 Outlook. Looking ahead, we remain optimistic about our growth trajectory. For the first quarter of 2025, we expect the total loan amount facilitated and originated to be between RMB 33.5 billion and RMB 34.5 billion.

[Frank Fuya Zheng, CFO at X Financial]

These positions position us to achieve a full-year total loan amount facilitated and originated between RMB 134.4 billion and RMB 138.4 billion. Closing remarks. As we progress through 2025, we remain confident in our strategic direction, supported by robust underwriting standards, disciplined risk management, and 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. We appreciate your trust and support as we execute on our strategy and drive long-term value creation. We look forward to delivering continued growth and success in the quarters ahead.

[Kan Li, President at X Financial]

Okay, operator, we can transfer to the Q&A session now.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Ramsey Ballastava with Blackbird Capital. Please go ahead.

[Ramsey Ballastava, 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 6.4 million ADSs on December 16. However, the share count on the financial report as of December 31 does not fully reflect the reduction. I am not sure if this is an accounting discrepancy, and if you could clarify that, that would just be better for me. Thank you.

[Frank Fuya Zheng, CFO at X Financial]

Hi, I'd be happy to answer your question. Since we bought that share back in the last quarter of 2024, the share count calculation is based on weighted average. Say you own that share in 2024, amount 300 days out of this 365 days. That share count still will be counted for 300 days. The share count calculation is weighted average. That is why you do not see that big reduction in the year-end because it is a weighted average. In 2025, you will see that those shares totally disappear from the share count. I hope I answered that question.

[Ramsey Ballastava, Analyst at Blackbird Capital]

Absolutely. Thank you. Yes.

[Operator]

The next question is from Mason Bourne with AWH Capital. Please go ahead.

[Mason Bourne, Analyst at AWH Capital]

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

[Frank Fuya Zheng, CFO at X Financial]

Why don't we ask Noah to tell you himself?

[Kan Li, President at X Financial]

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

[Noah Kaufman, Director of Strategic Analytics at X Financial]

Yeah, sure.

[Noah Kaufman, Director of Strategic Analytics at X Financial]

Yeah. Good morning. Yeah. Good morning and evening, everyone. Thanks, Mason, for the question. Yeah. 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 Kan 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. X Financial's sustained profitability and growth speak for themselves, and I look forward to playing a role in strengthening that. My focus is going to be on deepening our engagement with U.S. capital markets. I'm sure, Mason, I'll be speaking to you in the near future and enhancing investor relations, driving strategic financial initiatives.

[Noah Kaufman, Director of Strategic Analytics at X Financial]

I will 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.

[Mason Bourne, Analyst at AWH Capital]

Great. 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?

[Frank Fuya Zheng, CFO at X Financial]

Sure. I'll take that question. The reason that we forecast a 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 reach better and more consumers, customers by ourselves. This obviously has always been the key focus of our acquisition strategy. 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 cooperate with us. 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.

[Frank Fuya Zheng, CFO at X Financial]

Mason, did I answer your other question? If I'm missing some part, could you repeat that? I will answer for you.

[Mason Bourne, Analyst at AWH Capital]

Oh, yeah. 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.

[Frank Fuya Zheng, CFO at X Financial]

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

[Kan Li, President at X Financial]

Mason, if you're looking in 2024 and our basically have almost the same volume as 2024 and 2023, and just also a little bit down a few billion or something like that. We are positive increase I believe is almost RMB 300 million on net income. The reason is mainly just by two factors. One is if you remember back in 2004 and the beginning of 2004, the risk level for our sector, our industry is at the highest level. We are managed from that risk level on a quarter-by-quarter basis, always managed to lower that credit risk. That's why we have a more profitable than originally much thought. Another big factor is the funding cost. The funding cost is down on a yearly basis in 2024, it's down more than 2%. Looking to 2025, the trend is more or less the same.

[Kan Li, President at X Financial]

The funding costs are probably not going to lower, but more or less remain in the low level as current as right now. The risk effect profile also more or less remains the same. That 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. As far as the situation based on current situation, we are very confident in reach very meaningful growth, both in volume and profitability in 2024. Thank you.

[Mason Bourne, Analyst at AWH Capital]

That's very helpful. Thank you. Last thing for 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. 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.

[Kan Li, President at X Financial]

Yeah. Mason, I thought you were asking that question. I'm ready for you. You see, when we introduced the dividend like $0.70 annually and $0.34 a year, at that time, our stock has been in mild, around about $3-$4 range for several years then. We pay like $0.34 for less than $4 stock price. Basically, we try to tell all the investors and potential investors, say, "If you buy our stock, we pay you more than you can get from short-term U.S. Treasuries." We definitely don't know when the stock price will appreciate. In case of stock appreciate, you will have a double gain and double sweep, something like that. Since last end of September and because of Chinese government policy change, the stock price basically from around $5 to up to $8.

[Kan Li, President at X Financial]

After there's a major event that happened, excited by DeepSeek, and the whole Chinese assets, especially technology, all revalued at the time. It's just like suddenly, for no particular reason besides DeepSeek, all the concerns remain issues, which have kept our Chinese stock at a very low level and all being blown away. I don't know. That's what happened. 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 an extra kick, which means we want to put more weight on stock buyback, a little less on dividend payout. You see, in 2024, in combination of both, we pay out $76 million, and we hope we can accomplish even more percentage. 34% is about over 30% payout for in terms of earning for 2024.

[Kan Li, President at X Financial]

For 2025, we hope we have a bigger payout combination of both, but more weight on share buyback. I think even though our stock has appreciated 200%, our stock still is very, very cheap. I just give you one number, and you see in 2024, our earnings per share in US dollar is $4.83. Our stock is based right now at what? $0.30, $13, something like that. I challenge anyone who has around $4-$5 range earnings per share, you are not going to find much stock in the U.S. for our sector below like 100. We believe our stock still has a long way to go. We will have more emphasis on share buyback in 2025. I hope I answered your question. Thank you.

[Mason Bourne, Analyst at AWH Capital]

That's great. Thank you.

[Operator]

Again, if you have a question, please press star and one. 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, Head of Investor Relations 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

• Noah Kaufman, Director of Strategic Analytics
• Kan Li, President
• Victoria Yu, Head of Investor Relations
• Frank Fuya Zheng, CFO

Analysts

• Ramsey Ballastava, Analyst at Blackbird Capital
• Mason Bourne, Analyst at AWH Capital