FinVolution Group Q1 2025 Earnings Report

FinVolution Group EPS Results

• Actual EPS: $0.41
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

FinVolution Group Revenue Results

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

FinVolution Group Announcement Details

• Quarter: Q1 2025
• Date: 5/20/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 20, 2025
• Conference Call Time: 8:30PM ET

FinVolution Group (NYSE:FINV) operates in the online consumer finance industry. The company operates a fintech platform that is empowered by borrowers with financial institutions. It operates in China and internationally. The company was formerly known as PPDAI Group Inc. and changed its name to FinVolution Group in November 2019. FinVolution Group was founded in 2007 and is headquartered in Shanghai, the People's Republic of China.

FinVolution Group Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Hello, ladies and gentlemen.

[Operator]

Thank you for participating in the First Quarter twenty twenty five Earnings Conference Call for Finvolution Group. At this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Yan Cheng, Head of Capital Markets for the company.

[Operator]

Yan, please go ahead.

[Yam Cheng, Head of Capital Markets at FinVolution Group]

Thank you, Wako. Hello, everyone. Welcome to our twenty twenty five first quarter earnings conference call. The company's results were issued via newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's e mail alerts by visiting the IR section of our website at ir.finvgroup.com.

[Yam Cheng, Head of Capital Markets at FinVolution Group]

Mr. Tieten Li, our Chief Executive Officer and Mr. Jiaoyuanxu, our Chief Financial Officer, will start the call with the prepared remarks and conclude with the Q and A section. During this call, we will be referring to several non GAAP financial measures to review and assess our operating performance. These non GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.

[Yam Cheng, Head of Capital Markets at FinVolution Group]

S. GAAP. For information about these non GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release. Before we continue, please note that today's discussion will contain forward looking statements made under the Safe Harbor provisions of The U. S.

[Yam Cheng, Head of Capital Markets at FinVolution Group]

Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the U. S.

[Yam Cheng, Head of Capital Markets at FinVolution Group]

Securities and Exchange Commission. The company does not assume any obligation to update any forward looking statements, except as required under applicable law. Finally, we posted a presentation on our IR website providing details of our results for the quarter. Now, I will turn the call over to our CEO, Mr. Ketan Li.

[Yam Cheng, Head of Capital Markets at FinVolution Group]

Please go ahead.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

Thanks, Yan. Hello, everyone, and thank you for joining our earnings call. This is Tianjin Li, CEO of Finvolution Group. We are happy to speak with you today. We are pleased to report that Finvolution delivered strong financial and operational results in the first quarter of twenty twenty five through effective execution of our local excellence global outlook growth strategy.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

While navigating the expected seasonal softness in the sector, we achieved 10% year over year revenue growth, fueled by our expanding take rate in China and surging international demand. International transaction volume grew robustly, up 36% year over year, complementing China's slightly 7% growth. These successes drove a record breaking quarterly net profit of million, the highest since our transition to a loan facilitation model in 2019. This represented increases of 39% year over year and 8% quarter over quarter, a testament to our operational excellence. While we are mindful of ongoing macroeconomic uncertainties such as global trade tensions, property sector softness and evolving regulations in China's consumer finance sector, we maintain a cautiously optimistic outlook.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

This confidence stems from two fundamental strengths in our business model. First, our proven resilience. Since our IPO in November 2017, we have successfully navigated multiple challenges, including our transition to an institutional funding model, Indonesia's regulatory change and the COVID pandemic. Notably, we have delivered consistent year over year growth in both transaction volume and revenue for every single quarter since 2021. This track record demonstrates our ability to adapt to regulatory changes and respond to market dynamics with agility and balance risk management with sustainable growth.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

Second, our strategic diversification initiatives in international markets continue to mitigate the impact of single country risk. Since entering Indonesia in 2018 and The Philippines in 2020, we have systematically built a broad credit type business designed to reduce geographic concentration risk. Our international business generated a total transaction volume of RMB3 billion in the fourth quarter and 36% year over year increase. This is outstanding loan balance growing 46% to RMB1.9 billion. Our international business contributes 20.4% of total net revenue in the first quarter, up from 18.8% in the same period last year.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

We are on track to achieve our strategic goal of having international business contribute 50% of the group's total revenue by 02/1930. Our customer base remains the cornerstone of our long term growth. In Q1 twenty twenty five, we maintained strong momentum in borrower acquisition across all markets, onboarding 1,200,000 new borrowers, up 62% year over year. This marked our third consecutive quarter exceeding 1,000,000 new borrowers and saw the effectiveness of our AI powered marketing strategy and diversified user acquisition channels. In China, we added 512,000 new borrowers, up 37% year over year in our international markets.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

We attracted six and fifty two thousand new borrowers, up 90% year over year. This marks the fourth consecutive quarter where international acquisitions have exceeded those in China. We expect this trend to continue, thanks to the rising penetration in online lending, as well as our strategic cooperation with lending e commerce and the e wallet platforms to acquire borrowers in international markets. Our technology initiatives continue to improve efficiency across our operations. We are exploring the use of a larger language models in risk assessment, leveraging their diverse capabilities to automatically extract and analyze and derive insights from unstructured data in consumer credit reports.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

For instance, the frequency with which a borrower changes a residential address is unstructured, contextual detail that can provide valuable insights into the stability of borrowers' work and the living conditions. Larger laundry models can automatically capture this type of contextual data and convert it into meaningful structured data that can be integrated into our existing risk assessment model to more comprehensively evaluate users' probability of default. In our recent AB testing, our model achieved observable, significantly improvements, indicating enhanced risk assessment effectiveness. We've also made substantial progress in automation through our virtual representative program. By integrating large laundry model, we've upgraded our natural laundry processing system with intelligent virtual agents that can handle customers' acquisition and a complex workflow.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

Looking ahead, we plan to expand their role across additional business functions to further boost operational efficiency. Before I wrap up, a brief update on our ESG efforts. Our commitment to sustainable finance continues to deliver meaningful impact. In Q1 twenty twenty five, we facilitated RMB15 billion in financing for 442,000 small business owners, up 1510% respectively. These small business loans represent 30% of our China transaction volume, demonstrating our ongoing support for the backbone of China's economy.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

We further solidified our position as an industry thought leader by serving as a core contributor to the China Finance Consumer Rights Protection Blue Book, a key industry publication developed in a partnership with the National Internet Financial Association of China. With its release in March, we helped shift best practice in consumer protection and financial literacy nationwide. In conclusion, our strong first quarter performance reflects excellent execution of our effective local excellent global outlook strategy. Looking forward, we are well positioned to capitalize on emerging opportunities while maintaining the agility required to navigate the evolving landscape. Our diversified footprint, technological leadership and commitment to sustainable growth position us well to continue creating value for all stakeholders.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

With that, I will now turn the call over to our CFO, Jiayuan Xu, who will discuss our operational and financial results.

[Jiayuan Xu, CFO at FinVolution Group]

Thank you, Jason, and hello, everyone. Welcome to our first quarter twenty twenty five earnings call. Let's go through our key results for the first quarter. To be mindful of the length of earnings call today, I encourage listeners to refer to our first quarter earnings press release for further details. China's macro environment remained uncertain in the first quarter due to global trade tensions.

[Jiayuan Xu, CFO at FinVolution Group]

However, there were some encouraging signs. China's GDP grew by 5.4% year over year, while retail sales rose by 5.9% in March. Total social financing expanded 8.4% in March up from February. Admin manufacturing PMI remained of 50 in February and March. Signaling continued recovery momentum.

[Jiayuan Xu, CFO at FinVolution Group]

On the regulatory front, we are pleased to see policy supporting consumption and consumer finance, including increased liquidity and the credit supply to boost the consumption. Against the bad job, we delivered a solid domestic performance by leveraging our operational powers and the tax trends. Our China business achieved an increase in take rate from 3.3% to 3.4% sequentially. Thanks to our strong partnerships with 114 funding partners that led to a 10 basis point decline in funding cost. On the credit front, day one delinquency also improved by 10 basis points to 4.6% and our thirty day loan collection rate held steady at 89%.

[Jiayuan Xu, CFO at FinVolution Group]

Turning to our international markets, although GDP growth in Indonesia and The Philippines showed marginally due to trade tensions and the tariff uncertainty, the overall economy remained resilient, bolstered by a large population with solid domestic consumption demand. Unmet credit demand for underserved communities in our footprint market continues to support our strong growth trajectory. Our total international transaction volume exceed RMB3 billion for the first time, up 36% year over year and 5% sequentially. Outstanding loan balance rose to RMB1.9 billion, up 46% year over year and 9% sequentially. Our cumulative international borrower base has now reached around 8,000,000.

[Jiayuan Xu, CFO at FinVolution Group]

Notably, our unique borrowers sold to a record high of $1,700,000 in the first quarter, marking an impressive 106% year over year increase. As a result, revenue from international markets increased to RMB711 million, up 19.5% year over year. And for Indonesia, while we experienced some seasonal impact in March due to revenue, growth continue at a measured pace in the first quarter. Indonesia's consumer confidence index stayed above 120, maintaining its high level for nearly two point five years. Unemployment also reached at the lowest level in the past ten years during the first quarter.

[Jiayuan Xu, CFO at FinVolution Group]

The change in the interest rate cap imposed at the end of twenty twenty four has had a limited impact on our business as our average loan tenure in Indonesia is less than six months. Moving forward, we will closely monitor potential effects from macro economy and the domestic uncertainties. Our transaction volume in Indonesia reached RMB1.8 billion, up 10% year over year, while outstanding balance reached RMB1.2 billion, up 18% year over year. Our user base continued to expand with unique borrowers reaching 671,000, up 32% year over year. With the interest rate cap overhang resolved, we allocated more resource to marketing and focus on quality growth, driving an increase in our new borrowers to 312,000 this quarter, up 69% year over year and 4% sequentially, bringing cumulative borrowers in Indonesia to $5,300,000,000 We also continue to diversify into offline consumption loan under the multi finance license we acquired, broadening our reach to near prime customers through scenarios like mobile home and electronic purchase.

[Jiayuan Xu, CFO at FinVolution Group]

All of these efforts drove solid growth in Indonesia amid the seasonal impact of Ramadan. Now let's zoom in on The Philippines where we achieved the rapid growth and the profitability despite Q1 being the traditional low season. In the fourth quarter, our transaction volume in The Philippines reached RMB1.2 billion, up 180% year over year and 18% sequentially. Outstanding loan balance also grew to RMB693 million, a 142% year over year and 26% secondretion increase. It accounted for 37% of our international loan balance compared with 23 in the first quarter of twenty twenty four.

[Jiayuan Xu, CFO at FinVolution Group]

Our outstanding performance in The Philippines has been driven by several key factors, including ongoing improvements in risk management and deeper collaboration with major e commerce platforms to expand buy and operate our offerings. Our excellent asset quality has consistently attracted institutional funding partners. This quarter, we onboarded the Union Digital Bank as funding partner with several additional institutions in the pipeline. The percentage of loan facilitated by local financial institutions remained around 70% for the quarter. Binary operated business continued to grow contributing 30% of Q1 volume up from 19% in 2024.

[Jiayuan Xu, CFO at FinVolution Group]

Going forward, we are confident of maintaining rapid transaction volume growth in The Philippines as we cement our rules in the country, further expand our funding sources and diversify our business models. Moving on to our financial metrics. This quarter's operational excellence results in a strong financial performance. Net revenue for the quarter reached RMB3.5 billion, marking a 10% increase year over year and a 1% increase sequentially despite the low season. Net income was RMB738 million representing a 39% increase year over year and an 8% secretionary increase.

[Jiayuan Xu, CFO at FinVolution Group]

Meanwhile, sales and marketing expenses rose by 18% year over year to RMB530 million as we continue to stress efforts to acquire new borrowers of higher qualities in both China and international markets. Leverage ratio, defined as risk bearing assets divided by shareholders' equity improved to around 2.7 times. Our total liquidity position consisting of cash and cash equivalents plus short term investments remained strong at RMB8.5 billion. Next, a brief update on our ongoing efforts to enhance shareholder value. Since 2018, we have continuously returned value to our shareholders in the form of share repurchase and dividends.

[Jiayuan Xu, CFO at FinVolution Group]

Recently, our Board of Directors approved our seventh annual dividend in the amount of US0.27 dollars per ADS, reflecting a DPS increase of 17% year over year. This dividend was distributed on 05/07/2025 bringing our total dividend distribution to shareholders for fiscal year twenty twenty four to US70.3 million In summary, strong execution of our local excellence global outlook strategy drove continued growth in the first quarter of twenty twenty five despite macro headwinds and seasonal softness. We remain confident in capitalizing on China's recovery while maintaining momentum in our international expansion. As such, we are reiterating our 2025 full year revenue guidance of RMB14.4 billion to RMB15 billion, representing 10% to 15% growth year over year. With that, I will now hand it over to for Q and A.

[Jiayuan Xu, CFO at FinVolution Group]

Operator, please continue.

[Operator]

Thank you. We will now begin the question and answer session. And for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, we ask that you please kindly repeat your question in English. Today's first question comes from Cindy Wang at China Renaissance. Please go ahead.

[Cindy Wang, Director at China Renaissance]

Thanks for taking my question and congrats for the great first quarter results. So I have two questions here. First, with recent new regulation on loan facilitation in China, do you see any business impact from it? And what's our base sales adjustment for this? And second, so given the recent U.

[Cindy Wang, Director at China Renaissance]

S. Tariffs uncertainty, have you seen any impact on the Indonesia or Philippines consumption loan demand since April? And how do you expect the international new loan volume in second quarter? Thank you.

[Jiayuan Xu, CFO at FinVolution Group]

Okay. Thanks, Cindy. I will take your first question and Tim will take your second question. Well, your first question is about the new regulations. Yes, it's about the loan facilitation model and the new regulation was announced in April and we are being effective in October.

[Jiayuan Xu, CFO at FinVolution Group]

I think it's the first time to clearly define the core model of loan facilitation as the loans issued by the traditional financial institutions through the external third party platforms. So it marks the official inclusion of the loan facilitation business in China's financial regulatory framework, as it represents the regulatory authorities to formal recognition across the sector. Meanwhile, we noted that the regulations were just following the regulators focus on consumer finance. We believe it's a positive signal to promote the healthy development of the industry and then to encourage the increase in supply of consumer finance products and boost the consumers' competence. And if we look at some details in the recognition, we can find the final version to be relatively moderate to this compared with the draft ones.

[Jiayuan Xu, CFO at FinVolution Group]

As a focus is more on qualitative aspects than the quantitative ones. And according to the regulation, banks now are required to implement a whitelist measurement system for those cooperative Internet platforms. And the financing costs are clearly defined with all revenue costs should be included and disclosed in contracts. So we think it will promote the industry's compliance level and benefit those leading platforms, which had adequate capital, the strong risk management capabilities and the high compliance standards. So in conclusion, we believe the over impact of the new revolution is manageable and it's very it's crucial for the long term development of the industry, okay?

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

I think, Dave, I will answer the second question. Yes, we do have observed the global trade tensions, have introduced certain economic challenges to Southeast Asia. Some of the trade oriented economies in the region are encountering slower than expected economic growth. And right now, many countries are currently engaged in negotiation with United States to secure favorable tariff rates. And this year, the macroeconomic trends of Indonesia and The Philippines are different.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

In the first quarter, Indonesia's GDP growth rate decreased to 4.9%, slightly below the 5.2% target, And PMI in April declined by 11% month on month to 46.7%. While in The Philippines, GDP growth came in at 5.4%, up slightly by 0.1% from previous quarter and keeping it among Asia fast growing economies. Domestic demand continues to drive the economy with consumer spending making up nearly 80% of GDP in Q1. Fortunately, our customers are mainly consumers and the loan demands are less affected by the trade war. On the ground, we've seen some seasonal softness in Indonesia.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

Remedance slowed since down a little bit, but volume was still up nearly 10% year over year. We expect a nice rebound in Q2 with sequential growth. In The Philippines, it's been a strong start in Q1. Volume jumped 18% quarter on quarter. And in Q2, we are projecting another solid quarter with good sequential growth.

[Tiezheng Li, Co-Founder, CEO & Vice Chairman at FinVolution Group]

Thank you, Cindy.

[Operator]

Thank you. And our next question today comes from Alex Yee with UBS. Please go ahead.

[Alex Ye, Research Analyst at UBS Group]

So I have two questions. First one is on the loan application demand trend in China in the past two months? And do you plan to tighten the credit approval preemptively given the rising macro uncertainty? And how would that impact your full year's loan volume outlook? Second question is regarding the drivers for the improved take rate for the Chinese business and outlook ahead.

[Alex Ye, Research Analyst at UBS Group]

Thank you.

[Jiayuan Xu, CFO at FinVolution Group]

Thanks, guys. I will take your questions. The first question is about the credit demand in April and May. We have delivered solid results in the first quarter and in terms of the loan application demand, we observed the rate holding steady in the April and May. Well, April, we saw a slight month over month decline and rebounded in May as the past the March levels.

[Jiayuan Xu, CFO at FinVolution Group]

And historically, the main demand tends to be softened slightly due to the seasonal holidays. But this year, we are seeing the moderately better demand. So that's about the application rate. And in terms of the credit performance, yes, it showed a steady improvement in the first quarter and have remained stable in the second quarter so far. As the macro economy still has a lot of uncertainties and given the moderately supportive demand, we have selectively adjusted our risk appetite for marginal assets.

[Jiayuan Xu, CFO at FinVolution Group]

And meanwhile, we will closely monitor the macroeconomic trends and the industry development and they will dynamically balance between the risk management and the business growth. The performance of April and May, the transaction volumes indicate that a healthy growth trajectory has emerged. So given our current business performance and operation capabilities, we are confident in achieving our guidance of 10% to 15% full year revenue growth. Okay. So that's about the first question.

[Jiayuan Xu, CFO at FinVolution Group]

And your second question is about the take rate in our domestic business. Yes. In the first quarter, our take rate in China increased by 10 basis points sequentially, primarily driven by several factors. Number one, we further improved the funding cost by 10 basis points quarter over quarter. And then number two, our long tenure extended slightly from eight months to eight point two months with the improved risk performance.

[Jiayuan Xu, CFO at FinVolution Group]

Currently, both risk metrics and the funding costs are at historical favorable levels. And looking ahead, we expect that both will remain stable. So it will stabilize the take rate at current level. We will continue to drive high quality growth in China market with refined operations and management. Okay.

[Jiayuan Xu, CFO at FinVolution Group]

Thank you, Alex.

[Operator]

Thank you. And our next question today comes from Yaron Lee with CICC. Please go ahead.

[Yada Li, Non-bank Financials & Global Fintech Equity Research at China International Capital Corporation (CICC)]

Then I'll do the translation. I was wondering if you could give more color on the latest business updates regarding the international expansion. Any guidance for revenue and profit in 2025? And besides Indonesia and The Philippines, could you elaborate more about the development of other regions as well? That's all.

[Yada Li, Non-bank Financials & Global Fintech Equity Research at China International Capital Corporation (CICC)]

Thank you.

[Jiayuan Xu, CFO at FinVolution Group]

Okay. Thanks, Yad. I will take your question. Well, for international markets, despite the uncertainties in the macroeconomic environment, with our proven technological capabilities and the risk control activities across those diverse markets, it enable us to deliver a strong first quarter performance. The transaction volume in our international market surpassed RMB3 billion for the first time in this quarter with year over year increase of 36% and quarter over quarter increase of 5%, yes.

[Jiayuan Xu, CFO at FinVolution Group]

And the number of unique borrowers reached historical high at 1,700,000 with triple digit year over year growth. And the net revenue for our international market posted to RMB711 million, marking a year over year increase of nearly 20% and accounting for 20.4% of total revenue. And in terms of the revenue and the profits, maintain our full year revenue growth target of 10% to 15%. The contribution for international markets is expected to increase to 25%. That indicates the growth rate of international revenue will outpace overall growth.

[Jiayuan Xu, CFO at FinVolution Group]

In the first quarter, Indonesia and The Philippines collectively achieved a modest profit, aligned with our projection. And look ahead, we expect they will generate a minimum net profit of $10,000,000 in 2025. For our expansion into the new markets, we have mentioned in the early earnings call, we shared that we recently obtained the banking finance company license in Pakistan. And operation in Pakistan is still in an early stage. Meanwhile, we were actively exploring the new countries to support our long term strategy.

[Jiayuan Xu, CFO at FinVolution Group]

That means we will we aim to deliver at least 15% revenue contribution from international market by 2015. We would be happy to share if there are any updates. Okay. Thanks, Yada.

[Operator]

Thank you. As there are no further questions at this time, I'd now like to turn the call back over to the company for closing remarks.

[Yada Li, Non-bank Financials & Global Fintech Equity Research at China International Capital Corporation (CICC)]

Okay. Thank you once again for joining us today. If you have any further questions, please feel free to contact us and our Investor Relations team. Thank you so much.

[Operator]

Thank you. This concludes this conference call. You may now disconnect your lines. Thank you.

Participants

Executives

• Yam Cheng, Head of Capital Markets
• Tiezheng Li, Co-Founder, CEO & Vice Chairman
• Jiayuan Xu, CFO

Analysts

• Cindy Wang, Director at China Renaissance
• Alex Ye, Research Analyst at UBS Group
• Yada Li, Non-bank Financials & Global Fintech Equity Research at China International Capital Corporation (CICC)