X Financial Q1 2026 Earnings Report

X Financial EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.29
• Beat/Miss: N/A
• One Year Ago EPS: N/A

X Financial Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $232.82 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

X Financial Announcement Details

• Quarter: Q1 2026
• Date: 5/28/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, May 28, 2026
• Conference Call Time: 7:30AM 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 Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: X Financial continued to sharply reduce origination activity in Q1 2026, with loans facilitated and originated falling 58.4% year over year to RMB 14.63 billion as management prioritized portfolio quality over growth.
• Negative Sentiment: Credit quality deteriorated further, as the 91-180 day delinquency rate rose to 9.95% from 6.31% in Q4, signaling ongoing stress in the borrower base and higher repayment risk.
• Negative Sentiment: Revenue and profitability remained under pressure, with net revenue down 39.3% year over year to RMB 1.18 billion and net income falling to RMB 37.9 million from RMB 458.1 million a year ago.
• Positive Sentiment: Operating performance improved sequentially versus Q4 2025, as operating income rebounded to RMB 140.7 million and operating margin expanded to 12% from 1.4%, helped by lower acquisition spending and more controlled provisions.
• Neutral Sentiment: The company ended the quarter with a strong balance sheet and liquidity position, including RMB 7.8 billion in equity, RMB 2.4 billion in cash and restricted cash, and continued share repurchases under its buyback program. Management guided Q2 2026 loan origination to RMB 11.5 billion-RMB 12.5 billion and warned that evolving Chinese lending regulations could materially affect future results.

Presentation

[Operator]

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. Our financial results for the first quarter ending March 31st, 2026 were released earlier today and are available on the company's investor relations website at ir.xiaoyinggroup.com. On the call today from X Financial are Mr. Kent Li, President, Mr. Frank Fuya Zheng, Chief Financial Officer, and Mr. Noah Kauffman, Chief Financial Strategy Officer. Mr. Li will begin with an overview of our business performance and the key operational developments. Mr. Kauffman will then discuss the regulatory environment and the first quarter financial performance, followed by Mr. Zheng, who will review the financial results, capital position, and outlook. After the prepared remarks, Mr. Li, Mr. Zheng, and Mr. Kauffman will be available to answer your questions during the Q&A session.

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

I remind you that this call may contain forward-looking statements and that the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on the management's current expectations and involve known or 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. 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 is now my pleasure to introduce Mr. Kent Li.

[Kent Li, President at X Financial]

Thank you, Victoria, and hello, everyone. In the first quarter of 2026, we continued to operate with a high degree of discipline as the operating environment remained challenging. Carrying forward the more conservative posture we adopted in the second half of 2025, we further reduced the pace of activity in Q1, keeping our business closely aligned with evolving supervisory expectations while maintaining an unwavering focus on credit quality and risk management. During the quarter, we facilitated and originated RMB 14.63 billion in loans, a decline of 58.4% year-over-year and 35.8% sequentially from the fourth quarter. This pullback was deliberate as we continue to place greater priority on portfolio integrity and long-term balance sheet stability over near-term origination volume. Operationally, we made further progress on a number of key initiatives during the quarter.

[Kent Li, President at X Financial]

We continued shifting our origination mix toward internally operated channels to deepen borrower relationships and reduce reliance on higher-cost third-party traffic. Underwriting criteria were further tightened, compliance infrastructure was strengthened, and we continued rolling out process automation across servicing and collections, all with the goal of improving operational efficiency while keeping our cost base. From a volume standpoint, borrower activity continued to contract in the first quarter. We served approximately 956,520 active borrowers, down 60.6% year-over-year and 43.5% from the prior quarter. We facilitated approximately 1.25 million loans during the period, with an average loan size of RMB 11,741 per transaction. Outstanding loan balance at quarter end stood at RMB 35.3 billion, a decline of 39.6% from the same period of 2025. Credit quality. Credit conditions remained under pressure in the first quarter, consistent with the broader stress we and others across the industry have been observing.

[Kent Li, President at X Financial]

As of March 31st, our 31 to 60-day delinquency rate was 2.61%, compared with 2.9% at end of Q4 2025 and 1.25% as of the same period of 2025. Our 91 to 180-day delinquency rate increased to 9.95%, compared with 6.31% at end of Q4 2025 and 2.73% as of the same period of 2025. The data reflects a borrower base under continuous financial strain, consistent with what we are seeing across the broader consumer credit industry. We have addressed this by further narrowing our approval criteria, deploying more resources into collections, and pulling back on our origination in segments where repayment risk has risen most sharply.

[Kent Li, President at X Financial]

Higher credit costs weighed on quarter's financial results. We accepted that trade-off knowingly. Protecting the integrity of the portfolio matters more to us than defending short-term earnings. Looking ahead, our focus is on keeping credit quality stable, managing liquidity carefully, and running the business with the same level of discipline we have maintained throughout this period. With that, I'll turn the call over to Noah, who will cover the key financial results for the first quarter, as well as the regulatory environment.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

Great. Thank you, Kent. Hello, everyone. It's great to speak with you again. Kent walked through the operational and credit developments. I'll take you through the financial results for the quarter and then provide an update on the regulatory landscape. In the first quarter of 2026, total net revenue was 1.18 billion RMB, or $170.5 million, representing a 39.3% decline year-over-year and a 19.9% decline sequentially from Q4 2025. Total operating costs and expenses came in at 1.04 billion RMB or $150.1 million, down 28.5% sequentially and 24.1% year-over-year. The year-over-year cost reduction was driven by the sharp pullback in borrower acquisition and marketing spend, which fell from 709 million RMB in Q1 2025 to 219.8 million RMB this quarter.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

Total provisions were RMB 282.9 million or $41 million, down substantially from RMB 669.3 million in Q4 2025, which was a meaningful sequential improvement but still well above the RMB 135.5 million we recorded in the same period last year, continuing to weigh on profitability relative to prior year levels. On the discretionary spending side, we maintained tight control. Borrower acquisition and marketing expense was RMB 219.8 million or $31.9 million in the first quarter, significantly below the RMB 709 million we spent in Q1 2025 as we continue to prioritize capital efficiency over volume growth. Income from operations recovered to RMB 140.7 million or $20.4 million, a 75.4% decrease year-over-year, but a meaningful rebound from the depressed Q4 2025 level. Operating margin improved to 12%, up from 1.4% in Q4 2025, that is still well below the 29.6% recorded in the prior year period.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

Income before income taxes was 136.8 million RMB or $19.8 million as the sequential improvement in operating results was partially offset by investment related items below the operating line. Net income was 37.9 million RMB or $5.5 million in the first quarter, compared with 57.2 million RMB in Q4 2025 and 458.1 million RMB in Q1 2025. Net profit margin was 3.2%, compared with 3.9% in the prior quarter and 23.6% a year ago. Return on equity was 1.9% for the quarter, reflecting the substantial reduced earnings base. On the regulatory environment, the regulatory environment governing internet-based lending in the People's Republic of China continued to evolve during the first quarter of 2026, with authorities further strengthening oversight across the consumer credit business chain. The company continues to monitor these developments closely. However, management has limited visibility into the ultimate scope and direction of implementation.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

If current and emerging regulatory requirements are implemented as currently understood, the company's operating results may be materially and adversely affected, and historical levels of profitability should not be assumed to be indicative of future performance. The first quarter results reflect a business in transition, revenue and profitability well below prior year levels as we work through a period of elevated credit costs and reduced origination activity, but with early signs of sequential stabilization and operating performance. We are managing carefully through this environment. With that, I'll hand things over to Frank to take you through the detailed financial results per ADS metrics, non-GAAP adjustments, and the balance sheet.

[Frank Fuya Zheng, CFO at X Financial]

Thank you, Noah, and hello, everyone. I will walk through the key financial highlights for the first quarter, then cover the balance sheet, capital returns, and our outlook. Please note that all numbers stated in RMB and rounded up. Full details are available in the 6-K file with SEC. Financial results. The total net revenue for the first quarter was approximately RMB 1.2 billion, down around 39% from the same period of last year, and about 20% from the prior quarter. The decline was driven primarily by the significant reduction in loan origination activity we have been deliberately pursuing and was partially offset by growth in guarantee income and financing income. Operating income was RMB 141 million, with an operating margin of 12%, well below the 29.6% we recorded a year ago, with a meaningful recovery from the 1.4% we reported in the fourth quarter of 2025.

[Frank Fuya Zheng, CFO at X Financial]

The improvement sequentially reflects the benefit of the low origination-related provisions as our credit tightening measures took hold. Net income for the quarter was RMB 38 million, compared with RMB 458 million in the same period of last year. The sharp year-over-year decline reflects substantially higher credit provisions and the substantially low revenue base. Non-GAAP adjusted net income was RMB 81 million. On a per ADS base, basic earnings were RMB 0.96, $0.14, compared with RMB 10.92 a year ago, and the non-GAAP adjusted basic earnings per ADS were RMB 2.8 or $0.30. Revenue mix. Across our business lines, the pattern was consistent with the overall volume pullback. Facilitation fees fell sharply as origination volume dropped. Post-origination fee declined more modestly, in line with the smaller outstanding portfolio. On the positive side, guarantee income more than tripled year-over-year, reflecting continued recognition of revenue from our existing guarantee loan portfolio.

[Frank Fuya Zheng, CFO at X Financial]

Finance income was broadly stable. For the full breakdown by line item, please refer to the 6-K. Balance sheet and liquidity. Our balance sheet remained well-capitalized at the end of the quarter. Total assets were approximately RMB 13.6 billion, and the shareholders' equity was approximately RMB 7.8 billion, giving us an equity to assets ratio of around 57%. We remained a solid liquidity position, and with total cash, including the restricted cash, of approximately RMB 2.4 billion, and the balance sheet's in good shape to navigate the current environment. Capital return to the shareholders. We continue our share repurchase program during the quarter. From January 1st through May 15th, 2026, we repurchased approximately 1.8 million ADS for a total of approximately $8.2 million. We have approximately $39.8 million remaining under the existing program, which will run through November 30, 2026.

[Frank Fuya Zheng, CFO at X Financial]

This reflects our ongoing commitment to returning value to the shareholders while maintaining balance sheet strength. Business outlook. Our near-term outlook remains cautious. The regulatory environment continues to evolve quickly, and we have limited visibility into the full scope and timing of the implementations. We expect these dynamics to continue to influence our industry pricing, funding conditions, and origination activity for the foreseeable future. For the second quarter of 2026, we expect total loan origination to be in the range of RMB 11.5 billion-RMB 12.5 billion. Consistent with our continued focus on quality over the volume. We remain focused on capital preservation, disciplined origination, and cost control. We will keep investors updated as the regulatory picture becomes clear. That concludes our prepared remarks. We will now take questions. Operator, please go ahead.

[Operator]

We will now begin the question-and-answer session. At this time, we will pause momentarily to assemble our roster. We are showing no questions at this time. 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]

Okay. 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. Thank you. Operator, back to you.

[Operator]

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

Participants

Executives

• Frank Fuya Zheng, CFO
• Kent Li, President
• Noah Kauffman, Chief Financial Strategy Officer
• Victoria Yu, Head of Investor Relations