X Financial Q2 2026 Earnings Report

X Financial EPS Results

• Actual EPS: $0.65
• Consensus EPS: $0.29
• Beat/Miss: Beat by +$0.36
• One Year Ago EPS: N/A

X Financial Revenue Results

• Actual Revenue: $146.24 million
• Expected Revenue: $145.96 million
• Beat/Miss: Beat by +$283.97 thousand
• YoY Revenue Growth: N/A

X Financial Announcement Details

• Quarter: Q2 2026
• Date: 8/24/2026
• Time: Before Market Opens
• Conference Call Date: Monday, August 24, 2026
• Conference Call Time: 8:30AM 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 Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Origination and revenue declined sharply: Loan facilitation volume fell 70.2% year over year to RMB 11.63 billion, while net revenue dropped 56.3% to RMB 993.6 million. The company is prioritizing credit quality and capital preservation over near-term growth.
• Neutral Sentiment: Credit metrics improved sequentially but remain elevated: The 31–60-day delinquency rate declined to 1.73% and the 91–180-day rate to 9.09%, although both remained above year-ago levels. Management attributed the improvement to tighter underwriting and stronger collections, while cautioning that older vintages continue to pressure results.
• Positive Sentiment: Profitability improved from the prior quarter: Net income rose 23.8% sequentially to RMB 47 million, adjusted net income increased 104.3% to RMB 166 million, and operating margin expanded to 19.6% from 12% in Q1. However, earnings remained substantially below the prior-year period.
• Negative Sentiment: Balance-sheet credit risk increased: The company recorded RMB 95.3 million of provisions for credit losses related to deposits and other financial assets, largely tied to one funding institution that has delayed returning guarantee funds. Management said the amount was conservatively written down but may ultimately be recovered.
• Positive Sentiment: Capital returns and liquidity remain important priorities: X Financial repurchased approximately 2.63 million ADS for $12.49 million and declared a $0.28-per-ADS cash dividend. The company reported approximately RMB 2 billion in cash and restricted cash, but provided no third-quarter guidance because of ongoing uncertainty.

Presentation

[Operator]

Good day, and welcome to the X Financial second quarter 2026 earnings conference call. All participants will be in a 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 a touch-tone phone. 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. Our financial results for the second quarter ended June 30, 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 review the second quarter financial performance, followed by Mr. Zheng, who will cover the detailed 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 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 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, and 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 my pleasure to introduce Mr. Kent Li.

[Kent Li, President at X Financial]

Thank you, Victoria, and hello, everyone. In the second quarter of 2026, we maintained the disciplined operating posture that has defined our approach over the past several quarters. Conditions remain challenging, and we continue to place credit quality, liquidity, and the balance sheet strength ahead of near-term origination volume. During the quarter, we facilitated and originated RMB 11.63 billion in loans, a decline of 70.2% year-over-year and 20.5% sequentially from the first quarter. The pace of contraction moderated meaningfully from the first quarter, consistent with our measured approach to originating in the current environment. Operationally, we continue to concentrate origination in our internally operated channels, where borrower quality and unit economics are strongest. Underwriting criteria for newer vintages were refined further. Automation was extended across servicing and collections, and discretionary spending remained tightly controlled.

[Kent Li, President at X Financial]

The average loan amount per transaction rose to RMB 12,712, up 8.3% from the prior quarter and 21.3% year-over-year, reflecting a shift in transaction mix toward higher-quality borrowers. From a volume standpoint, we served approximately 720,258 active borrowers in the quarter, down 74.8% year-over-year and 24.7% from the prior quarter. We facilitated approximately 0.91 million loans during the period. Outstanding loan balance at quarter end stood at RMB 24.97 billion, a decline of 61.5% from the same period of 2025 and 29.2% from the end of the first quarter. Credit quality. Credit trends showed encouraging sequential improvement in the second quarter, although overall conditions remain challenging. As of June 30, our 31-60 day delinquency rate was 1.73%, compared with 2.61% at the end of Q1 2026 and 1.16% as of the same period of 2025.

[Kent Li, President at X Financial]

Our 91-180 day delinquency rate improved to 9.09%, compared with 9.95% at the end of Q1 2026 and 2.91% as of the same period of 2025. Both rates improved from the prior quarter, the first sequential improvement we have recorded in several quarters, which we attribute to the tighter underwriting standards applied to recent vintages and the additional resources deployed in collections. That said, both rates remain well above prior year levels, and the 91-180 day rate, in particular, remains elevated as earlier delinquency balances continue to season through the portfolio. We are not declaring victory on credit. We are maintaining the same conservative stance until the improvement proves durable.

[Kent Li, President at X Financial]

With that, I'll turn the call over to Noah, who will take you through the financial results for the second quarter.

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

Thank you, Kent. Hello, everyone. It's great to speak with you again. Kent covered the operational and credit developments, so I'll take you through the financial performance for the second quarter. In the second quarter of 2026, total net revenue was RMB 993.6 million or $146.4 million, representing a 56.3% decline year-over-year and a 15.5% decline sequentially from Q1 2026. The year-over-year decline primarily reflects substantially lower loan facilitation volumes, partially offset by higher guarantee income. Total operating costs and expenses came in at RMB 798.6 million, or $117.7 million, down 22.9% sequentially and 50% year-over-year. Borrower acquisition and marketing expense was RMB 149.5 million, or $22 million, down from RMB 219.8 million in the first quarter and RMB 556.3 million in the same period last year, as we continued to prioritize capital efficiency over volume growth.

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

Aggregate credit-related provisions were RMB 183.1 million or $27 million, down 35.3% sequentially from RMB 282.9 million in the first quarter and 36.4% below the same period last year. Within that, the provision for contingent guarantee liabilities declined to RMB 57.6 million, with the guaranteed loan portfolio broadly unchanged from both comparison periods. The decrease primarily reflected the reversal of a portion of provisions recognized in prior periods as the loan loss rate declined during the quarter. Provision for credit losses for deposits and other financial assets increased to RMB 95.3 million. Income from operations was RMB 194.9 million or $28.7 million, a 71.1% decrease year-over-year, but an increase of 38.6% sequentially. Operating margin improved to 19.6%, up from 12% in the first quarter, though still below the 29.7% recorded in the prior year period.

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

Income before income taxes was RMB 220 million or $32.4 million.

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

Net income was RMB 47 million or $6.9 million in the second quarter, compared with RMB 37.9 million in Q1 2026 and RMB 528 million in the same period last year, with income tax expense and investment-related items below the operating line accounting for the difference from pre-tax income. Net profit margin was 4.7%, compared with 3.2% in the prior quarter and 23.2% a year ago. Return on equity was 2.4% for the quarter, reflecting the reduced earnings base. Taken together, the second quarter represents a second consecutive quarter of sequential improvement and operating performance. Revenue is still finding its floor, but margins, provisions, and net income all moved in the right direction. On the regulatory front, the environment continued to evolve during the quarter. We are monitoring developments closely and have nothing new to report beyond the disclosure in our 6-K.

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

With that, I'll hand things over to Frank to take you through the detailed results per ADS metrics, non-GAAP adjustments, and the balance sheet. Go ahead, Frank.

[Frank Fuya Zheng, CFO at X Financial]

Thank you, Noah, and hello everyone. I will walk through the key financial highlights for the second quarter and then cover the balance sheet, capital returns, and our outlook. Please note that all numbers stated are in renminbi and rounded. Full details are available in the 6-K filed with the SEC. Financial results. Total net revenue for the second quarter was approximately RMB 994 million, down around 56% from the same period last year and about 16% from the prior quarter. The decline continues to reflect the deliberate reduction in origination activity we have been pursuing, partially offset by growth in the guarantee income. Net income for the quarter was RMB 47 million, up 23.8% from RMB 38 million in the first quarter and down substantially from RMB 528 million in the same period last year.

[Frank Fuya Zheng, CFO at X Financial]

Non-GAAP adjusted net income was RMB 166 million, up 104.3% sequentially and down 72% year-over-year. We view the sequential improvement in both measures as an early indication that our credit and cost actions are taking hold. On a per ADS basis, basic earnings were RMB 1.26 or $0.19, compared with RMB 0.96 in the prior quarter and RMB 12.6 a year ago. Non-GAAP adjusted basic earnings per ADS were RMB 4.44 or $0.65. Revenue mix across our business lines. Loan facilitation service fees declined 85.5% year-over-year to RMB 199 million, in line with low origination volumes. Post-origination service fee increased 41.2% to RMB 160 million, consistent with the smaller outstanding portfolio. Guarantee income more than doubled year-over-year to RMB 225 million, reflected continued recognition of the revenue from our existing guarantee loan portfolio.

[Frank Fuya Zheng, CFO at X Financial]

Finance income was RMB 278 million, down 13.2%. For the full breakdown by item, please refer to the 6-K. Balance sheet and liquidity. Our balance sheet remains strongly capitalized at the end of the quarter. Total assets were approximately RMB 12.1 billion and shareholders' equity was approximately RMB 7.8 billion, giving us an equity to asset ratio approximately 54%, up from around 57% at the end of first quarter. Total cash, including restricted cash, were approximately RMB 2 billion. Liquidity remained ample for the current environment. After return to the shareholder, we continued to purchase shares during the period from January 1st, 2026 to August 14, we repurchased approximately 2.63 million ADS for the total consideration of approximately $12.49 million. We have approximately $35.5 million remaining under the existing $100 million program, which runs through November 30, 2026.

[Frank Fuya Zheng, CFO at X Financial]

Returning capital to shareholders remains an important part of our capital allocation framework. Dividend update. As a part of our semi-annual dividend policy, the board has approved a cash dividend of $0.28 per ADS, which is equivalent to approximately $0.0467 per ordinary share. Shareholders of record as of September 10, 2026, will be entitled to receive the dividend, and the payments are expected to be distributed on and around September 28, 2026. ADS holders will receive their dividend payments through our depository at The Bank of New York Mellon shortly thereafter, with timing subject to the brokerage processing. Business outlook. Turning to the outlook. Given the material uncertainties in the current operation environment, we are not providing quantitative guidance for the third quarter at this time. Our priorities are unchanged: capital preservation, disciplined origination, rigorous cost control and protecting the balance sheet.

[Frank Fuya Zheng, CFO at X Financial]

We will resume providing guidance when visibility improves. That concludes our prepared remarks, and we will now take questions. Operator, please go ahead.

[Operator]

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch tone phone. If you are 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 today comes from [Brian Guard] with Warburg Asset Management. Please go ahead.

[Brian Guard, Shareholder at Warburg Asset Management]

Good morning. I am very pleased to see that the results have been improving in the last quarter. My question is quite a broad one. I am a relatively new shareholder to the company. I want to understand theoretically why this company is publicly traded, given that tangible book value is over $20 per ADS. Why don't you just take this company private?

[Frank Fuya Zheng, CFO at X Financial]

Let me try to answer that question again. I think a previous investor asked a similar question before. In China, being a listed company is kind of a privilege and a special status. If we privatize, we might lose the opportunity for current business to be listed again. Because if a Chinese-based company try to be listed overseas, you need to get approval from the government. Based our current industry situation, as lands for our industry is not going to be a list. That probably is the main reason you will rarely see the Chinese listed company in the U.S. go private. Many years ago, some company did this kind of thing, and they try to change the venue and try to be listed in Hong Kong or in China, but it's not. In general, everybody don't see still prioritize or prefer to be listed in the U.S.

[Frank Fuya Zheng, CFO at X Financial]

That's why.

[Brian Guard, Shareholder at Warburg Asset Management]

Given that there's such a large gap, what's going to be your process for maybe returning more cash to shareholders or driving the company towards a much higher valuation that's much more close to, say, U.S. style valuations?

[Frank Fuya Zheng, CFO at X Financial]

Compared with U.S. valuation is probably is kind of a rich goal and based on the current business and the current regulation environment, I think the best way for us and also from investor perspective, as we find new revenue sources, basically re-engineer the company to other than facilitation business as we are. That probably is the best way it could. We are doing the best we can and basically based on the very low volume right now, we are doing the almost maximal buyback in the normal buyback rules and still preserve enough capital to explore new business opportunity, even though those new venture opportunities are far, not very clear at this point.

[Brian Guard, Shareholder at Warburg Asset Management]

Right. Thank you very much.

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

Yeah, Brian, just-

[Brian Guard, Shareholder at Warburg Asset Management]

Appreciate it.

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

Yeah, Brian.

[Brian Guard, Shareholder at Warburg Asset Management]

Go ahead.

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

Yeah, Brian. Yeah, this is Noah Kauffman. Just to add to what Frank was saying. We have had two consecutive quarters of sequential credit improvements, and so the credit metrics, at least over the last couple of quarters, have moved a bit in the right direction. And so the cost base is also getting a bit leaner. I think certainly what Frank says is true. Going private is sort of like a one-way door, and so coming back to the public market, especially as a Chinese headquartered fintech, is very difficult. I think with a couple quarters kind of moving in the right direction, we are very focused on what are the operational efficiencies that we can add. Obviously, as APRs have come down and then beyond that, what are areas of organic growth?

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

Certainly with the strength of the balance sheet, we have the ability to, as the loan book comes down, cash is freed up. So certainly we have the ability to continue to pay quite a healthy dividend. But I think, on the back of maybe we will call it like a rough year or really rough year, we are not quite ready to throw in the towel. I think things are going in a little bit better direction, and we are obviously watching it.

[Brian Guard, Shareholder at Warburg Asset Management]

Okay. Again, thank you for your answer. I much appreciate it.

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

Thanks, Brian.

[Operator]

As a reminder, if you would like to ask a question, please press star then one to join the question queue. The next question comes from Kenning Zhao with Norton Andrews. Please go ahead.

[Kenning Zhao, Analyst at Norton Andrews]

Hi, thanks for taking my call. I am Kenning from Norton Andrews. My first question is that there is a significant decrease in provision for contingent guarantee liabilities down from like RMB 200 million in the first half in 2025 to RMB 57 million this half year. I see there is a significant decrease in loan balance, outstanding loan balance, but the delinquency rate has jumped as well. I wonder why did you make such adjustment, like if there are from some evidence from the most recent vintages? That is my first question.

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

Hi, Kenning, this is Noah. Thanks for your question.

[Kenning Zhao, Analyst at Norton Andrews]

Hi.

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

The main driver is the loan, is the loss rate assumption. The guaranteed portfolio itself was broadly unchanged against both the comparison periods, so I do not believe it is a size effect. What moved in our estimate was the average loss rate on the book, which came down during the quarter. Because a portion of that we had reserved in prior periods, we were no longer required at that level to reverse it. That reversal is what makes the line look as low as it does. I treat that way rather than as a new lower run rate for the provision. On your second point, you are right that the two things sit somewhat uncomfortably next to one another, and the distinction that I draw is between the stock and the flow.

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

The elevated delinquencies that you are seeing are concentrated in older paper that is seasoning through the portfolio.

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

That is the roughly like 91-180 bucket, and it is still very high. The recent vintages originated under the materially tighter criteria are performing better than what preceded them. Both delinquency buckets improved sequentially for the first time in several quarters. The reserve reflects where we think losses on the book are and where it is composed of today, which is increasingly newer vintages rather than the old book as it looked a year ago. Did you have a second question?

[Kenning Zhao, Analyst at Norton Andrews]

Yes, if I may. There is another item, like provision for credit losses for deposits and other financial assets. It was not material before, but it jumped from It is quite big now. It is like RMB 95 million from only like RMB 700,000 before. May I ask what is in that item?

[Frank Fuya Zheng, CFO at X Financial]

Oh, that involved one funding institutional-

[Kenning Zhao, Analyst at Norton Andrews]

From the comprehensive income.

[Frank Fuya Zheng, CFO at X Financial]

Yeah.

[Kenning Zhao, Analyst at Norton Andrews]

Yeah.

[Frank Fuya Zheng, CFO at X Financial]

That involved with one funding institution, and the business with them is already basically gone or finished, and they haven't returned to our guarantee money yet. That guarantee money is kind of in the area. It doesn't mean it eventually will not return to us. But I think for whatever reason, it's behind schedule, and we took precautions accounting-wise to write them off at this time. That's about it. It only involved one institution funding partner.

[Kenning Zhao, Analyst at Norton Andrews]

Right. I understand. Okay. Thank you. If I may, one more question, but actually quite similar to the previous one, if you have any further capital return plans apart from the existing ones given the current market?

[Frank Fuya Zheng, CFO at X Financial]

At this point, we are doing all we can under the normal buyback circumstances and rules. At this time, we don't have particular buyback or privatization plan at this moment.

[Kenning Zhao, Analyst at Norton Andrews]

Right. Thank you. Thank you very much.

[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, 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 soon. Operator, back to you.

[Operator]

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

Participants

Executives

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

Analysts

• Brian Guard, Shareholder at Warburg Asset Management
• Kenning Zhao, Analyst at Norton Andrews