X Financial Reports First Quarter 2022 Unaudited Financial Results

SHENZHEN, China, May 23, 2022 /PRNewswire/ -- X Financial (NYSE: XYF) (the "Company" or "we"), a leading online personal finance company in China, today announced its unaudited financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Financial Highlights

• Total net revenue in the first quarter of 2022 was RMB888.4 million (US$140.1 million), representing a decrease of 2.0% from RMB906.3 million in the same period of 2021.
• Income from operations in the first quarter of 2022 was RMB314.1 million (US$49.5 million), compared with RMB251.2 million in the same period of 2021.
• Net income in the first quarter of 2022 was RMB139.9 million (US$22.1 million), compared with RMB189.2 million in the same period of 2021.
• Non-GAAP^[1] adjusted net income in the first quarter of 2022 was RMB153.9 million (US$24.3 million), compared with RMB212.0 million in the same period of 2021.
• Net income per basic and diluted American depositary share ("ADS") ^[2] in the first quarter of 2022 was RMB2.52 (US$0.40) and RMB2.46 (US$0.39), compared with RMB3.48 and RMB3.42, respectively, in the same period of 2021.
• Non-GAAP adjusted net income per basic and adjusted diluted ADS in the first quarter of 2022 was RMB2.76 (US$0.44) and RMB2.70 (US$0.43), compared with RMB3.90 and RMB3.84, respectively, in the same period of 2021.

First Quarter 2022 Operational Highlights

• The total loan amount facilitated and provided^[3] in the first quarter of 2022 was RMB15,250 million, representing an increase of 40.5% from RMB10,855 million in the same period of 2021 and an increase of 16.6% from RMB13,084 million in the previous quarter. Starting from the first quarter of 2021, all loans facilitated and provided by the Company have been Xiaoying Credit Loan^[4].
• The total outstanding loan balance^[5] as of March 31, 2022 was RMB26,659 million, compared with RMB24,912 million as of December 31, 2021 and RMB16,589 million as of March 31, 2021.
• The delinquency rate for all outstanding loans^[6] that are past due for 31-60 days as of March 31, 2022 was 1.31%, compared with 1.48% as of December 31, 2021 and 0.82% as of March 31, 2021.
• The number of cumulative borrowers^[7] was 8.4 million as of March 31, 2022.
• Total cumulative registered users reached 70.1 million as of March 31, 2022.

Mr. Justin Tang, the Founder, Chief Executive Officer and Chairman of the Company, commented, "We are pleased to start 2022 with a solid performance for the first quarter, despite of multiple challenges from the resurgence of COVID-19 and the economic slowdown in China. The total loan amount facilitated and provided in the first quarter increased on both a yearly and quarterly basis. We also saw our asset quality remained stable during the quarter. However, given the uncertainties of the macro environment, we are cautious about the business outlook for the coming quarters. We will continue to closely monitor the market dynamics, and stay vigilant to any inefficiencies and issues related to the pandemic in China."

"On the regulatory side, the Chinese government recently highlighted the importance of promoting the healthy development of the platform economy in China. We believe a more visible market with clear and standardized regulations will benefit all the market participants, including us. We fully comply with and support the government's initiatives and policies to promote the long-term development of the industry. We have laid a strong foundation and are very confident of our expertise to capture growth opportunities amid a healthy regulatory environment."

"Recently, we were included in the list for the first year under the Holding Foreign Companies Accountable Act (the "HFCAA"), which allows the U.S. regulator to delist companies if they fail to comply with American audit standards for three consecutive years. According to the Foreign Ministry of China, the Chinese securities regulator has already been in communication with U.S. regulators in this regard. Whether these companies will be delisted or not from the U.S. Stock Exchanges depends on the progress and results of the China-U.S. audit supervision cooperation. We hope and look forward to the two governments reaching an agreement in the near future. In the meantime, we have been proactively exploring possible solutions to protect the interest of our stakeholders and maintain our listing status on the New York Stock Exchange."

Mr. Kent Li, President of the Company, added, "During the first quarter, our total loan amount facilitated and provided reached RMB15 billion, up 40.5% year-over-year and 16.6% quarter-over-quarter, in line with our previous guidance. The delinquency rate for all outstanding loans that are past due for 31-60 days as of March 31, 2022 decreased to 1.31% from 1.48% as of December 31, 2021. We are pleased to see that our tightened risk control measures have successfully stabilized our asset quality amid the complex environment, and especially during the recent COVID-19 resurgence and lockdowns."

"In the meantime, we have been actively working with various partners to jointly explore new opportunities in the personal financing market. In the fourth quarter of 2021, we became an indirect minority shareholder of the Newup Bank of Liaoning("Newup Bank"). Since the second quarter of 2022, we have started to provide loan facilitation services to Newup Bank. Now we are in active discussions with Newup Bank to jointly design and develop products and programs that cater to the financing needs of small and micro-businesses, in line with the government's call to support the development of small and medium enterprises in China. We look forward to deepening our cooperation with Newup Bank by leveraging our extensive experience in the personal financing market, and our capabilities in cutting-edge and tech-driven risk control and assessments. We believe helping licensed financial institutions to grow their business will benefit both parties in the long term."

Mr. Frank Fuya Zheng, Chief Financial Officer of the Company, added, "We are pleased to see our top line increased 7.9% quarter-over-quarter sequentially in the first quarter. As per the guiding principles of the government, we are on track to further reduce the total borrowing cost of the borrowers, in order to jointly promote and stimulate economic growth. We have been stepping up our efforts to acquire more high-quality borrowers and securing a larger user base for long-term sustainable growth. This strategy has put some pressure on our bottom line due to our increased user acquisition costs, but we believe that a solid foundation of borrowers is critical to the long-term development of our business. We will continue to strengthen user acquisition while implementing disciplined cost control measures to deliver a balanced top line and bottom line growth."

First Quarter 2022 Financial Results

Total net revenue in the first quarter of 2022 decreased by 2.0% to RMB888.4 million (US$140.1 million) from RMB906.3 million in the same period of 2021, primarily due to a decrease in average total borrowing cost of the borrowers; and also partially offset by an increase in the total loan amount facilitated and provided this quarter compared with the same period of 2021.

Loan facilitation service fees in the first quarter of 2022 decreased by 26.5% to RMB508.7 million (US$80.2 million) from RMB692.2 million in the same period of 2021, primarily due to a decrease in average total borrowing cost of the borrowers; and partially offset by an increase in the amount of loan facilitated compared with the same period of 2021.

Post-origination service fees in the first quarter of 2022 increased by 46.4% to RMB87.3 million (US$13.8 million) from RMB59.7 million in the same period of 2021, primarily due to the cumulative effect of increased volume of loans facilitated in the previous quarters. Revenues from post-origination services are recognized on a straight-line basis over the term of the underlying loans as the services are being provided.

Financing income in the first quarter of 2022 increased by 75.9% to RMB231.3 million (US$36.5 million) from RMB131.5 million in the same period of 2021, primarily due to an increase in average loan balances held by the Company as a result of the increase in total loan amount facilitated and provided in the first quarter of 2022 compared with the same period of 2021.

Other revenue in the first quarter of 2022 increased by 165.3% to RMB61.0 million (US$9.6 million) from RMB23.0 million in the same period of 2021, primarily due to an increase in technology service fees received for providing assistant technology development services and referral service fee for introducing borrowers to other platforms.

Origination and servicing expenses in the first quarter of 2022 decreased by 18.9% to RMB464.5 million (US$73.3 million) from RMB572.5 million in the same period of 2021, primarily due to a decrease in insurance fee paid to insurance company.

General and administrative expenses in the first quarter of 2022 increased by 6.6% to RMB45.3 million (US$7.2 million) from RMB42.5 million in the same period of 2021, primarily due to an increase in consulting service fee expenses in the first quarter of 2022. 

Sales and marketing expenses in the first quarter of 2022 increased by 2.9% to RMB4.7 million (US$0.7 million) from RMB4.5 million in the same period of 2021, primarily due to an increase in marketing expenses resulting from the business expansion.

Provision for accounts receivable and contract assets in the first quarter of 2022 was RMB26.1 million (US$4.1 million), compared with RMB17.3 million in the same period of 2021, primarily due to an increase in accounts receivable from facilitation services as a result of the increase in total loan facilitation amount in the first quarter of 2022 compared with the same period of 2021.

Provision for loans receivable in the first quarter of 2022 was RMB33.7 million (US$5.3 million), compared with RMB26.6 million in the same period of 2021, primarily due to an increase in loans receivable held by the Company as a result of the increase in total loan amount facilitated and provided in the first quarter of 2022 compared with the same period of 2021.

Income from operations in the first quarter of 2022 was RMB314.1 million (US$49.5 million), compared with RMB251.2 million in the same period of 2021.

Income before income taxes and gain from equity in affiliates in the first quarter of 2022 was RMB317.8 million (US$50.1 million), compared with RMB224.4 million in the same period of 2021.

Income tax expense in the first quarter of 2022 was RMB181.0 million (US$28.6 million), compared with RMB37.2 million in the same period of 2021.

Net income in the first quarter of 2022 was RMB139.9 million (US$22.1 million), compared with RMB189.2 million in the same period of 2021.

Non-GAAP adjusted net income in the first quarter of 2022 was RMB153.9 million (US$24.3 million), compared with RMB212.0 million in the same period of 2021.

Net income per basic and diluted ADS in the first quarter of 2022 was RMB2.52 (US$0.40), and RMB2.46 (US$0.39), compared with RMB3.48 and RMB3.42, respectively, in the same period of 2021.

Non-GAAP adjusted net income per basic and diluted ADS in the first quarter of 2022 was RMB2.76 (US$0.44), and RMB2.70 (US$0.43), compared with RMB3.90 and RMB3.84, respectively, in the same period of 2021.

Cash and cash equivalents was RMB649.2 million (US$102.4 million) as of March 31, 2022, compared with RMB584.8 million as of December 31, 2021.

Business Outlook

The Company expects total loan amount facilitated and provided for the second quarter of 2022 to be between RMB15.0 billion and RMB16.0 billion, and the range of increment in total loan amount facilitated and provided for 2022 to be from 15% to 25%. This forecast reflects the Company's current and preliminary views, which are subject to changes.

Conference Call

X Financial's management team will host an earnings conference call at 7:00 AM U.S. Eastern Time on May 24, 2022 (7:00 PM Beijing / Hong Kong Time on the same day).

Dial-in details for the earnings conference call are as follows:

Please dial in ten minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until May 31, 2022:

Additionally, a live and archived webcast of the conference call will be available at http://ir.xiaoyinggroup.com.

About X Financial

X Financial (NYSE: XYF) (the "Company") is a leading online personal finance company in China. The Company is committed to connecting borrowers on its platform with its institutional funding partners. With its proprietary big data-driven technology, the Company has established strategic partnerships with financial institutions across multiple areas of its business operations, enabling it to facilitate and provide loans to prime borrowers under a risk assessment and control system.

For more information, please visit: http://ir.xiaoyinggroup.com.

Use of Non-GAAP Financial Measures Statement

In evaluating our business, we consider and use non-GAAP measures as supplemental measures to review and assess our operating performance. We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We believe that the use of the non-GAAP financial measures facilitates investors' assessment of our operating performance and help investors to identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income (loss) from operations and net income (loss). We also believe that the non-GAAP measures provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

We use in this press release the following non-GAAP financial measures: (i) adjusted net income, (ii) adjusted net income per basic ADS, and (iii) adjusted net income per diluted ADS, each of which excludes income (loss) from financial investments and share-based compensation expense. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, investors should not consider them in isolation, or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.

We mitigate these limitations by reconciling the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and Non-GAAP results" set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.3393 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of March 31, 2022.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "potential," "continue," "ongoing," "targets," "guidance" and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: the Company's goals and strategies; its future business development, financial condition and results of operations; the expected growth of the credit industry, and marketplace lending in particular, in China; the demand for and market acceptance of its marketplace's products and services; its ability to attract and retain borrowers and investors on its marketplace; its relationships with its strategic cooperation partners; competition in its industry; and relevant government policies and regulations relating to the corporate structure, business and industry. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC. All information provided in this announcement is current as of the date of this announcement, and the Company does not undertake any obligation to update such information, except as required under applicable law.

For more information, please contact:

X Financial
Mr. Frank Fuya Zheng
E-mail: [email protected]

Christensen

In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: [email protected]

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected]

SOURCE X Financial