Release Date: November 20, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Jiayin Group Inc (NASDAQ:JFIN) achieved a record loan facilitation volume of approximately RMB 26.5 billion in Q3 2024, marking a year-over-year growth of 10.3%.
• Revenue from loan facilitation services increased by 18.1% year-over-year, reaching around RMB 1.1 billion.
• The company has successfully expanded its institutional partnerships, establishing collaborations with 70 diverse financial institutions.
• Jiayin Group Inc (NASDAQ:JFIN) has made significant advancements in technology, including the introduction of a self-developed automated machine learning platform to enhance credit risk measurement and marketing scenarios.
• The company reported a 71.3% year-over-year growth in new borrowers, acquiring 826,000 new borrowers in Q3 2024.

Negative Points

• Net revenue decreased by 1.5% year-over-year, and net income dropped by 16.8% compared to the same period in 2023.
• The average borrowing amount per loan decreased by 30.5% year-over-year, indicating a potential shift in user preference towards smaller loan amounts.
• Accounts receivable balance increased significantly, exceeding RMB 2.8 billion, which may impact cash flow management.
• Sales and marketing expenses rose by 34.9% year-over-year, primarily due to increased borrower acquisition costs.
• Despite improvements, the net profit margin for Q3 2024 was 18.7%, reflecting a decrease from the same period last year.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with JFIN.

Q: Noticing that the net revenue for this quarter decreased by 1.5% and the net profit dropped by 16.8% year over year, could the management explain the reasons behind these changes and provide a forecast for the future trend of the company's profit margin? A: The decrease in net revenue and profit is primarily due to a strategic shift in revenue structure, focusing more on high-margin loan facilitation services and reducing reliance on lower-margin guarantee services. The company expects profit margins to improve as the proportion of high-margin services increases and investments in borrower acquisition and R&D begin to yield results. (Answered by Unidentified_2 and Unidentified_4)

Q: The company's loan facilitation volume for the third quarter was RMB 26.7 billion, showing growth both quarter over quarter and year over year. Does the management expect this growth rate to continue or accelerate? A: The company is confident in sustaining strong growth due to market potential and platform development. However, growth will be carefully evaluated based on macroeconomic trends and credit demand. The company aims to maintain a strong growth trend into 2025. (Answered by Unidentified_2 and Unidentified_6)

Q: The accounts receivable balance at the end of Q3 increased significantly. Could management provide more information on this increase and its recovery status? A: The increase in accounts receivable is aligned with the growth in loan facilitation volume and revenue. The company maintains a strong collection history and will continue to monitor and improve cash flow processes. (Answered by Unidentified_2)

Q: Revenue from loan facilitation services increased by 10.3% year on year, but the average borrowing amount decreased by 30.5%. What is the reason for this, and does it indicate a preference for smaller loan amounts? A: The decrease in average borrowing amount is due to strategic optimization and structural shifts, focusing on retaining high-quality borrowers and expanding access for new borrowers with initially lower credit levels. This strategy supports long-term growth potential. (Answered by Unidentified_2 and Unidentified_6)

Q: What are the expectations for the company's net profit margin moving forward? A: The company expects profit margins to improve as the proportion of high-margin loan facilitation services increases and investments in borrower acquisition and R&D enhance operational efficiency and scale. (Answered by Unidentified_2)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.