LexinFintech Holdings Ltd. (LX) saw its stock surge 8.38% in pre-market trading on Tuesday, following the release of its impressive third quarter 2024 financial results. The Chinese fintech company reported strong profitability metrics despite a year-over-year decrease in sales revenue, driven by robust cost controls and operational efficiencies.

The company's Q3 performance was underpinned by its continued efforts in strengthening risk management capabilities and upgrading its overall business model. This led to a significant improvement in new loan asset quality and a turning point in the risk levels of its overall loan portfolio.

LexinFintech's net profit margin reached an impressive 8.45% in Q3, representing a substantial increase of 223 basis points from the previous quarter. This was driven by the declining risk levels of its loan portfolio and enhanced asset quality, as well as record-low funding costs achieved through partnerships with cost-efficient financial institutions.

The company's management expressed confidence in delivering stronger profitability growth in 2025, supported by the ongoing progression of its risk management initiatives and the launch of the Intelligent Credit Platform (ICP). The ICP, a capital-light model, is expected to expand LexinFintech's addressable market while smoothing potential risk fluctuations across credit cycles.

Furthermore, LexinFintech's efforts in reactivating dormant users from its large existing customer base and optimizing online advertising channels have led to a significant reduction in customer acquisition costs, further contributing to its profitability.