• Total Transaction Volume: RMB52.2 billion for the third quarter.
• Total Outstanding Loan Balance: RMB68.1 billion, up 3.3% year over year.
• Net Revenue: RMB3.3 billion, a 3% increase year over year.
• Net Income: RMB624 million, a 9% increase year over year.
• Sales and Marketing Expenses: RMB516 million, up 6% year over year.
• Leverage Ratio: 3.2 times.
• Total Liquidity Position: RMB9 billion, up 13% from December 2023.
• International Transaction Volume: RMB7.2 billion for the first nine months, up 29% year over year.
• International Revenue Contribution: RMB636 million, representing 19% of total revenues.
• Share Repurchase Program: USD24.3 million deployed in the third quarter to repurchase 4.6 million ADS.

• Warning! GuruFocus has detected 2 Warning Sign with FINV.

Release Date: November 19, 2024

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

Positive Points

• FinVolution Group (NYSE:FINV) achieved significant growth in international revenue, increasing from 3.7% in 2020 to an expected 20% in 2024.
• The company reported a strong increase in the number of new international borrowers, with a 60% year-over-year growth in the third quarter.
• FINV's total transaction volume reached RMB52.2 billion, with a year-over-year increase in both transaction volume and outstanding loan balance.
• The company has successfully reduced its funding costs by 190 basis points since the beginning of the year, reflecting strong market recognition of its asset quality.
• FINV's net income for the third quarter increased by 9% year over year, showcasing solid financial performance.

Negative Points

• China's overall economic growth remained restrained in the third quarter, impacting domestic operations.
• The company faces challenges in maintaining growth amidst industry-wide fluctuations and size reduction.
• Sales and marketing expenses increased by 6% year over year, indicating higher costs in acquiring new borrowers.
• Despite international expansion, the company is still working towards achieving meaningful profits from its international business.
• The improvement in funding costs is expected to slow down in the fourth quarter, indicating limited room for further cost reductions.

Q & A Highlights

Q: What drove the loan volume increase in China during the third quarter, and what are the expectations for the fourth quarter? A: Jiayuan Xu, CFO, explained that the loan volume increase was driven by a 12% sequential rise in customer applications and continued investment in new customer acquisitions. The stimulus package announced in late September also contributed to improved daily transaction volumes. The company expects this positive trend to continue into the fourth quarter.

Q: What is the outlook for the international business, particularly regarding profitability and pricing adjustments? A: Jiayuan Xu, CFO, noted that after a price reduction process in 2024, the company has transitioned to better quality borrowers and resumed growth. There are no current notifications for further price declines, and under stable pricing, the international business, especially in Indonesia, is expected to contribute more meaningful profits in 2025.

Q: Is there room for further improvement in funding costs in the fourth quarter? A: Jiayuan Xu, CFO, indicated that while there is still room for improvement in funding costs, the rate of improvement might be smaller compared to earlier in the year. The company has already seen significant reductions in funding costs, reflecting market recognition of their asset quality.

Q: Can you elaborate on the customer acquisition strategy and costs in Indonesia and the Philippines? A: Tiezheng Li, CEO, explained that the company has expanded its base of local funding institutions in Indonesia and established partnerships with local partners like OPPO and OOP. In the Philippines, strong partnerships with financial institutions and platforms like TikTok Shop have been established. These strategies have led to robust customer growth and are expected to contribute to profits in 2025.

Q: How does the company plan to balance long-term growth with shareholder returns? A: Jiayuan Xu, CFO, stated that the company prioritizes long-term shareholder value through sustainable business growth and a leading capital return program, including share repurchases and dividends. Since 2018, they have returned $618 million to shareholders, and they plan to maintain high-quality growth and stable dividend distribution.

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