Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- X Financial (XYF, Financial) reported a 24% year-over-year increase in loan volumes for Q4 2024, exceeding their guidance.
- The company achieved a 43% year-over-year increase in total net revenue for Q4 2024, reaching RMB1.7 billion.
- Net income for Q4 2024 more than doubled year-over-year, reaching RMB386 million.
- The delinquency rate for loans overdue by 31 to 60 days improved significantly to 1.17% from 1.57% a year ago.
- X Financial (XYF) has implemented strategic AI investments, enhancing efficiency and customer engagement through advanced technologies.
Negative Points
- Despite strong financial performance, the share count reduction from repurchases was not fully reflected in the year-end financial report.
- The company faces uncertainties due to potential changes in the regulatory environment and macroeconomic conditions.
- There is no guarantee of continued profitability growth, as the company did not provide specific profitability forecasts for 2025.
- The company's stock, despite recent appreciation, is still considered undervalued, indicating potential market skepticism.
- Visibility into future funding costs and credit risk remains limited, posing challenges for long-term financial planning.
Q & A Highlights
Q: During the fourth quarter, the company repurchased approximately 6.4 million ADSs, but the share count on the financial report as of December 31 does not fully reflect the reduction. Is this an accounting discrepancy?
A: Fuya Zheng, Chief Financial Officer: The share count calculation is based on a weighted average. Since the shares were repurchased late in the year, they are still accounted for in the share count for most of the year. You will see the full reduction in the share count in 2025.
Q: Can you discuss the role of the new team member, Noah Kauffman, and his contributions to the company?
A: Noah Kauffman: I am excited to join X Financial and will focus on deepening our engagement with US capital markets, enhancing investor relations, and driving strategic financial initiatives. My goal is to optimize financial strategy and capital allocation to deliver long-term value for shareholders.
Q: What are the drivers behind the expected strong loan volume growth for 2025, and how will it impact profitability?
A: Kan Li, President: The forecasted 30% increase in loan volume is driven by our ability to reach more consumers and partner with more platforms. Although we don't provide specific profitability forecasts, we expect profits to increase at the same pace as loan volumes.
Q: How do you view capital allocation priorities going forward, particularly regarding dividends and buybacks?
A: Kan Li, President: Given the recent stock price appreciation, we plan to focus more on share buybacks rather than dividends. Despite the stock's appreciation, we believe it remains undervalued, and we aim to enhance shareholder value through strategic buybacks.
Q: Can you elaborate on the impact of funding costs and risk management on profitability?
A: Fuya Zheng, Chief Financial Officer: In 2024, funding costs decreased by over 2%, and we managed to lower credit risk, which contributed to profitability. We expect funding costs to remain low in 2025, supporting continued growth in both volume and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
