This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Good day ladies and gentlemen, thank you for standing by and welcome to the Jai Yin Group's first quarter 2022 earnings conference call. Currently all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. As a reminder we are recording today's call. If you have any objections you may disconnect at this time. I will now turn the call over to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Please proceed.
spk04: Good day, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the first quarter of 2022. We released the results earlier today. The press release is available on the company's website as well as from NewsWare Services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer, Mr. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifa, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese Renminbi. With that, let me now turn the call over to our CEO, Mr. Yan Jinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Mr. Yan. 大家好,感谢大家参加江英经科2022年第一季度。
spk05: We continue to strengthen our core competitiveness In the first quarter, our loan payment size reached 81.53 billion yuan, achieving a similar growth of 95.4 billion yuan. More importantly, we are focused on achieving the best balance between growth and profitability. By improving operating efficiency, we have further optimized the cost-benefit structure, and thus achieved continuous growth in profits. In the first quarter, our profit and loss reached about 1.83 billion yuan, Hello, everyone.
spk04: Thank you for joining our first quarter 2022 earnings conference call. In the first quarter, we were faced with significant volatilities from the macro environment following the latest COVID-19 resurgence in certain areas of China. However, despite the pandemic-induced economic deceleration, We continue to strengthen our core competencies by enhancing our risk management capabilities, acquiring high-quality borrowers, and expanding partnerships with licensed institutions. Notably, our loan origination volume grew by 95.4% year-over-year to RMB $8,153 million in the first quarter. More importantly, we focus on achieving an ideal combination between business growth and profitability improvement. We further refine our cost and expenses structures by enhancing our operating efficiencies leading to continued margin expansions. In the first quarter, our income from operations reached RMB 182.5 million. and our night income was RMB 144.6 million.
spk05: One of our strategic priorities during the quarter was to further enhance the credit
spk04: the credit risk profiles of our borrowers to ensure the quality and sustainability of our solid portfolio growth. The success of our efforts here can be seen in our 30-day delinquency rate reduction to 0.78% from 1.31% at the end of 2021. The 90-day Delinquency rate also dropped to 0.53% from 0.72% at the end of last year, illustrating the consistent improvement of overall borrower credit quality.
spk05: 在未来,我们也将持续投入线上金则营销,以进一步扩大我们的借款规模和提升顾客水平,顾客效率,同时保持我们的借款整体信用质量在一个非常健康的水平。 We also continue to optimize our borrower acquisition efforts this quarter. Our increased investments in our targeted online marketing programs
spk04: enabled us to improve our borrower acquisition efficiency and the quality of our borrower base. Going forward, we will continue to invest in our online marketing initiatives to further expand our borrower base with enhanced borrower acquisition efficiency while maintaining our borrower's credit quality at a very healthy level.
spk05: We continue to expand our cooperation with private financial institutions and diversify our funding sources. Since the end of this quarter, we have cooperated with 40 financial institutions in total, and 45 financial institutions are currently in the process. More importantly, this quarter, the total amount of funds of the national financial institutions has reached the total amount of the total amount. At the same time, we are actively trying new business models to use our comprehensive capabilities At the same time
spk04: we remain committed to expanding our partnerships with licensed financial institutions to continue diversifying our funding sources. As of March 31st, 2022, we have four partnerships with 40 financial institutions, and we are currently in discussion with another 45. More importantly, national financial institutions in our partnership network contributed to the majority of our total loan volume in the first quarter. In addition to that, we are also actively exploring new collaboration models by leveraging our integrated platform to empower our financial institution partnerships. Under the new partnership model, we provided specialized services including borrow, acquisition, risk analysis, and other operational services to enable our partners to digitize their own operations. We have already implemented the new partnership model with four financial institutions, and we are in discussion with another three institutions to further expand our partnership network.
spk05: In addition,
spk04: We also upheld our corporate responsibility to support small and micro business owners during the quarter through loan services. While small businesses have the hardest time adjusting to the economic disruptions, their financing needs remain largely under-penetrated and underserved. As such, we continue to develop our loan program for small business owners in order to help them better recover from the economic hardships. Finally, on our global expansion, we continue to roll all tailored services and products in each regional market. We also adopted a more prudent approach in response to the pandemic across different markets. However, we are still achieving solid progress in penetrating targeted markets. We are also actively developing new partnerships with local licensed financial institutions to expand our market share and fortify our leadership.
spk05: On April 29, the CCP Central Political Bureau launched a measure to promote platform economic health development. According to our observation, Recently, on April 29, the Politburo of the Chinese Communist Party introduced steps to support the healthy development of the platform economy. By our observation,
spk04: the regulatory ratification process is nearing its final phase. We firmly believe that a better regulated industry environment will continue to benefit leading fintech platforms such as Giant Group.
spk05: To conclude, we upheld our commitment to strengthening our risk management capabilities.
spk04: growing our borrower base and deepening our partnerships with the licensed financial institutions. As our strong performance in the first quarter again demonstrated vitality and resilience, we are laying on a solid foundation of improved profitability and asset quality to overcome any macro uncertainties in 2022. With that, I will now turn the call over to our CFO, Mr. Fan Chunling. Please go ahead.
spk03: Thank you, Sean. Thank you, Mr. Yan. And thank you, everyone, for joining our call today. First of all, I'm glad to be back after departure from Jiayin for more than one year. I'm so pleased to renew my role of CFO and meet investors and all the friends here. I also really appreciate the team of Jiayin for their great job during my absence. As Mr. Yen mentioned earlier, we delivered robust financial results in the first quarter marked by strong top-line growth and margin improvements. During the quarter, we grew our loan origination volume by 95.4% and the revenue by 49%. Our net income increased by 54.3% year-over-year, while net margin further expanded to 28.3% from 27.3% a year ago. Such achievements against the backdrop of increasing microeconomic uncertainties and COVID-19 disruptions again demonstrated the effectiveness of our growth strategies. Now let me go through our financial highlights for the quarter. Please note that, unless stated otherwise, all numbers quoted are in RMB, and percentage changes refer to year-over-year comparisons. Net revenue was $511.2 million, up 49%. Revenue growth was primarily driven by the significant growth in loan origination volume which increased 95.4%. Other revenue increased to $64.7 million, driven by the increase in revenues from individual investor referral services. This increase was partially offset by a decrease in our revenues from overseas markets in the quarter. Moving on to costs. Origination and servicing expenses were $93.4 million, up 45.7%. largely in line with the increase in our loan elimination volume. Allowance for uncredible receivables, counter assets, loans receivable reduced by 50% to $4 million, mainly as a result of the decreased loan volume from our overseas business during the first quarter of 2022. G&E expense was $40.7 million, up 7.7%. Due to higher professional service fees, we incurred this quarter. R&D expense was $41.8 million, up 48.8%. We recorded higher employee compensation and benefit costs, as well as increased fees for professional services in the quarter. Sales and marketing expenses were $148.8 million, up 63.2%. reflecting higher borrower acquisition and credit assessment expenses in line with the increased loan origination volume. Consequently, we reported a net income of $144.6 million compared to $93.7 million in the same period of last year. We ended this quarter with $170.3 million in cash and cash equivalents compared with $182.6 million. as of December 31st, 2021. Moving to our guidance, we expect our loan information volume in the second quarter of 2022 to be between RMB 11 billion and 12 billion, and our four-year guidance remains unchanged. With that, we can open the call for questions. Mr. Yan, our CEO, Mr. Xu Yifang, our chief risk officer, and I will answer questions. Operator, please go ahead.
spk00: Thank you. We will now begin the question and answer session. If you wish to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the hash key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Andrew Scutt from Roth Capital Partner. Please ask your question.
spk02: Good morning. Congrats on the strong quarter and thanks for taking my questions. My first question is about your guys' international presence. Can you guys just maybe provide an update on the different international markets you guys are in and just comment on if you guys are going to start reporting any origination metrics around the international business?
spk01: Hello, Andrew. This is Yifan Xu. I'm going to take on your questions about our international markets. In the early part of the call, you have here some overall view of our international performance. Now I'm just diving into a little bit of details in each of our markets. In Mexico, as we have previously communicated, we have been a strong player in the market, which is continue, we are taking that leading position in terms of the volume. In Q1 2022, our focus in Mexico has been focused on the product offering expansions. We are starting working on our strategy to move up to better, higher quality customers and providing a product that was a longer term. Then moving on to our Nigeria markets. Last quarter, we have been reporting on our aggressive high volume growth. which is at a double-digit month-over-month growth rate in terms of a volume. In Q1 2022, we are maintaining our growth, but not at a higher rate and a higher double-digit rate. But we are much more focusing on at a bigger volume now, continue to drive down the risk metric, which is that we have been able to achieve both reasonable health growth while having a better and improved risk performance. Going back to Indonesia, we are working on a relaunch, set forth to relaunch our presence in Indonesian market. Compared to our operational model, in 2021 while exploring much more flexible and different strategy to allow us to continue to play in Indonesia lending market. In terms of the reporting metrics, due to the Due to the operational setup, it's slightly different from market to market. We are still working on what's the best way to reporting on the exact operational metric to providing our investors a better view on that. But I'm hoping what I have discussed above that can help understand a little bit about what our overall strategy means to market. way of focusing on. That'll be all.
spk02: Yeah, thank you. Yeah, that was very, very helpful. Thank you. Next question for me, a very exciting guide of, I believe it was 11 to 12 billion R&D in originations next quarter. Can you kind of talk about what's driving that growth, whether it might be better acquisition of customers? for the introduction of the small business loans. Just any commentary around that would be helpful.
spk01: Sure. This is Yvonne again. I'm going to get a little bit more detailed into a question about our growth, loan growth. So I think if we're looking at a year and a half back when we fully in Q4 2020, which is the time when we fully transitioned into loan facilitation model. I believe our last year and a little bit over a year performance has proven to be welcomed and acknowledged by our institutional partners. As a result, our partnership with licensed financial institutions has continued to grow and which we have seen a significant growth in Q1 2022. As we have a broader and deepened relationship with our institutional partners, we're seeing that our overall loan growth, we're happy that our overall loan growth was able to meet the needs from our institutional partners. On the other side of our loan origination, with long-term focus and investment in the technology and the lending capabilities, our operational teams were able to meet such a high demand on our loans, as well as deliver a healthy performance. In particular, we have been focusing on the online marketing acquisitions, especially due to the COVID resurgence in pocket areas all over in China. Our focus on the online marketing has benefited us to continue to drive the growth while we are experiencing some uncertainties from the COVID situation in China. On the other hand, we continue to focus on the our R&D risk management. Aside from the technological investment, we also have pioneered the early risk metrics, both model implementation and model monitoring, which allow us to take a much early peek at both our prospects' risk profiles as well as our applicants' risk profiles in addition to our mature day one risk and day 90 risk. So with that, we are able to drive a high double-digit, even triple-digit growth in our portfolio. In the meantime, we are keeping our risk metrics at a healthy level. and which is actually going even downward with a meaningful downward trend.
spk02: That would be my comment on that. Great, thank you. I really appreciate all the detail. And the last one for me, just my understanding, the government put out some notices on – How to enhance the financial services market to spur economic growth during the pandemic, ongoing pandemic issues that have been going on around the world. So can you kind of talk about how that impacts JAPAN moving forward, especially during the recent lockdowns that were put in place?
spk03: Okay, Andrew, I will take this one. So as you all know that Shanghai has just underwent a so-called all silent period. Officially, we don't call that lockdown. So everybody is aware that China's economy is facing difficulties since March, and the challenges are very tough compared with the 2020 pandemic control even. So the central government and the local government, they are fully aware that economic development including the GDP growth, employment data, control of inflation is the foundation of China's overall development. And since the reopening of Shanghai on June 1st, most of the employees of Jiayin we say goodbye to our family and come back to office. And the good thing about Jiayin is number one, almost all our business could be conducted online. Number two, we are focused on consumer loan exercise. And number three, our loan facilitating business is nationwide, and Shanghai only accounts for a small portion of our whole business. So fundamentally, the impact to our business is minimal compared with other industries. Certainly, given the current microenvironment in China, we will keep a close monitoring of the evolving microenvironment. our particular segments. And the company is fully prepared to face any difficulties resulting from the microeconomy and the pandemic control. So we're also happy to see that due to the nature of our business I just mentioned, we haven't seen any obvious deterioration of our delinquency data yet. So you can probably add on to that. And on the contrary, due to our better asset quality and special efforts, the data has proven to be further improved, and that's the current figures that we have seen. So in all, despite the all-time period over the past two to three months in Shanghai, we have seen a lot of good news and the measures coming out from the government as well, right? So which gives us a lot of confidence, and I think that, in short, we are optimistic about our future, and the guidance that we just gave is actually pretty conservative, that's my view.
spk02: Thank you very much for answering my questions, and once again, congrats on a strong quarter. That's all from me. Thanks.
spk00: We have no more questions at this time. I will return the call to Sean for closing remarks. Please go ahead.
spk04: Thank you, operator, and thank you all for participating on today's call, and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.
spk00: This concludes today's conference call. Thank you for participating. You may now disconnect.
Disclaimer