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spk08: Good day ladies and gentlemen, thank you for standing by and welcome to the GI in group second quarter 2024 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 Tang from Investor Relations of Jiayin Group. Please proceed.
spk13: Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the second quarter of 2024. We released our earnings 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 Ding Gui, Chief Executive Officer, Ms. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifeng, 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 . With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with the corresponding English translations. Please go ahead, Mr. Yan.
spk15: Hello, everyone.
spk13: Thank you for joining our second quarter 2024 earnings conference call.
spk15: Whether we can maintain this trend is still to be observed and analyzed further. In this not easy process, Jiayin's wind control ability and technological ability have been tested. To assist financial institutions and customers to continue to grasp the first line of defense, under the big background of observing the risk level well, our team has completed a set strategic goal with full innovation and firm execution. In the second quarter, the company achieved a loan and transaction amount of 24 billion yuan.
spk13: Reflecting on the second quarter, this was a time of change in the external environment and deep adjustment in domestic industries and consumption. China's macroeconomic situation is moving forward under pressure. with conscious consumer credit demand. After a period of risk volatility, various risk indicators have improved. However, it remains to be seen whether the changes in the market risk levels will continue this trend in the second half of this year, which requires further observation and analysis. During this challenging period, The company's risk control and technological capabilities were put to the test, but we never stopped assisting financial institution clients in maintaining a strong first line of defense. Against this backdrop of improving risk levels, our team successfully achieved our strategic goals with innovation and firm execution. In the second quarter, the company achieved a loan facilitation volume of RMB 24 billion, a further increase compared with the previous quarter. In addition, the company's achieved net revenue of RMB 1.476 billion, a 15.5% year-over-year increase, continuing our healthy growth momentum.
spk15: In terms of technology applications, Xiaoying Technology has been actively exploring the application of AI technology in business scenarios. In the second quarter, we have deepened the application of artificial intelligence technology on the basis of the construction of original technical capabilities, including customer service, internal communication, decision-making support, production monitoring, predictive maintenance, and personality marketing. In the second quarter, In terms of technology, we have actively advanced our technological transformation
spk13: we have continuously explored the use of AI technology in business scenarios. In the second quarter, we built out on our existing capabilities and integrated AI into several areas, including customer services, internal communications, decision support, production monitoring, predictive maintenance, and personalized marketing, By leveraging our strong in-house research capabilities, we launched several innovative products in the second quarter. This includes the Canglong Intelligent Recommendation System and the Linxi AI Agent Platform. These advances are part of our commitment to use technological innovation as a driving force to inject digital power into the company's business development.
spk15: In terms of institutional cooperation, the company continues to promote high-quality, sustainable cooperation and financial institution network construction. Since June 30, we have established a cooperation relationship with 69 financial institutions. At the same time, we are still in cooperation with another 35 financial institutions. In addition, our deepening cooperation plan with key cooperation partners is also being interestingly promoted. In particular, deep cooperation in the field of real-life scenarios, traffic cooperation, and other business areas has gradually entered the ground. In the second quarter, we helped a private bank to connect with a fixed asset customer channel and successfully landed the designated flow channel, plus the bank's model and joint project. While cooperating with customers, we are also working to expand the service boundary, exploring multiple new industries, including vehicle delivery and delivery services. In addition, we are also promoting the landing of the customer channel dedicated to small and medium-sized enterprises. Our company has also continued to advance the construction of high-quality and sustainable network of cooperative financial institutions. As of June 30th,
spk13: We have established partnerships with 69 financial institutions and are in talks with additional 35. Overall, our plans to deepen our cooperation with key partners are progressing well, and we are gradually implementing additional and deep cooperation in credit reporting scenarios, traffic cooperation, and other business areas. Example of our achievements in the second quarter, we assisted a private bank in connecting targeted asset acquisition channels. And we successfully implemented a joint operation project based on the designated traffic channel plus G loan plus bank model. As part of our deepening cooperation with institutions, we are also exploring expanding services boundaries and exploring multiple new businesses, including car loan matching services. We are also continuously advancing the channel docking and implementation to help attract borrowers for small and macro business owners. Each of these developments is part of our commitment to provide comprehensive and multi-level technical services to our partners. We are continuously striving for high-quality, synchronous development with institutions through these and other various deep cooperation models.
spk15: At the same time, we are also investing more in the customer side. Based on the optimization of original channels, We have added the collaboration with several head-to-head traffic platforms. Through the exploration of different types of expansion methods, we have created new customer scenarios to meet the needs of the borrowers. At the same time, we have adjusted the customer identification strategy and supported the whole chain of marketing systems to achieve the supplementation of existing customers. The number of new borrowers in this quarter has reached 680,000 in total, which has increased by 32.9% and has contributed to the company's future development. As the number of new borrowers and the constant increase in the number of customers, we must also pay attention to the efficiency of the transfer of customers. By meticulous operation and product delivery, we continue to exert force in terms of user connectivity. In this quarter, our non-borrowing rate is stable at 67.1% in the future.
spk13: We also increased our investment in borrower acquisition. In addition to optimizing on existing channels, we have established partnerships with several top-tier platforms. This occurred as we continued exploring different types of touchpoints innovating borrower acquisition scenarios and meeting the diverse needs of borrowers. At the same time, we adjusted our borrower identification strategy and enhanced it with a comprehensive marketing system leading to a broader borrower base. With these measures in place, the number of new borrowers this quarter reached 680,000, reflecting a 32.9% year-over-year growth and injecting strong momentum into our future development. As our new borrower acquisition figures and capabilities continue to strengthen, we have placed a strong emphasis on conversion efficiency. Through targeted operations and continuous product iteration, we have consistently improved user retention. This quarter, our repeat borrowing rate remained stable at 67.1%. Looking ahead, our focus will be on optimizing the balance between new and existing borrowers. while fully leveraging the lifetime value of our user base, which will be central to our long-term strategic objectives.
spk15: The risk level is always the focus of our strategic attention and business operations. At the end of the second quarter, the expected rate of 61 to 91 days remains at 0.67%. The quality of the asset is clearly improving. At the same time, we also continue to carry out consumer protection work to ensure the systematization and fine-tuning of work. In the first half of the year, more than 1.59 million people have been identified and effectively stopped by fraud. Among them, 16 million people have been successfully identified and intercepted by black-collar malicious attackers. Use technology innovation to build a safe and protective factory for consumer protection.
spk13: Risk management is always a key focus in our strategic planning and business operations. By the end of the second quarter, our 61 to 90 days delinquency rate remained at 0.67%, demonstrating a clear improvement in asset quality. We also continue to work on consumer rights protection. implementing systematized and refined consumer rights protection operations. In the first half of this year, we identified and effectively blocked fraudulent borrowers over 1.59 million times. In all 160,000 malicious attackers were successfully identified and intercepted. We have leveraged technological innovation to build a strong protective shield for safeguarding consumer rights.
spk15: International business has always been the focus of the company's future development. It has also maintained a healthy and stable growth in the second quarter. In the Indian market, we are highly concerned about the changes in the local requirements for new supervision. The improvement of the performance of local business cooperation partners in the industry has been significant. In the second quarter, the share price of Indonesian business partners increased by 25%. The overall performance and business situation exceeded the expected year-end. At the same time, we also learned that our business partners in the second quarter still have five local financial institutions to continue to negotiate and continue to expand the network of business partners. In the Mexican market, we continue to focus on the improvement of various business technology facilities and try to explore long-term products. In the Iberian market, the risk index in the second quarter International business remains
spk13: a key focus for the company's future development, and we maintain healthy and stable growth in this area during the second quarter. In the Indonesian market, we are paying close attention to the changes in local regulatory requirements. Meanwhile, our local partner optimized its entire business chain, achieving significant results. In the second quarter, the loan size of our Indonesian partner increased by 25% compared with the previous quarter. Overall performance and business conditions exceeded expectations set at the beginning of the year. And we also recognized that our local partner was in ongoing discussions with five local financial institutions, striving to expand our partnership network. In the Mexican market, we continue to focus on improving various business infrastructures and exploring long-term products. In the Nigerian market, against the backdrop of the stable risk indicators in the second quarter, our business scale furtherly increased compared with the previous quarter. In the market, some local regulations are also being implemented to regulate the listing of financial loan applications. We believe that regulatory norms will help the industry develop in a compliant, healthy, and sustainable direction.
spk15: At the beginning of August, we released the ESG report of Group 2023. The company has achieved a lot of results in the field of technology, support for small and medium-sized enterprises, employee care, environmental protection, and social engineering. It is worth mentioning that we pay attention to the empowerment of technology and the support of data elements. These two factors have greatly improved the coverage and accuracy of our general finance. We adhere to the concept of sustainable development and integrate ESG practice into all aspects of cooperative management
spk13: In early August, we released our 2023 ESG report. Our company actively pursues technology empowerment, support for small and macro enterprises, employee care, environmental protection and social welfare. This has brought fruitful results. It is worth mentioning that we also focus on empowering technology and supporting data elements, which have improved the coverage and accuracy of our inclusive finance. While focusing on high quality development in our core businesses, we remain dedicated to promoting social welfare with ongoing efforts in educational support youth mental health care, and volunteer services. Looking ahead, we plan to continue to actively take on social responsibilities and promote the sustainable and high-quality development of the company.
spk15: Based on the overall assessment of the market, I am confident in the growth of the second half of the year and the completion of the year-end goal, and have decided to raise the amount of the third quarter to about $8.5 billion. At the same time, we are also working hard to improve the value of shares and maintain the confidence of investors. A while ago, we just announced the first specific distribution plan for the stock market this year. This time, the plan is to send $0.5 per ADS and send a total amount of about $26.6 million. As the market gradually softens, we expect the future to continue to repay investors who care about the development of the company in various ways. This will make investors in Guangda
spk13: Based on our overall assessment of the market, we are confident in the company's growth for the second half of the year and in achieving our annual targets. Therefore, we have decided to set the guidance for the loan facilitation volume in the third quarter at approximately RMB 25 billion. Additionally, we are focused on enhancing shareholder value and reinforcing investor confidence. Recently, we announced this specific distribution plan for the first dividend of this year. The dividend distribution plan is USD 0.5 per EDS, and the total amount for the dividend is approximately USD 26.6 million. With the market gradually improving, we look forward to rewarding investors who care about the company's development in various ways, and we strive to share the fruits of our progress with the company and investors.
spk15: With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead. Thank you, Mr. Yan.
spk02: and hello everyone for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB, and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yan mentioned, our company remains strong and adaptable, maintaining stable performance despite shifts in the microenvironment. Notably, Our loan facilitation volume reached $24 billion, exceeding our previous guidance of $23 billion. Our net revenue was about $1.48 billion, up 15.5%. The growth of our revenue from loan facilitation services moderated to 2.8%, primarily driven by the service fee optimization within our loan facilitation operations. Moving on to costs. Facilitation and servicing expense was $608.2 million, representing an increase of 70.9% from the same period of 2023, primarily due to the increase of guaranteed costs incurred. Reversal of uncredible receivables, country assets, loans receivable, and others represented a reversal of $3.3 million. compared with an allowance of $13.8 million in the same period of 2023. This was primarily due to the net impact of the current period provision and recovery of certain receivables written off in the prior year. Sales and marketing expense was $486.6 million, representing an increase of 15.7% from the same period of 2023. primarily due to an increase in borrower acquisition expenses. G&E expenses were $65 million, representing an increase of 29.8% from the same period of 2023, primarily driven by an increase in payroll expenses and share-based compensation. R&D expense was $92.8 million, representing an increase of 36.3% from the same period of 2023, primarily due to high employee compensation benefit expenses. Consequently, our net income for the second quarter was $238.3 million, representing a decrease of 27% from $326.3 million in the same period of 2023. Our basic and diluted net income per share were both 1.12 compared with 1.52 in the second quarter of 2023. Basic and diluted net income per ABS were both 4.48 compared with 6.08 in the second quarter of 2023. We are pleased to report that our cash position significantly improved this quarter. As of June 30, 2024, our cash and cash equivalents reached $880.2 million, a substantial increase from $568.2 million at the end of the previous quarter. This growth reflects our continued emphasis on financial discipline and operational optimization. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer your questions. Operator, please proceed.
spk08: Thank you. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
spk06: We will now take the first question.
spk08: Hello, Mr. Guan. Thank you for giving me the opportunity. I have two questions for you.
spk11: First, considering that the net income has increased by 15.5% in this quarter, but the net income has dropped by 27%. The operating cost and marketing costs have also gone up. What changes do you expect to see in the future? The second question is, note that in the second quarter of the company, the balance of loans and transactions is 240 yuan, which is the same as the market share, and the net income has increased by 7%. In the future quarter, do you expect this increase to continue or will the economy speed up? Okay, let me do the translation. Here is Yusheng Chen from Huatai Securities. The first question is, considering that the net revenue this quarter increased by 15.5% year-over-year, but the net income decreased by 27%, and the operating costs and the sales and marketing expenses also increased, how does the management expect the take rate and the net margin to change in the future? And the second question is, we noticed that the company's second quarter loan facilitation volume was RMB to 24 billion flat year-over-year and up 3.7 quarter-over-quarter. Do we expect this growth rate to continue in the coming quarters, or is there potential for it to accelerate in the future? At the same time, will the management be confident about the future growth? The same quarter balance of RMB 25 billion seems relatively conservative. Could you please elaborate on the considerations behind this? Thanks.
spk16: Okay. Thank you for your question.
spk02: I'm the CFO of the company, Fan Chenglin. Let me answer the first question about the profit-loss ratio and the trend of the future. Yes, as you just mentioned, there is indeed an increase in revenue in the second quarter of this year. There is a 15.5% increase, but our profit-loss ratio has dropped. The main reason is the following. First, there is a structural difference in revenue-loss ratio. I am in the guarantee business, and my main revenue-loss ratio The second quarter of this year is very different from the second quarter of last year. As we have said before, the profit rate of guaranteeing business income is much lower than the profit rate of our traffic control service. According to the quarter, the relative ratio of guaranteeing business income in Q1 of 2023 to Q2 of 2024 has a greater impact on the profit rate. In Q2 of 2024, the relative income of my guarantee service is 4.24 billion. Thank you, Yuxuan, and I am finally the CFO of the company, and I will answer your first question. Just as what you said, the company's revenue for the second quarter has a year-over-year increase of 15.5%, but the
spk13: net income decline, and the main reasons are as follows. First is because of the structural difference in the revenue, mainly because of the proportion of our guaranteed business. Just like what we said before, the margin of the guaranteed business is much lower than that of loan facilitation services. If we talk about this indicator in the quarter, the guarantee services we needed revenue in the second quarter of 2024 was 424 million RMB, which was much higher than the 197 million RMB in the second quarter of 2023. So it lowered the overall margin and net income level in the second quarter. So from the perspective of the company's overall business development strategy, the listed entity will continue to focus on the loan facilitation services and reasonably control the balance of different business segments in the proportion of revenue. And the guarantee business has been steadily declining since the year, and we will see that in the second half of the 2024, it will significantly improve the company's future overall margin level.
spk02: And that's the first reason. And the second reason is because we have made
spk13: more strategic investment in the borrower acquisition, and also R&D portion. And that's also in the view of the company's relatively healthy profitability and the cash flow situation.
spk02: In terms of getting new customers, our entire QI cost and credit cost are significantly increased. The second quarter of the company's new customers also reached nearly 33%. So the operation of the company will continue to focus on the improvement of the utilization rate and flow rate of high-quality customers and the value of the entire life cycle of users. This investment can enhance the future of the company's performance growth and contribute to the long-term sustainable development of the company's business. Of course, we will also continue to review and ensure that the efficiency of this cost is further improved.
spk13: And so acquiring the new borrowers and retaining high-quality existing borrowers, so the borrower acquisition cost and the credit cost in the second quarter increased significantly. And the company's proportion of new borrowers in the second quarter reached about 33%. So in the future, we will also focus on this. sustainable and healthy growth of our business. And our investment in those areas will prove that, will help our business to grow in this way.
spk02: 第二季度研發費用同比增長幅度超過了36% 那麼公司在AI技術的落地業務場景方面 So our R&D expenses in the second quarter increased by more than 36% year-over-year. And our investment in the AI technologies and also the application of several business scenarios
spk13: is good for the long-term development of our company's business. So just as Mr. Yen just mentioned that we set our third quarter guidance at 25 billion RMB and the company focuses on high quality growth and stable price and continuous optimization of capital costs and further improvement of asset quality. which can support our take rate to remain at the current level, and we also have the room to improve in the future.
spk02: At the same time, with the continuous optimization of the revenue structure, the development results of strategic investment in customer research and development, the company has improved our credit credibility for the next half of the year.
spk13: At the same time, with the continuous optimization of revenue structure and the results of strategic investment in borrower acquisition and also R&D, the company is confident that the profit margin will increase in the second half of the year. OK, so the second question will turn over to Ms. Xu Yifang.
spk05: Let's talk about the three-segment performance target. First of all, there are two levels of our three-segment target. The first level is the overall risk indicator. We hope that there will be an increase in the overall risk indicator. And under this target, we will continue to push the performance target to 2.5 billion. This is Xu Yifeng. Thank you for your question and I will talk with you about our guidance. So first of all, we set a goal for further reducing risk and continuing to grow to
spk13: about 25 billion RMB in the third quarter of this year as our third quarter guidance. And actually this guidance is a certain challenge for us, but our team is confident about that.
spk05: Secondly, the guidance is a direction and goal.
spk13: set by the company's management based on a comprehensive consideration of the overall economic environment, borrowers' needs, market competition, and also our own strategic position.
spk05: In terms of finance, it benefits our overall economic development. Although we see that the demand for modern products, especially when it comes to Q3, is quite abundant, especially when we look at the number of modern physical customers, it has also shown an obvious rise in recent years. But as an industry, If we are a technology provider, we have to balance to measure the health of this demand and its sustainability. So, at this stage, it is also necessary to strengthen the risk management section for the approval and management of the current application.
spk13: And as Mr. Yen just remarked before, that we are still cautiously optimistic about the overall economic environment. And as you know, the financial serves as the economic development, and the borrowers' demand for the credit products has been strong in the third quarter. We have been We have seen that the number of the multi-application borrowers has been rising recently, but as a credit service provider, we need to balance the health and sustainability behind the demand and strengthen the approval process and the management work upon the applications during the risk management.
spk05: From the perspective of the competitive market, there are some stable and dynamic changes. The participants in the industry, especially those who work with us, are considering how to balance the market's long-term development and ensure its long-term health, and make such a balance and choice between scale and risk indicators.
spk13: In the competition landscape of the loan facilitation market, it is stable, but also with dynamic changes. And we can see that the industry participants, including our licensed financial institution partners, are more prudently considering how to make the consumer credit market develop healthy in the long term, and also to balance and choosing between the skill and risk indicator management. And I can tell you that our peers and us will not rush into to achieve rapid expansion in the short term.
spk05: Our policy is to maintain a steady growth rate and ensure a long-term leadership policy. I think it depends on the development of the market to see if there will be significant changes in the future.
spk13: And so in general, our business strategy will continue to maintain a stable and slightly rising long-term business guideline. And in specific, to answer a question if the guidance or our group speed will speed up in the future, I think we need to also observe the overall environment in the future as well. So that will be my answer about your question about our third quarter guidance. That's all.
spk08: Thank you. We will now take the next question. From the line of Hua Rong from GNU Assets, please go ahead.
spk07: Hello, Manager Cheng.
spk04: I'm Huarong, an analyst from Capital Management. I have two questions for you, Manager Cheng. The first one is that we saw that the debt rate in this quarter dropped from 70.1% in the same period last year to 67.1%, and the sales and marketing costs increased by 15.7%. But the loan amount and customer year are declining. Does this reflect the current market environment? Does the company have certain challenges in customer efficiency and customer maintenance? In the face of these situations, has the management team taken more targeted measures to consolidate old customers and attract new customers, and optimize the investment strategy to reduce ineffective sales? Hello, management. I have two questions. The first one is the repeat borrowing rate this quarter dropped from 70.1% last year to 67.1% while sales and management expense grew by 15.7% year-over-year. But the average borrowing amount per borrowing and customer thickness have declined Does this indicate challenges in borrowing acquisition efficiency and retention under current market conditions? What targeted strategies has management implanted to retain existing borrowers, attract new ones, and optimize marketing spend to reduce ineffective advertising? And my second question is, at the end of this quarter, the company's cash and the cash equivalent position reached about 880 million RMB, a significant increase compared to the previous quarter. How did the company achieve cash flow growth under the current macroeconomic pressure? What are the main factors for the growth? What plans does the company have for the youth for the cash flow in the next few quarters? Thank you.
spk05: Hello, Ms. Huang. I'm Xu Yifang. Regarding the first question you mentioned, we should talk about the contradiction between the return rate and the increase in sales revenue. I also feel that you are very concerned about the next business. Some changes in our key indicators are also very sharp. But the changes in these indicators are actually more in line with our overall business ideas and decision-making results this year and the first half of this year.
spk13: Mr. Hua, hello and I'm . I will answer about your first question generally about the repeat borrowing rate and also the of our borrowing amount per borrowing. And I can also see that you are really focusing upon our business and you are very familiar with our key business indicators. And just as what you said, these indicators are in line with the overall business thinking and also are the results of our decision-making execution.
spk05: These two indicators, the drop in the payback rate and the increase in our sales cost, actually show that we have increased the profitability of the entire new customer in this quarter. In addition, at the same time, we have lowered the trust rate of each user.
spk13: In summary, these two indicators reflect that we have increased the efforts to acquire new borrowers while reducing the credit limit for each borrower.
spk05: On the one hand, we are talking about the marketing cost and the growth of the marketing cost is 15.7%. But as I mentioned earlier, the marketing cost of this quarter is also quite high. From the point of view of sustainability, after the market correction of Q2 in the beginning of the year, the risk index, especially the trade-off index, in fact, we have seen an improvement in the whole industry, especially we ourselves have seen an improvement in the whole market. So the overall prediction in the first form is also very strong and positive for the next 24 years. And on the one hand, after this so-called silent period of the market at the beginning of this year,
spk13: And so in the second quarter, we can see that the risks, especially the post-loan indicators, have been optimized across the industry. And the overall economic situation is also full of expectations for the whole year of 2024. And the borrowers' credit demand is also very strong. So from the perspective of borrower acquisition, it is a good time and that's also why we invest more on the new borrower acquisition. So to clarify that, can you repeat that?
spk05: Okay, thank you. So to clarify that, the increase on our S&M expenses
spk13: is 15.7% year-over-year. And if you talk about the chance in the number of our new borrowers, it will be 32.9%.
spk05: In Q2, we have increased the capacity of new customers. On the other hand, from the perspective of the military and US users, So on the other hand, from the perspective of average per borrowing or per borrower credit perspective, we have
spk13: made more complex structural adjustment and set differentiated business goals for different borrower groups. So the final result is a decrease in the amount of borrowing amount.
spk05: Next, we hope that this year, from the scale of the exchange, we can have a steady growth and guarantee the entire business profit. At the same time, we want to expand the customer scale on a larger scale, so that we can make a more flexible response in the next stage of the market, and then continue to do so.
spk13: So overall, we hope to maintain the scale of facilitation volume to be stable and maybe some increase in this year. And also we want to ensure our operating profits and also to expand the borrower base and enable us to be more flexibly meet the next stage of market changes. So I will turn over to Mr. Fan for your second question.
spk02: Thank you, Mr. Fan. The second question is about our cash flow. Our cash flow has been continuously improved. In the second quarter, we had a cash flow of 8.8 billion yuan. In the third quarter, we had a cash flow of more than 300 billion yuan. The main benefit is on both sides. Okay, thank you, Juan.
spk13: So the company's cash flow continued to improve, increasing by about 312 million RMB at the end of the second quarter compared with the end of the first quarter, mainly due to two reasons. The first will be the company's profitability and operating cash flow performed very well, especially as the company's performance growth switched from the ultra-high speed growth before 2023 to the high-quality growth model. The company's accounts receivable balance growth slowed down and the recovery was very good, which made the company's net operating cash inflow and current profits show a stronger linear relationship.
spk02: The second reason is that our business model optimized the release of funds. And the second is because the funds released by business model optimization with the strategic reduction of guarantee business and the continuous optimization of related commercial terms
spk13: the company's funds occupied by the security deposit have been continuously released.
spk02: So in the next quarter,
spk13: Our company's cash flow situation will be continuously optimized, laying a solid foundation for the long-term sustainable development of the company's business, including the development of overseas businesses.
spk02: At the same time, the company will continue to implement the policy of financing and stock return in accordance with policy. On August 16, the board of directors So at the same time, if our policy permits, the company will continue to implement the currently existing dividend policy
spk13: and share repurchase plan to continuously report our shareholders. Just as Mr. Yen remarks before, on August 16th, our board permits the dividend, the current, the very first cash dividend of this year, which is 0.5 US dollars per ADS. And the ADIS holders can expect to receive the dividends on the 6th of September. So that will be my answer for your second question. Thank you.
spk08: Thank you. I would now like to turn the conference back to Shawn Tsang for closing remarks.
spk13: 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.
spk08: This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you. Thank you. Thank you for watching. Thank you. Good day ladies and gentlemen, thank you for standing by and welcome to the GI in group second quarter 2024 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 Tsang from Investor Relations of Jiayin Group. Please proceed.
spk13: Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the second quarter of 2024. We released our earnings 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 Ding Gui, Chief Executive Officer, Ms. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifeng, 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 . With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with the corresponding English translations. Please go ahead, Mr. Yan.
spk15: Hello, everyone.
spk13: Thank you for joining our second quarter 2024 Earnings Conference Call.
spk15: Whether this trend can be maintained is still to be observed and analyzed further. In this not easy process, Jiayin's wind control and technological capabilities have been tested. To assist financial institutions and customers to continue to grasp the first line of defense, under the big background of observing the risk level well, our team has fully innovated, firm execution, and successfully completed a set strategic goal. In the second quarter, the company realized a loan and transaction amount of 24 billion yuan.
spk13: Reflecting on the second quarter, this was a time of change in the external environment and deep adjustment in domestic industries and consumption. China's macroeconomic situation is moving forward under pressure. with conscious consumer credit demand. After a period of risk volatility, various risk indicators have improved. However, it remains to be seen whether the changes in the market risk levels will continue this trend in the second half of this year, which requires further observation and analysis. During this challenging period, The company's risk control and technological capabilities were put to the test, but we never stopped assisting financial institution clients in maintaining a strong first line of defense. Against this backdrop of improving risk levels, our team successfully achieved our strategic goals with innovation and firm execution. In the second quarter, the company achieved a loan facilitation volume of RMB 24 billion, a further increase compared with the previous quarter. In addition, the company's achieved net revenue of RMB 1.476 billion, a 15.5% year-over-year increase, continuing our healthy growth momentum.
spk15: In the field of technology applications, XIANGYING TECHNOLOGY is actively exploring the application of AI technology in business scenarios. In the second quarter, we have deepened the application of artificial intelligence technology on the basis of the construction of original technical capabilities, including customer service, internal communication, decision-making support, production monitoring, predictive maintenance, and personalized marketing. In the second quarter, In terms of technology, we have actively advanced our technological transformation
spk13: we have continuously explored the use of AI technology in business scenarios. In the second quarter, we built out on our existing capabilities and integrated AI into several areas, including customer services, internal communications, decision support, production monitoring, predictive maintenance, and personalized marketing, By leveraging our strong in-house research capabilities, we launched several innovative products in the second quarter. This includes the Canglong Intelligent Recommendation System and the Linxi AI Agent Platform. These advances are part of our commitment to use technological innovation as a driving force to inject digital power into the company's business development.
spk15: In terms of corporate cooperation, the company continues to promote high-quality, sustainable cooperation and financial institution network construction. Since June 30, we have established cooperation relations with 69 financial institutions, and we are still working with another 35 financial institutions. In addition, we are also actively promoting the deepening cooperation plan with our key partner. In particular, deep cooperation in the field of real-life scenarios, traffic cooperation, and other business areas has been gradually established. In the second quarter, we helped a private bank to connect with a fixed asset customer channel and successfully landed a designated flow channel, plus a joint venture, plus a bank model, and a joint project. While cooperating with customers, we are also working hard to expand the service boundary, exploring multi-layered new business, including vehicle delivery and delivery service. In addition, we are also promoting the landing of the customer channel dedicated to small and medium-sized enterprises. Our company has also continued to advance the construction of high-quality and sustainable network of cooperative financial institutions. As of June 30th,
spk13: We have established partnerships with 69 financial institutions and are in talks with additional 35. Overall, our plans to deepen our cooperation with key partners are progressing well, and we are gradually implementing additional and deep cooperation in credit reporting scenarios, traffic cooperation, and other business areas. As an example of Our achievements in the second quarter, we assisted a private bank in connecting targeted asset acquisition channels, and we successfully implemented a joint operation project based on the designated traffic channel plus GROAM plus bank model. As part of our deepening cooperation with institutions, we are also exploring expanding services boundaries and exploring multiple new businesses, including car loan matching services. We are also continuously advancing the channel docking and implementation to help attract borrowers for small and macro business owners. Each of these developments is part of our commitment to provide comprehensive and multi-level technical services to our partners. We are continuously striving for high-quality, synchronous development with institutions through these and other various deep cooperation models.
spk15: At the same time, we are also investing more in the core and end areas. Based on the optimization of original channels, We have added the collaboration with several top traffic platforms. Through the exploration of different types of expansion methods, we have created new customer scenarios to meet the needs of the borrowers for diversification. At the same time, we have adjusted the customer identification strategy to support a comprehensive network of marketing systems, and realized the supplementation of existing customers. The number of new borrowers in this quarter has reached 680,000 in total, which has increased by 32.9% and has contributed to the company's future development. As the number of new borrowers and the constant increase in the number of customers, we also pay close attention to the efficiency of the transfer of customers. By meticulous operation and product delivery, we continue to exert force in terms of user connectivity. In this quarter, our non-borrowing rate is stable at 67.1% level in the future.
spk13: We also increased our investment in borrower acquisition. In addition to optimizing on existing channels, we have established partnerships with several top-tier platforms. This occurred as we continued exploring different types of touchpoints innovating borrower acquisition scenarios and meeting the diverse needs of borrowers. At the same time, we adjusted our borrower identification strategy and enhanced it with a comprehensive marketing system leading to a broader borrower base. With these measures in place, the number of new borrowers this quarter reached 680,000, reflecting a 32.9% year-over-year growth and injecting strong momentum into our future development. As our new borrower acquisition figures and capabilities continue to strengthen, we have placed a strong emphasis on conversion efficiency. Through targeted operations and continuous product iteration, we have consistently improved user retention. This quarter, our repeat borrowing rate remained stable at 67.1%. Looking ahead, our focus will be on optimizing the balance between new and existing borrowers. while fully leveraging the lifetime value of our user base, which will be central to our long-term strategic objectives.
spk15: The risk level is always the focus of our strategic attention and business operations. At the end of the second quarter, the expectation of 61 to 91 days remains at the level of 0.67%. The trend of asset quality improvement is obvious. At the same time, we also continue to carry out consumer protection work to ensure the systematization and precision operation of work. In the first half of the year, more than 1.59 million people have been identified and effectively interrupted by fraud. Among them, 16,000 people have been successfully identified and intercepted by malicious attackers. We use technology innovation to build a safe and protective factory for consumer protection.
spk13: Risk management is always a key focus in our strategic planning and business operations. By the end of the second quarter, our 61 to 90 days delinquency rate remained at 0.67%, demonstrating a clear improvement in asset quality. We also continue to work on consumer rights protection. implementing systematized and refined consumer rights protection operations. In the first half of this year, we identified and effectively blocked fraudulent borrowers over 1.59 million times. In all, 160,000 malicious attackers were successfully identified and intercepted. We have leveraged technological innovation to build a strong protective shield for safeguarding consumer rights.
spk15: International business has always been the focus of the company's future development. It has also maintained a healthy and stable growth in the second quarter. In the Indian market, we are highly concerned about the changes in the local demand for new supervision. The local business cooperation partners in India have optimized the business chain. We continue to focus on the improvement of various business technology facilities and explore long-term products. International business remains
spk13: a key focus for the company's future development, and we maintain healthy and stable growth in this area during the second quarter. In the Indonesian market, we are paying close attention to the changes in local regulatory requirements. Meanwhile, our local partner optimized its entire business chain, achieving significant results. In the second quarter, the loan size of our Indonesian partner increased by 25% compared with the previous quarter. Overall performance and business conditions exceeded expectations set at the beginning of the year. And we also recognized that our local partner was in ongoing discussions with five local financial institutions, striving to expand our partnership network. In the Mexican market, we continue to focus on improving various business infrastructures and exploring long-term products. In the Nigerian market, against the backdrop of the stable risk indicators in the second quarter, our business scale furtherly increased compared with the previous quarter. In the market, some local regulations are also being implemented to regulate the listing of financial loan applications. We believe that regulatory norms will help the industry develop in a compliant, healthy, and sustainable direction.
spk15: At the beginning of August, we released the S-G report of Group 2023. The company has achieved a lot of results in the fields such as technology performance, employee care, employee protection, environmental protection, and social engineering. It is worth mentioning that we pay attention to the performance of technology and the support of data elements. These two factors have greatly improved the coverage and accuracy of our general finance. We adhere to the concept of sustainable development and integrate ESG practice into all aspects of cooperative management
spk13: In early August, we released our 2023 ESG report. Our company actively pursues technology empowerment, support for small and macro enterprises, employee care, environmental protection and social welfare. This has brought fruitful results. It is worth mentioning that we also focus on empowering technology and supporting data elements, which have improved the coverage and accuracy of our inclusive finance. While focusing on high quality development in our core businesses, we remain dedicated to promoting social welfare with ongoing efforts in educational support youth mental health care, and volunteer services. Looking ahead, we plan to continue to actively take on social responsibilities and promote the sustainable and high-quality development of the company.
spk15: Based on the overall assessment of the market, I am confident in the growth of the second half of the year and the completion of the year-end goal, and have decided to raise the amount of funding for the third quarter to about $8.5 billion. At the same time, we are also working hard to improve shareholder value and continue to boost the confidence of investors. A while ago, we just announced the specific development plan for the first stock market this year. This time, the plan is to send $0.5 per ADS and send a total amount of about $26.6 million. As the market gradually softens, we look forward to the future to continue to repay investors who care about the development of the company in various ways.
spk13: Based on our overall assessment of the market, we are confident in the company's growth for the second half of the year and in achieving our annual targets. Therefore, we have decided to set the guidance for the loan facilitation volume in the third quarter at approximately RMB 25 billion. Additionally, we are focused on enhancing shareholder value and reinforcing investor confidence. Recently, we announced this specific distribution plan for the first dividend of this year. The dividend distribution plan is USD 0.5 per EDS, and the total amount for the dividend is approximately USD 26.6 million. With the market gradually improving, we look forward to rewarding investors who care about the company's development in various ways, and we strive to share the fruits of our progress with the company and investors.
spk15: With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead. Thank you, Mr. Yan.
spk02: and hello everyone for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yan mentioned, our company remains strong and adaptable, maintaining stable performance despite shifts in the microenvironment. Notably, Our loan facilitation volume reached $24 billion, exceeding our previous guidance of $23 billion. Our net revenue was about $1.48 billion, up 15.5%. The growth of our revenue from loan facilitation services moderated to 2.8%, primarily driven by the service fee optimization within our loan facilitation operations. Moving on to costs. Facilitation and servicing expense was $608.2 million, representing an increase of 70.9% from the same period of 2023, primarily due to the increase of guaranteed costs incurred. Reversal of uncredible receivables, country assets, loans receivable, and others represented a reversal of $3.3 million. compared with an allowance of $13.8 million in the same period of 2023. This was primarily due to the net impact of the current period provision and recovery of certain receivables written off in the prior year. Sales and marketing expense was $486.6 million, representing an increase of 15.7% from the same period of 2023. primarily due to an increase in borrower acquisition expenses. G&E expenses were $65 million, representing an increase of 29.8% from the same period of 2023, primarily driven by an increase in payroll expenses and share-based compensation. R&D expense was $92.8 million, representing an increase of 36.3% from the same period of 2023, primarily due to high employee compensation benefit expenses. Consequently, our net income for the second quarter was $238.3 million, representing a decrease of 27% from $326.3 million in the same period of 2023. Our basic and diluted net income per share were both 1.12 compared with 1.52 in the second quarter of 2023. Basic and diluted net income per ADS were both 4.48 compared with 6.08 in the second quarter of 2023. We are pleased to report that our cash position significantly improved this quarter. As of June 30, 2024, our cash and cash equivalents reached $880.2 million, a substantial increase from $568.2 million at the end of the previous quarter. This growth reflects our continued emphasis on financial discipline and operational optimization. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer your questions. Operator, please proceed.
spk08: Thank you. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
spk06: We will now take the first question.
spk08: From the line of Chen, Q1 from HotSight Securities. Please go ahead.
spk11: Hello, Mr. Guan. Thank you for the opportunity. I have two questions for you. First, considering that our net income has increased by 15.5% in this quarter, but the net income has dropped by 27%. The operating cost and sales costs have also gone up. What changes do you expect to happen in the future? The second question is, the company's second quarter's bond exchange volume is 240 yuan, which is the same as the market share, and it has increased by 9.7%. In the future, do you expect this increase to continue or will there be an increase? Okay, let me do the translation. Here is Yu Xuanchen from Huazhai Securities. The first question is, considering that the net revenue this quarter increased by 15.5% year-over-year, but the net income decreased by 27%, and the operating costs and the sales and marketing expenses also increased, how does the management expect the tech rate and the net margin to change in the future? And the second question is, we noticed that the company's second quarter loan facilitation volume was RMB to 24 billion flat year-over-year and up 6.7 quarter-over-quarter. Do we expect this growth rate to continue in the coming quarters, or is there potential for it to accelerate in the future? At the same time, will the management be confident about the future growth? The same quarter balance of RMB 25 billion seems relatively conservative. Could you please elaborate on the considerations behind this? Thanks.
spk16: Okay.
spk02: Thank you for your question. I'm the CFO of the company, Wang Chenglin. Let me answer the first question about the profit-loss ratio and the trend of the future. Yes, as you just mentioned, there is indeed a similar situation. The revenue of the company in the second quarter of this year has increased by 15.5%, but our profit-loss ratio has dropped. The main reason is the following. First, there is a structural difference in revenue-loss. I am in the guarantee business, and my main revenue-loss ratio The second quarter of this year is very different from the second quarter of last year. As we have said before, the profit margin of guaranteeing business income is much lower than the profit margin of our traffic control service. If we look at the quarter, Q1 of 2023 to Q2 of 2024, the relative ratio of guaranteeing business income has a greater impact on the profit margin. In Q2 of 2024, the relative income of guaranteeing service is 4.24 billion. Thank you, Yuxuan, and I am finally the CFO of the company, and I will answer your first question. Just as what you said, the company's revenue for the second quarter has a year-over-year increase of 15.5%, but the
spk13: net income decline, and the main reasons are as follows. First is because of the structural difference in the revenue, mainly because of the proportion of our guaranteed business. Just like what we said before, the margin of the guaranteed business is much lower than that of loan facilitation services. If we talk about this indicator in the quarter, the guaranteed services related revenue in the second quarter of 2024 was 424 million RMB, which was much higher than the 197 million RMB in the second quarter of 2023. So it lowered the overall margin and net income level in the second quarter. So from the perspective of the company's overall business development strategy, the listed entity will continue to focus on the loan facilitation services and reasonably control the balance of different business segments in the proportion of revenue. And the guarantee business has been steadily declining since the year, and we will see that in the second half of 2024, it will significantly improve the company's future overall margin level.
spk02: And that's the first reason. And the second reason is because we have made
spk13: more strategic investment in the borrower acquisition and also R&D portion. And that's also in the view of the company's relatively healthy profitability and the cash flow situation.
spk02: In terms of getting new customers, our entire QI cost and credit cost are significantly increased. The second quarter of the company's new customers also reached nearly 33%. So the operation of the company will continue to focus on the improvement of the conversion rate and flow rate index of high-quality customers, and to dig into the value of the user's lifetime cycle. This investment can strengthen the growth of the company's performance, which will contribute to the long-term healthy and sustainable development of the company's business. Of course, we will also continue to review to ensure that the efficiency of this cost is improved.
spk13: And so acquiring the new borrowers and retaining high-quality existing borrowers, so the borrower acquisition cost and the credit cost in the second quarter increased significantly. And the company's proportion of new borrowers in the second quarter reached about 33%. So in the future, we will also focus on this. sustainable and healthy growth of our business. And our investment in those areas will prove that, will help our business to grow in this way.
spk02: In the second quarter, the cost of R&D is 36% higher than the growth rate. In terms of the business landscape of AI technology, So our R&D expenses in the second quarter increased by more than 36% year-over-year. And our investment in the AI technologies and also the application of several business scenarios
spk13: is good for the long-term development of our company's business. So just as Mr. Yen just mentioned that we set our third quarter guidance at 25 billion RMB and the company focuses on high quality growth and stable price and continuous optimization of capital costs and further improvement of asset quality. which can support our take rate to remain at the current level, and we also have the room to improve in the future.
spk02: At the same time, with the further optimization of the revenue structure, the development results of the strategic investment in customer research and development, the company has improved our profitability for the second half of the year.
spk13: At the same time, with the continuous optimization of revenue structure and the result of strategic investment in borrower acquisition and also R&D, the company is confident that the profit margin will increase in the second half of the year. OK, so the second question will turn over to Ms. Xu Yifang.
spk05: Let's talk about the three-segment performance target. First of all, there are two levels of our three-segment target. The first level is the overall risk indicator, hoping for an improvement. And under this target, to continue to promote performance, we can increase it to 25 billion. This is Xu Yifeng and thank you for your question and I will talk with you about our guidance. So first of all, we set a goal for further reducing risk and continuing to grow to
spk13: about 25 billion RMB in the third quarter of this year as our third quarter guidance. And actually this guidance is a certain challenge for us, but our team is confident about that.
spk05: Secondly, the guidance is a direction and goal
spk13: set by the company's management based on a comprehensive consideration of the overall economic environment, borrowers' needs, market competition, and also our own strategic position.
spk05: In terms of finance, it benefits our overall economic development. Although the demand for modern products, we see that especially when it comes to Q3, the growth is quite abundant. Especially when we look at the number of modern physical customers, it has also shown an obvious rise in recent years. But as an industry, We also need to balance the health and sustainability of the needs of the technology providers. Therefore, at this stage, we need to further enhance the risk management part of the review and management of the new applications.
spk13: And as Mr. Yen just remarked before that we are still cautiously optimistic about the overall economic environment. And as you know, the financial serves as the economic development and the borrowers' demand for the credit products has been strong in the third quarter. We have been We have seen that the number of the multi-application borrowers has been rising recently, but as a credit service provider, we need to balance the health and sustainability behind the demand and strengthen the approval process and the management work upon the applications during the risk management.
spk05: From the perspective of the competitive market, there has been a steady change in the dynamics. The participants in the industry, especially those who work with us, are considering how to balance the market's long-term development and ensure its long-term health, and make such a balance and choice between scale and risk indicators.
spk13: In the competition landscape of the loan facilitation market, it is stable, but also with dynamic changes. And we can see that the industry participants, including our licensed financial institution partners, are more prudently considering how to make the consumer credit market develop healthy in the long term, and also to balance and choosing between the skill and risk indicator management. And I can tell you that our peers and us will not rush into to achieve rapid expansion in the short term.
spk05: The first question you asked is whether the development will be further accelerated or will remain the same as it is now. Our policy is to maintain a steady growth rate and ensure long-term management of such a guidance policy. Specifically, whether there will be significant changes in the rate of development in the future depends on the development of the entire market.
spk13: And so in general, our business strategy will continue to maintain a stable and slightly rising long-term business guideline. And in specific, to answer a question if the guidance or our group speed will speed up in the future, I think we need to also observe the overall environment in the future as well. So that will be my answer about your question about our third quarter guidance. That's all.
spk08: Thank you. We will now take the next question. From the line of Hua Rong from GNU Assets, please go ahead.
spk07: Hello, Manager Cheng.
spk04: I'm Huarong, an analyst from Capital Management. I have two questions for you, Manager Cheng. The first one is that we saw that the negative interest rate in this quarter dropped from 70.1% in the same period last year to 67.1%, and the sales and marketing costs increased by 15.7%. But the loan amount and customer year are declining. Does this reflect the current market environment? Does the company have certain challenges in customer efficiency and customer maintenance? In the face of these situations, has the management level taken more targeted measures to consolidate old customers and attract new customers, and optimize the investment strategy to reduce ineffective marketing expenses? Hello, management. I have two questions. The first one is the repeat borrowing rate this quarter dropped from 70.1% last year to 67.1% while sales and management expense grew by 15.7% year-over-year. But the average borrowing amount per borrowing and customer thickness have declined Does this indicate challenges in borrowing acquisition efficiency and retention under current market conditions? What targeted strategies has management implanted to retain existing borrowers, attract new ones, and optimize marketing spend to reduce ineffective advertising? And my second question is, at the end of this quarter, the company's cash and the cash equivalent position reached about 880 million RMB, a significant increase compared to the previous quarter. How did the company achieve cash flow growth under the current macroeconomic pressure? What are the main factors for the growth? What plans does the company have for the youth for the cash flow in the next few quarters? Thank you.
spk05: Hello, Ms. Huang. I'm Xu Yifang. The first question you asked is about the contradiction between the return rate and the increase in sales costs. Let's talk about it. I can feel that you are very concerned about the future of the company and the changes in our key indicators. This question is also very sharp. However, the changes in these indicators are actually more in line with our overall business ideas and decision-making results this year and the first half of this year.
spk13: Mr. Hua, hello, and I'm . I will answer about your first question generally about the repeat borrowing rate and also the of our borrowing amount per borrowing. And I can also see that you are really focusing upon our business and you are very familiar with our key business indicators. And just as what you said, these indicators are in line with the overall business thinking and also are the results of our decision-making execution.
spk05: These two indicators, the drop in the return rate and the increase in the cost of delivery, actually show that we have increased the purchasing power of the entire new customer in this quarter. In addition, at the same time, we have lowered the trust rate of each user.
spk13: So in summary, these two indicators reflect that we have increased the efforts to acquire new borrowers while reducing the credit limit for each borrower.
spk05: From the point of view of sustainability, after the market correction of Q2 in the beginning of the year, the risk index, especially the trade-off index, in fact, in the whole industry, especially we ourselves have seen an improvement in the whole market. So, the overall judgment of the economy in the first form is also very strong and positive for the next 24 years. And on the one hand, after this so-called silent period of the market at the beginning of this year,
spk13: And so in the second quarter, we can see that the risks, especially the post-loan indicators, have been optimized across the industry. And the overall economic situation is also full of expectations for the whole year of 2024. And the borrowers' credit demand is also very strong. So from the perspective of borrower acquisition, it is a good time and that's also why we invest more on the new borrower acquisition. So to clarify that, can you repeat that?
spk05: Okay, thank you. So to clarify that, the increase on our S&M expenses
spk13: is 15.7% year-over-year. And if you talk about the chance in the number of our new borrowers, it will be 32.9%.
spk05: In terms of Q2, we have increased our new customer base. On the other hand, we have increased our new customer base So on the other hand, from the perspective of average per borrowing or per borrower credit perspective, we have
spk13: made more complex structural adjustment and set differentiated business goals for different borrower groups. So the final result is a decrease in the amount of borrowing amount.
spk05: Next, we hope that this year, from the scale of the exchange, we can have a steady growth and guarantee the entire business profit. At the same time, we want to expand the customer scale on a larger scale, so that we can make a more flexible response in the next stage of the market.
spk13: So overall, we hope to maintain the scale of facilitation volume to be stable and maybe some increase in this year. And also we want to ensure our operating profits and also to expand the borrower base and enable us to be more flexibly meet the next stage of market changes. So I will turn over to Mr. Fan for your second question.
spk02: Thank you, Mr. Fan. The second question is about our cash flow. Our cash flow has been continuously improved. We have a cash balance of 8.8 billion yuan at the end of the second quarter. It has increased by more than 300 million yuan in the first quarter, mainly due to two aspects. Okay. Thank you, Hua.
spk13: So the company's cash flow continued to improve, increasing by about 312 million RMB at the end of the second quarter compared with the end of the first quarter, mainly due to two reasons. The first will be the company's profitability and operating cash flow performed very well, especially as the company's performance group switched from the ultra-high speed growth before 2023 to the high-quality growth model. The company's accounts receivable balance growth slowed down and the recovery was very good, which made the company's net operating cash inflow and current profits show a stronger linear relationship.
spk02: The second reason is that our business model optimized the release of funds. And the second is because the funds released by business model optimization with the strategic reduction of guarantee business and the continuous optimization of related commercial terms
spk13: the company's funds occupied by the security deposit have been continuously released.
spk02: So in the next quarter,
spk13: Our company's cash flow situation will be continuously optimized, laying a solid foundation for the long-term sustainable development of the company's business, including the development of overseas businesses.
spk02: At the same time, the company will continue to implement the policy of financing and stock return in accordance with the policy. On August 16, the board of directors So at the same time, if our policy permits, the company will continue to implement the currently existing dividend policy
spk13: and share repurchase plan to continuously report our shareholders. Just as Mr. Yen remarks before, on August 16th, our board permits the dividend, the current, the very first cash dividend of this year, which is 0.5 US dollars per ADS. And the ADIS holders can expect to receive the dividends on the 6th of September. So that will be my answer for your second question. Thank you.
spk08: Thank you. I would now like to turn the conference back to Shawn Tsang for closing remarks.
spk13: 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.
spk08: This concludes today's conference call. Thank you for participating. You may now disconnect.
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