LexinFintech Holdings Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Lexin FinTech first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your first speaker today, Ms. Jamie Wang, IR Manager. Thank you. Please go ahead.

Thank you, Operator. Hello, everyone. Welcome to Lushin's first quarter 2022 earnings call. With us on the line today are our CEO, Jay Hsiao, CFO, Sunny Sun, and CRO, Jayden Chow. Before we get started, I'd like to remind you that the call and presentation containing business outlook and forward-looking statement, which are based on assumption as of today. The actual results might differ materially and we undertake no obligation to update any forward-looking statement. Jay will first provide an update on our performance, Jayden will then discuss risk management. And lastly, Sunny will then cover the financial results in more detail. I'll now turn the call over to Jay. His remark will be in Chinese, and English translation will follow. Jay, please.

Good morning, everyone. The first quarter of this year is full of uncertainty and various challenges. The uncertainty in the external environment is expressed in Shenzhen, Shanghai, Beijing, and other core cities. Good morning, everyone. 1Q22 was a quarter full of uncertainty and challenges.

In China, a number of major cities like Shenzhen, Shanghai, and Beijing have had to deal with the resurgence of COVID. The unpredictability of the pandemic has dented consumer confidence and led to a slowdown in the economy. Beyond China, the external environment is also highly volatile, with high inflation in the U.S., a federal reserve that is committed to further rate hike, the squeeze in liquidity, volatility in the Sino-U.S. relations, and the conflict between Russia and Ukraine. These factors combined have been clouding the performance of capital markets. They have also caused more uncertainty to our company and the whole sector. It's difficult to predict how these factors will develop in the next few quarters and how they will affect our operations and the execution of our strategy. From COVID alone, the impact to the society and economy has surpassed that of 2020.

We have been actively analyzing and summarizing the changes in consumer behavior and capital markets' demands on listed companies. We have always been proactively analyzing the situation.

how consumer behavior will change and how the change in capital markets will affect listed companies. Given the economy, pursuing scale at all costs will expose the company to more risk. We will work on the following instead. First, proactively responding to external change and adjusting operation and strategy to ensure asset quality. Second, further solidifying our foundation, increasing the operational efficiency. staying committed to our strategy in order to improve the diversification and quality of revenue.

Lexin's management team has the confidence and determination to respond to challenges and set a solid foundation for Lexin's long-term sustainable development. In the past few years, Lexin has experienced many major policy changes and adjustments in the industry. Since its establishment, the company has accumulated a total of 70.2 billion in loans and registered users of more than 1.71 billion. This is also a reflection of our comprehensive ability.

The management are committed and confident that we can handle the challenge and continue to build up a solid foundation to achieve long-term sustainable development. We have successfully navigated multiple policy changes in the past few years. Since our inception, we have facilitated over RMB $702 billion of loans and amassed a user base over $171 million. These are testament to our capability.

The company achieved an additional loan of 4.32 billion RMB in the first quarter 8.38 billion in loan amount Frankly speaking, the management team is not satisfied with the performance in the first quarter We are fully capable and can do better But on the other hand, we are also satisfied Because we have taken a positive response and adjustment in the management strategy 1. Increase the risk of running the company Increase the risk of running the company to lower the number of customers and lower the service weight of long-term customers effectively control the increase in risk and prevent the deterioration of asset quality due to the epidemic. During the epidemic, the assets of the company in the first quarter of 2022, the various risk indicators and profit conditions are better than in 2020. Second, the company has steadily opened up its capital channels. The number of capital sources in the first quarter of the country has reached 76% in the proportion of capital sources in the first quarter. By the end of 2021, The policy has led to a gradual reduction in the problem of capital misappropriation. The company is in the financial technology, technology retail, and other new business segments. Make reasonable resource investment. Strictly promote the company's income. Multidirectional, risk-dividing, multidirectional strategic goals. In the first quarter, the company came from a risk-free income ratio of 47.7% to a growth of 10.1% in the same ratio. At the regulatory level, the company's APR will work steadily to advance. The APR of the first quarter is 25%, of which 24% of the capital ratio has reached 77.8%. As a leading financial technology platform enterprise in the industry, Lexin is actively responding to the policy calls to provide credit support to small and medium-sized enterprises affected by the epidemic and individual industrial and commercial companies. Since the first quarter, Lexin has already provided loans to small and medium-sized enterprises for about 42.4 billion yuan, which has increased by 9.5%.

In the first quarter, the loan origination volume reached RMB $43.2 billion and the outstanding loan balance RMB $83.8 billion. To be honest, we're not pleased with the quarterly results. We have the potential to do more, but on the other hand, it should not be a disappointment because we had already done our best in responding to change and adjusting the operations. First, We further manage risk and control the impact from COVID by focusing on serving existing low-risk users and reducing the high-risk tail. Comparing the 1Q 2022 to 1Q 2020, all risk and profitability indicators were better this time around. Second, we have been broadening the founding channels. Nationwide partners already made up 76% of the total funding in the first quarter, The mismatch in asset and liability due to the original policy restriction that we experienced from the end of 2021 is now being addressed. Third, we continue to invest in new growth opportunities, including the technology-driven and new consumption-driven businesses. It's our strategic goal to further promote the revenue diversification and our risk management capability. In the first quarter, non-credit-driven services made up 47.7% of total revenue. up by 10 percentage point year-over-year. Fourth, in compliance, we have been making further progress in bringing down the APR. In the first quarter, the APR went down to 25%. The mix of assets within 24 reached already 77.8%. Lastly, as a leading fintech platform, Lushin is fully aligned with regulatory priorities. We have been providing credit support to SMEs and sole proprietors. facilitating the resumption of their operations. In the first quarter, loans to small and micro businesses amounted to RMB 4.24 billion, up 9.5% quarter over quarter.

This is what I introduced to you in the beginning of the year. The company will focus on three key projects. First, to modernize operations and increase the mining value of existing customers. Second, to improve the company's profit and loss ability. Third, to adjust the income structure. Fourth, to improve the income structure. 3. The management system of the company continues to optimize and reach a continuous downward trend. In a situation where the business environment is extremely uncertain, there is a greater challenge to achieve the company's annual GMV growth of 10%. But under the principle of regulation, risk control, and growth, we will continue to work hard to achieve this goal. As I explained earlier this year, we are committed to three strategic priorities. First, strengthening the management of existing customers so as to increase the profitability while ensuring risk performance.

Enhancing the revenue structure to promote more diversification and service nature as a platform provider. Third, optimizing the management system to further increase operational efficiency. Given the uncertainty of the macro and operational environment, it's challenging to achieve loan growth of 10% this year, though we do expect 2Q loan origination volume to be higher than this quarter. We will bring our best, but business structure and risk performance matters more than scale. We will also work towards the 24% policy goal and keeping full year take rate at similar level to this quarter, the first quarter 2022, while trying our best to aim for three. 外部环境的变化及疫情的反复在未来一段时间仍将面临不确定性。

In this environment, there is a crisis and an opportunity. Companies will take positive measures to deal with these changes, and will work hard to achieve the goals of the year. We have also noticed that the state's stable economy has released some positive signals recently, which have stimulated the growth of the credit line and increased market liquidity, which will be good for the industry. Recently, the central bank announced that the Internet financial risk management work industry policy and development will gradually move towards maturity. In summary, the external environment and COVID situation remain highly fluid.

There will be both difficulties as well as opportunities. We have been implementing mitigating measures and will continue to work towards our target. On the policy front, the authorities have been sending signals to support the economy, driving credit demand, and promoting market liquidity. Moreover, the PBOC has also made positive comment on the industry ratification for internet finance. The policy regime and development of the sector is getting more mature. These are all steps in the right direction. In the second half of the year, we believe that the domestic economy will gradually turn around in the presence of stimulus policies, and we are confident that we can ride out this cycle and continue to create more value for our shareholders. Now we'll pass it to Jayden, and he will discuss about our risk management. Jayden, please.

Thank you, Jay. Thank you, Jamie. Good morning, everyone. Let me elaborate more on what we're doing in response to COVID. We have tightened the entire user acquisition process from advertising credit areas most hit by COVID marketing spending has been reduced, and selection criteria revisited in order to manage exposure to high-risk users. We are dedicating more resources to existing relationships where the visibility on credit performance is much higher. Overall, day one delinquency has been going down every month this year. Since the second half of last year, in response to the 24% loan pricing, we have already taken mitigating actions to reduce exposure to high-risk users. The customer structure is therefore much stronger than a year ago. This has strengthened our defense against the surge in COVID in this wave. With the improvement in customer mix, day one delinquencies also better and is now 12% lower from the end of December last year. 30-day collection rate, on the other hand, recorded a modest decline in March and April. But we are seeing signs of stabilization in Maine. Back two years ago, when the pandemic first started in Wuhan, Most of the collection team was located in the city, and the operation suffered a major interruption. After the incident, we have decentralized the presence, upgraded the system, and revisited the credit policy to make sure that we can respond more swiftly. We're therefore in a significantly better position to cope with the situation this time. The increase in 90-plus degrees was within expectations, given the macro environment and the reduction in outstanding loan balance. The extent of increase is a better indicator for our ability in managing asset quality. And relative to some of the bigger players, we have been able to show more resilience. What China is going through is unprecedented. The visibility on the path to recovery is not the best, but we are constantly refining our strategies to enhance the risk models and analytics. The risk management team is also working more closely with marketing and business development teams to budget customer acquisition as well. In short, we're much better prepared than two years ago. Thank you. I will now pass it over to Sunny.

Thank you, Jayden. Thank you, Jay. Hello, everyone. It's my pleasure to speak to you again. The management team are dialing in from different locations today. With widespread lockdown measures to contain the pandemic, economic activities have faced different degrees of interruptions or even complete shutdowns. In the first quarter, we made a decision to step up the provision so we can have a stronger buffer to weather the turbulence. Most of the increase was reflected in day one provision for new loan origination. This is the main reason behind the drop in revenue. Just to recap, most of the provision for our contract is recognized as deduction to revenue. Further decline in loan pricing is another factor. Loans priced within 24% APR reached 78% of loan origination in the first quarter, up by 40.5% year over year and 18.5% quarter over quarter. Volume did hold up well given the current environment. Loan originations reached 43.2 billion RMB down only by less than 1% quarter over quarter. The outstanding loan balance stood at 83.8 billion RMB, just a slight drop of 2.5% quarter over quarter. Consumer sentiment has become much more subdued, and most of all, we have also tightened credit assessment. On the funding side, About 76% of the funding in the first quarter came from nationwide funding partners, up by more than 10% from the fourth quarter. Funding costs began to climb at the end of last year when regional financial institutions pulled back from cross-border lending. This shock led to a mismatch between assets and liabilities, which has since been gradually resolved. The offline Puhui team has been effective in meeting the needs of our regional partners. At the headquarter level, we have also got more nationwide relationships. The uptrend in funding costs has since reversed. With now a dedicated sales team, we expect to bring on board more national partners. The top line performance is always subject to external volatility, from regulatory to macro to COVID. This is the nature of the credit business. We are proud to see how quickly Le Xin is able to adapt to new changes and how teams from across the company can quickly adjust our operations and support each other. Now let me go through the expenses. Sales and marketing expenses rose 4% year over year to 360 million RMB, a seasonal trend as we laid out the full year foundation in first quarter. For the loan facilitation business, we did adjust the acquisition strategy and scale back advertising in areas affected mostly by COVID. This was done in March. There was also spending related to the expansion of technology-driven services and the new consumption-driven services. Research and development rose 23% to 153 million RMB, reflecting our continuous investment in technology to support business initiatives. G&A expenses went down by 11% year-over-year to 170 million RMB. It was a drop both year to year and quarter over quarter, demonstrating the continuous improvement of our operational efficiency. Net profit did decline and went down to 81 million RMB in the first quarter. But the business remained profitable. Our cash reserve also remains solid. Cash position stood at 5.6 billion RMB at the end of March, 9% above last year. The increase in shareholders' equity was 30% in the same period to 8.2 billion RMB. In these challenging times, we remain focused on building our long-term capabilities in order to stay compliant and resilient. On the regulatory front, we maintain constant dialogue with regulators. We have been reinforcing internal control and processes and carrying out self-examinations based on the same requirement as the 13 platforms. The priority is to ensure the stability of the credit-driven business while broadening the reach into technology-driven and new consumption-driven services. The contribution from non-credit driven services increased by 10% year over year to 47.7% of total operating revenue in the first quarter, demonstrating the progress in diversification. We have already built up a large base of individual users and insights into Chinese consumers, which we can leverage to generate more 2B and 2F opportunities. And our relationships with 2B and 2F can also serve to further enhance our interactions with 2C. The current environment is not easy. The past quarter saw a sharp rise in COVID numbers in a few regions and the government instituting lockdown and other restrictive measures, some of which are much more stringent than the previous outbreaks. This is not the first time that Le Xin has to come from uncertainty. The business fundamentals are more solid than two years ago when COVID first started. We are at a stronger position to respond to change. The recovery path will not be a straight line, but we believe both China and Le Xin will come out of it stronger. Thank you.

Operator, we're now open to taking some questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you need to cancel your request, please press the pound or hash key. Once again, that's star 1 to ask a question. Our first question will come from Alex Yee at UBS. Please go ahead.

Good morning. Thank you for answering my question. The first question is about the tech rate. You just mentioned that we will try to reach a level of only 3% in the first quarter of this year. I would like to ask if you can give us more details about the trend of going forward and how to look at it, including how to influence the trend of the next quarter, including how to influence the trend of the next quarter, including how to influence the trend of the next quarter, Especially if we have seen a good trend in the stock market in May, should we expect a sequential improvement? But why do we expect to maintain the level of QE? My first question is on the outlook for tech rate. Just now Benjamin mentioned the company will try to maintain your tech rate for a full year around the Q1 level of around 3%, so I'm wondering if you could give us more color on how both the equity and your pricing cut will have different impacts in the coming quarters. In particular, if we assume your equity is sequentially improving from May, Shouldn't we expect Eurotech Way to also improve sequentially? Second question is on your capital-like percentage contribution in terms of loan volume. Could you give us some color on the current percentage in Q1 and the plan ahead? Thank you.

I'll speak in Chinese first. Thank you very much for your question. If I understand correctly, the first question is about the take rate. Jayden and I have mentioned that overall, due to the pandemic, there has been a lot of uncertainty in terms of the economic situation and the status quo throughout the year. In the first quarter, our take rate is now around 2.7%. So we still hope to achieve 3% this year. Of course, there are certain challenges and difficulties. The reason why we still have a lot of confidence, and we are willing to work hard for this reason, there are several reasons. One is the cost of the loan. Although when we were in Q4, including Q1, there was a slight increase, but now So we think that the cost of loans will be relatively stable. So from the perspective of risk, as I said earlier, although there is a slight improvement in 30 plus and 90 plus, but at present, if the epidemic does not intensify, we have already seen the risk of the pandemic. So we still have confidence in the overall trend of risk. Of course, this is based on the premise that the overall economic environment is no longer deteriorating. In addition, Jay also mentioned that our current business focus is on our storage customers. So we are focusing on I'll be sure I'll take time and I'll see you see the time and I'll say the same way you're going to want to tell me you need it. We need to have a lot of time and I'll send some time and I'll tell you that I'll be good. They come in the same thing. So you know what we're going to make some sense. I don't think I'm going to tell you what I'm going to tell you. I'll tell you what I'm going to tell you. I'll tell you what I'm going to tell you. I'll tell you what I'm going to tell you. to maintain such a level in the first quarter. This is the first question, right? The second question, I understand, is in terms of the share price of loans. In terms of the share price of loans, the share price of loans has decreased a little bit compared to last year's Q4. in terms of risk reduction, in terms of a stable business model. So the share price is now a little bit down. We think it will gradually stabilize in the following Q2 and Q3. But we did not deliberately pursue the share price to be at a certain level. Most of the time, our share price is at 25% or 30%. I don't know if I've answered your question. I'll repeat it.

It's about the real estate market. I don't think this is the focus of our next work. We're looking for a better balance of income and profit. I've answered the question in Chinese. If you need it, I can answer it in English.

So the first question regarding the take rate, I understand the question is about how we can maintain the take rate at the Q1 level, which is currently at 2.7%, and why we are trying our best and strive to maintain the 3% take rate for the full year. To start with, as Jay and Jayden and myself outlined earlier, obviously there are a lot of uncertainties associated with the microenvironment. And if the COVID situation is not getting worse in China, we believe that we'll be able to, first of all, maintain a stable funding cost. In Q4 and Q3 this year, our funding cost went up a little bit to above 8%, but we have seen a very clear trend that it has been stabilized in Q4, and we believe that the funding cost will be stabilizing and will be maintained at between 7.5% to 8% this year. Secondly, I think in terms of the risk cost and the level of risk, Jay and Jayden have also outlined. First of all, we will be focusing on managing the existing customers. We have a lot of data about them, we understand their behavior, and we also have clearer We also have digitalized segmentation and analysis regarding these existing customers. Therefore, we feel that we'll be able to manage the risk in a more controllable manner going forward. And thirdly, I think in terms of the overall business performance, Jay has outlined earlier The second quarter, our loan scale is expected to be slightly higher than Q1, and our revenue will continue to be stabilized. So therefore, we feel that with all the efforts and the measures that were taken to contain the risk and also to contain the funding cost, the take rate should be able to be maintained at the Q1 level. And of course, we will do our very best to strive for the 3%. Okay, the second question is regarding the profit-sharing model. We have not deliberately maintained a percentage or a fixed percentage of the profit-sharing model, because for us, as we have repeatedly emphasized, focusing on controlling risk, focusing on profitability is our priority. Therefore, the profit-sharing model is a natural result of us taking such measures. But traditionally, I mean historically, our profit-sharing model has been maintained at between 25% to 30% or so within our overall long origination.

Okay, thank you very much.

Once again, if you'd like to ask a question, please press star 1 on your telephone. Our next question will come from at Morgan Stanley. Please go ahead.

So my first question is about the four-year non-growth, any change of the plan given the current situation and and any target, new targets. And second question is about from the risk perspective. I want to know if there's any color on the early indicators such as day one, et cetera, management can share with us any quantitative metrics on that from by the end of last year, by the end of first quarter, and the latest trends we can get a color on. Thank you.

The first question I will answer is that we haven't made any changes to the previous year's goals. So I'll answer the first question. As for loan volume, we have not yet changed our guidance for the full year 2021 despite challenges, but we actively believe that the economy will get better and we're still targeting and aiming for the 2022 guidance that we gave.

Now, Jayden.

Okay, let me answer the second question. Let me start with two dimensions. One is the new asset and the amount of assets. The new asset, as I mentioned just now, since Q4 last year, we have been making a series of improvements and policy adjustments. So, we have been looking for risk indicators in the first quarter, especially the FPD30, which is more stable. The FPD30 in January has been improved significantly. is 0.63%. Compared to Q4, it has decreased by 15%. But from the perspective of February and March, due to the impact of the post-pandemic pandemic and the economic downturn, there is a bit of an uptrend. But the obvious trend is that our new customers are superior to old customers. This is due to the impact on the annual index. From the stock assets, we can also see that our 90 plus and 30 plus compared to Q4, there is a certain rise. There are also several reasons for the impact. In fact, early on, there was a certain time for high-risk users to be released. The second part is that the inflation of the Hongwan economy has had a certain impact on our employment and consumption. In addition to the recurrence of the epidemic, especially in cities such as Shanghai, the impact on the economy under different anti-corruption policies is still relatively obvious. So from this point of view, we can see that 30 plus 9 plus has a certain rise. For new issue loans, thanks to the strategies introduced in fourth quarter last year for the 24 pricing policy, early day risk indicators, such as FPD30, trended better quarter over quarter. FPD30 stood at 0.63%, down by 15% compared with fourth quarter last year. While for recent one or two months, since we still face some impact from COVID, we see a little bit of uptick from the trend. But the new customers' quality are better than existing ones. Overall asset quality, 90-day plus increase and 30-day plus increase increased from Q4 last year. However, overall day one increase has been going down every month this year and is now 12% lower from the end of December last year. 30-day collection rate, on the other hand, recorded a modest decline in March and April but we are seeing signs of stabilization and better trends in May. Some of the pressures include the further drop in low pricing, financial institutions continue to step away from high-risk users, and also a slowdown in macroeconomy has impacted employment and consumption. Together with the COVID lockdown and restrictions, we also see some different degrees of impact to our portfolio. But going forward, we believe the risk performance will stabilize in the second quarter this year and continue to improve through the rest of the year.

Thank you. Thank you, management.

Once again, if you'd like to ask a question, please press star 1 on your telephone. We have no further questions, but just a final call, please press dial 1 on your telephone. Our next question will come from Ethan Wang at CLSA. Please go ahead.

Thank you. I have two questions. The first one is about asset quality. I have a follow-up question. Because we know that Lexin has always been a reputation customer. The repeat loan rate for old customers is relatively high. But we also heard from Jayden that under the current environment, we will be able to improve some of the loan rates. This risk control, so for new customers, their quality may be better. So I would like to ask the management to help us to confirm that now the key to the positive treatment aspect is that there will be a change in the customer group, or in this environment now, to adopt a strategy that can be said to be defensive, to find some better customers in these existing customer groups. This is the first question. The second question is about our buy-in business, the pre-buy and post-buy business. Because we know that a large part of Leqin's pre-buy and post-buy business is offline. Looking at the environment today, it may have a greater impact. So, please, Mr. Guan, please help us introduce the future. Will there be any adjustment to this business? For example, will there be more online cooperation? Thank you. I have two questions. The first one is to follow up on the asset quality to understand that for those in the palliative customers, the petition bond rate has always been quite high on their current environment. And Jayden has also mentioned that we have tightened some lending standards. So for the newer borrowers, they may be better in terms of asset quality. performance. So just wondering, going forward for nursing, is there any strategic change in our lending standard? Are we looking at our existing borrowers and pick out the better ones, or are we changing our customer profile to lend more, to lend to older borrowers with a different occupation? So that's the first question. And secondly, it's on the Maya business or buy now, pay later business. So we understand for leasing, a larger part of that is for the offline. But with the COVID situation here in China, will there be any change in the strategy going forward? For example, maybe we'll do more online business. Thank you.

Okay. I'll answer the first question. Regarding the asset quality of the entire new user, I think there may be a little misunderstanding just now. It's not that our old customers have high risk and new customers have low risk. From the whole data we took, the risk of our new customers must be higher than that of old customers. So what I just meant is that the risk of our new customers may be a little more stable, and the asset quality of the old customers may be a little worse. That's what I meant just now. So from our point of view, The risk of a new customer is usually higher than that of an old customer, because as the new customer has more current risk, its asset quality will gradually stabilize and fall. I want to say this. In fact, this year, in terms of our entire business strategy, I think we will focus more on the old customer's business. And we can see that in fact, Lexin's entire asset and industry, in fact, compared will not say that our asset quality will not be good or what. In fact, in the first quarter, we can see that our entire risk, the entire rise rate is actually relatively more controllable. And we just talked about it. We are in the second quarter. Okay, so I'll translate the first question first. As of the first question about the asset quality for our current customers or our old customers,

Not that we did not to meant that old customers or our current assets are bad and the new ones are better. Statistically speaking, the new customers are actually varies with higher risk and the old customers, our current more assets are actually more stable. And our new customers actually gets lower on their APR and their stability as we have more performance of them as we have more evaluations of them. And our current target is focusing on managing our current asset, exploring their potential. As for our asset quality on our assets overall, it's not comparatively, it is getting a little bit higher if compared to ourselves, but not as, it is still stable comparatively industry-wide. And as we mentioned earlier, we are still seeing signs of this quarter being, second quarter being stabilized, and we do expect the quality, asset quality trend to get even better if the economy recovers from the COVID and also the macroeconomies gets better.

Okay. Let me answer the second question. In the past, we used to market in Shenzhen, and now we also market in Shenzhen. We mainly market in Shenzhen and brand sales, as well as the entire service of commercial real estate. In the first quarter of this year, we have already launched the App for Buying and Selling. The App for Buying and Selling can help offline brands to start using the whole operation and management online. So I think in this area, the progress is actually quite smooth. We can see that after the App for Buying and Selling is online, it can help offline businesses to achieve transactions. We are now in the part of the commercial market. The data we have seen so far can reach more than 1,000 daily sales. So I think this result is still satisfactory. Another point is to buy online. We will record more platforms. I think we have plans in the future. We are in the middle of expansion. I think in the first quarter, we were also affected by the epidemic, especially in Shenzhen. In the first quarter of this year, there was an epidemic in Shenzhen, which caused many offline stores to close. So its short-term performance was also affected. So in the long term, we are still relatively confident in the development of the business in China. Okay, so I'll do the translation for the second one. As for the Maya business, our offline team was currently on trial run in our main city, Shenzhen, where our headquarter was.

It used to collaborate with brands and as well as real estate offline. But our app actually went online in the first quarter, helping offline brands to go online and manage, helping them retain their traffic, and it's been going well. The app also helped the offline brands and places to increase their sales volume. We are now seeing in the first quarter over 1,000 tickets per day. And we are actually exploring more online platforms, connecting with more online platforms into our apps. As for COVID, it did affect our 1Q sales volume, as well as the ticket sizes and ticket numbers, because as you might know, that Shenzhen actually went on lockdown for about a week or so in 1Q, which also had a short impact on our volume in this quarter. But Maya, are able to actually bring more than just buy now, pay later functions and also value to our merchants. It was also capable of bringing our merchants more traffic and more customer retention and more ticket and bigger in ticket size. And I believe this is the future and this is the direction that we're going with that is in trend with the overall economy. I hope that answers your question.

Thank you. Thank you, Jackie.

Thank you. We have no further questions, so I will pass back to management for closing remarks. Thank you.

Thanks again, everyone, for joining us today. If you have any more questions, please contact us offline. Our contact information is available on our website. Thank you.

Thank you. This concludes today's conference call. Thank you all for joining. You may now disconnect.