Qfin Holdings, Inc.

I'll walk you through the progress we made in Q3. By the end of the quarter, our AI-powered credit decision engine and asset distribution platform served 167 financial institutions delivering efficient, intelligent digital credit services to over 62 million credit line users on a cumulative basis. To navigate the evolving regulatory environment, we dynamically fine-tuned our risk strategies to maintain a healthy balance between risk and growth. As a result, total loan facilitation and origination volume on our platform reached RMB $83.3 billion in the quarter, broadly in line with Q2. Despite the macro headwinds, we delivered steady financial results. Non-GAAP net income reached RMB $1.51 billion, while non-GAAP EPADS on a fully diluted basis came in at RMB 11.36, reflecting our solid profitability and operating resilience. On the risk front, funding liquidity in the high price segment continued to tighten in Q3, leading to an uptick in overall delinquency risk across the industry. To stay closely aligned with evolving market conditions, we further tightened our credit standards and optimized our customer mix by increasing the proportion of high-quality borrowers. In addition, we proactively refined our risk models and completed 611 iterations, implementing differentiated risk management and distribution strategies. On the collection front, we improved efficiency through smarter resource allocation and deeper technology integration. For example, we allocated more resources to high-performing collection partners to ensure sufficient capacity and better productivity. For customers willing to repay but facing temporary financial difficulties, we offered measured concessions and flexible repayment options. In addition, we were able to assess repayment intent and capacity in real-time through large language model algorithms, enabling more precise segmentation and more agile resource deployment. These efforts helped us maintain steady progress even as the broader industry faced rising collection pressure. Our FPD7, a leading risk indicator for new loans, declined in September versus August. Since October, given the new regulations and heightened industry self-discipline initiatives, we expect risk indicators to remain volatile in the near term. with current levels above historical averages. That said, having navigated multiple industry adjustment cycles in the past with prompt and effective responses, we remain confident that we can once again bring risk levels back within a reasonable range in a timely manner. On the funding front, we have been whitelisted by all of our active financial institution partners. ensuring a smooth and stable cooperation going forward. Despite a relatively tight funding environment driven by liquidity conditions and policy factors, we maintained the industry-leading pricing power and secured ample funding supply at stable costs. Our average funding cost for Q3 held steady from last quarter, remaining at historical lows. In the ABS market, we issued RMB 4.5 billion during the quarter, up 29% year over year, with issuance costs down by another 10 basis points. For the first nine months of 2025, total ABS issuance grew 41% year over year to RMB 18.9 billion, further optimizing our funding structure. Looking ahead, we expect our funding costs to remain largely stable in the coming quarters. For user acquisition, we continued to diversify our channels, enhance targeted operation, and improve efficiency. Compared with last quarter, the number of new credit line users grew by 9% to 1.95 million, while average cost per credit line user declined by 8%. The number of new borrowers also grew 10% sequentially to 1.35 million. We have seamlessly integrated convenient and efficient credit services into diversified channels and scenarios, including short-form videos, e-commerce, mobility, food delivery, and financial services. In Q3, we further expanded our embedded finance network. adding seven new strategic partners and extending our presence across internet and financial institution platforms. As a result, the number of new credit line users from the embedded finance channels increased by 13% sequentially, while loan volume up by 11%. For placement strategy, we remain focused on onboarding high quality users and optimizing our overall user mix. As such, our long-term strategic priority will focus more on our high-quality customers. Supported by AI-driven data models, we expect to gain deeper insights into user needs and behaviors, and further refine products and services. This approach will allow us to deliver a superior user experience and improve both our unit economics and user lifetime value. We believe this focus is critical to strengthening our long-term competitive edge and cementing our leadership position in the industry. In our technology solutions business, we continue to advance our AI plus banking strategy, empowering financial institutions in their digital and intelligent transformation. During the quarter, loan volume supported by this business achieved exponential growth, up by roughly 218% on a sequential basis. Our collaboration with banks continue to deepen, expanding from their proprietary channels to a broader range of internet scenarios, where we provide end-to-end technology support in customer acquisition and risk management. Powered by our Focus Pro credit tech platform, our proprietary solution for SME lending, which is built on a three-tiered credit assessment system, was adopted by several new banking partners and received positive feedback for its industry-leading performance. As part of our AI plus banking initiative, our two proprietary AI agents, the AI credit officer and AI loan officer, entered pilot testing with our first bank client, The engagement rate among the activated user base has reached around 50%, providing initial validation for the AI agent's practical effectiveness in core credit scenarios. Looking ahead, we will focus on strengthening our capabilities in multimodal recognition, voice data collection, lead management, and feedback loops, while expanding pilot programs and further improving user engagement. At the same time, we are seeing growing interest from financial institutions, laying a strong foundation for broader commercial rollout and scaled adoption in the next phase. On October 1st, the new rules officially came into effect. As a leading player in the industry, we have always held ourselves to the highest compliance standards, with no exception this time. Working closely with our financial institution partners, we quickly optimized our business structure and product experience. While these measures may temporarily impact our loan volume and profitability, we believe that prioritizing value for users will eventually strengthen their trust and help us maintain more sustainable and resilient growth over the long term. Meanwhile, certain new industry-wide regulatory measures may have some impact on the industry dynamics. That said, we believe our diversified business model and ample funding capacity will help position us to navigate these changes with limited disruption. Given the current phase of industry-wide adjustment, we will prioritize risk management over near-term growth focusing on improving user quality and collection efficiency. Since mid-October, we have already seen encouraging early signs of stabilization in asset quality. Over the years, we have a proven track record of emerging stronger from past challenges, including multiple industry-wide adjustments, and we are confident that this time will be no different. Looking ahead, We will continue to advance our one body, two wings strategy, further strengthen our AI capabilities and empower financial institutions in their digital transformation, driving efficient, healthy and sustainable development of our core business. On the international front, we are actively exploring opportunities across multiple overseas markets. After extensive research, we are even more convinced that our FinTech capabilities are among the best in the world. We view the international expansion as a challenging yet strategically sound path. Quality always comes from deliberate execution, and we are confident we will deliver. In closing, short-term industry headwinds will not alter our long-term trajectory or our fundamental commitment to giving back to our shareholders. Going forward, we will continue to pursue efficient capital allocation and deliver value to our shareholders through compelling shareholder returns. With that, I will now turn the call over to Alex.

Okay. Thank you, Haisheng. Good morning and good evening, everyone. Welcome to our third quarter earnings call. Unexpected chain of events in the last few months put significant pressure to our operations, and such headwinds may persist through the next couple quarters as the consumer finance industry faces a new round of regulatory scrutiny and the participants try to settle in a vastly different environment. Total net revenue for Q3 was $5.21 billion versus $5.22 billion in Q2 and $4.37 billion a year ago. Revenue from credit-driven service capital-heavy was $3.87 billion in Q3 compared to $3.57 billion in Q2 and $2.9 billion a year ago. The sequential and year-on-year increase was mainly driven by higher capital-heavy loan balance. Overall funding costs remain stable Q&Q despite some liquidity shortage later in the quarter. In the first three quarters, we issued a record-breaking $18.9 billion ABS, an increase of over 40% year-on-year. Revenue from platform service Capital Light was $1.34 billion in Q3 compared to $1.65 billion in Q2 and $1.47 billion a year ago. The year-on-year and sequential decline was mainly driven by lower capitalized facilitation and ICE volume. Platform service accounted for roughly 48% of the quarter-ending loan balance. We will continue to make timely adjustments to the business mix through the rest of the year to reflect the changing market dynamics and regulatory guidelines. During the quarter, average IRR of the loans we originated and or facilitated was 20.9%, compared to 21.4% in Q2. Looking forward, we may see further pricing decline as a new regulatory environment requirement being fully implemented across the industry, although the pace of the decline should be modest. Sales and marketing expenses remain stable Q1Q, but unit cost declined by about 8% sequentially. We added approximately 1.95 million new credit line users in Q3 versus 1.79 million in Q2. We were likely to adjust the pace of the new user acquisition in the coming months given the volatile micro condition and further optimize our user acquisition channels and improve user engagement, and retention. 90-day delinquency rate was 2.09% in Q3 compared to 1.97% in Q2. Day one delinquency rate was 5.5% in Q3 versus 5.1% in Q2. 30-day collection rate was 85.7% in Q3 versus 87.3% in Q2. C-M2, which represents the outstanding delinquency rate after 30 days' collection, increased Q1Q to 0.79% from 0.64%. As overall portfolio risk continued to increase in the last few months, we took additional measures to tighten the risk standard in September and October. While it's still a bit too early to reverse the trend, we start to see marginal improvement in new loans quality. It may take a few more months to see overall portfolio risk improves as the mix of the loans become more favorable. In such a challenging backdrop, we took even more conservative approach to book provisions against potential credit loss. Total new provisions for risk-bearing loans in Q3 were approximately 2.58 billion versus 2.5 billion in Q2, despite lower risk-bearing loan volume Q1Q. Provision booking ratio hit another historical high. Writebacks of previous provisions were approximately 785 million in Q3 versus 1.18 billion in Q2, Provision coverage ratio, which is defined as total outstanding provisions divided by total outstanding delinquent risk-bearing loan balance between 90 and 180 days, remained near historical high at 613% in Q3. Non-GAAP net profit was $1.51 billion in Q3 compared to $1.85 billion in Q2. non-GAAP net income per fully diluted ADS was 11.36 RMB in Q3 compared to 13.63 in Q2 and 12.35 a year ago. At the end of Q3, total outstanding ADS share count was approximately 130.2 million compared to 132.4 million at the end of Q2 and 144.2 million a year ago. Effective tax rate for Q3 was 20.9% compared to our typical ETR of approximately 15%. The higher than normal ETR was mainly due to withholding tax provision related to the cash distribution from onshore to offshore. With higher contribution from capital heavy model, Our leverage ratio, which is defined as a risk-bearing loan balance divided by shareholders' equity, was 3.0 times in Q3, still near the low end of historical range. We expect to see leverage ratio fluctuate around this level in the near term. We generate approximately $2.5 billion cash from operation in Q3 compared to $2.62 billion in Q2. Total cash and cash equivalent and short-term investment was $14.35 billion in Q3 compared to $13.34 billion in Q2. Our strong cash flow and financial position should give us sufficient resources to navigate through the challenging environment and allow us to satisfy the commitment and obligations to the market. We start to execute the $450 million share repurchase program in January 1st. As of November 18th, 2025, we had, in aggregate, purchased approximately 7.3 million ADSs in the open market for the total amount of approximately $281 million, inclusive of commissions, at the average price of $38.7 per ADS. We intend to resume the repurchase program after the window opened after this earnings call. Finally, regarding our business outlook, given the persistent economic uncertainty and fast-changing market dynamic, we will continue to take cautious approach in business planning for the next couple quarters, focusing on risk control of our operations. For the fourth quarter of 2025, the company expects to generate non-GAAP net income between $1 billion and $1.2 billion. This outlook reflects the company's current and preliminary view, which is subject to material changes. With that, I would like to conclude our prepared remarks. Operator, we can now take some questions.

Thank you. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2 and if you are on a speakerphone, please pick up your handset before asking your question. For those who can speak Chinese, please start your question in Chinese followed by English translation. To allow enough time to address everyone on the call, please keep it to one question and one follow-up and return to the queue if you have more questions. Thank you. Your first question today comes from Xiao Huang from Morgan Stanley. Please go ahead.