FinVolution Group

Hello, ladies and gentlemen. Thank you for participating in the fourth quarter and full year 2024 earnings conference call for Finvolution Group. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Jimmy Tan, head of capital markets for the company. Jimmy, please go ahead.

Hello everyone and welcome to our fourth quarter and full year 2024 earnings conference call. The company results were issued via Newswire Services earlier today and are posted online. You can download the earnings release and sign up for the company email alerts by visiting the IR section of our website at ir.finvigroup.com. Mr. Kie Jun Lee, our Chief Executive Officer and Mr. Jia Yuan Xu, our Chief Financial Officer will start the call with their prepared remarks and conclude with a Q&A session. During this call, we will be referring to certain non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For information about these non-GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company filings with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Finally, we post a slide presentation on our IR website providing details of our results for the quarter. I will now turn the call over to our CEO, Mr. Tia-Jeng Lee. Please go ahead, sir.

Thanks, Jamie. Hello, everyone, and thank you for joining our running call. This is Tia-Jeng Lee, CEO of Vimolution Group. We are happy to speak with you today. 2024 marked another strong year of growth and progress for the company. Despite the persistent uncertainties over the micro economy in China, our operations in Indonesia and the Philippines have experienced favorable micro supported by strong growth in a stable foreign exchange environment. Through strong execution of our local excellence, global outlook, our legal strategy, we successfully navigated through 2024's challenges and continued to deliver progressive growth in the China market and rapid expansion in the international market. For example, in terms of transaction volume, we have achieved 5% growth in China and a rapid growth of around 28% in our international market. Both our total transaction volume and outstanding loan balance also reached new records highs for the full year, rising to 206 billion RMB and 72 billion RMB respectively, both up by 6% year over year. Cumulatively, we have served around 34 million borrowers across China, Indonesia, and the Philippines, representing a net increase of around 4 million new borrowers in 2024. Achieving growth in all of these metrics amid 2024's soft consumer environment is a strong testament to our business resilience, our outstanding technology, innovation, and our overall operational excellence. It's worth noting that while the industry's transaction volume was generally shrinking in 2024, we continue to deliver growth in our business at stable risk levels. In line with our strategy, we have expanded our regulatory license portfolio in our key market, including micro-lending license in China, multi-finance license in Indonesia, and non-banking financial companies license in Pakistan. These additional licenses help us expand our customers' outreach and product offerings. We have also further expanded our customer acquisition channels. In China, we have established customer acquisition collaborations with leading internet platforms through API connections. In Indonesia, we are expanding beyond online into providing consumption loans in offline settings. In the Philippines, we have been growing our BuyNowPayLater product with various partnerships with leading e-commerce platforms as well. Boasted by our robust operational results, total revenue for 2024 reached 30.1 billion RMB, up 4% year-over-year. Revenue from international operations rose 19% year-over-year to 2.5 billion RMB, representing close to 20% of total revenue for full year 2024. We also improved our funding costs by over 200 basis points during the year. Thanks to our ample liquidity and validated track record, in risk performance. By maintaining our long-term development trajectory and enhancing operational efficiency, we've laid a solid foundation for continued growth in 2025 and beyond. Our commitment to innovation is a primary driver for these positive outcomes. In 2024, we invested approximately 500 million in R&D, bringing our cumulative R&D investment over the last five years to 2.3 billion. As of December 31, 2024, we employed a dedicated R&D team of around 700 skilled professionals, and we've built a comprehensive IP portfolio comprising 287 registered software copyrights and a successful filing of 196 patent applications. with 58 invention patents already granted. Let me walk you through a few R&D highlights over the past year. In 2024, we have completed a significant upgrade in AI by integrating the full version of DeepSeq R1 into our technologies, which already incorporates 17 years of credit data and domain knowledge. With this upgrade, we are now able to further automate some of the processes in marketing content creation, customer acquisition, and servicing, resulting in better productivity. For example, our internal pilot testing indicated AI-facilitated content can generate 60% potential reduction in advertising production costs. AI-powered customer service and acquisition can more accurately identify customer demand and concerns, leading to 9% increase in borrowers conversion rate. On the risk management front, the enhanced AI model enables us to better identify fraud from deep fake technology with an accuracy of up to 99%. We are also proud to share that we have completed the general AI service registration with the Cyberspace Administration of China for our Red Seed Large Language Model, not only validating regulatory recognition, but also allow wider potential to consumer applications, which we will explore in the future. To date, we have published and presented more than 25 papers at top-tier international artificial intelligence conferences, These three of these papers were recognized as the best papers at top tier conferences, demonstrating our leadership in this field. As we have mentioned previously, we have set a target of reaching 50% of revenue from international markets by 2030 under our legal strategy. I'm pleased to say that our strong strategic execution has paid off over the years. and our international operations have come a long way since 2018. Revenue contributions from international markets have increased rapidly, rising from 3.7% in 2020 to 10.3% in 2022 to around 20% in 2024. Looking ahead, we expect international business to play an even greater role in our company. supported by our validated successes in Indonesia and the Philippines. We plan to accelerate our international expansion efforts this year for 2025. We anticipate the total revenue will increase between 10% to 15%, and the international revenue contribution will further increase to around 25%. Let's move on to ESG. In line with our social responsibility goals, We deepened our commitment to financial inclusion in 2024, particularly with respect to small business owners. We believe three things. Small businesses are the heart of a healthy economy. That's why we constantly supported their efforts to create jobs and foster hyper-local economic prosperity. In 2024, we empowered 826 small businesses 1,000 small business owners with loans totaling 58 billion RMB, up 2% and 23%, respectively, year over year. We also published our first Consumer Protection Annual Report in 2024. One of the many ways we integrated our consumer protection into the group's ESG strategy. This initiative aims to enhance borrowers' financial literacy, promote financial inclusion, and consistently deliver exceptional consumer experiences, contributing to our outstanding borrower satisfaction rate of 98.9%. I'm proud to report that our ESG efforts continue to win accolades from leading international rating agencies. In 2024, Morningstar and S&P, among others, ranked us as a top-tier ESG performer within the diversified financial industry. In summary, we successfully leveraged and expanded our strengths in technology, customer acquisition, and retention to deliver solid results and made a challenging environment in 2024. Through firm execution of our local excellence, global outlook strategy, a sharp focus on AI innovation, and deep dedication to our mission of financial inclusion, We continue to advance and accelerate our progress and sustain our long-term growth trajectory. Our accomplishments in 2024 has bolstered our confidence in achieving our vision for 2025 and beyond to become the leading fintech player across the Pan-Haitian region. We will continue to work tirelessly towards that goal. and look forward to sharing our successes with our customers, shareholders, and the communities in the regions where we operate. With that, I will now turn the call over to our CFO, Jiaoyan Xu, who will discuss our operational and financial results.