LexinFintech Holdings Ltd. (NASDAQ:LX) Q3 2023 Earnings Call Transcript November 23, 2023
乐信金融控股有限公司（纳斯达克股票代码：LX）2023年第三季度财报电话会议记录，日期为2023年11月23日。

Operator: Good day and thank you for standing by. Welcome to LexinFintech’s Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. It is now my pleasure to hand you over to the IR Director, Ms. Mandy Dong. Please go ahead, ma’am.
操作员：大家好，感谢您的耐心等待。欢迎参加乐信金融2023年第三季度财报电话会议。目前，所有参与者都处于听取模式。演讲结束后，将进行问答环节。【操作员指示】请注意，今天的会议正在录音。现在我很荣幸地将您转给投资者关系总监董女士。请开始，董女士。

Mandy Dong: Thank you, Amber. Hello, everyone. Welcome to the Lexin’s third quarter 2023 earnings conference call. Our results were issued earlier today and can be found on our IR website. Joining me today are our CEO, Jay Xiao; President, Jared Wu; and CFO, James Zheng. Before we get started, I’d like to remind you of our safe harbor statement in our earnings press release, which also applies to this call. During the call, we may refer to business outlook and forward-looking statements, which are based on our current plans, estimates and projections. The actual results may differ materially, and we undertake no obligation to update any forward-looking statements. Last, unless otherwise stated, all figures mentioned are in RMB.
曼迪·董：谢谢，安伯。大家好。欢迎参加乐信2023年第三季度财报电话会议。我们的财报今天早些时候已经发布，并可以在我们的投资者关系网站上找到。今天与我一起参加的有我们的首席执行官肖军，总裁吴杰，和首席财务官郑杰。在开始之前，我想提醒大家我们在财报新闻稿中的免责声明也适用于本次电话会议。在通话过程中，我们可能会提到业务展望和前瞻性声明，这些都是基于我们目前的计划、估计和预测。实际结果可能会有重大差异，我们不承担更新任何前瞻性声明的义务。最后，除非另有说明，所有提到的数字都以人民币计算。

Jay will first provide an update on our overall performance. James will cover the financial results in more details. And lastly, Jared will then discuss risk management. I will now turn the call over to Jay. His remarks will be in Chinese and the English translation will follow.
杰伊将首先对我们的整体表现进行更新。詹姆斯将更详细地介绍财务结果。最后，贾里德将讨论风险管理。现在我将把电话交给杰伊。他的发言将用中文进行，随后将有英文翻译。

Jay Xiao: Hello, everyone. It’s a pleasure to share with you our performance for the third quarter of 2023. In the face of the current industry-wide and the macroeconomic challenges, we adopted our prudent and steady strategy in the third quarter despite a slight volatility in asset quality. We reasonably tightened our risk strategy to balance growth and quality. In the third quarter, we adhered to the dual-wheel drive of risk and data, pushed forward the refinement of operations and continued to strengthen our fundamental capabilities, recording another solid growth performance. Transaction volume was RMB 63.3 billion, up 13% year-over-year. Loan balance under management was RMB 120.7 billion, up 28% year-over-year. Revenue was RMB 3.5 billion, up 30.4% year-over-year.
杰伊·肖：大家好，很高兴与大家分享我们2023年第三季度的业绩。面对当前行业和宏观经济的挑战，尽管资产质量稍有波动，我们在第三季度采取了审慎稳健的策略。我们合理收紧风险策略，平衡增长和质量。在第三季度，我们坚持风险和数据的双轮驱动，推进运营的精细化，并继续加强我们的基本能力，取得了又一次稳健的增长业绩。交易额为633亿元人民币，同比增长13%。管理的贷款余额为1207亿元人民币，同比增长28%。收入为35亿元人民币，同比增长30.4%。

Net profit was RMB 371 million, up 34.4% year-over-year. In the third quarter, the effectiveness of both new customer acquisition and existing customer operation was further improved. The synergies between e-commerce and the consumer credit business were further enhanced, and the tech empowerment business continued to grow with its commercialization capability being validated, and we are accelerating its expansion. There were three main highlights of the third quarter results. Firstly, refined operations have led to improved efficiency in both acquiring new customers and managing existing ones. In terms of new customers, we made a major upgrade on our new customer acquisition model and strategy in the third quarter, resulting in notable achievements.
净利润为3.71亿元人民币，同比增长34.4%。在第三季度，新客户获取和现有客户运营的效果进一步提高。电子商务和消费信贷业务之间的协同效应进一步增强，科技赋能业务继续增长，其商业化能力得到验证，我们正在加速扩张。第三季度业绩的三个主要亮点是：首先，精细化运营提高了获取新客户和管理现有客户的效率。在获取新客户方面，我们在第三季度对新客户获取模型和策略进行了重大升级，取得了显著成就。

The efficiency of attracting customers through feed channel increased by 38.5% compared to the first quarter. The approval rate number of drawdown borrowers and facilitated loan volume for new customers all showed improvement of over 20% compared to the control group. Additionally, early-stage delinquency indicator decreased by nearly 20%. We expect both the scale and quality of new customers to continue to benefit in the fourth quarter. In the third quarter, we further enhanced our off-line customer acquisition capabilities. This included upgrading the organizational structure of the off-line inclusive finance, in Chinese, [indiscernible] team, improving the sales management system, strengthening the cultivation of standardized talent and enhancing the ability to accurately identify off-line customers.
通过反馈渠道吸引客户的效率比第一季度提高了38.5%。与对照组相比，放款借款人的批准率和新客户的贷款额都提高了20%以上。此外，早期拖欠指标下降了近20%。我们预计在第四季度，新客户的规模和质量都将继续受益。在第三季度，我们进一步提升了线下客户获取能力。这包括升级线下普惠金融的组织结构，改进销售管理系统，加强标准化人才的培养，并提高准确识别线下客户的能力。

These efforts solidified the advantages of our offline direct customer acquisition model, resulting in a decrease in overall customer acquisition cost. Sales expenses in the third quarter declined by 9.5% compared to the second quarter. We see more potential and opportunities for off-line growth in the future, and we’ll continue to deepen our presence in this unique business model. In terms of existing users, we maintained a steady operation and strengthened the underlying capability building for model application, further enhanced our service capabilities. During the quarter, we introduced more data sources and built an identification system centered around the credit system of PBOC. We improved the model framework for the entire customer acquisition, risk management and operational life cycle.
这些努力巩固了我们的线下直接客户获取模式的优势，导致整体客户获取成本的降低。与第二季度相比，第三季度的销售费用下降了9.5%。我们在未来看到更多的线下增长潜力和机会，并将继续深化我们在这种独特业务模式中的存在。在现有用户方面，我们保持了稳定的运营，并加强了模型应用的基础能力建设，进一步增强了我们的服务能力。在本季度，我们引入了更多的数据来源，并建立了以人民银行信用体系为核心的身份识别系统。我们改进了整个客户获取、风险管理和运营生命周期的模型框架。

The sequencing and the stability of the model were improved by 10% to 20% over the previous version. In the third quarter, we utilized the enterprise WeChat for user operations, which has accumulated 700,000 borrowers and improved service efficiency and satisfaction. Through refined operations target high-quality customer groups by our enterprise WeChat compared to the traditional methods, we achieved a nearly 65% increase in customer order rates and a 107% increase in transaction volume. In the third quarter, our product, Lexin card priced below 18%, 1-8, and targeted towards high-quality customer segments delivered satisfying progress. After using those incurred, users’ willingness to place order and the transaction volume has been significantly improved.
该模型的测序和稳定性比上一个版本提高了10%至20%。在第三季度，我们利用企业微信进行用户运营，已积累了70万借款人，并提高了服务效率和满意度。通过我们的企业微信对高质量客户群体进行精细化运营，与传统方法相比，我们的客户订单率几乎增长了65%，交易量增长了107%。在第三季度，我们的产品Lexin卡定价低于18%，面向1-8号客户，并针对高质量客户群体取得了令人满意的进展。使用这些产品后，用户下单意愿和交易量显著提高。

The order rate, average transaction volume per person and the total transaction volume all experienced around an 80%, 8-0, increase. This effectively enhanced the engagement of high-quality active borrowers and facilitated the return of more high-quality settled users expanding the scope and the opportunities for managing our premium user base. The second highlight was the continued growth of Lexin ecosystem and further enhancement of synergies. Firstly, the tech empowerment business, after achieving quarterly profit in the fourth quarter of last year, the scale of this business line grew further with a 59% sequential increase in the third quarter. After nearly two years of exploration, we have completed upgrades in solutions, diversified our product portfolio and validated the standardized capabilities in systems and deliverables, which was well recognized by multiple urban and rural commercial banks.
订单率、人均交易量和总交易量都经历了约80%的增长。这有效地提高了高质量活跃借款人的参与度，并促进了更多高质量结算用户的回归，扩大了管理我们的优质用户群体的范围和机会。第二个亮点是乐信生态系统的持续增长和协同效应的进一步增强。首先，科技赋能业务在去年第四季度实现季度盈利后，该业务线规模进一步扩大，第三季度环比增长了59%。经过近两年的探索，我们已完成解决方案的升级，产品组合的多样化，并验证了系统和可交付能力的标准化，得到了多家城市和农村商业银行的高度认可。

The 59% growth rate further validated the commercialization capability of our tech empowerment business, although it currently accounts for a small proportion of Lexin’s overall business. In the context of increasingly refined industry regulation and the downward trend in consumer credit market interest rate and tech empowerment business, can help banks quickly undergo retail credit digitalization transformation with tremendous market potential. It can also bring better synergy to funding cooperation and drive deeper and broader collaborations between Lexin and the financial institutions. Currently, the tech empowerment business team is accelerating its expansion and will cover more city and rural commercial banks to further expand the scale.
59%的增长率进一步验证了我们科技赋能业务的商业化能力，尽管它目前在乐信整体业务中所占比例较小。在日益精细化的行业监管和消费信贷市场利率下降的背景下，科技赋能业务可以帮助银行快速进行零售信贷数字化转型，具有巨大的市场潜力。它还可以为资金合作带来更好的协同效应，推动乐信与金融机构之间的合作更加深入和广泛。目前，科技赋能业务团队正在加速扩张，并将覆盖更多城市和农村商业银行，进一步扩大规模。

Secondly, our e-commerce business brought out more value in terms of customer new acquisition and activating existing ones, further enhancing the synergies with our core consumer credit business. In the third quarter, our e-commerce division continued to solidify its highest level authorization for Apple T1s and Huawei L1s maintaining advantage in scale and initial supply. This further boosted consumer spending on our e-commerce platform, taking Huawei as an example, sales of the new Mate 60 Series and the X5 reached a record high for the year in the third quarter with an approximately 60%, 6-0, increase in revenue compared to last year’s Mate 50 product. In addition to our strength in the consumer electronics 3C category, we introduced more high-quality new brands and merchants onto our platform in the third quarter, covering categories that are favored by young generation, such as luxury goods, sports and packed goods].
其次，我们的电子商务业务在客户新获得和激活现有客户方面带来了更多价值，进一步增强了与我们核心消费信贷业务的协同效应。在第三季度，我们的电子商务部门继续巩固其对苹果T1和华为L1的最高级别授权，保持了规模和初期供应的优势。这进一步推动了消费者在我们的电子商务平台上的消费支出，以华为为例，第三季度Mate 60系列和X5的销售额达到了今年的最高纪录，与去年的Mate 50产品相比，收入增长了约60%。除了在消费电子3C类别中的实力外，我们在第三季度还引入了更多高质量的新品牌和商家到我们的平台上，涵盖了年轻一代喜爱的奢侈品、运动和包装商品等类别。

The number of new merchants reached 241, representing a sequential growth of 51% in brand coverage. With the addition of more merchants and expansion of product categories, a large number of existing users have been activated, leading to a stimulation between e-commerce and consumer credit business. During the 11/11 shopping festival, the period from November 1 to 11, the growth in the e-commerce consumer base resulted in a notable increase in transaction volume from high-quality active customers RR1 to operate with a sequential increase of approximately 12.4%. At the same time, these active consumer credit user further drove e-commerce spending, creating a reinforcing cycle within our business ecosystem. Third highlight is the data-driven approach to improve quality and efficiency, further enhancing our profitability.
新商家数量达到241家，品牌覆盖率环比增长51%。随着更多商家的加入和产品类别的扩展，大量现有用户被激活，促进了电子商务和消费信贷业务之间的互动。在11/11购物节期间，即11月1日至11日，电子商务消费者基数的增长导致高质量活跃客户RR1的交易量显著增加，环比增长约12.4%。同时，这些活跃的消费信贷用户进一步推动了电子商务支出，为我们的业务生态系统创造了一个强化循环。第三个亮点是数据驱动的方法来提高质量和效率，进一步增强我们的盈利能力。

In the third quarter, we implemented a series of data-driven measures to improve our operational efficiency. These measures included applying data tools such as life-like] models to strengthen procedure operations enhancing the efficiency of funds and asset matching through decision simulation system and improving the customer retention rate for settled users. The drop in funding cost has further improved profitability. In the third quarter, the Company achieved significant optimization of our funding structure and entered into strategic partnership with multiple major banks, including national wide joint-stock banks. Funding costs reached a new record low, 21-bip drop on a Q-on-Q basis. The rapid development of our business also relies on continuous investment in technology and research and development.
在第三季度，我们采取了一系列数据驱动的措施来提高我们的运营效率。这些措施包括应用数据工具，如逼真的模型，来加强流程操作；通过决策模拟系统提高资金和资产匹配的效率；提高已结算用户的客户保留率。资金成本的下降进一步提高了盈利能力。在第三季度，公司对我们的资金结构进行了重大优化，并与多家主要银行达成了战略合作伙伴关系，包括全国范围的股份制银行。资金成本达到了新的历史低点，环比下降了21个基点。我们业务的快速发展还依赖于对技术和研发的持续投资。

In the third quarter, our company invested RMB 127 million in research and development, maintaining our industry-leading position. During the quarter, we accelerated the development of the use case of AI large language models in our business through exclusive data pretraining and fine-tuning of business data. In terms of business application, we have already fully implemented the AI model in key business process, such as telemarketing, customer service and loan collection. In terms of working tools, the AI model is widely applied in scenarios such as coding assistant tools, generating design ideas and data analysis, enhancing the overall operational efficiency of the Company. In terms of risk management, we are closely watching the industry trends and actively exploring the use case of AI large language models.
在第三季度，我们公司在研发方面投入了1.27亿元人民币，保持了我们在行业中的领先地位。在这个季度，我们通过独家数据预训练和业务数据的精细调整，加速了AI大型语言模型在我们业务中的应用案例的开发。在业务应用方面，我们已经在电话营销、客户服务和贷款催收等关键业务流程中全面实施了AI模型。在工作工具方面，AI模型广泛应用于编码助手工具、生成设计思路和数据分析等场景，提高了公司的整体运营效率。在风险管理方面，我们密切关注行业趋势，并积极探索AI大型语言模型的应用案例。

These initiatives have significantly improved the overall operational efficiency and the customer experience. Solid technology advantages in the third quarter, Lexin has been selected for the fourth time as one of the top 500 Chinese service companies making us the only fintech company on the list for 4x. In terms of corporate social responsibility, in the third quarter, we made major upgrades to our consumer rights protection measures. Upon the foundation of our 5S Guardian system, we have carried out four major initiatives: one, strengthening our data security management system; two, enhancing anti-fraud protection capabilities; three, expanding intelligent customer service application; and fourth, intensifying efforts to combat illegal anti-collection groups.
这些举措显著提高了整体运营效率和客户体验。在第三季度，凭借坚实的技术优势，乐信已经第四次入选中国服务业500强，成为该榜单上唯一一家连续四次入选的金融科技公司。在企业社会责任方面，第三季度我们对消费者权益保护措施进行了重大升级。在我们的5S守护者系统的基础上，我们开展了四项重大举措：一是加强数据安全管理系统；二是提升反欺诈保护能力；三是扩大智能客户服务应用；四是加大打击非法催收团伙的力度。

These measures collectively established a comprehensive safety firewall for consumers. From January to August this year, Lexin intercepted 160 million instances of data security attacks, maintaining a record of zero data leak since the launch of the data protection and governance system. The anti-fraud system has prevented potential user logs for over RMB 270 million]. And the customer satisfaction has reached 99.6%. Looking ahead to the fourth quarter, in the face of a complex and uncertain external environment, we will adhere to the principle of prudent operation and prioritize risk management. We will continue to enhance risk management capabilities and improve asset quality while striking a fine balance between transaction volume and asset quality.
这些措施共同为消费者建立了一个全面的安全防火墙。今年1月至8月，乐信拦截了1.6亿次数据安全攻击，自数据保护和治理系统启动以来，保持了零数据泄漏的记录。反欺诈系统已经阻止了超过2.7亿元人民币的潜在用户日志。客户满意度达到了99.6%。展望第四季度，在复杂和不确定的外部环境下，我们将坚持谨慎经营原则，优先考虑风险管理。我们将继续提升风险管理能力，改善资产质量，同时在交易量和资产质量之间取得良好的平衡。

We maintain the guidance on full year loan origination we gave earlier this year, ranging from RMB 245 billion to RMB 255 billion, representing a 20% to 25% year-over-year growth. Next, I will pass to our CFO for financial updates.
我们保持今年早些时候给出的全年贷款发放指导范围不变，介于2450亿元人民币至2550亿元人民币之间，同比增长20%至25%。接下来，我将转交给我们的首席财务官更新财务情况。

James Zheng: Thank you, Jay. I will now provide more details on our financial results. Please note that all numbers are in RMB, unless otherwise stated. In the face of a sluggish macroeconomic environment and subdued consumer confidence, we have sustained our growth for the sixth straight quarter, signaling a robust V-shaped recovery since the first quarter of 2022. Our focus on improving risk management capabilities, customer upgrading, operational refinement, cost optimization] initiatives and optimizing our funding, particularly by lowering the early repayment rate has prepared us forward this quarter. Amidst the ongoing economic uncertainties, our strategy has been prudent. We have moderated new loan originations to prioritize asset quality and conservatively made ample provisions in our financials, which while impacting us in the near term, supports our long-term financial health.
詹姆斯·郑：谢谢，杰伊。现在我将提供更多关于我们的财务结果的细节。请注意，除非另有说明，所有数字均以人民币表示。面对疲软的宏观经济环境和消费者信心低迷，我们已经连续第六个季度保持增长，表明自2022年第一季度以来我们出现了强劲的V型复苏。我们专注于提高风险管理能力、客户升级、运营精细化、成本优化措施和优化资金，特别是通过降低提前还款率来为本季度做好准备。在持续存在的经济不确定性中，我们的策略一直是谨慎的。我们已经适度调整了新贷款发放，以优先考虑资产质量，并在财务报表中保守地进行了充分的拨备，虽然这在短期内对我们产生了影响，但支持了我们的长期财务健康。

To provide some context, first, let’s take a look at the year-over-year number of comparisons. Total loan origination increased by 12.7% year-over-year to RMB63.3 billion. Revenue climbed to RMB3.5 billion, up 30.4% year-over-year, largely due to reduced early repayments and larger outstanding loan balance now at RMB121 billion. Notably, we significantly cut the early repayment ratio in Q3 to a level at about 90% of Q2’s level and aim to keep it optimal in Q4. The average weighted APR remained under 24%, with loans below this threshold comprising 86% of total loans, up over 5% from last year. Our funding cost hit a record low of 6.4%, down from 7.0% last year, attributable in part to successful partnerships with the national banks which we anticipate to further reduce costs.
为了提供一些背景，首先，让我们来看一下年度对比的数量。总贷款发放额同比增长12.7%，达到633亿元人民币。收入增长至35亿元人民币，同比增长30.4%，主要是由于提前还款减少和更大的未偿还贷款余额，目前为1210亿元人民币。值得注意的是，我们在第三季度显著降低了提前还款比例，约为第二季度的90%，并计划在第四季度保持最佳水平。平均加权年利率仍然低于24%，低于此门槛的贷款占总贷款的86%，比去年增加了5%以上。我们的资金成本降至创纪录的6.4%，低于去年的7.0%，部分归功于与国家银行的成功合作，我们预计将进一步降低成本。

Loan tenders decreased as we fine-tuned our portfolio’s structure in response to the market uncertainty, averaging 13.1 months compared to 13.8 in Q3 of 2022. Cost efficiencies continue with operating expenses, including processing and services, sales and marketing, R&D and G&A falling to 0.91% of the average loan balance, a 35 basis point saving from the previous year. Consequently, net income rose to RMB371 million, a 34.4% increase year-over-year, improving our net margin to 10.6%. Despite the heightened provisions, the increase underscores our resilient profitability and the business momentum. Apart from the above year-over-year analysis, I would also like to share some perspectives from quarter-over-quarter comparisons. Total GMV remained relatively stable as we balanced, maintaining asset quality with business growth.
由于市场不确定性，我们对投资组合的结构进行了微调，导致贷款招标减少，平均为13.1个月，而2022年第三季度为13.8个月。成本效益继续提高，包括处理和服务、销售和市场营销、研发和总务在内的运营费用下降到平均贷款余额的0.91%，比去年节省了35个基点。因此，净收入增至3.71亿元，同比增长34.4%，将净利润率提高至10.6%。尽管拨备增加，但增长凸显了我们的盈利能力和业务势头的强劲。除了以上的同比分析，我还想分享一些季度对比的观点。总交易额保持相对稳定，我们在平衡资产质量和业务增长方面取得了良好的效果。

A slight take rate improvement reflects effective early repayment control and reduced funding costs, although offset by pricing reductions, shorter loan durations and additional provisioning. Risk management remains a cornerstone strategy yet factors like the slow economic recovery and challenges within the loan collection industry have slightly affected the asset quality as reflected in metrics such as day one delinquency rate, M1 collection rate and 90 days delinquency rate. For instance, our 90 days delinquency rate in Q3 was 2.67%, which is slightly higher in comparison with 2.59% in Q2. Nonetheless, we have adjusted our bad debt provisions, reaching a coverage ratio of approximately 350%, which is defined as a total provision amount divided by the principal amount of 90 days delinquent loans.
轻微的接受率改善反映出有效的提前还款控制和降低的资金成本，尽管受到定价降低、贷款期限缩短和额外拨备的抵消。风险管理仍然是一个基本策略，但缓慢的经济复苏和贷款回收行业的挑战等因素略微影响了资产质量，如首日逾期率、M1回收率和90天逾期率等指标所反映的。例如，我们在第三季度的90天逾期率为2.67%，与第二季度的2.59%相比略有增加。尽管如此，我们已经调整了坏账准备金，达到了约350%的覆盖率，即总准备金金额除以90天逾期贷款的本金金额。

The current fluctuation in asset quality across the industry seems to continue to clout Q4. We are vigilant and have taken all measures to safeguard our asset quality level. Operating expenses fell by 7.2% from the last quarter, primarily from reduced sales and marketing and the general administrative spending. With the increased provisions from Q2, we still achieved a 4.2% sequential growth in net income and maintained a 10.6% net margin. From both year-over-year and quarter-over-quarter perspectives, we have made significant improvement during Q3. Although macro headwinds persist, we have maintained the rebounding pace of our business, and anticipate the business growth momentum to continue. Let’s review some specific financial items. Total operating revenue hit RMB3.5 billion for Q3 with an increase of 14.8% quarter-over-quarter and 13.4% year-over-year, driven mainly by the credit facilitation business, which saw a significant increase both quarterly and annually.
目前行业内资产质量的波动似乎仍在影响第四季度。我们保持警惕，并采取了一切措施来保护我们的资产质量水平。运营费用较上一季度下降了7.2%，主要是由于销售和市场营销以及一般行政支出的减少。尽管从第二季度开始增加了拨备，我们仍然实现了4.2%的净收入环比增长，并保持了10.6%的净利润率。从年度和季度的角度来看，我们在第三季度取得了显著的改善。尽管宏观风险仍然存在，我们保持了业务的复苏势头，并预计业务增长势头将继续。让我们来看一些具体的财务项目。第三季度总营业收入达到35亿元人民币，环比增长14.8%，同比增长13.4%，主要受到信贷促进业务的推动，该业务在季度和年度上都有显著增长。

Tech empowerment services also grew, while installment e-commerce platform service revenue declined due to the high Q2 numbers, driven by the 618 promotion and an accounting reclassification. Despite of orders, the e-commerce GMV grew by 12.8% year-over-year. Expense ratio demonstrates our continued progress in cost optimization, notably in marketing, where we have achieved greater efficiency and lower customer acquisition costs. The sales and marketing expenses decreased by 9.4% quarter-over-quarter and decreased by 3.3% year-over-year, which was mainly due to the improved efficiency of upgraded RTA customer acquisition models. In Q3, new users with approved credit lines increased 15.1% and new active users increased 8.2% on a quarter-over-quarter basis, indicating a lower customer acquisition cost in Q3.
科技赋能服务也增长了，而分期电子商务平台服务收入由于高Q2数字而下降，这是由618促销和会计重新分类驱动的。尽管订单有所增长，电子商务GMV同比增长了12.8%。费用比率显示了我们在成本优化方面的持续进展，特别是在营销方面，我们实现了更高的效率和更低的客户获取成本。销售和营销费用环比下降了9.4%，同比下降了3.3%，这主要是由于升级的RTA客户获取模型的效率提高。在Q3，获得批准的信用额度的新用户环比增长了15.1%，新活跃用户环比增长了8.2%，表明Q3的客户获取成本较低。

Net profit for the quarter was approximately RMB371 million, marking steady increase with a 4.2% growth quarter-over-quarter and a 34.4% growth year-over-year. Our cash position is strong, ending the quarter with around RMB5 billion in hand and a solid equity position of RMB9.8 billion. In Q3, we have declared a recurring cash dividend plan and paid out a cash dividend for the first half of 2023 amounting around USD 90 million, equivalent to roughly 20% of the total net profit for the first half of 2023. Looking forward, we will continue to look for ways to return more value to shareholders. Looking ahead to the rest of 2023. Given the current macros and the pressure on asset quality throughout the industry, we remain conservative in loan origination pacing.
本季度净利润约为人民币3.71亿元，环比增长4.2%，同比增长34.4%。我们的现金状况良好，季末手头约有50亿元人民币，并且拥有98亿元人民币的稳固股权。在第三季度，我们宣布了一项定期现金股息计划，并支付了2023年上半年约9000万美元的现金股息，相当于2023年上半年总净利润的约20%。展望未来，我们将继续寻找回报股东的方式。展望2023年剩余时间，考虑到当前的宏观经济状况和整个行业资产质量的压力，我们在贷款发放节奏上仍保持谨慎。

We maintained the earlier guidance of annual GMV of RMB245 billion to RMB255 billion growth, which represents a 20% to 25% year-over-year. These estimates reflect our current expectations, which is subject to change. To sum up, Q3 marks our sixth consecutive growth quarter. Our key strategies: risk management, customer enhancement, operational refinement and cost efficiency are all paying off. As we navigate ongoing macro and industry challenges, we will maintain our focus on asset control, measured business expansion and operational optimization, poised to seize opportunities as they arise. Now I will hand over to Jared Wu, our President, to discuss our approach on risk management in detail. Jared, please take it from here.
我们保持了年度GMV增长的早期指导，即人民币2450亿元至2550亿元，同比增长20%至25%。这些估计反映了我们目前的预期，可能会有所变化。总之，第三季度标志着我们连续第六个增长季度。我们的关键策略：风险管理、客户增强、运营精细化和成本效益都取得了成果。在应对持续存在的宏观和行业挑战时，我们将继续专注于资产控制、有节制的业务扩张和运营优化，以便抓住机遇。现在我将把发言权交给我们的总裁Jared Wu，详细讨论我们的风险管理方法。Jared，请接下去。

Jared Wu: Thank you, James. In the third quarter, we continued to step up our efforts in honing our holistic risk management system and optimizing our customer base on the ground of our corporate strategy, risk management upgrading and customer base upgrading, which yield consistent results. Although we continued to improve our risk management capabilities, our loan collection rate experienced some fluctuations due to the slow recovery of macro conditions and the rise of illegal anti-collection activities recently. We anticipate this impact from these factors may last into Q4, therefore, we have built into a more prudent risk management approach going forward. Meanwhile, we rolled out a series of countermeasures to mitigate these impacts on loan collection.
在第三季度，我们在公司战略、风险管理升级和客户群体升级的基础上，继续加强整体风险管理系统的努力，并取得了持续的成果。尽管我们不断改善风险管理能力，但由于宏观条件复苏缓慢和最近非法反催收活动的增加，我们的贷款回收率出现了一些波动。我们预计这些因素对贷款回收的影响可能会持续到第四季度，因此我们在未来将采取更加谨慎的风险管理方法。与此同时，我们还推出了一系列应对措施，以减轻对贷款回收的影响。

For instance, in the collection process, we have set up our internal collection workforce and leveraged the advantage of internal collection manpower, and we also increased the proportion of manual case handling to uphold the collection right. During the third quarter, through continuous optimization of our RTA model and the risk models for new customer credit line approval. We achieved a 50%, 5-0, improvement in customer acquisition efficiency and a 20% reduction in new customer risk levels. In Q4, we will gradually amplify our experimental flow and continue to rapidly advance strategies iteration, striving to accumulate a sufficient number of high-quality customers this year and laid a solid foundation for next year’s growth. In the third quarter, we accelerated the recruitment of top-notch industry talent in risk management space, further enhance our core competitiveness.
例如，在收款过程中，我们已经建立了内部的收款团队，并利用了内部收款人力资源的优势，同时我们还增加了手动案件处理的比例，以维护收款权益。在第三季度，通过不断优化我们的RTA模型和新客户信用额度批准的风险模型，我们实现了客户获取效率的50%改善，并降低了新客户的风险水平20%。在第四季度，我们将逐步扩大我们的实验流程，并继续快速推进策略迭代，努力积累足够数量的高质量客户，并为明年的增长奠定坚实基础。在第三季度，我们加快了在风险管理领域招募顶尖行业人才，进一步增强了我们的核心竞争力。

We anticipate their professional skills and extensive experience in risk management space will assist us to achieve more breakthroughs. Adhering to the risk management-driven principle, we will continue to build up our industry-leading risk management team. Looking ahead, in the face of the current macroeconomic situation in Q4, we will continue to adhere to the principle of risk management first, adopt a prudent strategy and at the same time, continue to enhance our underlying risk management capabilities, and persistently integrate the overall level of our risk management.
我们预计他们在风险管理领域的专业技能和丰富经验将帮助我们取得更多突破。坚持以风险管理为驱动的原则，我们将继续建设行业领先的风险管理团队。展望未来，在面对第四季度的宏观经济形势时，我们将继续坚持风险管理至上的原则，采取谨慎的策略，同时不断提升我们的基础风险管理能力，并持续整合我们的风险管理整体水平。

Mandy Dong: Operator, that closed all our prepared management remarks. I think we are now good to open the floor for questions.
曼迪·董：操作员，那就关闭我们准备好的管理发言。我认为现在可以开放提问环节了。

See also 20 Healthiest States in the US in 2023 and 15 Best Countries for Dental Implants.
请参阅2023年美国最健康的20个州和15个最佳的牙种植国家。

Q&A Session 问答环节

Operator: [Operator Instructions] Our first question comes from the line of Alex Ye from UBS.
操作员：[操作员指示]我们的第一个问题来自于UBS的Alex Ye。

Alex Ye: I have two questions. The first one is regarding the management remarks, about the control in early repayment ratio in Q3, which helped to increase the revenue take rate. Could you share with some more color in terms of the specific measures taken and provide us with some color into the — your expectation for the Q4? And second question is about your new customer acquisition. We have noticed good progress in Q3 in terms of both lower customer acquisition costs and a number of new customers acquired. So could you also give more color on this?
我有两个问题。第一个问题是关于管理意见，关于在第三季度控制提前还款比例，从而提高收入利率。您能否分享一些具体措施，并对第四季度的预期提供一些信息？第二个问题是关于您的新客户获取。我们注意到在第三季度在降低客户获取成本和获取新客户数量方面取得了良好的进展。您能否对此提供更多信息？

Jay Xiao: Thank you, Alex. So in the first quarter, we set up a special task force directed by the Company’s management level and then spanning multiple departments such as operations, to determine based on the customers’ outstanding balance for credit line decide approval strategies based on their own performances to better determine whether they are likely to do the repayment, early repayment process or not to better avoid our strategic error to cause that. We — as well as we issued the suitable and the fit coupons in order to deter them from doing so, which effectively helps us to reduce the earning premium rate and also our tasked team held weekly meetings to review, adjust and reoptimize and achieve a very good result in the third quarter.
杰伊·肖：谢谢，亚历克斯。所以在第一季度，我们成立了一个特别的工作组，由公司管理层指导，并涵盖多个部门，如运营，根据客户的未偿余额决定批准策略，根据他们自己的表现更好地确定他们是否有可能进行还款、提前还款过程，以更好地避免我们的战略错误导致这种情况。我们还发行了适当和合适的优惠券，以阻止他们这样做，这有效地帮助我们降低了收益溢价率，我们的工作组每周举行会议，审查、调整和重新优化，并在第三季度取得了非常好的结果。

In the third quarter, our early repayment rate was only about 9% of which — in the second quarter, which significantly improved the take rate level of the revenue and then we expect to maintain such strategy as well as the optimized level in the early repayment rate to go on in the fourth quarter. So in third quarter, we continue to iterate our ability to acquire new customers and achieve the same reduction in the new customer risk in comparison with the previous quarter. We did a significant new customer risk model upgrade, including integrating more on the, say, model usage as well as promoting the RDA model upgrade with our own — with our main media channel. Specifically, our customer acquisition efficiency will increase by 50% and reduced new customers risk by 20%.
在第三季度，我们的提前还款率仅约为9%，其中在第二季度，这显著提高了收入的接受率水平，我们预计将继续保持这样的策略，并在第四季度继续优化提前还款率水平。因此，在第三季度，我们继续改进我们获取新客户的能力，并与上一季度相比，实现了相同程度的新客户风险降低。我们进行了重大的新客户风险模型升级，包括更多地整合模型使用以及通过我们的主要媒体渠道推广RDA模型升级。具体而言，我们的客户获取效率将提高50%，新客户风险降低20%。

And from a pure earnings point of view, sales and marketing expenses decreased by 4% over-quarter, but newly registered user increased 9.0% quarter-over-quarter. And new users with improve credit line has increased by 15.1% and new active users will increase by 8.2% on a quarter-over-quarter basis. It’s hitting a much lower customer acquisition cost in the third quarter. Coming in the fourth quarter, we will increase the volume of our comparison as well as the experimental group mentioned before and to continue to push forward the strategy of generation at a more faster pace to better reserve a significant number of high-quality customers as well as including — pushing the new model, which has been showing prominent results to better lay a foundation for the next year’s growth.
从纯收益角度来看，销售和市场营销费用环比下降了4%，但新注册用户环比增长了9.0%。具有提高信用额度的新用户增长了15.1%，活跃用户环比增长了8.2%。在第三季度，客户获取成本大幅降低。进入第四季度，我们将增加比较量以及之前提到的实验组，并继续以更快的速度推进一代策略，以更好地储备大量高质量客户，包括推动表现突出的新模型，为明年的增长打下更好的基础。

Hope that answers your questions, Alex.
希望这回答了你的问题，Alex。

Operator: Our next question comes from the line of Yada Li from CICC.
操作员：下一个问题来自中金公司的李亚达。

Yada Li: I’ll do the translation. I was wondering if you could elaborate more about how the current loan demand looks like in October and November? And compared with the previous quarter, currently, how is the recent trend of the asset quality? And that’s all.
亚达·李：我会进行翻译。我想知道你是否能更详细地说明一下十月和十一月的贷款需求情况？与上个季度相比，目前资产质量的最新趋势如何？就这些。

Jay Xiao: Okay. Thank you, Yada. At the operational level, we see demand growth seen so far in October and November is down slightly compared to the third quarter and no significant recovery is seen. So specifically, in the demand level were slightly weaker in October compared to the third quarter, probably ranging in the mid-single digits. And from the point of view that the average daily demand in November up to now benefiting from the boost of 11.11 e-commerce special compared with the level of third quarter is basically flattish. However, considering the year’s seasonality factors, including the bank’s yearly slight tightening and the recent trend of overall capital flow shifting to government and real estate assets, we maintain a cautious and conservative stance on the fourth quarter volumes.
Jay Xiao：好的。谢谢，Yada。在运营层面上，我们看到10月和11月迄今为止的需求增长与第三季度相比略有下降，没有明显的复苏迹象。具体来说，与第三季度相比，10月的需求水平稍微较弱，可能在中个位数范围内。从11月迄今为止的平均日需求来看，由于双11电商特别促销的推动，与第三季度的水平基本持平。然而，考虑到年度季节性因素，包括银行年度轻微收紧和最近整体资金流向政府和房地产资产的趋势，我们对第四季度的交易量保持谨慎和保守的态度。

And in terms of the asset quality, as Jared mentioned earlier, in the fourth quarter, the factors affecting our asset quality persisted mainly because of the macro economy is still in a period of steady recovery as well as the growth and the impact of the anti-collection industry has been expected, the rate of our collection rate to a certain extent. And it seems that we are currently under pressure on the quality of assets and the various group indicators have been concerning]. However, we have actively taken various countermeasures to deal with the fluctuations caused by external factors such as increasing the proportion of our own in-bound causes] and continuously iterating our risk management model and the volatility of risk will put some pressure on the growth for the fourth quarter, that’s for sure.
就资产质量而言，正如贾里德之前提到的，第四季度我们的资产质量受到了一些影响，主要是因为宏观经济仍处于稳定复苏期，以及反催收行业的增长和影响，对我们的催收率产生了一定程度的影响。目前看来，我们的资产质量正面临一定的压力，各项指标也引起了关注。然而，我们已经积极采取了各种对策来应对外部因素带来的波动，比如增加自有资金的比例，并不断优化我们的风险管理模型。风险的波动对第四季度的增长将会带来一定的压力，这是肯定的。

But we are doing measures to combat that. Hope that answers your question, Yada. So just to add one last point in terms of the results that we’re getting and the progress we’re getting for new customer acquisitions, with it, we are hoping with promising side and the volume that comes out of new customers as well as the cost being lower for new customer acquisitions as well as the risk level, looking very promising and good right now. It should be a very good factor for us in the future. It should be helping whether it’s on our asset quality side of the — or the operational side in the future. So I hope that answered your question, Yada.
但我们正在采取措施来对抗这一点。希望这回答了你的问题，Yada。所以最后再补充一点关于我们获得的结果和新客户获取的进展，我们希望通过这些进展，新客户的数量和成本都能降低，风险水平也能降低，目前看起来非常有希望和好。这对我们未来来说应该是一个非常好的因素。无论是在我们的资产质量方面还是在未来的运营方面，它都应该会有所帮助。所以我希望这回答了你的问题，Yada。

Operator: Our next question comes from the line of Betty Li from CLSA.
操作员：下一个问题来自于CLSA的Betty Li。

Betty Li: I will translate by myself. The first one, given the current loan guidance, I think the Company is in good track in maintaining the — in the full year loan origination. But just wonder if you have any outlook for the 2024 loan demand. The second one is I just wonder if the Company has any further share buyback plans.
贝蒂·李：我会自己翻译。第一个问题，考虑到当前的贷款指导方针，我认为公司在全年贷款发放方面走在了正确的轨道上。但我想知道你们对2024年贷款需求有何预期。第二个问题是，我想知道公司是否有进一步的股票回购计划。

James Zheng: Okay. I will take the question. Basically, first question is related to the outlook. Second question is about the buyback, right? Basically, for the macro perspective, we still believe there is a considerable amount of uncertainty in the fourth quarter. The overall recovery of the consumption still remain relatively slow. Because at the same time, because of the typical kind of seasonal factor of funding supply in the fourth quarter is a little bit tight, so we expect the overall lending volume in Q4 to be broadly in line with Q3, okay? This is one. Two, obviously, we have other factors affecting the seasonal asset quality. These factors continue to exist as mentioned earlier, right? One is the macro kind of still — the growth is a little bit slow.
詹姆斯·郑：好的，我来回答这个问题。基本上，第一个问题与前景有关。第二个问题是关于回购，对吗？从宏观角度来看，我们仍然认为第四季度存在相当多的不确定性。消费的整体复苏仍然相对缓慢。因为与此同时，由于第四季度资金供应的季节性因素有点紧张，所以我们预计第四季度的整体贷款规模与第三季度大致相当，好吗？这是第一点。第二点，显然，我们还有其他因素影响季节性资产质量。正如前面提到的，这些因素仍然存在。其中一个是宏观层面上的增长有点缓慢。

And also the — within the loan industry, the impact of the combating illicit financial activities related to the debt collection, this is still kind of affecting the rate of entry into the collection and also the asset from the collection, okay? So based on this, the overall kind of asset quality is still under slight pressure at this point. The short-term risk indicators have still show some fluctuations. So based on all of this, we have basically continue to maintain a prudent approach for Q4, really adhering to the principles of prioritization risks and prudent management. And up to now, as a reminder, actually, we have maintained a pretty good rate of growth. We have completed about RMB 188 billion so far for the first three quarters of this year.
而且，在贷款行业内，打击与债务追收相关的非法金融活动的影响，仍在影响着追收的入场率和追收资产。所以基于这一点，整体资产质量仍然稍受压力。短期风险指标仍然显示出一些波动。基于所有这些，我们基本上继续保持第四季度的审慎态度，真正坚持风险优先和审慎管理的原则。截至目前，提醒一下，实际上我们保持了相当不错的增长率。今年前三个季度我们已经完成了约1880亿元人民币的业务。

Really, this is about 26.7% year-over-year growth, okay? So we’re going to continue — we’re confident we’ll continue to achieve the RMB245 billion, RMB255 billion GMV growth, this will be 20% to 25%. And in terms of 2024, we’re probably going to wait until after we close this year to give more guidance. By that time, hopefully, we have more certainty about the overall macros next year, okay? That’s the first question. Second question in terms of any buyback plans. As a matter of fact, the Board has approved two buyback plans last year. We completed about RMB50 million buyback, earlier part of this year. And then the Board authorized RMB20 million buyback in November last year. For that, we haven’t done anything yet. But in last quarter, we have declared a dividend plan.
实际上，这是年同比增长约26.7％，好吗？所以我们将继续努力-我们有信心能够实现人民币2450亿元到2550亿元的增长，这将是20％到25％。至于2024年，我们可能会等到今年结束后再提供更多指导。到那时，希望我们对明年的整体宏观经济有更多的确定性，好吗？这是第一个问题。第二个问题是关于回购计划。事实上，董事会去年批准了两个回购计划。我们在今年年初完成了约5亿元的回购。然后董事会在去年11月批准了2亿元的回购。至于这一点，我们还没有采取任何行动。但在上个季度，我们已经宣布了分红计划。

Basically, we declared we’re going to pay out from 15% to 30% of our net income as a dividend payout range. So the first half of this year, we paid out 20% of our net income, and we have completed paying out the dividend in the last month or so. So we will continue to look for ways to return value to our shareholders. Basically, when we close the end of this year, we’re going to come back to look at our dividend planning again to see whether we should continue to pay out for the second half of the dividend for this year, okay? So basically upholding the shareholder value is the #1 priority for us. Thank you. Hopefully, that answers your question.
基本上，我们宣布我们将支付15%至30%的净收入作为股息支付范围。所以今年上半年，我们支付了净收入的20%，并且在最近一个月内完成了股息支付。所以我们将继续寻找回报股东的方式。基本上，当我们结束今年时，我们将回顾我们的股息计划，看看是否应该继续支付今年下半年的股息，好吗？所以基本上，维护股东价值是我们的首要任务。谢谢。希望这回答了您的问题。

Operator: We have reached the end of the question-and-answer session. I’ll now turn the conference back to the Company for any additional closing comments.
操作员：我们已经结束了问答环节。现在我将把会议交还给公司，以便进行任何额外的总结性评论。

Mandy Dong: Well, I think that closes our conference call today. Thank you again, everyone, for joining us today. If you have further questions, please contact us via our contact information on the IR website. Thank you all. Have a good day and a good night. Thank you.
曼迪·董：好的，我认为今天的电话会议到此结束。再次感谢大家今天的参与。如果您有进一步的问题，请通过我们在IR网站上提供的联系方式与我们联系。谢谢大家。祝大家白天愉快，晚上好。谢谢。

James Zheng: Thank you. Okay. Bye-bye.
谢谢。好的。再见。

Operator: Thank you. That concludes today’s conference call. Thank you for participating. You may now disconnect.
操作员：谢谢。今天的电话会议到此结束。感谢您的参与。您现在可以挂断电话。