Jiayin Group Inc.
Q3 2020 Earnings Call Transcript

Published: 30 Nov 2020

[Operator:]

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Jiayin Group Third Quarter 2020 Earnings Conference Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objection, you may disconnect at this time. I will now turn the call over to Ms. Julia Qian, Managing Director of The Blueshirt Group Asia. Ms. Qian, please go ahead.

[Julia Qian:]

Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the third quarter of 2020. We released the results early today. The press release is available on the company's website as well as on newswire services.

[Dinggui Yan:]

Hello, everyone. Thank you for joining our third quarter 2020 earnings conference call. We are pleased to report aznother solid quarter. We made significant progress in driving our business transformation, shifting funding sources to institutions and optimizing our cost structure. Most notably, we are excited to have reached an important milestone. As of November 10 2020, the outstanding loan balance of our legacy P2P lending business was reduced to zero. This signifies that we have successfully completed this transition to being a fintech company, with a platform fully funded by institutions. We do this by leveraging our technology, our advanced data algorithms and our risk systems. We facilitate and enable financial institutions to offer products and services to our large database of borrowers. The magnitude of this transition is remarkable. Just one year ago, our platform was over 90% funded by individuals. Being able to shift to complete institutional funding in just one year demonstrates our agility and our authentic execution capability. By transforming our business process, we were able to enable the functionality of our platform such that institutions can onboard and integrate easily. We've built the team and capabilities to scale and transform to a fintech service company with a technology platform optimized to serve financial institutions. With the new solid foundation under our business, combined with strong brand recognition, we are confident that we can achieve robust growth for years to come.

[Chunlin Fan:]

Thank you, Mr. Yan and Shelley. And thank you everyone for joining our call today. As Mr. Yang just mentioned, we ended Q3 on a strong note. Notably, as of November 10, Jiayin is no longer a P2P lending company as we close out our last individually funded loan. This quarter, we continued to operate conservatively while achieving attractive profitability. We have stayed our focus on serving high quality borrowers, which led to our repeat borrowing rate reaching 74.5%. Loans performed well and investor confidence remained strong. This creates an outstanding foundation for future growth.

[Operator:]

. First question is from the line of Andrew Scutt of ROTH Capital.

[Andrew Scutt:]

Congrats on the quarter. Very strong results and great to see the progress you guys are making. First question here with regards to revenue and margin. So, great quarter on the top line. Can you provide some extra information on the other revenue? I believe it was RMB77 million. It was a big gain there quarter-over-quarter and year-over-year. So, some extra details on the other revenue. And very strong margins this quarter. Looks like you guys are doing well with the cost controls. Is that something that we'll be able to stay steady over the next few quarters, these strong margins? Any color you can provide there would be great as well.

[Chunlin Fan:]

Other revenue was related to a decrease of the P2P related outstanding loan balance, with a combination of reversal of the overestimate of the funded liability item and other factors, the revenue was generated, it’s around like RMB77 million for this quarter. And actually, it's a non-recurring revenue. With the P2P running down to zero in November, we should have very little P2P-related revenue in Q4. And going forward, because our P2P outstanding loan balance have decreased to zero, so we will not see that item anymore, I mean P2P related revenue. That's the answer to your first question.

[Andrew Scutt:]

A good segue into my next question. So, can you just provide an update on your client take rate right now and the cost of acquisition, especially now that you guys have transitioned away from the P2P lending? And if you guys have a kind of target marks there that you're working towards?

[Xu Yifang:]

Our Q3 take rate actually is very similar to our Q2 because, in Q3, 100% of our loan origination volume comes from the institutional funding and it's around 7%. Actually, it's much lower if you compare that with our take rate last year. Last year, our take rate is above 10%. And we are seeing the revenue take rate will keep at that level and probably will get lower once we lower our pricing and lower our funding cost and lower our credit cost. That's the trend, trajectory we are reserving.

[Andrew Scutt:]

And then, last question for me for now. Congrats on the acquisition or the investment into Keen Best Investment. Can you just kind of provide some more color around the strategy there and if you guys have plans to make some more investments in the future?

[Xu Yifang:]

Are you talking about our short-term investment where we made a provision of RMB34 million this quarter?

[Andrew Scutt:]

Yeah, the acquisition of Keen Best investments – the 35% stake you guys….

[Xu Yifang:]

We acquired 35% of the shares of the company, namely Keen Best, right, and with a consideration of HK$105 million. And actually, the decision was made in the first quarter of this year. And we consider this will be very beneficial to our overall business when the decision was made. And the share transfer agreement actually was signed in Q1 this year, and the deal was officially closed by the end of Q3.

[Operator:]

. Thank you. I’m seeing no more questions in the queue, let me turn the call back to CFO, Mr. Charlie Fan, for closing remarks.

[Chunlin Fan:]

Thank you all again. This concludes the call. You may now disconnect. Thank you very much.

[Operator:]

Thank you, ladies and gentlemen. This concludes the conference call for today. And thank you for participating. You can all disconnect.