Ladies and gentlemen, thank you for standing by and welcome to the Jiayin Group's Second Quarter 2025 Earnings Conference Call. Currently, all participants are in 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 objections, you may disconnect at this time. I will now turn the call over to Mr. Sam Lee from Investor Relations of Jiayin Group. Please proceed.
Thank you, Operator. Hello everyone. Thank you all for joining us today on today's conference call to discuss Jiayin Group's financial results for the second quarter of 2025. We released our earnings results earlier today. The press release is available on the company's website, as well as from newswire services. On the call with me today are Mr. Dinggui Yan, Chief Executive Officer; Mr. Chunlin Fan, Chief Financial Officer; and Ms. Yifang Xu, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Cybersecurity Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP financial measures to GAAP financial measures. Please note, unless otherwise stated, all figures mentioned during the conference call are in Chinese Renminbi. With that, let me turn the call over to our CEO, Mr. Dinggui Yan. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Mr. Yan.
[Foreign language]
Good afternoon, everyone. Thank you for joining Jiayin Group's Second Quarter 2025 Earnings Conference Call.
[Foreign language]
In the first half of this year, China has vigorously advanced its special initiatives to boost consumption, with total retail sales of consumer goods rising by 5% year-on-year. Additionally, six government departments jointly issued the Guiding Opinions on Financial Support for boosting and expanding consumption, aiming to further expand financial supply in the consumption sector. Against this backdrop, the company has seen market opportunities, leveraged its core strengths, accelerated the matching of consumer credit supply and demand, and supported the release of household consumption potential. In the second quarter, the company achieved loan facilitation volume of RMB 37.1 billion, representing a year-on-year increase of approximately 54.6%, setting a new record. Non-GAAP income from operations reached RMB 738 million, up approximately 182% year-on-year, while net income reached RMB 519 million, a year-on-year increase of approximately 117.8%.
While ensuring compliant operations, the company has successfully achieved its established operational targets and maintained a positive development momentum.
[Foreign language]
During the reporting period, the company maintained in-depth cooperation with 70 financial institutions, with another 58 under active negotiation. We have also been included in the whitelist of loan facilitation partners by multiple institutions, which not only recognizes our compliance capabilities, technological strength, and brand influence, but also helps enhance the sustainability and diversity of funding supply, providing long-term support for stable operations. Meanwhile, the company is also jointly exploring new business development paths under the new regulatory framework with funding partners. Examples include launching joint operation projects to assist financial institutions in connecting with targeted private channels, achieving resource integration and complementary advantages through refined scenario engagement and risk control modeling. To date, we have collaborated with over 10 banks and consumer finance companies, with the number and scale of projects continuing to grow, effectively empowering institutional partners and significantly strengthening ecosystem synergy.
[Foreign language]
In the second quarter, we have further enhanced our asset generation and risk pricing capabilities, leveraging precise borrower segmentation strategies and more competitive credit limits. The average borrowing amount per repeat borrower increased by 4.8% quarter- on- quarter, and the share of loan facilitation volume rose from 71.9% in the previous quarter to 75.6% in the current quarter, effectively boosting borrower stickiness. We have also achieved multi-point borrower outreach through continuously expanding acquisition channels and a diversified partnership ecosystem. The number of borrowers in the current quarter reached 908,000, representing a year-on-year increase of approximately 33.5%, achieving balanced growth between new and repeat borrowers, which together form the growth resilience of the company.
[Foreign language]
In terms of risk management, we have continued to increase investment in technology and adhere to a data-driven risk control framework. Key efforts have been focused on building a multimodal anti-fraud system by extracting voice prints from tens of millions of calls. We have established our own voice print database, which has been applied in multiple business processes, such as identifying black and gray market activities and preventing fraud. Through multidimensional data cross-verification and real-time dynamic intelligent recognition, we blocked approximately 320,000 malicious fraud applications in the first half of 2025 and cumulatively identified and intercepted over 460,000 high-risk habitual fraud applications. To address market fluctuations, we customized risk models to assess high-volatility, high-risk users, enhancing risk prediction capabilities. At the end of the second quarter, the 90-day plus delinquency ratio remained stable at 1.12%.
[Foreign language]
To continuously strengthen the value of AI technology in empowering our business, the company has focused on building foundational capabilities and scenario-based AI applications, expanding breadth and depth of business intelligence. In the second quarter, we launched a data intelligence assistant with three key agents, effectively reducing the threshold for business R&D and improving data R&D efficiency. In the agent intelligence domain, we have gradually replaced some commercial large language models with post-trained self-optimized models, resulting in significant cost reductions and efficiency improvements. For example, in agent assistant scenarios, the cost of AI-generated conversation summaries decreased by approximately 80% year-on-year. In terms of infrastructure development, our models optimized through reinforcement learning ranked fifth on the internationally authoritative BERT evaluation leaderboard, securing the top position among models with the same amount of parameters, with a generation accuracy rate reaching 71%.
This lays a solid foundation for the subsequent implementation in loan facilitation scenarios and the construction of our core competitiveness in data engineering. Meanwhile, the company has built a one-stop self-service R&D platform that supports various business departments in developing and deploying exclusive AI agents as needed. Within just one month, over 200 such agents have been deployed, strengthening internal empowerment and systematically advancing the in-depth implementation of AI across the business ecosystem.
[Foreign language]
Overseas markets remain a critical component of the company's long-term strategic layout. In the second quarter, our Indonesian partners saw robust business growth, with loan disbursements increasing by over 200% year-on-year and registered users growing by approximately 170%. While maintaining compliance, we continue to enhance user accumulation and operational efficiency. In Mexico, loan disbursement and registered users both increased by nearly 40% quarter- on- quarter, with a focus on product innovation and optimizing risk control systems. Guided by an open and win-win philosophy, we will continue to collaborate with local partners to unlock the potential of overseas markets.
[Foreign language]
Recently, we released our 2024 ESG report, which highlights substantial progress in sustainable development. At the corporate governance level, we adhere to leveraging technological innovation to advance inclusive finance. In terms of social responsibility, we have carried out multiple public welfare initiatives focusing on educational support and mental health care. For environmental protection, we have reduced energy intensity and carbon emission intensity through optimized energy and emission management. We have deeply integrated ESG practices into our business operations, fostering a positive cycle among economic returns, social value, and low-carbon operations.
[Foreign language]
Regarding shareholder returns, in July of this year, the company distributed its annual cash dividend. The Board of Directors approved a cash dividend of $0.8 per ADS, with a total dividend amount of approximately $41.1 million, representing an increase of over 50% compared to last year. In terms of share repurchases, in June, the Board approved extending the current repurchase program's validity period to June 12, 2026. In August, we increased the existing share repurchase plan by an additional $50 million. We will flexibly adjust cash dividend and share repurchase policies to share development achievements with shareholders and achieve mutual value creation.
[Foreign language]
Looking ahead to the second half of the year, as new loan facilitation regulations are gradually implemented, the policy environment in the internet finance sector is becoming clearer. We will adhere to the principle of compliance as the foundation and prudent operation, dynamically adjusting our operational pace. The company expects its third quarter 2025 loan facilitation volume guidance to be RMB 32 billion- RMB 34 billion, with non-GAAP income from operation guidance set at RMB 0.49 billion- RMB 0.56 billion. Moving forward, we will take compliance as our cornerstone and innovation as our wing, accelerate the building of differentiated competitive barriers and ensuring sustainable and steady growth for the company.
[Foreign language]
With that, I will now turn the call over to our CFO, Mr. Chunlin Fan. Please go ahead.
Thank you, Mr. Yan. Hello, everyone, for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB, and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yan noted earlier, we maintained the robust growth momentum throughout the second quarter, setting a new record high in business scale. Loan facilitation volume was RMB 37.1 billion, representing an increase of 54.6% from the same period of 2024. Our net revenue was RMB 1,886.2 million, representing an increase of 27.8% from the same period of 2024. Moving on to costs, facilitation and servicing expense was RMB 285.1 million, representing a decrease of 53.1% from the same period of 2024. This was primarily due to decreased expenses related to financial guarantee services.
Allowance for our credit assets, loan receivable, and others was RMB 32.5 million, compared with RMB 3.3 million reversal in the second quarter of 2024, primarily due to the additional cap of overseas guarantees, which the company provided for loan facilitation business conducted by the companies invested in the second quarter of 2025. Sales and marketing expense was RMB 710.5 million, representing an increase of 46% from the same period of 2024, primarily due to an increase in borrower acquisition expenses and commission expenses. G&A expense was RMB 110.5 million, representing an increase of 70% from the same period of 2024, primarily driven by an increase in payroll expenses and share-based compensation. R&D expense was RMB 108.4 million, representing an increase of 16.8% from the same period of 2024, primarily due to higher share-based compensation as well as increased professional service fees.
Non-GAAP income from operation was RMB 737.6 million, compared with RMB 261.6 million in the same period of 2024. Consequently, our net income for the second quarter was RMB 519.1 million, representing an increase of 117.8% from RMB 238.3 million in the same period of 2024. Our basic and diluted net income per share was RMB 2.46, compared with RMB 1.12 in the second quarter of 2024. Basic and diluted net income per ADS was RMB 9.84, compared with RMB 4.48 in the second quarter of 2024. We ended this quarter with RMB 316.2 million in cash and cash equivalents, compared with RMB 190.3 million at the end of the previous quarter. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer your questions. Operator, please proceed.
Thank you. If you'd like to ask a question, please press Star, one,one. If your question has been answered and you'd like to move yourself from the queue, please press Star, one,one again. One moment for questions. Our first question comes from Ron Hwa with Genu Asset. Your line is open.
[Foreign language] Hi management, I have two questions. The first one is, the company's loan facilitation business has sustained high growth. How does management view the impact of the new regulations on business going forward? My second question is, what are management's plans around shareholders' returns? Thank you.
[Foreign language]
Hi, Ms. Hwa, thank you for your question. We sustained high growth this quarter, and this proves our consistent investing and focus in the digitalization and credit technology of our company. In the future, we'll continue to focus on enhancing operational capabilities through data and AI empowerment, to enable financial institutions with our expertise to pursue long-term and quality growth.
[Foreign language]
Speaking of the new regulation, the specific implementation will probably become more clear in the fourth quarter. At the present, not only for us, but for the entire industry, licensed financial institutions seem to be adopting a more cautious approach to funding supply. The decisions of which platforms to cooperate with are also being made with greater consideration.
[Foreign language]
In terms of the whitelists of institutional partners, earlier Mr. Yan referenced it, but we're proactively ensuring that these requirements don't impact our existing loan facilitation business. On the business model side, we're actively preparing multiple contingency and product plans so that in the next couple of months, we can quickly respond to product model requirements of our institutional partners related to the new regulation.
[Foreign language]
The company's operational and management focus will continue to be on strengthening our capabilities in credit technology, data, risk management, and operations. Really, regardless of how the product and cooperation models evolve under the new regulations, these capabilities are our core competitive advantages in the loan facilitation and credit tech industry. That's what really makes us appealing to our partners. As the new regulations become clear and fully implemented, we expect this to drive a long-term, healthy industry development and growth, ensuring that fair, healthy competition. For long-standing established players like us in the industry, this is a positive signal.
[Foreign language]
For the second question, Mr. Fan will answer your question.
[Foreign language]
For dividends, Mr. Yan touched upon it earlier. The company will maintain an annual dividend policy, with the total amount being approximately 30% of the previous year's net income after tax. In July of this year, the company distributed a cash dividend of $0.80 per ADS, representing a 60% increase compared to last year's $0.50 per ADS.
[Foreign language]
For our share repurchase, at the recent board meeting in August, an additional $50 million was approved for the share repurchase plan, bringing the total authorized repurchase amount to $80 million. As of August 2025, the total repurchase amount is approximately $30.4 million.
[Foreign language]
To summarize, as always, we will continue to share the results of the company's development with our shareholders and seek to provide excellent returns to our investors.
[Foreign language]
Thank you, Ms. Bai.
Thank you. Our next question comes from Yu Chen with HCSC. Your line is open.
[Foreign language]
Okay, let me do the translation. Hello management, thanks for giving me this opportunity. I'm Chen Yuxuan from Huatai Securities. I have two questions. The first one, we noticed the company's profitability has improved over the past two quarters. In light of new regulations, what is your outlook for profit margin going forward? The second one is, we have observed continued improvement in risk performance this quarter. What are the key drivers behind this and how has the risk performance trended so far in the third quarter? Also, some funding partners have become more cautious in lending, resulting in tighter market liquidity. Could this create volatility in asset quality? What measures has management taken in response? That's all. Thanks.
[Foreign language]
Thank you, Yu Chen, for your question. I will answer the first question, and Ms. Chu will answer the second question. In Q2 2025, the company's non-GAAP income from operations reached RMB 738 million, really exceeding our guidance range of RMB 660 million to 730 million previously given. The net income reached RMB 519 million, a year-on-year increase of 117.8%. The net income margin stood at 27.5%, significantly up from 16.1% in the same period last year. The strong profit margin performance over the past two quarters can be attributed to the following key factors.
[Foreign language]
First, there's a significant increase in the company's loan facilitation volume. In Q2 of 2025, the loan facilitation volume reached RMB 37.1 billion, a year-on-year increase of almost 55%, marking a new record since the company's listing. The economies of scale have really helped improve the profit margin.
[Foreign language]
The second factor is the continued optimization of the company's revenue mix. This is a key point we have consistently emphasized to our investors. The high-quality growth in the loan facilitation service revenue and the significant reduction in the proportion of guarantee service revenue really have effectively optimized our profit margin. With the rapid year-on-year growth in facilitation transaction volume in Q2, the company's facilitation service revenue reached RMB 1.609 billion, about a 70% increase compared to the previous year. In terms of revenue contribution, facilitation service revenue's share of the total revenue increased from 64% in Q2 last year to 85% in Q2 this year. Correspondingly, the proportion of lower margin guarantee-related service revenue decreased from about 29% in Q2 2023 to less than 7% in Q2 2024. The continued optimization of the revenue mix has significantly improved the company's profit margin.
[Foreign language]
Third, the company's continued strategic investments in AI technology and R&D have led to significant improvements in operational efficiency. Our ongoing investment, combined with the implementation of AI applications across various operational processes, has really laid a solid foundation for sustained improvements in operational efficiency for Q2 and over the long term.
[Foreign language]
Implementation of the new regulations, as Ms. Xu mentioned earlier, in the short term, will require institutions to adjust their strategy, pricing strategies, and cooperation models. However, in the long term, these regulations will benefit the entire industry by fostering healthier, more compliant, and more sustainable development. As the new regulations become implemented, Jiayin Group will further strengthen our long-term advantages. Given the details of the new facilitation regulations are yet to be clarified, we're taking a prudent approach in providing the Q3 loan facilitation volume guidance of RMB 32 billion- RMB 34 billion. For Q3, the non-GAAP income from operation guidance is RMB 490 million- RMB 516 million. For the full year, we're keeping our guidance the same, RMB 137 billion- RMB 142 billion for the loan facilitation volume.
[Foreign language]
That's my answer for the first question, and the second question, I'll turn it over to Ms. Xu.
[Foreign language]
The second question, all the questions are related to risk performance. This quarter, the risk performance has continued to improve for us, mainly due to several factors. First, the ongoing investment in risk data and models, focusing on the changes in characteristics during risk cycle, automating the monitoring of leading risk indicators and trends, and quickly responding with corresponding risk strategy and frameworks and solutions.
[Foreign language]
The second reason is that the denominator, our loan volume, has continued to increase at a fast speed. That is another contributing factor.
[Foreign language]
The third reason is technological. We've increased our investment in the forward-looking research on risk cycles. Beginning at the end of Q1 and the earlier part of Q2 of this year, we've already begun the research and quantification on sensitive borrower segments. We anticipate that in the context of cautious funding supply, there will be short-term adjustments, and fluctuations are inevitable, especially among the cyclical sensitive borrowers and those with tail-end pricing. As liquidity decreases, the performance for these borrower groups is expected to decline.
[Foreign language]
For the repeat borrowers, we're proactively managing the exposure and transaction criteria. For new borrowers, what we're doing is we're focusing on the concentration of sensitive borrower segments within the acquisition channels and adjusting the scale, proportion, volume, and structure of these channels. Throughout this credit cycle, we will continue to monitor and research the customer segment characteristics and enhancing the differentiated credit and operational strategies for our top-tier, high-quality borrowers to ensure the healthy development of our overall risk profile in the broader context of the industry environment.
[Foreign language]
That's my answer for the risk indicators and risk performance. Thank you.
Thank you. Seeing no more questions, I'll return the call to Sam for closing remarks. Please go ahead.
Thank you, Operator, and thank you all for participating on today's call. We appreciate your interest and look forward to reporting to you again next quarter on our progress.
Thank you all again. This concludes the call. You may now disconnect.