FinVolution Group First Quarter 2026 Earnings Conference Call

Hello, ladies and gentlemen. Thank you for participating in the first quarter 2026 earnings conference call for Finvolution Group. At this time, all participants are in listen-only mode. After management prepare remarks, there will be a question and answer session. Today's conference call is being recorded. I'll now turn the call over to your host, Yem Ching, Head of Capital Markets for the company. Yem, please go ahead.

Thank you, Desmond. Hello, everyone. Welcome to our first quarter, 2026 earnings conference call. The company's results were issued via newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's email alerts by visiting the IR section of our website. Mr. Tietjen Li, Tim, our CEO, and Mr. Jiayun Xu, Alexis, our CFO, will start the call with the prepared remarks and conclude with a Q&A section. During this call, we will be referring to several non-GAAP financial measures to review and access 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 U.S. 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 harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filing with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Finally, we posted a slide presentation on our IR website providing further details of our results for this quarter. I will now hand over to our CEO Tim. Tim, please go ahead. Thank you, Yan. Hello, everyone.

Let me close out 2025. Besides, we were stepping into this year with clarity, not certainty. One quarter in, the clarity is beginning to show in the trajectory of our business and in the early results of discipline choices we made last year. The micro backdrop has its challenges, yet we delivered a firm first quarter. Race is recovering in China. Overseas business continues to scale with its own strength. And across the platform, years of technology investment are compounding into operating efficiency. Despite the typical seasonal softness in the first quarter. Transaction volume held broadly steady at 42.6 billion RMB. Roughly in line with last quarter, our group net revenue reached 3.2 billion RMB, up 6% sequentially. Operating profit was up 13% sequentially. Net profit came in at 421 million RMB, up 1%, reflecting the impact of foreign exchange fluctuation. Overseas markets again delivered 30% of group revenue this quarter. This is no longer only a diversification story. It has matured into a second profitable engine. To give investors a clear view of this business, for the first time, we are disclosing our overseas business as a separate reputable segment. In the first quarter, overseas revenue reached 949 million RMB, up 35% year-over-year. However, operating profit reached 46 million RMB up 88% year on year. This is a reflection of both the scale we have built and the earnings power that now stands on its own. Now let me walk you through our two segments. Let's start with our mature market, Chinese mainland. The first quarter in China was in a word patience. We are seeing early signs of a recovery in progress. The Chinese New Year holiday always makes the first quarter a seasonally softer period. Yet transaction volume held up at 38.5 billion, roughly flight sequentially. On risk, we are seeing gradual improvements. The actions we took in the second half of last year are working, and credit risk is finding its way back to a healthier baseline. Vintage delinquency eased by 30 business points. Day one delinquency ratio also improved while 30-day collection rates ticked up. This improving environment has given us the operating hide rooms to re-engage with growth, cautiously not aggressively as the industry consolidated some players pulled back we selectively acquired more high quality customers at compiling cost conversion improved acquisition cost came down and we added roughly 0.6 million borrowers in China this quarter of 7% sequentially in the near term we We will continue to closely observe the evolving regulatory landscape. There is still uncertainty ahead. Our approach is to stay aligned with the rules, manage risk carefully, and capture opportunities as they emerge. Now a route through our overseas business. Our overseas market segment is a regional platform that learns, compounds, and transfers. Under our LEGO Plus framework, the capabilities we build in one market are deliberately designed to flow into the next. That means risk infrastructure, product architecture, customer strategy, funding relationships. A lot of these can be leveraged and replicated. This quarter is a demonstration of that idea in practice. The first quarter is traditionally a low season for our overseas markets as well. Across the region, transaction volume was 4.1 billion RMB, broadly flight sequentially. Indonesia moved through Ramadan in the Philippines. We deliberately moderated origination ahead of new interest rate regime, taking effect in the second quarter, a mirrored decision. consistent with our playbook. Year-over-year, the direction is clear. Loan volume up 35%, loan balance up 38%, unique borrowers more than double to 4.5 million. Australia is unfolding on the roadmap we've said. We are firmly executing the initiative we laid out from day one, expanding new customer acquisition channels, migrating the platform onto our proprietary risk infrastructure, deploying credit models, and the decisioning rules tailored for the Australian consumers. Early results are there, sharper risk detection, better borrower segmentation, stronger portfolio economics. What will make Australia work is the same combination that has served us before. Cross-market experience layered onto deep local knowledge. Technology, AI is no longer a supporting capability for us. It's how we run the business, from AI agents to workflow automation. We are proactively deploying nearly 120 active initiatives across the business, and more than 50% are embedded directly in frontline operations. For example, our engineering teams are building proprietary AI-native infrastructure to support new product launches across our current and future markets. In some of our overseas businesses, the results are already tangible. AI collection agents are not only the default touch point for pre-due reminders. They are also handling 50% of early stage collections at a recovery efficiency level in line with our historical benchmarks. We believe this is durable, compounding competitive mode, and we are just getting started. Community. Our long-standing community engagement programs continue to make an impact this quarter. Our maker business support program further expanded its reach this quarter, opening eligibility to retired athletes who run their own business in China. Since the launch, over 140 small business owners have benefited from this initiative and upgraded their business with our help on operational and funding support. In the Philippines, our local platform partnered with multi-local institutions to combat fintech-related cybercrime, reinforcing our commitment to building a safer digital financial ecosystem. Together, these initiatives reflect the depth of our local roots and the consistency our commitment to responsible growth. To close, the first quarter gave us the early shape of the year, a recovery in China amid regulatory fog. Our overseas business standing on its own with growth and profit, a technology advantage that is compounding. Against an uncertain macro, we move with the same posture we spoke of last quarter. Clarity, not certainty. Patience, not hate. We remain focused on growth that lasts and on creating durable value for consumers and our stakeholder. I will now turn the cloud over to Alexis.

Thank you team. This quarter marks a meaningful evolution in how we report. For the first time, we are presenting our overseas operations as a separate segment. The reason is simple. Our overseas operation has grown into awareness with its own skill, probability, and the trajectory. Reported alongside our China operations, the two tell a cleaner story. China is the foundation of cash flow and the stability. Overseas is the engine of growth. Two engines distinct but aligned. The overseas segment consists of the Indonesia, the Philippines, and Australia. Together, these three markets have reached scale, growth, and the probability where segment reporting gives investors a much clearer view of how they will drive upside going forward. We are also introducing adjusted EBITDA for each segment. This metric aligns with how global peers report their financial service experience and helps investors see the underlying probability of each engine. Transparency builds trust by separating the two engines. We make it easier for investors to value each segment on its own metrics and unlock the true value of the platform we have built. Now let me discuss each of the segments. China, the macro backdrop was broadly stable, GDP growth of 5%. Consumption settlement holdings is ground. Our China business continues to walk through the reset and begin in the second half of 2025. Lower generation volume was largely flat quarter-on-quarter. Given Q1 seasonality, this is the resilient outcome. Net revenue coming at MB 2.2 billion, up 7 percent sequentially. Take ratios from 3 percent to 3.2 percent, supported by the better risk performance. On risk, the picture is consistent across the indicators. In the first quarter, vintage delinquency is from 3 percent to 2.7 percent. Day-way delinquency improved from 5.5 percent to 5.2 percent. The 30-day collection rate ticked up from 85.9 percent to 86.8 percent. As a result, M2 flow rate declined from 0.77 percent to 0.68 percent. On the funding side, we continue to maintain stable partnerships with a board base of financial institutions which kept the founding core stable during the quarter. This healthy risk environment allows us to selectively broaden our credit appetite. Targeting has sharpened. Conversion has improved. New borrowers rose 7% sequentially, even when we actually reduced sales and marketing spend in China. Overseas segment. Overseas revenue was up 35% year-over-year at expanding margin. Adjusted EBITDA was IMB 47.5 million of 87% year-over-year. More encouragingly, all three markets contributed to this probability. The deeper picture is seeing how we deepen our integration into local ecosystems. We are embedding our financial services into the daily life and the commerce of each market. This plays out across three consistent themes. First, customer upgrading through target product development. Across all markets, we are systematically shifting our portfolio toward better quality borrowers. This is not a collection of win-off products. It's a consistent push toward higher quality portfolio composing. In Indonesia, offline buy-no-pay-later remains the primary growth engine despite Ramadan. A seasonally slow period, both transaction volume and the loan balance go 5 percent sequentially. Customer quality improved and integrated here this study, even as headline PMI eased modestly to 15.1. Unique borrowers reached 3.2 million, nearly five times the level of the same period last year. Second, regulator prepare this as our core capability. Our regulator playbook is being applied again in the Philippines. We tightened the law generation ahead of the new pricing regulation and the early read on risk indicators suggest the caution is playing off. We have navigated a pricing transition in Indonesia and China before and we are approaching one with the same posture and the same quiet confidence. Third, our proprietary risk infrastructure. Refund over years in China and the Southeast Asia is being gradually deployed in Australia. Credit trends there have moved lower for last quarter's seasonal peak, a validation of the portability of our infrastructure. With a renewed credit model, we still achieved secretion growth in transaction volume despite seasonal softness in the first quarter. Finally, our funding ecosystem continues to expand. We have recently added a permanent international bank to our funding partnerships in the Philippines. We are encouraged by the shared mission of our partners to support the exciting growth of the digital credit industry in the country. On a group basis, net revenue for the quarter reached $3.2 billion, marking a 6% increase, secretionally driven by an improved tick rate. Operating profit improved by 30% quarter-on-quarter to MB 547 million. Offset by impact of FX fluctuation that income reached MB 421 million of 1% secretionally. Our shareholder return since 2018 we have continuously returned value to our shareholders through share repurchase and dividends. Recently our Board of Directors approved our eighth annual dividend in the amount of US 0.306 per ADS, reflecting a DPS increase of 10.5% year-over-year. This dividend was distributed to May 7, 2026, bringing our total dividend distributions to shareholders for fiscal year 2005 to US $74.5 million. At the end of April, we have deployed US $15.4 million towards share repurchase, reflecting our conviction in our business and the commitment to our shareholders. Our look for full year 2026. We reiterate our revenue guidance in the range of MB 11.5 billion to MB 12.9 billion. We are on track toward our 2013 ambition, 15% of growth revenue from overseas markets. To conclude, China continues to provide a resilient foundation and it's steadily founding its footing. Overseas is scaling probability alongside it. The combination gives us the stability we need today and growth we are building for tomorrow. We step a quarter deeper into the year with the confidence this is quieter but warmer in the resilience of our model, in the discipline of our execution, and in the partnerships that carry us forward. Thank you. Now back to the operator for questions.

Thank you, management. We will now begin the question and answer session. To ask a question, please press star 1 and 1 and wait for a name to be announced. For the benefit of all participants on today's call, if you wish to ask your questions to management in Chinese, we ask that you please kindly repeat your question in English. One moment for the first question. The first question comes from the light of Alex Yeh from UBS.

Please go ahead. 这边两个问题第一个关于回购的就是也很欣喜看到就是公司在一季度保持了像去年四季度一样比较快的一个回购节奏 想请问能不能给我们展望一下后续在回购的一个安排然后具体的节奏上会有什么样的考量或者有什么变化吗 那第二个关于这个监管的一些展望吧 今年以来也看到这些持续的一些监管文件的出台,包括近期出台的一个金融产品网络影响管理办法,能不能给我们分享一下这个文件在哪些方面可能对公司的经营带来影响,以及公司计划如何去应对。 So I'll translate for my question, the first one is on buyback, so we are glad to see a company has maintained its pace of buyback in Q1 similar to previous quarter, so can you give us some color in terms of the outlook and including the pace for your buyback in the coming quarters? The second question on the regulatory outlook, so we have seen several new documents, regulated documents coming up in past several months, including the latest document which is so called E-management rules on the online marketing of financial products. Could you share with us what impact could this regulation document bring to your day-to-day operations and how would the company react to you to mitigate the impact?

Thanks. I will take your first question and the team will take your second question. And your first question is about the buyback. On the execution side, as you have seen, we have been running a very pretty active pace since the first quarter last year. We did around $14 million in the first quarter and the momentum has carried into 2026. In the first quarter we executed another $39 million and by the end of April we have added another $15 million dollars so the total amount this year is about for 54 million dollars and at the remaining capacity and our current program stands at about 20 million dollars with that as the backdrop our board recently approved a new US 150 million dollars program and also as for two years it's quite similar to the two programs we did in 2023 and 2025. And on the capital allocation our goal is always to maximize the shareholder return. The return acquisition could come from business expansion especially from the overseas business and it could also come from the share repurchase at the dislocated price so we will make sure we have enough firepower to support the business expansion and then deploy the buybacks in a more flexible ways based on the liquidity and at the price we trade it would be dynamically balanced okay hi Alex as you mentioned the online marketing of financial products we think

I think this regulation is a natural continuation of a long-running trend. The core ideas, I think, are protecting consumers, ensuring only licensed players offer financial products, and keeping a clean line between tech and finance. And all of these we are already agree with. Right now, I think it's still early to determine the full impact. The industry is working through the details on execution. And generally, we see three board areas where the industry will adapt. First, marketing rules are getting tighter. Things like low barrier to entry and instant disbursement and the zero costs are out. The days of flashy, borderline misleading advertisements are fading. For the industry, that means higher compliance costs, and some players we think may need to make some adjustments to their processes. Our approach has always focused on responsible lending and the long-term brand buildings. So we see this as an opportunity to raise our standards even further. And second, on user traffic flow from a platform to lenders, the rules added some fiction. It requires third-party platform to refer users directly to the financial institution's own platform. A lot of details still need to be hammered out on implementation, so it's too early to say for sure, but we are working with financial institutions and the internet platforms to restructure some of the workflow under this renewed framework there will certainly be some adjustment to the process we are in closed communication and the third on business boundaries the regulation reinforced that core financial decisions such as credit approval and the risk assessment must rest with licensed financial institutions this has always been our model we provide the technology and data tools our partners make the final calls and overall this regulation rates the bar for the entire industry there would be adjustments near term near term but as a company FIMolution as a company with with strong compliance and technology infrastructure. We see it as a net positive over the media to long term. And thanks, Alex.

Thank you for the questions. One moment for the next question. Our next question comes from the line of Cindy Wang of China Renaissance.

Please go ahead. 这边四五月的一个风险表现 那有机会持续在第一季度的一个基础下 持续向好吗 那风险向好的情况下的话 第二季我们怎么看国内的一个新放贷款量 然后第二个问题的话是 我们注意到就这次公司做了这个分布的一个披露 那可否请您分享一下关于这个分布披露背后的一个考量 然后海外的话 这边可不可以帮我们介绍一下 Thanks for taking my call. I have two questions. First, could you let us know whether domestic risk performance in April and May continue to improve from first quarter? and then if credit risk improves, well, transaction volume in China in the second quarter would increase. And second, we noticed that the company has made segment disclosure this time. Could you please share the consideration behind the segment disclosure? And also, could you please introduce some operating indicators for overseas markets, including like APR, funding costs, and default rate? and then what percentage of the group's EBITDA is expected to contribute from overseas market by 2030? Thank you.

Okay, thank you Cindy. I will take your questions. Your first question is about the domestic awareness. When we look at the risk of performance in the second quarter, the improving trend is continued. The asset quality has continued to get better and by the end of April our day one delinquency had already fallen below 5 percent back to where we were in July and August of last year. The sustained improvement in the asset quality is really the reflection of the risk management we have been building across the full credit life cycle. On the front end, customer acquisition and the pre-approval, we have been actively moving up the credit quality curve, offering higher limits and a better pricing to those high-quality customers. And on the technology side, we have been leveraging the large language model to refine the risk analysis, fraud detection and intelligent post-loan collections which has meaningfully lived most the BNS efficiencies and assay quality. As the assay quality stabilized we have selectively raised our risk appetite in the second quarter. We are now running diversified approach backed by the AI models. For those high-quality existing borrowers, we are now offering more credit limit at a controlled pace and we also selectively offering a wider group of customers of reasonable credit quality to expand our potential customer pool. So we are making progress on sustaining the first quarter growth momentum into the second quarter and we will keep a close eye on the macro environment and our early risk indicators stay focused on the high quality growth and continue to keep the balance between volume risk and the probability okay and then your next question is about the overseas business I think it's the multi-part question so I will break it into three pieces. First is about the overseas operating metrics. We will not break our APR funding costs or release by market because each is very different from interest rate to borrow profile, but I will give you some high-level guidance for reference. For APR, competency is always our first priority. We strictly follow the local pricing rules. At the same time, moving toward high-quality customers will give us the flexibility to offer different price. Take the binopulated product as an example. It helps us reach more prime customers. And for the funding cost, more institutions recognize our asset quality. And our funding partners go from 13 in 2004 to 18 today, which is continuously optimizing our funding costs. And for the delivery rate, as we upgrade customer quality and advance our risk capabilities, the risk metrics are improving across all markets. We continue to progressively bring this down going forward. And the second part is about the EBITDA contribution okay for 2030 overseas EBITDA I think it's due to early to guide on that because it depends on too many variables the contribution from Chinese business accounting rules impact and the pace of the overseas business but for 2026 we have a very clear target yeah But if you look back over the past few years, you will see a very careful map. We clarify our strategy and then execute it, deliver the results, and report them. So second, the disclosure is the nature of my stones in that ongoing narrative. When we look back at our international journey, it goes like the step one, prove and replicate the operating model we first approved of the viability and the probability of our bins model in Indonesia this was our first zero to one breakthrough in overseas market and then we replicate the success to the Philippines and step two we set a long-term goal and the deliver the study as our overseas B&A structure we formulated a group strategy to guide operations and the girls our local excellence global outlook or legal strategy we also clearly laid out the goal of reaching 50 percent overseas revenue by 2030 we are now already at 30 percent today steadily on the track and a step three the full strategic upgrade to legal class as we expanded into develop a market like Australia we have made a fundamental upgrade to what we call legal class we moved from being a collection of local wings to an integrated platform with compounding platform level advantages so under this framework regular experience products, structures, risk capabilities, and the funding networks all validating the market can be systematically renewed and the mitigated to new markets that has great accelerate and the risk of the new market entry and the next steps the formal segmented disclosure now we truly run the business that is both high growth and the probability probable on its own that's the right time to provide separate this culture for better understanding of the value you have in this this segment discussion is a nature link in our overseas story and it ties together what we have done and where we are headed and then it is the success of our legal strategy to date and it provides the transparent window into the high-quality global goals we are building for the future. In the coming years, you will see that our engine is not only fast, but also increasingly profitable with unit economics that are keeping improving. Okay, thank you, Cindy.

Thank you, Cindy, for the questions. One moment for the next question. Our next question comes from the line of Yu Chie-Jing from CICC. Please go ahead.

Thank you for taking my question. I'm Yijey Ding from SACC. I have a question regarding overseas market expansion. Now that other overseas business has achieved profitability, What will be the key drivers for its sustainable growth? Could you also share your outlook for this business? Thank you.

Thanks, Yujian. I have your answer to this question. As previous mentioned, our OCS business continues to deliver strong and resilient growth growth. And over the past several years, from 2020 to 2025, overseas transaction volume grew at 69 CAGR. In the first quarters of this year, despite the seasonally slow period, we still delivered solid results. And revenue grew 35% year-over-year with EBITDA up 87%. And overseas business is now the group's second-largest growth engine. The co-driver behind this growth is a dual flywheel loop we built as a data-driven type platform. With over 56 million registered users, our growing data pool sharpens our risk models. And high-quality assets consistently attract more institutional funding. More capital at better cost allows us to serve broader and higher-quality customer segments. Across Indonesia, the Philippines, and Australia, we graduate from the early investment phase and are now profitable. And for the Indonesian market, after fee adjustment in the past years, growth has resumed. The first quarter transaction volume grew over 30 percent year over year, and our approach is proactively pursue higher quality customers and continued traction of our offline ban operator product is a direct result of that strategy. In the first quarter, offline ban operator volume doubled from last year. And the Philippines, we proactively adjust our a landing piece in the first quarter and ahead of the new interest rules it's taking effect in the second quarter this year even so transaction volumes still grow on double digit year over year we also broadened our founding sources with one new international bank a clear recognition of our assets quality, and for the Australian market we are systematically deploying our FinTech expertise and risk management capabilities, automated system, and funding capacity from the group. And the first quarter transaction volume grew 25 percent year-over-year with more local data and ongoing model improvements we are confident australia will continue to grow in both top line and profitability and looking ahead as our business scales the flywheel loop would accelerate our long-term vision is to become a global example of technology driving includes safe financial platform operating on multiple fronts globally comes with a challenge but we are mature tech mode but with our mature tech mode

and operational agility we are very confident about the journey ahead thank you thank you for the questions as there are no further questions now I like to turn the call back over to the company for closing remarks.

Thank you, Desmond. Thank you once again for joining us today. If you have any further questions, please feel free to contact our groups and our team. Thank you so much.

That does conclude today's conference call. You may now disconnect your lines. Thank you.