Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jiayin Group's First Quarter 2025 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 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 on today's conference call to discuss Jiayin Group's financial results for the first 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. Yan Dinggui, Chief Executive Officer, Mr. Fan Chunlin, Chief Financial Officer, and Mr. Xu Yifang, 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 U.S. Private Securities 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 discussions 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 that unless otherwise stated, all figures mentioned during this conference call are in Chinese RMB. With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with the corresponding English translation. Please go ahead, Mr. Yan.

Hello, everyone. Thank you for joining our first quarter 2025 earnings conference call. This quarter, China's economy continued to demonstrate recovery momentum and maintained steady growth. Total retail sales of consumer goods rose by 6.4% year over year, with the growth rate accelerating to 5.9% in March, indicating a pickup in consumer spending. We capitalized on the momentum and delivered a strong start to 2025, with loan facilitation volume reaching RMB 35.6 billion, up approximately 58.2% year over year. Non-GAAP operating profit hit RMB 607 million, marking a year-over-year increase of 91.6%, and net profit surged to RMB 540 million, reflecting a year-over-year rise of 97.5%. Both business scale and profitability metrics hit record quarterly highs since the company's listing, marking the beginning of a new phase of rapid growth. Leveraging diverse acquisition channels and ramping up marketing efforts in the first quarter, the company added 1.056 million new borrowers, representing a year-over-year growth of 126.6%. New borrower contribution of total loan facilitation volume was 28.1%, demonstrating robust growth momentum. In terms of channel expansion, we explored cross-industry use cases to reach new borrowers across different platforms, including lifestyle services, online video, and travel. By establishing strategic partnerships with multiple leading platforms, we further diversified our existing borrower base. Additionally, we integrated AI tools to analyze user feedback and optimize marketing material, enabling real-time adjustments to marketing strategy and targeted resource allocation to enhance borrower acquisition efficiency. To meet the rapid growth in consumer demand, we also actively expanded our high-quality institutional partnerships. As of the end of quarter one, the company maintained partnerships with 59 financial institutions, with another 55 financial institutions in discussion. This ensures robust funding support for our loan facilitation business. We view independent innovation as our key growth driver and continue to accelerate the digital transformation of our business. We actively promoted our four plus two AI development strategy in the first quarter, focusing on four major product matrices: business intelligence, data intelligence, aging intelligence, and workplace intelligence, while collaboratively building two infrastructure platforms: the intelligent agent platform and the large model post-training platform. This helps establish a technological framework that supports the end-to-end AI capability upgrade across the company, comprehensively driving high-quality development and intelligent business scenarios. In May, we launched the Fuxi model management platform, which now covers 90% of our business lines. The platform is capable of faster model deployment, greatly streamlining operations and improving model deployment efficiency threefold. Furthermore, model data preprocessing efficiency, model stability, and execution speed have all seen notable improvement with the adoption of the Fuxi model management platform. We have also comprehensively upgraded the Tianlu R&D performance management platform, creating a unified management platform that covers the entire lifecycle from product development to online operations. This further enhances the standardization and automation of R&D processes. In response to the rapid growth of new users and continuous rise in credit demand, we fully implemented the quality score framework, utilizing our self-developed models to establish a risk assessment system for new borrowers. Collaborating across multiple departments, including borrower acquisition, modeling, and risk management, we unify the evaluation standards for borrower acquisition quality. This approach enhanced borrower acquisition efficiency while maintaining disciplined management over risk performance. By the end of Q1, the 90-day plus delinquency ratio stood at 1.13%, reflecting the remarkable stability of the company's risk management system. In terms of overseas business, the company's continued investment in risk control and operation has yielded significant results. Our business partners in Indonesia delivered outstanding performance in the first quarter, with the number of new registered users surging by 196% year over year and loan volume growing by 190% year over year, both representing substantial breakthroughs. As the business matures, we plan to collaborate with local partners through diversified collaboration to deepen our engagement in the local market. Meanwhile, risk metrics in our Mexico operations improved, accompanied by an increase in return on borrower acquisition investment. This fully demonstrates the continued advancement of our overseas operational capability. We have always adhered to a customer-centric philosophy and view upholding industry standards as our responsibility. In the first quarter, the company released a 2024 consumer rights protection white paper, integrating consumer rights protection into every aspect of the company's operations and management. This initiative spans multiple dimensions, such as technology-driven fraud prevention, engaged customer service, external collaboration, and consumer protection education. The white paper showcases our commitment to enhancing the innovative practices and social responsibility in consumer rights and protection. Additionally, we advanced the HeartSmile Youth Mental Care Project and conducted training for teachers and students focused on psychology, organized parent workshops, and activities supporting children with autism in multiple regions. The program has covered nearly 60 schools, benefiting over 16,000 individuals and was recognized by China National Radio as an annual exemplary case of innovative philanthropy. Furthermore, the volunteer service team consistently provided services for community and special schools, promoting the normalization of volunteer services. Looking ahead, we will continue to drive industry development through technological innovation and give back to society through concrete actions, reaffirming the trust placed in us. Regarding shareholder return, in March, we updated our dividend policy, raising the dividend payout ratio from no less than 15% of the previous fiscal year's net profit after tax to approximately 30% of the previous fiscal year's net profit after tax. In May, the board of directors approved a dividend plan of $0.8 per ADS, with the dividend amount increasing by approximately 60% compared with last year. Further details and dates for this dividend will be announced separately after the Board of Directors finalizes them. For the share repurchase program, the current plan has an upper limit of $30 million, and the board of directors has approved extending its validity to June 12, 2026. We are deeply honored, as always, to have the trust and support of our shareholders. In the future, we remain committed to sharing the company's development achievements and rewarding our shareholders.

This is the operator. Speakers, we cannot hear you at the moment. Please check if the line is muted. Callers, please do hold the line whilst we get the speakers' sound connected.

Hi, operator. This is Xu Yifang calling from Jiayin Group. I believe the speaker who was presenting just now got disconnected. They are dialing in at this moment. Thank you very much.

Participants, please do continue to hold the line whilst the speakers reconnect. Thank you. Hi, Sarah. Hello. Is this the speaker line reconnected?

Yes. We got disconnected. Sorry.

Thank you. The line is connected now, so please do continue.

Okay. Okay. Hold on. In April, China's National Financial Supervision and Administration Commission issued a notice on strengthening the management of Internet loan facilitation business of commercial banks to enhance the quality and efficiency of financial services. The new rule affirms the positive value of the loan facilitation model and sets a clear regulatory framework, helping the industry move towards a more standardized and transparent practice. Looking ahead, despite global uncertainties affecting China's economic recovery, we still see many positive factors and remain cautiously optimistic. For Q2 2025, we set our guidance for loan facilitation volume at RMB 37 billion to RMB 39 billion, and non-GAAP operating profit at RMB 660 million to RMB 730 million. And with that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Go ahead.

Thank you, Mr. Yan, and 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 mentioned earlier, we sustained robust growth momentum in the first quarter, achieving a record-breaking expansion in both business scale and profitability. Loan facilitation volume was RMB 35.6 billion, representing an increase of 58.2% from the same period of 2024. Our net revenue was RMB 1,775.6 million, representing an increase of 24.4% from the same period of 2024. Moving on to costs, facilitation and servicing expense was RMB 336 million, representing a decrease of 49.6% from the same period of 2024. This was primarily due to decreased expenses related to financial guarantee services. A loss for unsecured assets, loans, receivables, and others was RMB 17.5 million compared with RMB 2.6 million in the first quarter of 2024, primarily due to the additional overseas guarantees the company provided in the first quarter of 2025. Sales and marketing expense was RMB 674.5 million, representing an increase of 87.5% from the same period of 2024, primarily due to an increase in borrower acquisition expenses. G&A expense was RMB 52.8 million, representing an increase of 14.2% from the same period of 2024, primarily due to increased professional service fees. R&D expense was RMB 88.1 million compared with RMB 83.3 million in the same period of 2024. Non-GAAP income from operations was RMB 606.6 million compared with RMB 316.6 million in the same period of 2024. Our net income for the first quarter was RMB 539.5 million, representing an increase of 97.5% from RMB 273.1 million in the same period of 2024. Our basic and diluted net income per share was RMB 2.53 compared with RMB 1.29 in the first quarter of 2024. Basic and diluted net income per ADS was RMB 10.12 compared with RMB 5.16 in the first quarter of 2024. We ended this quarter with RMB 190.3 million in cash and cash equivalents, compared with RMB 540.5 million at the end of the previous quarter. Mr. Xu, our Chief Risk Officer, and I will answer your questions. Operator, please proceed.

Thank you. We will now take our first question. This is from the line of Hua Rong from Genuity Assets. Please go ahead.

First, congratulations to management for having that brilliant revenue report this quarter. I have two questions. The first one, there has been a noticeable trend of rising customer acquisition costs across the industry. How has the company's acquisition cost evolved recently? And in this context, what measures are you taking to mitigate the credit risk of new borrowers and ensure asset quality? My second question is how is the company's management planning to address the potential ADR listing risk? And what contingency measures are in place to mitigate the impact? Thank you.

Hi, Ms. Hua Rong. I will answer your first question on the rising customer acquisition cost, and Mr. Fan will answer your second question on the ADR delisting risk. Starting from Q4 last year, the market has become a lot more dynamic, and the overall macro trend has become a little bit different. In Q1 this year, the market, as well as our competitors, have turned to acquiring new customers. So yes, Jiayin has also observed a rising trend in customer acquisition cost. This development is the result of multiple factors, including the broader external market environment, seasonal growth dynamics, and the company's own strategic decision. Since the second half of last year, competition among loan facilitation platforms has really intensified, with various acquisition channels seeing increased pressure after new users. This is one of the main external factors. The first quarter marks the beginning of the year, and we have proactively positioned ourselves to support our full-year performance goal, reflected in the strong push for user base expansion early on. Additionally, earlier Mr. Yan referred to the new regulatory framework. The new framework on governing loan facilitation. We have been actively exploring new areas of growth. This has led to increased investment and experimentation in acquiring new customers and expanding our customer segment. As a result, the rise in our customer acquisition cost to a large extent is a strategic choice. We expect this to be reflected in both the scale and quality of customers acquired going forward. In regards to the new customer asset quality, the concerns regarding the asset quality, we will continue to monitor shifts in user acquisition models across the traffic ecosystem while staying focused on effectively reaching our target customer segment. We plan to strengthen our front-end risk modeling capabilities, dynamically adjusting our channel mix, and further enhancing AI applications and data mining for credit risk identification. These efforts aim to drive continued improvement in both customer acquisition cost and risk cost metrics for our new borrowers. Mr. Fan will answer your second question.

I will answer the question regarding the ADR delisting risk. The risk with the Chinese ADRs being delisted has been an ongoing concern for several years, with the first wave of pressure starting during President Trump's first term. Following his return to the White House, we have again observed potential delisting of Chinese ADRs, renewed rhetoric, and actions in the US related to this. What we have done is we have engaged in extensive communication and consultation with our legal, financial advisers, and regulatory bodies to assess the potential risk of delisting. Based on our evaluation of various factors, including our industry, business model, ownership structure, and audit disclosure standards, we believe that the risk of delisting for Jiayin Technology in the near term remains relatively low. At the same time, we still have to be ready and proactively prepared for any alternative scenario. In guiding of Hong Kong exchanges, we have conducted a comprehensive assessment and preliminary preparations across key areas, such as shareholder structure, accounting standards, and corporate governance. This is all in line with the requirements for dual primary listing or secondary listing in Hong Kong. As a company that has achieved meaningful scale, maintains core competitiveness, and delivers consistent profitability, Jiayin Technology is well-positioned with multiple options. Regardless of volatility in the capital market, we remain open to all possibilities and are actively preparing to ensure the company's long-term sustainability and to safeguard the interest of our shareholders. That concludes my answer to your questions. Thank you, Ms. Hua Rong.

Thank you. We will now move to the next question. Your next question is from Yuxuan Chen from Huatai Securities. Please go ahead.

Hello, management. Thanks for giving me this opportunity. This is Yuxuan Chen from Huatai Securities. I have two questions. The first one is I noticed the net profit increased by 97.5% in this quarter. What were the main drivers behind this significant improvement in profitability? And what is your outlook for profitability in the coming quarters? The second question is, recently, the financial regulators issued new guidelines on loan facilitation in China. How does the company view this policy development? And what impact do you expect it to have on your business operation? Thanks.

Thank you, Yuxuan. I will answer the first question, and Ms. Xu will answer the second question regarding the new guidelines. As Mr. Yan mentioned, in Q1, we came out really strong with good financial results for the first quarter. In the first quarter of 2025, the company achieved a net profit of RMB 540 million, representing a year-over-year increase of 97.5%. Net profit margin reached 30.4%, significantly higher than the 18.5% reached in Q1 2024. This improvement was driven by several key factors. The first reason is due to a significant increase in loan facilitation volume. In the first quarter of 2025, total loan facilitation volume reached RMB 35.6 billion, up 58.2% year over year, marking a new high since our IPO. The resulting economies of scale enabled cost and efficiency, leading to improved net profit margins. The second reason is ongoing optimization of revenue structures. As we mentioned before, our current revenue is primarily composed of loan facilitation service revenue and guarantee-related revenue. In recent quarters, we have strategically focused on driving high-quality growth in loan facilitation services, which are at the core of our capabilities. In contrast, guarantee-related services carry lower margins, so we have been intentionally reducing their share of revenue. Specifically, loan facilitation service revenue accounted for 83% of total revenues in Q1 2025, up from 56% in Q1 2024, while at the same time, guarantee-related revenue dropped to 9.6% in Q1 2025, down from 35.6% in the same period last year. This shift in revenue mix has significantly enhanced our overall profitability. The third reason is improved operational efficiency driven by continued investment in AI technology and R&D. We continue to invest strategically in technology, AI, and R&D, with a particular focus on deploying AI across various operational functions. These efforts have laid a solid foundation for sustained improvement in efficiency both in Q1 and going forward. In terms of future guidance and outlook, for Q2, we are guiding loan facilitation volume to be in the range of RMB 37 billion to RMB 39 billion. This represents a 54% to 62% increase. And our non-GAAP operating income between RMB 660 million and RMB 730 million. This is also a significant increase year over year. We remain committed to delivering on the goals set at the beginning of the year. First, returning to a path of high-quality sustainable growth, and second, at the same time, continue to improve asset quality and operational efficiency. We are confident in achieving significant profitability improvements for the full year of 2025. Okay, thank you. And we will have Ms. Xu answer the second question.

As far as the new regulation goes, we think that they started drafting this regulation in the second half of last year and really became official this year. Overall, the new regulation reflects the regulatory recognition of the loan facilitation business model while also setting higher standards for its management. We believe it encourages platforms to support licensed financial institutions in delivering much broader financial inclusion through better service, better service quality, lower pricing, and thereby promoting the industry's orderly development and effective risk control. In order to help our institutional partners achieve their goals and requirements, we are actively adapting to the evolving product requirements from our partner institutions in terms of pricing and structure. Given the large number and diversity of our institutional partners, the responses from them to the new regulation vary to some extent. That said, we are really nearing the completion of our product adjustments and implementation. So for the partners who are seeking faster alignment with the new regulatory standards, we will begin switching over and rolling out the updated offering shortly. We expect to complete all the necessary adjustments and meet all the requirements across our institutional partnerships ahead of the scheduled deadline. At the same time, we continue to invest in new growth drivers across regions and really to expand the scale of optimized product models, and really further enhancing our capabilities in risk management, internal metrics, and cost efficiency, and to sustain high-quality growth for Jiayin Technology. Hope that answers your question.

Thank you. Seeing no more questions, I will return the call to Sam for closing remarks. Please go ahead.

Thank you, operator, and thank you all for participating. We look forward to reporting to you again next quarter on our progress.

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