Earnings Call Transcript - JFIN Q4 2025

Operator, Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jiayin Group's Fourth Quarter 2025 Earnings Conference Call. 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.

Sam Lee, Head of Investor Relations

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 fourth 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 Ms. 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 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 that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. 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 corresponding English translation. Please go ahead, Mr. Yan.

Yan Dinggui, Chief Executive Officer

Spoke in Chinese; English translation follows below. Hello, everyone. Thank you for joining our fourth quarter and full year 2025 earnings conference call. 2025 was a pivotal year for the industry, marked by deepening regulation and standardized development. Despite the continuously tightening external environment, we maintained steady progress. For the full year, our loan facilitation volume reached RMB 129 billion, representing a year-on-year increase of approximately 28%. We achieved revenue of RMB 6.22 billion, up approximately 7.3% year-on-year, and net income of RMB 1.54 billion, a year-on-year increase of approximately 45.4%, demonstrating our operational resilience amidst a complex environment. In the fourth quarter, following the implementation of the new regulation, we observed a continuous decline in comprehensive financing costs alongside higher entry barriers and stricter compliance requirements. In response to this new regulatory landscape, we have proactively collaborated with our funding partners to facilitate necessary adjustments. As of now, we maintain partnerships with 79 financial institutions and are negotiating with an additional 53. We have consistently adhered to the operating philosophy of compliance as the foundation, and quality and efficiency as priorities. We proactively adjusted our borrower acquisition pace this quarter, adding approximately 407,000 new borrowers, reflecting a year-on-year decline. To further enhance the precision of channel management and the efficiency of marketing spend, we implemented cross-functional collaboration to revamp our channel evaluation framework and to continue to optimize onboarding standards, ongoing monitoring and off-boarding processes. Additionally, by establishing a more flexible credit limit management system and implementing targeted reactivation strategies for existing borrowers, we effectively unlocked the repeat borrowing potential among quality borrowers. Repeat borrowing contribution accounted for 79.4% of loan facilitation volume, an increase of 6.7 percentage points compared to the same period last year. Since the fourth quarter, risk indicators have remained under pressure. We have been advancing a phased deep restructuring of our risk control strategy, which includes multiple rounds of tightening entry criteria, optimizing credit limits and iterating on product offerings. This has allowed us to proactively manage risk exposure and refine borrower segment structures, mitigating the impact of certain external fluctuations on asset quality. As of the end of the fourth quarter, the 90-plus day delinquency ratio was 2.03%. Entering 2026, thanks to precise identification and isolation of tail risk, along with structural optimization of our existing asset portfolio, forward-looking risk indicators are showing positive trends. We will continue to build a risk control system that balances long-term stability with short-term dynamics to support steady operations. On the artificial intelligence front, we made solid progress in 2025 in multimodal technologies, antifraud, AI-powered agents and data intelligence. In 2026, our 4+2 strategy will undergo a key upgrade. We have reorganized our four core pillars into two main tracks: production and non-production. The production track focuses on core business value creation, covering three directions: borrower acquisition, risk management and marketing. We are exploring AI-driven identification and acquisition of high-quality borrower groups, deepening the application of multimodal technologies such as voiceprint, knowledge graph and antifraud, and enabling AI-powered content generation, review and marketing. The non-production track aims to improve efficiency and quality in daily operations, covering engineering intelligence, agent assistance and office intelligence. Key initiatives include advancing AI programming from coding completion to autonomous coding, adopting a human-machine collaborative agent model to enhance service quality and efficiency, and further upgrading our internal intelligent workplace systems. Meanwhile, our intelligent agent platform and machine learning platform, as the two foundational infrastructures, will continue to provide underlying tooling support for upper-layer applications. This strategic upgrade marks a shift in our AI strategy from capability building to value creation, embedding AI more deeply into our business value chain and providing stronger, more sustainable drivers for development. In terms of new business expansion, we have continued to focus on three dimensions: financial product innovation, partnership model innovation and overseas markets. On the product side, we actively expanded into auto-backed loans and digital intelligent micro loans, enriching our credit product portfolio. In partnership models, we connected with leading traffic ecosystems through joint operations, establishing deep strategic partnerships with multiple institutions. Throughout the year, we launched 21 projects with business scale growing month by month. As an early mover in global markets, our strategic value has become increasingly prominent. In 2025, facilitation volume in Indonesia increased by approximately 187% year-on-year, while registered users grew by approximately 119% year-on-year, demonstrating gradual scale effects. Mexico business accelerated significantly in the fourth quarter. For the full year, the total loan facilitation volume grew approximately 105% year-on-year, while registered users were up approximately 110% year-on-year, marking a key milestone in validating our business model. We plan to use several countries where we have investment and operational experience as anchors to explore opportunities in other markets. Through cross-geography and cross-cycle deployment, we will steadily expand our global footprint. The essence of financial inclusion lies not only in the depth of service reach, but also in conveying social value. Over the past year, our philanthropic initiatives reached multiple areas, including youth mental health and support for special needs groups. We directly trained over 30,000 teachers, students and parents covering more than 1,300 schools and conducted mental health assessments for over 60,000 students and teachers, protecting the healthy growth of children through concrete actions. In terms of volunteering services, since the establishment of the Jiayin volunteer service team, we have grown to 120 members, completed 28 activities and accumulated nearly 3,800 hours of service. Our philanthropic practices and social responsibility efforts have received multiple recognitions from government departments, authoritative media outlets and social organizations. This is not only an affirmation of our commitment to long-termism, but also a core competitive advantage in building trust in our brand. Regarding shareholder returns, in 2025, we continued to deliver on our commitment to share the benefits of our development with our shareholders. During the year, we completed cash dividend distributions totaling USD 41.1 million, representing an increase of over 50% year-on-year. In August, we increased the total quota of the current share repurchase program to no less than USD 80 million. To date, we have repurchased nearly 4.6 million ADS with a total value of approximately USD 30.4 million. We will maintain our existing dividend policy and make disciplined use of the remaining repurchase capacity to deliver sustainable returns to shareholders. Given the ongoing uncertainty in the macro environment, we maintain a prudent stance and expect loan facilitation volume for the first quarter of 2026 to be between RMB 18.5 billion and RMB 19.5 billion. We will continue to use compliance as our foundation and innovation as our engine to continuously solidify the technological foundation and build resilience against cyclical fluctuations.

Fan Chunlin, Chief Financial Officer

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 noted, amid the liquidity tightening and heightened risk volatility following the new regulatory implementation, we have proactively pivoted to prioritize asset quality over expansion to safeguard our long-term stability. Loan facilitation volume in Q4 was RMB 24.2 billion, representing a decrease of 12.6% from the same period of 2024. Our net revenue was RMB 1,090.2 million, representing a decrease of 22.4% from the same period of 2024. Moving on to costs. Facilitation and servicing expense was RMB 328.2 million, representing a decrease of 3.3% from the same period of 2024. Reversal of credit losses of uncollectible assets, loans receivable and others was RMB 20.1 million compared with an RMB 1.2 million allowance for credit losses of uncollectible assets, loans receivable and others in the same period of 2024, primarily due to write-back of allowance for overseas contingent guarantees arising from lower expected loss rates. Sales and marketing expense was RMB 498.7 million, representing a decrease of 3.6% from the same period of 2024, primarily driven by the improvement in operational efficiency. General and administrative expense was RMB 66.8 million, representing an increase of 24.4% from the same period of 2024, primarily due to an increase in employee costs. R&D expense was RMB 121.9 million, representing an increase of 21.4% from the same period of 2024, primarily due to an increase in professional service fees and employee costs. Non-GAAP income from operations was RMB 120.4 million compared with RMB 402.4 million in the same period of 2024. Consequently, our net income for the fourth quarter was RMB 100.6 million compared with RMB 275.5 million in the same period of 2024. Our basic and diluted net income per share were both RMB 0.49 compared with RMB 1.30 in the fourth quarter of 2024. Basic and diluted net income per ADS were both RMB 1.96 compared with RMB 5.20 in the fourth quarter of 2024. Each ADS represents four Class A ordinary shares of the company. We ended this quarter with RMB 61.8 million in cash and cash equivalents compared with RMB 124.2 million as of September 30, 2025. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer questions. Operator, please proceed.

Operator, Operator

Our first question comes from Yuxuan Chen with Huatai Securities.

Yuxuan Chen, Analyst, Huatai Securities

I have two questions. The first one is about risk. Could management share how your risk metrics have been trending in the fourth quarter of 2025 and year-to-date in 2026? Given the recent volatility in the industry, how have you adjusted your customer acquisition strategy? The second one is about regulation. With the regulatory environment in China continuing to tighten, what are your expectations for growth this year? In particular, how do you see the key metrics like loan facilitation volume and profitability trending?

Xu Yifang, Chief Risk Officer

Mr. Chen, I will answer your first question, and Mr. Fan will answer your second question. As you know, risk this year is highly related to the regulation, so I won't go into too much detail on the interpretation of the new policy and regulation because I believe most investors in the sector are already quite familiar with the dynamics. From Jiayin's perspective, compared with the previous cycle, the increase in risk last year was more pronounced and more prolonged. Particularly in the first four to six weeks leading up to the peak at the new borrower level, we observed the market peaked around late September to early October. The exact timing varied across different channels and different quality levels, but risk levels remained elevated through November before starting to decline in December. During this period, we proactively adjusted our channel mix. We tightened our standards in the new borrower models and strategies and controlled the absolute volume of new borrower acquisition. From the repeat borrower side, for incremental assets from repeat borrowers, risk peaked in November and then gradually declined starting in December. In response, we adopted a more selective and disciplined approach to risk management, focusing on higher-quality and more resilient borrowers for approval. We also applied more stringent underwriting and credit limit management for customers who are higher risk, with multiple outstanding debts, weaker asset profiles and limited financing capacity, particularly among near-prime or marginal borrowers. Overall, our structured risk management approach has delivered tangible results. Based on our internal analysis, amid the broad industry-wide risk cycle, our measures contributed to an improvement in risk metrics by approximately 25% to 30%. Since January, we have been closely monitoring overall industry volume trends. Both the platforms and our financial institutional partners are still digesting the impact of last year's risk volatility. That said, we're seeing continued improvement in our new risk vintages. Regarding customer acquisition, we remain cautious in ramping up volumes. In terms of channel strategy, we're prioritizing leading traffic platforms and lower-cost acquisition channels so that we can optimize our customer mix for the long term.

Fan Chunlin, Chief Financial Officer

Mr. Chen, your second question is on the effects of the regulation and the metrics. For the full year of 2025, we achieved total facilitation volume of RMB 129 billion, with revenue and net profit reaching RMB 6.2 billion and RMB 1.54 billion, respectively, representing a net margin of 24.7%. Since the second quarter of 2025, particularly following the formal implementation of the new regulation, industry liquidity has gradually tightened and risk levels have shown a clear upward trend. Against this backdrop, we proactively tightened our standards and restructured our risk management strategies. After reaching a historical quarterly peak of RMB 37.1 billion in facilitation volume in Q2, we continued to scale back in Q3 and Q4 with Q4 volume declining to RMB 24.2 billion. Revenue and net profit for the quarter were RMB 1.09 billion and RMB 100 million, respectively, with net margin declining to 9.2%. Similar to other leading players in the industry, we have faced short-term pressure on profitability due to declining pricing, volatility in risk metrics and diseconomies of scale resulting from rapid volume contraction. That said, as we've iterated in previous earnings calls, the implementation of the new regulation is expected to raise industry entry barriers and increase market concentration. As a leading platform, we believe that Jiayin's technology can navigate through this period of short-term risk volatility and scale adjustment. We are well positioned to enter a new phase of high-quality, moderate growth over the medium to long term. Encouragingly, after several quarters of rising risk across the industry, we are beginning to observe the early signs of stabilization and improvement in asset quality. Looking ahead, we'll continue to operate with compliance as our foundation, closely monitoring changes in risk trends and market liquidity and dynamically adjusting our strategy in line with evolving industry fundamentals. Given that the industry is still undergoing a transition period following the new regulations, we will maintain a high degree of flexibility and review our targets on a quarterly basis. As Mr. Yan mentioned, for the first quarter of 2026, we expect facilitation volume to be in the range of RMB 18.5 billion to RMB 19.5 billion.

Operator, Operator

Our next question comes from Roxy Liu with Kaiyu Capital.

Roxy Liu, Analyst, Kaiyu Capital

Given the rapid growth of the company's overseas business in 2025, could management elaborate on Jiayin's strategy roadmap and the future outlook in the overseas market?

Xu Yifang, Chief Risk Officer

Roxy, I'll answer your question on the overseas part. In today's fintech landscape, the international business has become a key growth pillar that we're actively cultivating. As Mr. Yan mentioned earlier, our operations in Indonesia and Mexico have both been growing at a strong pace with volumes roughly doubling year-over-year in 2025. We expect this momentum to continue. From the scale perspective, we look to achieve similar growth in 2026—another year of doubling in scale. At the same time, on the quality front, both markets are expected to reach important strategic milestones and move towards profitability. From a business model perspective, we will continue to deepen our localization strategy, expanding partnerships with local financial institutions and enhancing our ability to serve and empower the local financial ecosystem. We will also continue to broaden our collaboration with international financial institutions to capture synergies from our global strategy. For new countries and markets, we've been actively laying the groundwork for expansion into new markets. We look forward to sharing more progress with you later in 2026. Thank you. That's my answer on the international part.

Sam Lee, Head of Investor Relations

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.

Operator, Operator

Thank you all again. This concludes the call. You may now disconnect. Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.